Experts have predicted that OTT service market revenues will go from 22.9 billion in 2017 to 48 billion USD in 2023, an effective doubling. IPTV operators’ revenues are expected to drop from 9 billion USD in 2015 to 4.7 billion in 2023. This suggests that IPTV services will be replaced by OTT platforms in the near future.
Here, we tell you what OTT services are, why the demand for them is steadily increasing, and how these services differ from IPTV, cable, and satellite TV.
What is an OTT platform?
An OTT streaming platform is an online service that makes video-on-demand, linear TV, and other media types available. It is usually cheaper than cable and satellite TV but often requires a subscription fee for access.
OTT service users do not have to download files because all content has already been uploaded to web servers. Media is displayed in real-time using TV set-top boxes (Apple TV and Android TV), PCs, tablets, smartphones (Android- or iOS-based), and game consoles (PlayStation and Xbox).
How do these platforms work?
Service access is provided via apps and websites. OTT services offer a wide range of content such as movies, TV series, television, music, and radio.
There are several OTT business models. The AVoD (advertising VoD) model offers free video content but has drop-in commercials. The SVoD (subscription VoD) model provides content access for a predetermined time, without the interruption of ads. The user pays a subscription fee and then chooses content from the operator’s catalog.
Some OTT services provide retail access to content meaning that the users are only charged for the videos that interest them. For instance, in the EST (electronic sell-through) model, users get a digital copy of the content, while in the TVoD model, they hire movies and TV shows (access is allowed for a few days).
Why is it called OTT?
OTT stands for “over-the-top”. It is so-called because the service is delivered over the top of another platform.
What is the difference between OTT and IPTV?
IPTV services use IP protocol technology. The service operator controls the content distribution, decides on the subscription package contents (e.g. the number of TV channels), and sets the fees. IPTV customers cannot access content from anywhere other than their homes because transmission is linked to the device’s hardware address.
OTT services operate similarly except that the communication channel between the operator and customer is independent of the internet provider. Therefore, the customer can access content from anywhere in the world where there is internet access.
How many OTT services are available?
OTT platforms are extremely popular. There are around 1000 service providers globally and about 600 in Europe and the US together. 75 per cent of Americans have two or more subscriptions and nearly 2 billion people worldwide use them. User numbers exploded during the COVID-19 pandemic but seem to be levelling off now.
There are several reasons for their popularity. OTT services spend less on infrastructure maintenance than satellite or cable TV providers, so their service subscription fees are lower. Also, it is much more convenient to use OTT platforms. Subscribers can access their favorite TV shows and movies anywhere where there is internet access and a playback unit.