The streaming, or OTT (Over-The-Top), industry is booming and the outlook is for more of the same for the foreseeable future. According to Streaming Media, spending for online video jumped by a whopping 72.5% between 2018 and 2019. The growth was sparked by 12% of US homes cutting the cable and switching to alternative programming sources. By the end of this year, up to 27% of US homes are expected to have made the switch.
Why the uptick in interest and spending, and what will sustain the momentum? Some of it is changing consumer behaviors and the continued extension of our on-demand culture. There are also the following eight factors that will further impact this industry:
1. The emergence of 5G
The rollout of 5G technology with its promise of much faster speeds, improved reliability, and reduced latency has the potential to be transformative. It will enable more detailed augmented and virtual realities, higher resolution video, expanded IoT networks, and much more. It should all but eliminate issues such as video buffering and other slowdowns that affect the streaming market, which should spur OTT consumption even further.
Increased speed is likely to come with a cost. However, about 29% of consumers would be willing to pay a premium if the result was better video quality, especially on mobile devices, which are a vital target market for streamed content. In the last five years alone, the number of active mobile broadband subscribers in the world has nearly doubled to more than five billion, and that trend will continue.
2. The COVID-19 effect
When the lockdowns and other restrictions on movement in response to the pandemic impacted individual mobility in the first quarter of 2020, the OTT industry was a leading indicator that entertainment options were being overhauled. The early spike in consumption is not surprising since traditional outlets were shuttered. During that time, new habits were engrained – why wait for a specific date/time for the next episode of a favorite program? Why bother with going to a movie theater when films can be enjoyed from your sofa?
Even as restrictions relax and people reclaim some of the social outlets that they previously had, the convenience of streaming remains. In addition, many of us began working remotely; the walk from home office to home theater never has a traffic jam, the user determines when the show starts, and you do not have to suffer the patron who insists on talking over the film.
3. Competition in the OTT industry to get tougher
More people have at least one streaming video subscription than have a traditional pay-tv subscription. A few major players, such as Netflix, have dominated this space for a long time, but that is changing. Virtually every media company wants to establish direct relationships with consumers, and all major US television networks and studios will have stand-alone streaming services by the end of the year.
In advance of this shift, the big studios are withdrawing content rights from third-party platforms, making it impossible to bring all major producers under one umbrella. This is a source of potential frustration for consumers who already have an average of three streaming video services. Do these customers use all of them? Are they all worth it? Look for the customer experience to become even more of a strategic priority in responding to disruptive competition.
4. Media giants to continue ruling the market
Building on the previous point, major players such as HBO Go, Disney+, NBC, and Peacock Premium have emerged, and more competition is also coming in from unlikely quarters. Apple TV+ is expected to give the likes of Netflix a challenge for market share. In addition, other name-brand companies will take the plunge this year, including Comcast and AT&T.
Another question is ads or no ads. Globally, streaming subscribers number in the billions and juggling multiple subscriptions eventually becomes a cost-benefit issue. Services with ads cost less, and as studios increasingly turn to streaming, there are questions about the effect on user rates.
5. CTV to grow in popularity
By 2025, an additional 1.5 billion people will have mobile internet, so it’s almost counter-intuitive to note that viewers are watching more content through TVs than smartphones and tablets. The growing popularity of the smart television, internet-enabled gaming consoles, and dedicated streaming devices define this trend.
Some popular CTV streaming technologies include Amazon’s Firestick, Roku, Xbox, Nintendo Switch, Sony PlayStation, and Apple TV. These devices are increasing the consumption of streaming services.
6. Immersive streaming technology to become more accessible
The one truism about technology is that it is perpetually evolving. The immersive streaming capability that has been talked about for some time is drawing closer to reality. Before 5G, a user could manage videos with 720p resolution, perhaps 1080p in the best-case scenario. That’s going to change.
Low Internet speeds were unable to support 4K streaming; 5G can easily do that. A 4K video needs about 30 Mbps of bandwidth, while live video requires double the speed. That has not been a standard capability among consumer-grade internet connections, and this higher speed will stream into your home and also play on 5G-enabled mobile devices.
7. Most households adopt both Pay TV and OTT
Cable is not going to wither and drop from the vine. While the number of subscribers has fallen since 2019, pay-TV remains profitable with steady revenue growth. This year and beyond, cable will remain a constant among consumer choices even as streaming services grow.
A more likely scenario than either/or is a blend of the two delivery systems. Cable provides a measure of convenience in a monthly bill, and not everyone has the time to get their money’s worth from multiple streaming providers. As a result, most households subscribe to both, meaning that the two are more likely to merge or otherwise cooperate than fight to the death.
8. Customer retention to get scientific
As the streaming space gets more crowded and consumer budgets become more stretched, something has to give. An earlier point mentioned the potential impact of ads and how those might offset subscriber fees. Either way, retention will be the single most critical KPI for streaming in the foreseeable future, something that holds true for any subscription provider, no matter the product or service.
Staying afloat in an ever-crowded marketplace requires data insights to understand the relationship between churn and revenue and focus on the right priorities. For instance, free trial abuse was a significant concern for revenue-conscious providers, but only 5% of US subscribers habitually canceled their free trials. Plenty of consumers canceled a single service but very few did that repeatedly. Other metrics to consider include involuntary cancellations due to subscribers failing to pay their bills or experiencing credit card problems.
Partnering with experts to tap into the streaming service trends for 2021
Tap into these trends to help your business experience accelerated growth. And don’t think that you have to do it alone. An expert partner like GlowTouch can help you develop and implement high-touch support programs that retain customers while increasing revenue. Contact our team at GlowTouch today for a free consultation. We’ll be happy to help you grow your business to the next level.