The entertainment and media industry is continually evolving and has displayed steady growth in recent years. The industry leaders leverage emerging technologies to get deeper, meaningful insights into consumer behavior shifts and have brought forth new digital content consumption platforms and new distribution models. According to the most recent PwC Global Entertainment & Media Outlook, the overall spending on the entertainment and media space grew at a 5.8 percent compound annual growth rate (CAGR) from 2015 to 2019.
With the world coming to a halt due to the worldwide lockdowns imposed, the global economy plummeted. The changes in consumer behaviors amid the COVID-19 pandemic accelerated the digital disruption that the media and entertainment industry had not expected for years to come. This space experienced the sharpest fall since 2009, that is 5.6% from 2019 – more than US$120 billion. However, the 2021 projections show a return of this sector promising a 6.4% growth. While some industry segments like cinema were hit hard, the OTT video saw a 26% increase in global revenue surge 2020. And it is expected to almost double in size by 2024.
Here, we look at some trends that have reshaped the media landscape, owing to the OTT phenomenon.
The Rise of OTT
Over the Top (OTT) services have been a result of the disruptive innovation in the media space, and it is here to stay. Simply defined, OTT refers to a streaming service or application offered directly to the consumers over the internet, bypassing the cable, broadcast, and satellite TV platforms. Some of the prominent players in the OTT sphere are Netflix, Amazon Prime Video, Hulu, Disney+, among others. While some of the streaming services entered the market after around 2007, it was only after 2013 that their true potential surfaced. Consumers could now watch what they wanted, and at any time. The proliferation of smartphones and internet technology in the market made it possible for viewers to choose their screen of choice to access the content from any streaming service.
In a highly competitive market space, OTT services face some major challenges. They must adopt long-term strategies to adapt to its further evolution, future disruptions, and ever-changing consumer behavior. Over the last few years, some areas have been significantly impacted by the OTT disruption in the media and entertainment industry. Here are a few
The insatiable demand for compelling, engaging, and original content has been a driver for the leaders in the OTT space. It is a key differentiator for the streaming service provider in this overcrowded and highly competitive marketplace. The conventional media – Television and cinema – can’t offer the diverse range of content and the freedom it gives to viewers to personalize the experience. Form only movies and TV series, the choice of content now has expanded to live sports, video games, podcasts, live concerts, music, and much more.
Another significant development for the OTT platform’s content aspect is its integration with the Learning Management Systems (LMS). With an increasing focus on digital adoption in the education sector, EdTech platforms are using this technology to increase engagement with learners and by the corporates to train and upskill their workers remotely.
Audience-Personalization & Relevance
The highly aware consumer of today expects personalized content and recommendations that are in-line with their unique preferences. Personalization of content and recommendations, coupled with a greater focus on building a strong value proposition for the subscribers, is driving growth in the media space.
It has become imperative that media businesses harness customer data by investing in AI and ML technologies to get better and actionable customer insights. The relevant and tailored recommendations make consumers feel that they get value from their interaction, leading to lasting customer relationships and an increased rate of subscriber retention and acquisition.
Rapid Content Delivery
The renewed focus on customer needs and consistent, seamless experiences across channels is primarily being met by the rapid creation of engaging and original content. While the industry is meeting the growing demands of immersive content, companies will need to accelerate their digital infrastructure adoption. The content workflows need to be migrated to the cloud and content supply chains automated to make them cost-efficient. They have to continually adapt to meet the increasing consumption of digital content by the global audience.
In-built monitoring and insights into viewer behavior
Data and analytics have emerged as a critical differentiator for media and entertainment companies. Used as a strategic tool, it differentiates content, brand, and user experience, enabling profitability. The media companies are increasingly adopting the data-powered approach to bring value at every stage of the creative and the distribution process. The growth in consumption of digital data and the fluctuating demands and behavior of consumers have made it imperative that data is processed in real-time to enable flexibility, timely decisions, and ease of access.
OTT providers need to leverage ML and AI technologies, combined with Big Data (internal data) and Thick Data (data from market researches and third-party reports). This integration can help them gain actionable insights to attain the level of hyper-personalization and enriched customer experiences needed to retain and acquire more subscribers. These algorithms and data-based processing functions need to be integrated into the business’s core systems architecture to automate data interactions between sources and act real-time based on the gathered insights, with minimum human involvement.
