NETWORKS
OTT Video Trends and Competition Netflix Leads Wide Variety of Subscription-Based Video Services By Steve Nason The U.S. OTT video services market continues to evolve, with a continued explosion of new, large services from big brands joining an already crowded market and consumers adding multiple services beyond the Big 3 players: Netflix, Amazon, and Hulu. Several overarching trends that have shaped the OTT video service market over the past year or so have affected providers across the entire ecosystem. These trends include unprecedented consumer consumption, the growing divide between OTT and pay-TV, and the evolution of content windowing. OTT consumption has increased across a variety of business models. While subscriptionbased services (SVODs) such as Netflix are the primary method of consuming OTT video, consumers use a wide variety of methods to access and consume content including free adbased services, TV Everywhere apps available via a pay-TV service, and pirated content. Additionally, “freemium” services that offer a tier of free content with the option to upgrade to a subscription tier for exclusive content, video content purchased previously via a marketplace or store such iTunes and Google Play Store and transactional services (TVODs) which offer the purchase or rental of single titles and episodes. (Figure 1) Parks Associates research reveals that more than half of households report using a subscription-based OTT service in the past 30 days, more than double the rate of other service business models. The launch of high-profile mega services just before and during COVID19 such as Disney+, Apple TV+, HBO Max, and Peacock, have helped keep usage high. OTT viewers also continue to gravitate to free adsupported services that are either standalone or
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part of hybrid “freemium” services. Adsupported services are extremely appealing during COVID-19 as no-cost video options with access to a deep and broad catalog of content in a “lean-back” environment. Fasttracking of new theatrical titles to VOD platforms such as Trolls World Tour, Frozen 2, and Onward towards the beginning of the pandemic also accelerated use of transactional OTT services. As the pandemic moved into fall 2020, some leveling off of OTT video consumption was seen as past 30-day use of subscription services was flat and ad-based OTT dropped five percentage points in Q3 2020 compared to Q1 2020. This result is not all that surprising as this follows typical consumer behavior. When video consumers were faced with the unprecedented nature of the beginning stages of COVID-19, they reacted by subscribing to and accessing many OTT video services. However, as the crisis continued, consumers have had ample (Figure 1)
opportunity to properly evaluate which service offerings to keep and which ones to cancel. This prolonged period of exposure to a variety of service offerings across OTT video has led to a certain plateauing and slight decline in consumption that likely will continue in the near-term. The unprecedented OTT video service consumption brought on by the COVID-19 pandemic is the trend that has touched all corners of the ecosystem and spurred all other trends in the space that has catapulted streaming video into its next phase. The pieces were in place prior to the pandemic for OTT video to take this major leap already. However, the COVID-19 crisis added the accelerant to the fire that has pushed trends that were expected to take many years to fully form and progressed them significantly in a short 12-month period. Disney+ and Apple TV+, which launched in November 2019, quickly gained market share in the highly competitive subscription OTT space.
