The main challenge of OTT companies: how to stay competitive in a saturated industry?

The main challenge of OTT companies: how to stay competitive in a saturated industry?

The global OTT market is predicted to grow to $83.4 billion by 2022, and OTT growth is second only to virtual reality in the media industry.

Almost half of all households already have some SVOD service and there are tens if not hundreds of providers on each country:

More is not always better

With too many options available, consumers get overwhelmed with the opportunities and are less satisfied with the one they finally pick. Standing out from that pool and leaving the customer satisfied is growingly difficult:

  • 47% of US consumers say they're frustrated by the growing number of subscriptions and services they need to watch what they want

  • 49% of consumers say the sheer volume of content across services makes it hard to choose what to watch

The markets are approaching saturation

The average spending on OTT services has actually stayed flat for the past three years. Even though a majority of US households watch online video, the overall number of hours spent watching video has declined.

As content becomes more and more personalised, people expect nothing less: or at least they’re not willing to pay for it. Two major trends have disrupted the TV industry that boil down to the users expecting more content for the buck:

  • Cord cutting: users cancel expensive (cable) packages in favour of on-demand content and specific networks.

  • Cord shaving: people are not tempted by massive bundles that might include the channel they really want to see. For example, they choose a specific basketball package instead of a huge generic sports package.

The same is happening for the OTT market. There’s only so much an average consumer is willing to spend on entertainment. By some estimation the average US consumer has a price ceiling of $38 a month for SVOD.

Price is also the main reason people cancel their subscription in Asia: 29% of VOD churn is due to high price tag and only 21% say there’s not enough shows.

In April 2019 Disney shocked its competitors with an announcement that the SVOD service Disney+ will cost just $6.99 a month or $69.99 a year. That’s significantly lower than what the competitors have been billing their customers.

All this means that the competition for the consumers’ limited wallets and time is getting fiercer by day. You have to come up with better and better content for less and less money to stay in the game.

Telco partnerships: one way to stand out

One strategy adopted by streaming companies for getting ahead of competition is telco partnerships. In these cases, streaming services team up with telcos either to offer users simpler ways to pay (carrier billing), run cross-promotions to get more users signed up (product bundling) or both.

If you want to learn more about how working with telcos is beneficial for streaming services, download our recent white paper on the topic. Leave your contact details below and you’ll get access to the research immediately.