The Rise of OTT Services in Media

OTT (Over-the-top) bypasses cable, broadcast, and satellite television platforms: the types of companies that have traditionally acted as controllers or distributors of such content.

In the dynamic world of entertainment and media, the way we consume our favorite shows, movies, and other content has undergone a significant shift. Traditional television and cable services, once the gatekeepers of content, are now sharing the stage with a powerful new player—Over-the-Top (OTT) services. This article aims to provide an in-depth understanding of OTT, explaining what it is, how it works, and its transformative impact on the media landscape.

What is OTT?

Over-the-Top (OTT) is the term used for the delivery of video, audio, and other media content directly over the internet, thus bypassing traditional distribution methods like cable or satellite providers. What makes OTT appealing is its capacity to provide users with on-demand access to their preferred movies, TV shows, documentaries, and more, anytime and anywhere, using any device with an internet connection.

HOW DOES IT WORK?

OTT services primarily operate on a subscription or ad-supported model. To access a range of content, users typically sign up for a specific OTT service such as Netflix, Amazon Prime Video, Hulu, or Disney+. These platforms offer a diverse selection of movies, TV series, and exclusive content to cater to an array of interests and genres.

Within the OTT ecosystem, various monetization models exist. AVOD (Advertising Video on Demand) services, such as YouTube and Pluto TV, offer free access to content supported by ads. SVOD (Subscription Video on Demand) services like Netflix, Amazon Prime Video, and Disney+ operate on a subscription model, providing ad-free streaming and exclusive programming for a recurring fee. TVOD (Transactional Video on Demand) platforms like iTunes and Google Play Movies allow users to rent or purchase individual movies or episodes. Linear OTT services, such as Sling TV and Hulu + Live TV, offer live streaming of linear channels over the internet, replicating traditional TV broadcasting. Additionally, FAST (Free Ad-Supported Streaming TV) platforms like Tubi and Roku Channel combine elements of AVOD and linear OTT, providing a selection of free, ad-supported content with a channel-based experience.

OTT technology delivers media content by utilizing streaming protocols like HLS (HTTP Live Streaming) and DASH (Dynamic Adaptive Streaming over HTTP). These protocols break down content into smaller, manageable segments, which are then transmitted over the internet. This segmented streaming eliminates the need for downloading entire content files, thus offering a seamless viewing experience at the click of a button. These technologies dynamically adjust the video quality in real-time based on the viewer’s bandwidth and latency conditions during playback.

However, HLS and DASH come with a downside. They add a few seconds of delay, which can be a hindrance during live events like sports. To address this, newer technologies like LL-HLS (Low Latency HTTP Live Streaming) and LL-Dash (Low Latency DASH) have been developed. These low latency technologies significantly reduce streaming delays and are gaining widespread acceptance in the industry enabling live events for OTT platforms.

Content Delivery Networks (CDNs), the unspoken heroes powering OTT delivery, enable platforms by ensuring that the streaming content is delivered quickly and efficiently to the end-user. CDNs consist of servers distributed in various locations, known as points of presence (PoPs), designed to move content around the world. They utilize caching mechanisms to ensure faster and more efficient content delivery of popular programs closer to end-users. By caching content locally, CDNs reduce wait times, improve streaming performance, and enhance the overall viewer experience.

The Impact of OTT on the Media Landscape

Cord-Cutting Trend

OTT platforms’ convenience, global accessibility, flexibility, personalized viewing experience, and cost-effectiveness have accelerated the ‘cord-cutting’ trend where viewers cancel or downsize their subscriptions to traditional cable or satellite TV services.

Original Content and Creative Freedom

To stand out in a crowded market, OTT providers invest in high-quality series, movies, and documentaries, providing creative freedom that results in innovative and diverse storytelling.

Disruption of Traditional Content Distribution Models

OTT has opened new channels for content distribution, empowering content creators and independent filmmakers to reach global audiences without the traditional gatekeepers.

Enabling the Advertising Market

OTT services have catalyzed a significant shift in the advertising industry. As viewers migrate from traditional TV to OTT platforms, advertisers are repositioning their budgets to adapt to these changes. This evolution has fostered the development of advanced TV advertising solutions. Dynamic Ad Insertion (DAI), for instance, serves personalized ads to viewers using variables such as their location, demographic data, and viewing habits. Another innovation, Automatic Content Recognition (ACR), facilitates more precise ad targeting by discerning the content being watched on the OTT platform and across other digital platforms. These advanced solutions enable more personalized, targeted, and thus effective advertising strategies.

Disrupting the Advertising Market

OTT’s impact extends to ad campaign verification, differing vastly from traditional TV. While traditional TV relies on ratings and samples for a broad impact overview, OTT leverages digital tracking for real-time data on exact ad views, completed views, and viewer engagement. OTT even identifies viewers’ demographic and behavioral characteristics, offering unprecedented detail. However, as with all things new and shiny, it also introduces challenges, including fragmentation of platforms and lack of standardization, which can lead to discrepancies in measurement. Data privacy regulations may also limit data collection and usage, affecting accuracy. Additionally, OTT is susceptible to ad fraud, which can distort metrics. Lastly, tracking user engagement across multiple devices for cross-platform measurement presents another complexity. Despite these issues, the OTT industry’s ongoing efforts promise to mitigate many of these challenges.

Over-the-Top (OTT) services have revolutionized the way we consume media, offering a convenient, personalized, and globally accessible viewing experience. By leveraging the power of the internet, OTT platforms are reshaping the media landscape, empowering both viewers and content creators. With ongoing technological advancements, we can expect further innovation and growth in the OTT industry, meaning an exciting future for the media industry.

James Baird is a Lead Product Engineer with a 12-year career in technology and expertise in media solutions. He develops custom solutions for global clients and specializes in new product development and solution design. Connect with James for insights on technical challenges in the media industry.

by James Baird, Lead Product Engineer

by James Baird, Manager of Solution Architecture