The times when people were hostages to the static programming of television channels seem prehistoric nowadays: the concepts of ‘’OTT’’ (over the top) and ‘’content on demand’’ have transformed the world of entertainment. Thanks to Netflix, YouTube Premium, Amazon Prime, Apple TV, Disney +, HBO Max and a growing number of platforms, today the consumer chooses what, where, when and on which device he wants to watch something.

This growth is exponential and was favored by the pandemic: Allied Market Research estimates that the US$121 million that the market represented in 2019 will become US$1,039 million by 2027.

According to Nielsen, in the United States, OTT consumption already represents 27% of the total time that viewers are in front of the screen, while the market share of traditional television, according to the same consulting firm, falls from 2% to 3% annually around the world.

From the customer’s point of view, things are more than simple: an internet connection and available time are enough to enjoy the content. For platforms, on the other hand, the challenges and opportunities multiply with new technologies, growing competitiveness and disruptive business models.

Business’s thousand faces

OTT market monetization opportunities are growing so much that there are already three major models to generate income:

1. The most used at the moment is the subscription video on demand (SVoD): it provides the viewer with a set of content for a recurring fee, usually monthly, being able to interrupt or cancel at any time.
2. The second model is video based on advertising on demand (AVoD): the content is offered free of charge on the condition that the viewer consumes the advertisements associated with each video. Those who pay are the advertisers and not the consumers.
3. The third model, transactional video on demand (TVoD), proposes that consumers buy specific content: a sporting event, a concert, etc. The contract ends at the time the content is consumed.

At the same time, new convergent models appear, such as multichannel video programming distributors (MVPD), in which telcos and traditional television companies coexist to deliver personalized content without needing a fixed monthly subscription.

Data as raw material

It is not possible to participate in the OTT market without having a data-driven approach: data is the fundamental raw material for understanding the tastes and behaviors of customers in order to deliver them while recommending relevant content and generating an increasingly friendly user experience. To achieve this, companies in the sector rely on a combination of big data, analytical tools and artificial intelligence.

From data, it is also possible to analyze the status of each client – connection type, device – to ensure that they have the best possible experience given their particular circumstances.

Another challenge is protecting the property rights of digital content, to keep it safe from piracy. For example, DRM (digital rights management) technology protects the transmission of videos and restricts any violation of copyright.

Infrastructure for the best experience

From the point of view of infrastructure, a cloud implementation is essential: it offers the scalability and flexibility to support resounding changes in demand or store a huge amount of content without paying exorbitant costs in its own data centers and content delivery networks (CDNs).

CDN is a distributed server that delivers content much faster based on your geographic location, the origin of the content, and the delivery server. It is, in a certain way, the fundamental element for the user experience: it allows viewing the content without cuts or interruptions.

From the network to the device, the opportunities and challenges multiply in a business that continues to experience live disruptions.