Content is and will remain the biggest differentiator for businesses in the media space. However, the economic needs of the consumer also have to be factored in. The competition is getting fiercer and customer retention is a challenge that most companies are facing today. Consumers need to be attracted and retained by offering tiered pricing options, starting with a free trial, ad-supported subscription, and ad-free paid subscriptions. The increasing production costs and other expenses, like exclusive streaming rights, have created the need to combine subscriptions and ads for “ultra-premium” content to stay viable.
Advertising-supported models vs. subscription-supported models
A significant portion of the OTT services today is built on either ad-supported or subscription-supported models. The customer demands highly desirable content, which is easily accessible and affordable. The economic slowdown has led to a fall in household incomes and many paid subscriptions for OTT services were canceled during the pandemic. The providers need to look at ways to meet this financial need of customers while ensuring that they remain viable and generate revenue.
Streaming services are increasingly offering ad-based subscriptions to address the cost concerns. Deloitte’s Digital Media Trends survey reported that 65% of the respondents prefer the ad-based content to reduce the subscription costs. The leaders in this space are looking at ways to deliver relevant and hyper-targeted adverts. Thanks to dynamic advertising technologies and actionable customer insights, brands can individualize and personalize ads based on the customer data.
Control & Censorship
The regulatory landscape around the media and entertainment industry has also evolved and the industry needs to adapt to it. The industry is facing data privacy issues, copyright infringements, net neutrality, and security and it is headed on the path towards stronger regulations. However, regulators are focusing on stakeholder generated best practice codes and global interoperability so as not to limit the data analytics through emerging technologies and innovation in the industry.
To add to the complexities of the regulations, the increase in content produced and streamed on OTT platforms has brought to the fore the growing issue of content censorship. For major players like Netflix and Amazon, it has become common to receive content removal notices from governments of other countries. These are based on defamation, national security, cultural insensitivity, hate speech, and many more such reasons. The answer may lie in a regulatory body that standardizes the disclosure and uses AI & ML technologies to audit for compliance and classify content without censoring it.
OTT platforms have made it possible to access content from all over the world, opening up doors to share cultures and experiences. The audience for these services is not limited to one country’s audience; their subscribers are from all parts of the world. A trend that has made its way to capitalize on this global reach is to provide content from another country in multiple languages, enriching the viewer experience and making the world smaller.
Challenges in Localisation – Global Scale
The growing demand for localized content has created the need to create original content and repurpose the content using dubs, subtitling, artwork, and metadata. This entails the challenges of security controls and avoiding duplicating costs, with the traditional localization workflows are reporting a high amount of wastage and repetition through their processes and costs. Other challenges are limited local talent pools, labor-intensive process management, lack of progress monitoring processes, and many more. Technology-led innovation may provide the answers to these issues to create workflow and process management efficiencies. A collaborative approach between the local vendors can eliminate cost and process duplication, resulting in production processes that are reliable, robust, and deliver consistent quality.
Final Thoughts – Looking Ahead
The pandemic has resulted in unprecedented growth in the OTT industry. However, once the restrictions are eased and access to other entertainment options opens up for people, the scenario may shift. The OTT service providers will need to be future-ready and create sustainable strategies that ensure growth and monetization while ensuring that the consumer base continues to grow.
The OTT businesses need to be more data-driven and integrate data analytics into their core workflows and strategies. To understand the constantly evolving user behavior and improve the user experience, leveraging data insights will be a key differentiator for the streaming services to build higher Lifetime Values and improved metrics like Daily Active Users and Monthly Active Users.
The 5G wave will be hitting the media space soon, and OTT players need to be prepared to leverage the improved speeds, low latency, and high-throughput offered by it. Providers need to focus on reducing the infrastructure and overhead costs while ensuring reliable and high-quality streaming services.
Disruptions like the COVID 19 pandemic have forced OTT platforms to make some hard choices, but they also have to build sustainable strategies to be ready for the post COVID world and any future disruptions. Technology-led innovations and Data Analytics lead the way to lay the groundwork for future preparedness.