Ooyala Report: Consumer Frustration with OTT to Drive Major Changes in 2018

Although a growing number of consumers continue to cut the cord with their traditional TV service providers, many of those who have turned to over-the-top (OTT) services are frustrated with the experience provided and that will drive major changes in 2018, according to Ooyala’s State of the Broadcast Industry 2018 report.

The report maps out emerging trends and challenges for content creators and distributors as they strive to maintain and grow audiences in what Ooyala said is an “increasingly fragmented media landscape.” The report drew on Ooyala’s own data and analysis, as well as research conducted by other organizations, it said.

Research in the report underscored that viewers are embracing content everywhere, on a wide range of devices, Ooyala said. However, the research also indicated that millennials, arguably the key demographic for streaming services, are already “overwhelmed with the plethora of options,” it said in announcing the report’s findings.

Those options were estimated by Park Associates to include more than 200 OTT services in North America alone. Meanwhile, 49% of viewers said there are now too many TV programs from which to choose, according to Hub Entertainment.

Despite that abundance of choices, millennials indicated they were not completely satisfied with their current OTT services. The consumer frustration will “drive improvements in the OTT experience,” including “streamlined authentication, better content curation, personalization and easier search and discovery,” Ooyala predicted.

Meanwhile, mobile viewing is expected to continue to explode, Ooyala said. Mobile video viewing is expected to account for 75% of mobile data traffic by 2022, it said, citing Ericsson data. Mobile video consumption has reached an estimated 28 minutes a day, up 25% from 2016, according to Zenith Media.

“TV viewing is continuing to go to a much more personalized, one-to-one experience,” said Belsasar Lepe, Ooyala co-founder and SVP of products and solutions, said in the company’s news release. He added: “Where previously you might have sat with your family and consumed your favorite show together, it’s going to be online and much more personalized with additional features such as virtual and augmented reality.”

Live, linear OTT viewing is expected to surpass traditional broadcast TV viewing by 2020, Unisphere Research projected.

Meanwhile, the majority of video content on every screen — be it connected TVs, desktop computers or mobile devices — is not long-form, according to Ooyala.

Ooyala’s report identified several areas of focus by content distributors as they seek to attract and maintain share of view. They include:

Format experimentation: Content delivery services are experimenting with formats including vertical video or mobile-specific content series, to optimize the TV anywhere viewing experience.

Social media: Major social-media platforms, including Facebook (with an estimated $1 billion content spend next year), Twitter and Snapchat — all grasping with the growing role of video online — are jumping into the streaming pool with big investments in long- and short-form video.

Bundling: Skinny bundles are gaining traction, and distributors will end the year with more than 3 million U.S. subscribers to mini-bundles, according to comScore. Look for more bundling experiments in 2018, Ooyala said.

IP technology: Traditional TV service providers — “broadcasters and cable programmers alike — are going all-in on IP technology, focusing on the related metadata which providers believe will drive critical advances in every area of video delivery,” Ooyala said. The next-generation broadcast TV standard, ATSC 3.0, is an example, it said, adding: “This embrace of data will be crucial to TV industry success during the next five years.”

Original Content: Although some viewers are saying there’s “too much content,” creators are attracting viewers with a combination of originals and exclusives, the budgets for which will continue to soar, Ooyala predicted, adding: “Consequently, distributors will have less patience for the time it has traditionally taken to build audiences and they may be quick to cancel shows — so look for shake-outs this year.  Content creators will also pursue new revenue streams (subscription plus advertising, more merchandising of shows, etc.).”

Given the report’s findings, “OTT is entering a pivotal year,” Ooyala said. Online viewership of major 2018 events including the Winter Olympics and the Royal Wedding are anticipated to “break the Internet,” it said, adding: “In 2018, success may come to the companies which excite consumers with innovations in discovery and content delivery, funded through new monetization methodologies.”