The Pitfalls of OTT and Why it’s Not a Great Trend to Encourage

OTT platforms: Image belongs to owner

“In 2020 digital media grew by 6.5% to reach INR235 billion and is expected to grow at 22% CAGR to reach INR425 billion by 2023. Digital subscription grew 49% in 2020 to reach INR43.5 billion as the pandemic and the consequent lock-down reduced fresh content on television, online sports went behind a paywall and the pandemic forced much of the population for longer periods indoors. Paid OTT subscriptions crossed 50 million for the first time in 2020.”

FICCI — EY — M&E Industry report 2021

In the recent past, especially during the pandemic lockdown, there has been a significant shift in the viewership towards the OTT platforms, including Netflix, Amazon Prime, nexGTv, Disney+Hotstar, APPLE TV, Hulu, and whatnot.

Digital Subscription Statistics

Source: EY & FICCI report 2021

OTT, the acronym ‘Over-The-Top’ entertainment offerings; ‘over and above’ of all conventional medium including broadcast, cable, or satellite pay-TV services, the digital streaming directly to your devices via the internet. OTT is the new name for futuristic digital entertainment whenever you wish for some. If you observe carefully, you will find that historically, the evolution entertainment industry experienced has been Cinema since 1880, then TVs since 1930, and then came mainstream digital streaming since 2014–15. So, in the past 5 years, this new-age M&E industry got a whopping spike in its popularity and consumer base.

Consumer Statistics

Source: EY & FICCI report 2021

The term OTT coined has an amazing factoid behind it. This is interesting to know that Dean Bubley, the founder of Disruptive Analysis and an independent telecom technology industry analyst in one of his conference called OTT. As mentioned that television and cable TV reach the audience via cables, dishes, and boxes but, this digital streaming is spread over the internet ‘Over The Top’ of these traditional mediums. And, thus OTT for ‘Over-The-Top’ became a name for digital streaming entertainment.

OTT emerged as a new-age entertainment instead of an alternative to the traditional entertainment means. It offers film and TV content over the internet without the need for conventional broadcast, cable, or satellite pay-TV services by users. The accessibility, convenience, and exclusivity have been the popularity of OTT content. OTT content comes from robust Apps and delivers to the Smartphone, desktop, connected TVs, and 3rd-party digital media players. It includes web-based apps, smartphones and tablets, connectedTV (CTV), Apple TV, Amazon Fire Tv stick, etc.

OTT platforms

“28 million Indians (up from 10.5 million in 2019) paid for 53 million OTT subscriptions in 2020 leading to a 49% growth in digital subscription revenues. We expect the M&E sector to rebound in 2021 and double to around INR2.68 trillion by 2025.”

- EY & FICCI

Source: Amity University research paper 2020

The OTT industry is going to share the bigger pie of the Media and Entertainment (M & E) world. Of course, there has never been a better time to thrive OTT service to the world when we have the lightning-fast internet and Smartphone. OTT industry seems a lucrative business plan to encash this unique opportunity, yet there are many traps for the unwary. Success of Netflix, Amazon Prime, and Disney+Hotstar is tempting enough to jump into this business, but did you consider all the traps; subtle and obvious. Let’s understand the common OTT pitfalls and experts opinion to turn them into opportunities.

Content access

You will be surprised to know that there is no shortage of content for OTT platforms. Yet, the real challenge is users’ access to content without going too overpriced of subscriptions. OTT players should realize that ‘content remains king’, yet it is quintessential to build a seamless distribution to your audience. A new-age distribution network using its own platforms and production will be an edge.

Content acquisition

OTT platform is evolving in the recent past since its inception. Consumers are like a ‘demanding girlfriend’ from their OTTs. Capturing and engaging your viewers with the right amount of authentic and original content is a more significant challenge. We already know that there is ‘no content shortage,’ yet the constant craving for fresh content needs to develop and deliver accordingly. OTT players should utilize TV analytics insights (data analytics) to create a content development plan focused on their subscriber pricing strategy.

Source: The Mack Institute for Innovation Management, Philadelphia, the United States

Customer attention

OTT players need to ensure a firm grip on their customers’ attentions. A clear understanding of your customers who is going to watch your content and what they might watch will decide your sustainability. OTTs also need to overcome the daily fight for subscribers in this congested market with a constant fear of SVOD saturation. Simply, build a strong brand image and offer your customer a differentiating customer value proposition to grab their attention.

New CX standards and technology

You are in a business of content that makes Customer Experience (CX) a crucial factor of your success. OTT players find a pitfall of seamless delivery, multi-screen experiences, ease of use, and quality with the growing CX standards. GAFAN* have the most advanced technology (like the cloud) to deliver the most unrivaled CX standards to stay at the forefront of internet business. The idea is simple for OTT players to use the advanced content delivery technologies that have the power to scale quickly and efficiently without going too expensive to match the desirable CX.

*GAFAN: Google, Apple, Facebook, Amazon and Netflix

Advertising, subscriber churn, and monetization

Image belongs to owner

M&E industry has a huge share of OTT users and subscribers base that require adopting strong monetization models. We all know that subscription fee is not the prime revenue generation source for OTT players rather than the advertisement, in-app purchases, and other data analytics-driven insights. OTT players should focus on hybrid models to deliver SVOD, AVOD, and TVOD in a single offering to reduce subscriber churn and increase tailor-made experiences.

OTT or ‘Over-The-Top’ space opens up a wide landscape of opportunities to OTT players and media companies in the internet business world. With these extraordinary opportunities, this is increasingly a crowded marketplace to build a sustainable OTT brand. OTT could be a ‘gold rush,’ yet requires a thorough understanding of advanced technologies and brilliant business practices to overcome these pitfalls. Keep your technologies correct with the evolving technology world and ‘smart’ business (as well as marketing) practices to grow in this space. If you wish to launch your own OTT App or wish to expand its reach, it would be highly recommended to get in touch with a specific OTT expert or OTT agency. These experts know from where to begin and what needs to address first.

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