The transition from streaming to streaming
The media and entertainment industries have seen a dramatic transformation over the past decade. With the advent of smartphones and easy access to the internet, streaming media has seen a boom in demand. The OTT revolution gave streaming media an additional boost by offering content on-demand, based on individual preferences. The streaming wave was impacted by changing technologies and consumer preferences. It became the preferred medium for content consumption across the country, surpassing other media such as the Covid-19 pandemic. In 2012 there were only two OTT providers. Today, there are more than 40. Boston Consulting Group predicts the OTT content market in India will reach $ 5bn by 2023, and is now at an inflection point.
Smart TVs are increasingly becoming popular. According to the ‘India CTV Report 2021 – Mapping Connected Television (CTV) Viewership and the Opportunities for Brands’, 78 percent of respondents have a smart television and 93 percent access internet-based content. This is a sign of a growing trend among viewers to switch from traditional satellite and cable subscriptions to subscriptions to streaming or video on demand formats.
Although broadcasting has seen a lot of changes in the last few years, broadcasting remains a storytelling business. A good story will always have an audience! This is great news for traditional broadcasters who are in transition. The market for OTT has just begun. Understanding these changes is key to maximizing your opportunities and adapting accordingly.
Which came first: the technology or consumers?
Broadcasting is a complicated and difficult process. Broadcasting video content on a large scale requires many elements to work together, including transmission technologies, licensing fees, delivery mechanisms, and other components. This makes traditional broadcasting capital-intensive and hardware-dependent. The broadcasting process remained largely unchanged for a long time without any significant improvements in the operational workflows or systems. Broadcasters generated revenue by generating advertising revenues and viewership.
The internet influenced the industry’s business model and caused a shift in behavior. Instead of viewing content on the family TV set, viewers began to use their own personal viewing devices. The internet was able to reach rural communities far away. The internet was popular with young consumers in all parts of the country. They viewed videos while traveling or commuting. YouTube and Netflix pioneered new models to meet these consumer preferences. Consumers today are switching to streaming TV and cancelling their TV subscriptions. They prefer personalized content and on-the-go culture.
The traditional model was “one to many” – it was a fixed technology that provided a set of content viewers consumed. OTT has changed everything. It puts viewers in control and gives them the ability to change gears whenever and wherever they like. Viewers now have the freedom to choose what they wish to see, whenever they like.
Media and entertainment have been built around their audience. New business models and technology are needed to address fragmented consumer behavior. Broadcasters must adopt an operating model that allows them to effectively respond to consumer needs, and not the traditional capex model which is restrictive and limited in scope and scale. The new consumer behavior is unpredictable. Technology that is able to support the new consumption patterns is essential for the operating model.
Migration to the cloud: The case for migration
Broadcasting is about storytelling. Those who can tell the most compelling stories have the best chance to succeed. The transition to streaming technology allows for a simpler operating model that allows the content to shine. There were many dependencies in the past – broadcasters had to not only tell the best stories, but also have the capital to invest into satellite and cable technology that would allow them to reach consumers. With OTT platforms, broadcasting is cheaper and there are fewer barriers to entry. The only thing that matters here is the ability tell great stories. This is where traditional broadcasters have an advantage: they understand audiences and have been telling stories for a long time.
Many broadcasters face the challenge of creating a digital infrastructure to keep up with consumer trends and move from an on-prem model to a virtual one. Cloud computing is the solution to all digital transformation. Cloud computing is the ideal model for OTT providers. It allows streaming media services to scale down or up on demand and only pay for what they use. After a serious database corruption prevented them from shipping DVDs to their members, Netflix began their journey to the cloud. They had eight times the number of streaming members when they completed the migration. They also reported higher viewer engagement and expanded to more than 130 countries at a fraction the cost of maintaining their data center.
The way forward
OTT streaming streamlines the broadcaster’s operational infrastructure, allowing them to focus on storytelling and content. Technology and content evolution are the two key levers that will transform the business model for OTT and content streaming. The business model will be shaped by content experience. The way content is consumed is changing. Can viewers choose which camera angle they would like to view a sporting event? Producers are looking for immersive and interactive ways to bring the viewer into the story telling process. These technologies are convergent as well as Augmented Reality and Virtual Reality.
Advertising is a major source of revenue today, but tomorrow there could be other sources. E-commerce integrations are an example. This allows viewers to purchase products they see in movies. These experiences will change the way we think about business and economics.