The number of people turning to OTT services for entertainment, news, education or even exercise is rising at a rapid pace. Users of OTT platforms are expected to be nearly 2 billion by 2025. Consumption patterns have changed.
It's no surprise that many media companies, broadcasters and content providers are seizing on favorable market conditions to launch their own OTT services. If you fall into one of these categories, bingo! We're about to share with you some trends that are expected to arrive in the OTT platform market in 2023.
It's right below!
Hybrid monetization strategies in the SVOD market
The SVOD market segment has never stopped growing since Netflix and Hulu launched their OTT streaming platforms over 15 years ago. However, we are starting to see indicators that SVOD growth is slowing down as the market reaches its peak in the US :
- Netflix lost subscribers for the first time in a decade, with a net loss of 200,000 subscribers in Q1 2022 and another million net subscribers leaving the market in Q2.
- High churn rates in SVOD (up to 44%).
- Hybrid revenue models are becoming increasingly important for SVOD providers, with Hulu generating more than $3 billion from OTT advertising and Netflix and Disney launching their own ad-supported offerings.
- SVOD market penetration is high, with 78% of U.S. households having access to at least one of the major SVOD services. This compares to nearly 60% in Europe.
As the SVOD market segment continues to mature, the major SVOD video platforms (Netflix, Disney, Amazon Prime Video, HBO, etc.) are investing in content and experimenting with hybrid monetization strategies to gain audiences, generate revenue and ward off competitors, especially the emerging FAST platforms. No doubt this OTT trend will continue into 2023.
FAST TV continues its impressive growth
Free to air television (FAST - free ad-supported streaming) represents a massive opportunity for content providers to reach new audiences and explore new revenue streams.
Its growing popularity is reflected in the increasing number of large companies investing in this new medium. Even players in the SVOD market are adding advertising offerings to their subscription offerings.
But FAST TV is not a new concept: ad-supported video-on-demand (AVOD) has been around for years and (according to Digital TV Research) is expected to generate over $70 billion in advertising by 2027. FAST simply extends the supply of ad-supported video content, using dynamically inserted ads.
These new channels can be created from existing SVOD or AVOD content. Content owners use existing libraries to create niche FAST channels, which are both a revenue stream and a way to get subscriptions to premium content. Some channel creators are even using short-form content more commonly found on platforms like YouTube or Facebook Watch to quickly and easily expand their custom channel portfolio.
The benefits of launching your Fast channel?
- A growing market far from saturation
- Lightweight infrastructure and low implementation costs
- Potentially unlimited number of channels
- Easier revenue optimization with dynamic advertising
- Expand access to your inventory so content that is not performing in the
- SVOD/VOD markets can serve you
- Free of cost to the viewers
Sports content providers will continue to expand in the OTT sector
Live sports has been a driving force for traditional pay TV providers over the past two decades, but we are seeing more and more of the biggest sports brands getting into OTT distribution.
BEE launched several sports-related platforms in 2022 including LNV TV and Handstar TV.
As for direct to consumer, we distinguish sports brands launching exclusive subscription streaming apps, where fans can subscribe to watch live games and access exclusive content. Examples include the NBA League Pass mobile app or the Formula 1 platform, F1 TV.
By 2023, we expect to see an increasing number of sports brands expand their OTT content distribution to reach a wider audience and generate revenue.
Smart TV growth
Between affordable prices and increased functionality, smart TVs are becoming increasingly popular. By 2023, they are expected to surpass streaming add-ons, like the Amazon Fire Stick, in popularity.
Smart TVs offer internet connectivity and additional smart features such as web browsers, voice commands and screen sharing. The steady increase in the use of OTT applications for streaming the latest TV content on smart TVs, along with the rise in broadband internet, is enhancing the viewing experience of users, which is expected to drive the market growth.
Moreover, increasing demand for viewing TV content is providing lucrative opportunities for TV content producers to cater to users via over-the-top (OTT) platforms such as Netflix, Amazon Prime, and more on smart TV.
OTT platforms localizing video content by geography
The final OTT trend on our list is about OTT platforms localizing video content to meet the needs of audiences in various geographic environments. We are starting to see more localized video content in the FAST market segment, where platforms can deliver local news and weather to audiences based on their location.
Major SVOD platforms like Amazon and Netflix have already been active in developing localized content for audiences in China, Japan, and India - but with global SVOD market penetration measured at around 15% and expected to grow over the next few years (especially in the EMEA market), we expect to see global OTT platforms investing more in localized content for niche geographic and cultural audiences around the world.
That's it for OTT platforms in 2023?
There are many more trends that are expected to hit the OTT market in 2023. We'll tell you more soon!
If you are looking to create your own OTT platform, you can contact us with the form below.