What is the Future of OTT?

The video streaming industry is constantly evolving. Everything changes quickly here as technology and content approaches improve as well. More businesses are getting involved in the sphere of over-the-top streaming, and more people are cutting cords of traditional television. So, where is the OTT industry going? What is its future? Let’s observe it in this article. 

What is the future of OTT video streaming?

The video streaming industry skyrocketed during the pandemic. People were stuck in their houses and wanted entertainment. They subscribed to multiple OTT platforms, like international Netflix and Hulu, or local – TVALB or USNILE. By the way, these services became popular during the pandemic. 

As we enter the post-pandemic world, it is interesting which direction the industry will move in. Some experts believe that a hybrid monetization model will prevail. 

A small digression

Let’s have a closer look at common monetization approaches in video streaming. We have the following OTT IPTV platform models:

• AVOD, or advertisement-based video-on-demand. It is a monetization model when a provider generates revenue by advertising. In this case, content is usually free of charge, and people don’t need to pay anything. They watch ads during the video playback instead. 
• SVOD, or subscription-based video-on-demand. The provider allows viewers to pay for monthly or yearly access to the whole library of videos on the platform. When the subscription period ends, it can be renewed or canceled. This is why subscriptions are usually appreciated by viewers. However, subscription fatigue was observed recently. People are canceling their abonnements and switching to ad-based services. 
• TVOD, or transactional-based video-on-demand. It is also known as a pay-per-view monetization model. In this case, viewers pay for a video they want to watch. The rest of the content is inaccessible. Providers define whether a video will be available for a viewer permanently or temporarily. 

The hybrid monetization model is the combination of several approaches described above. For example, you allow viewers to choose whether to purchase a subscription or a single piece of content. You combine SVOD and TVOD here. 

Now to the business

As the pandemic was coming to end, Netflix decreased its expenses. It struggled to maintain the previous level of subscriber growth. That’s why it announced the introduction of a new purchasing plan – subscriptions combined with ads. 

Deloitte predicts that in 2022, at least 150 million subscriptions to VOD streaming services will be canceled worldwide. The churn rate is going to be up to 30% per market. 

The experts say that AVOD might become the prevailing platform viewers will be using. They point out that SVOD services publish content that is appealing to many people, while AVOD covers niche and mass content. Moreover, ad-based services are more profitable for advertisers because there are more chances to reach your target audience there due to accurate targeting capabilities. 

Others think that a hybrid model will take the center stage in India specifically as to this market, it matters what price to pay when using a VOD service. The hybrid model can help cover the diverse needs of different viewer segments. Some people would prefer to purchase a monthly subscription, and others would like to watch ads instead of paying. 

Final Thoughts

The video streaming industry is growing and adapting to changes. People are getting tired of all the subscriptions they have. That’s why they start canceling them and switching to ad-based services. And experts also point out that AVOD or hybrid monetization models are becoming more popular than SVOD. 

If you want to create or upgrade your video streaming platform, we recommend you contact Setplex. They can offer a solution to achieve your business goals.