Over-the-top (OTT) has become the new industry standard as pay-TV providers adapt to new customer expectations. With internet video traffic set to reach 80 percent of all consumer traffic by 2019, it would take one person over five million years to watch all the video crossing IP networks every month.
OTT is redefining the concept of TV.
As more content is delivered online, the line between linear television, video on demand (VOD), and OTT continues to blur. OTT and VOD both refer to providing on-demand content to end users; however, there is a stark difference in the mechanism used by both for content delivery. We’re here to provide clarity on how OTT and VOD are distinct.
What is OTT?
OTT is the hottest term in entertainment right now, not the least of which because it sits at the center of the inevitable and unstoppable merger between the worlds of television and digital video. But what exactly does OTT mean?
OTT is short for over-the-top, the term used for the delivery of film and TV content via the internet, without requiring users to subscribe to a traditional cable or satellite pay-TV service like Comcast or Charter and Cox.
OTT applications can be anything that disrupts the traditional delivery billing model. Examples of OTT include services like Hulu and Netflix that are replacements for traditional TV providers, and services like Skype, which are replacements for long-distance communication providers.
According to IAB, OTT video is “video content transported from a video provider to a connected device over the internet outside the closed networks of telecom and cable providers.”
What is VOD?
VOD has been around since the 1990s. Accessing VOD content requires a cable subscription for streaming videos.
According to IAB, VOD is “video content that is controlled, enabled, and consumed whenever a viewer wants after its official release date or original air date and time. VOD content can be found on set-top boxes, OTT devices, mobile web, mobile apps, and video streaming services.”
Simply put, VOD is an online business model in which television broadcasters, particularly cable networks, allow their customers to access live and/or on-demand video content from their networks through internet-based services.
Understanding the difference between OTT and VOD
OK, this is where the line can get blurry. VOD is sometimes referred to as OTT. That isn’t really true, because VOD still requires users to pay for traditional TV, whereas OTT does not. OTT content is transmitted via the internet without requiring users to subscribe to a traditional cable or satellite pay-TV service like Comcast.
One of the biggest ways OTT differs from other streaming video is what it offers to customers. On-demand streaming is the defining feature of OTT—the ability to give consumers constant, easy access to video content. In contrast, traditional television requires users to either watch at specified times or record episodes.
OTT is faster than VOD. VOD providers such as YouTube also use HTTP, but the process requires the user to progressively download the file, rather than streaming the content. This can result in a long buffering time and lower-quality video.
OTT video streaming also has considerable advantages over downloading, another main form of online video consumption. Consumers get much more content from OTT than they get for the same price when downloading; OTT can be viewed on any device; no download time is required, and OTT doesn't take up the valuable computer or device memory.
Are you down with OTT?
With Gen Y and Millennial content connoisseurs increasingly cutting the cord to their linear TV services and also starting their own families, their preference for uninterrupted video on demand is being passed down to their offspring. Young children in these households are now less familiar with the concept of ad breaks and have high expectations when it comes to variety and quality of video content. As today's children grow up, access to content is becoming greater year by year.
OTT delivers undiluted content directly to consumers without the traditional gatekeepers.
The ad-buying firm Magna said that national TV ad sales fell 2.2 percent in 2017. It predicted that they would decline at least 2 percent each year through 2022.
Why the change? The hottest shows on TV networks – which command the highest ad prices – are attracting older viewers, which is a challenge for brands that want to reach Millennials and teens, who are consuming content online. Businesses love digital advertising because it gives them the ability to target ads based on their own lists of customers – like holders of store loyalty cards – and profiles like “first-time car buyers” or “people who like foreign travel.” And they want that kind of capability on TV, too.
If you want to align your brand with viewing trends, you need to follow the eyeballs and shift to over-the-top digital advertising.
Watch this video to find out more about how OTT can impact your digital revenue growth.
By adopting OTT as an ad delivery platform, you have the opportunity as an advertiser to better segment the market, build your user base, reach a new set of customers, and offer them a more diverse experience than ever before.
The world of digital video and entertainment is always changing. Follow us to stay on top of all the digital advertising jargons and terms. We cover OTT vs. online video in another blog post here.
ZypMedia specializes in local OTT digital video advertising. We can help you place your OTT ads in front of your audience while helping you drive sales and generate a positive ROI.