In 2018, spend on OTT media tripled in two years and it continues to grow, with 46% of adults now using OTT services in the UK. On the surface, pay OTT is a booming industry to be in. New services from BritBox, Disney, NBCUniversal, Time Warner and possibly even Apple are expected in 2019 or early 2020, and as of late 2018, Ofcom reported that the number of UK subscriptions to television streaming services like Netflix, has overtaken those to traditional pay television for the first time.
There’s no doubt about it: The way we choose to view content is changing dramatically. In this blog post, we explore the impact of service segmentation, net neutrality, looking at how consumers can be kept engaged with multiple platforms and justify the costs.
More than financial
New OTT services are popping up everywhere, and with basic services like Sky and Virgin coming in at a cost of about £80 per month, any extra subscriptions to those such as Netflix, or Spotify could see some paying over £100 to get their monthly entertainment fix. With this in mind, there is a risk that consumers are going to reel in horror at the total cost they are spending on these services each month.
But what about the psychological cost? An over-saturation of platforms is likely to result in customer fatigue. Furthermore, content that was once exclusive to one platform could end up being licensed across a few in order to tempt customers to use another service, and vice versa with widely available content suddenly only available on an exclusive basis. The fear is that consumers will burn out and unsubscribe from extra services altogether.
So how can providers make their service the one that keeps the viewer’s interest? Keep things simple. Nothing is more frustrating than a convoluted user experience. Secondly, but perhaps most importantly, any content needs to play smoothly; users will lose patience if a platform consistently crashes, no matter how good the content is.
Finding a balance
More OTT services mean an inevitable increase in discussions around net neutrality. With the FCC in the US repealing the net neutrality rules, internet providers can now restrict access to their network based on who can afford to pay.
The reality is that streaming services and broadcasters need telco providers, and vice-versa. However, a balance needs to be struck, otherwise one could disappear and the other will swiftly follow. But who pays? Well, it always comes down to the end subscriber. If content platforms like Netflix don’t want to pay broadband providers to prioritise their traffic, the end consumer receives poor service and in turn, could unsubscribe to services.
If broadband providers are going to start restricting access and charging a fee for using their connection, the impact will be greater on the smaller vendors and end subscribers. The only way around this, therefore, is paying, which increases the cost for subscribers. And the chances of being successful are always lower if there are high costs to work around.
That said, to date the UK and indeed the EU as a whole is not in favour of reducing net neutrality, allowing all to compete fairly, so it looks hopeful that subscribers at least won’t be handcuffed by this extra charge and service providers will continue to have a level playing field.
What does reality look like?
Service segmentation is always going to put costs up for the end user, whether it’s through an increase in services or rise in subscription costs. And for providers, the content war could also prove costly, with viewers expecting both quantity and quality. We’ve talked before about options in building an OTT service and what this means for a service provider and the cost impact, which you can read here.
There is no avoiding it: Pay OTT services are going nowhere. But what is clear, is that content providers need to continue to put the customer first and realise that there will come a point where they aren’t happy paying the price for OTT.
If you need advice on creating a user experience that works for you and your customers, then get in touch! HELLO@SPICYMANGO.CO.UK