COVID accelerated online viewing, viewing habits are undergoing a big transformation, and the proliferation of OTT services has prompted the need to aggregate and partner, research presenters said at the OTT.X Fall Summit in Los Angeles Sept. 1.
“In December 2019, before the viewing uptake [with stay-at-home orders] we saw about 68 million OTT households watching about 6.4 billion hours of OTT content in a month,” noted Ray Yinger, director of marketing solutions at Comscore. “By June of 2021, this had risen to about 82 million active OTT homes watching about 8.3 billion hours of content through OTT. Though we see a bit of a dropoff after January of 2021 as some of the states began opening up and we began leaving our homes a little bit, the number of households who engage in various OTT services stays very strong. As the data show, the overall appetite for OTT content accelerated through the pandemic. More households than ever before now engage in OTT services.”
With the increased viewership also came an explosion of OTT services.
“As of the first half of 2021, there are globally 5,000 active SVOD services, more than 2,000 active AVOD and free TV services and over 1,200 transactional services available to the global consumer,” noted Marija Masalskis, advertising research lead at Omdia.
Consumers are finding services on smart TVs and other aggregation players.
“When we asked consumers how they found something to watch, flicking through channels and services came up on top, particularly among the U.S. consumers,” Masalskis said. “So what this really means is that you need to be available on these platforms that enable this new channel flicking, enable seamless discovery of content, enable consumers to just lean back and scroll through and find your service.”
Other partnerships are key, as they offer free-with-sub bundles and prime placement.
“Partnerships with global telcos and digital aggregators are essential, not just for SVOD companies to subsidize their offering but also to AVOD companies, particularly as you see the emergence of connected TV advertising,” she said. “In fact, we expect TV to account for 25% of all online video spend by 2025. And we do expect that partnerships and alliances will be absolutely necessary to reach the scale that will enable AVOD services to compete.”
Another key is consumers’ perception of value. Consumers are willing to pay less and wait through ads, and the higher-priced premium model isn’t necessarily most profitable for services such as Hulu.
“The user that pays a smaller subscription price but is exposed to advertising brings in more revenue than the user that is on their most premium tier opting to pay more to not see ads,” Masalskis said, adding “they perceive that they are getting a premium service for a discount.”
Also, binge viewing may be on the wane as a way to attract subscribers.
“What we started to see recently is that acquisition shows are starting to have a weekly release and retention shows are being dropped as a binge,” said Renee Engelhardt, global director of partner insights at Parrot Analytics.
Streaming services aren’t the only beneficiaries of the new order.
Nelson Granados, professor of information systems and technology management, Pepperdine University, noted that in addition to video streaming, digital video rental is holding its ground and digital sellthrough is continuing to grow (8% from 2016 to 2021).
“There is a market for electronic sellthrough and it’s growing, so there is a market for downloading content and it’s steadily growing unaffected by SVOD,” he said.