The impact of OTT on the TV industry: Understanding the current and future scale of disruption

Over the last decade, OTT services have caused significant disruption within the broadcast and pay-TV industries, both in the UK and worldwide. The provision of these services has transformed viewers’ relationships with television: affecting consumption habits, payment models and even content trends.

But what is the scale of disruption caused by OTT services on linear TV? And more significantly, how will the growth of OTT services continue to shape and affect the TV industry?

On Tuesday 23rd January 2018, over 100 guests gathered to attend MTM’s Forum on the scale of disruption caused by OTT services, hosted in Google’s offices in central London, and chaired by Jon Watts, Managing Partner and co-founder at MTM.

We were delighted to host five expert panelists from across the industry to guide our discussion:

  • Justin Gupta – Head of Broadcast & Entertainment, Strategic Partnerships, UK & Ireland, Google
  • Martin Goswami – Director of Pay and Distribution, ITV
  • Humphrey Black – Vice President, Media Distribution, EMEA, Turner
  • Sarah Milton – All 4 Head of Product, Channel 4
  • Kiaran Saunders – VP, EMEA leading Channel Distribution, Business Development & Corporate Finance, A+E Networks

The current OTT business models will evolve

The panel agreed that the growth of OTT services would continue, but there was some debate regarding whether Amazon and Netflix’s share of the market, and the huge investment in content to create global viewership, would continue. One panelist was skeptical, arguing that Netflix will potentially look into providing more freemium services, suggesting that there is ceiling on subscription-based services. Instead consumers’ and providers alike may turn to an ad-funded model, as the ability to charge for a service becomes more of a challenge

“Having a good brand, and managing a good brand is not easy. Your services have got to be better, they have to be really good. You can’t afford to be mediocre.”

As for the future, the panel saw two possible options: the re-aggregation of services (making it easier for consumers to access content) or the emergence of thematic services, developing niche-interest content but at a global scale.

 In a world of abundant choice, consumers are in control

In order to capture a share of OTT growth, broadcasters have focused on content: the type that attracts consumers. The scale of change has placed the consumer in a position of control. With better, more exciting content emerging, the panel agreed that the battle to establish familiarity and presence of both platform and content will continue in the face of abundant choice. Not only are consumers demanding more premium and niche content; but also greater accessibility in a multi-platform world. A service that would combine these two features would see an influx in subscription rates.

“The ability to watch what you want when you want, people are finding niches of content of interest, and wanting more content that fits that demand. We’ve become a fan-centric company, we can serve fans the way that linear broadcast can’t.”

OTT players are helping to create ‘a golden era of content’

Broadcasters, OTT services and production studios have responded to consumer demand, creating increasing volumes of higher-quality content. Within the OTT domain, shows such as Netflix’s The Crown and Stranger Things, and Hulu’s The Handmaid’s Tale have been acclaimed by audiences and critics, while big broadcasters have continued to platform traditional drama such as BBC’s War and Peace. Alongside large-scale global productions, local programming was noted as thriving, with greater Brazilian, Turkish and Korean programming as an example.

 “We have two divergent trends, big hits are getting bigger, but increased interest in local programming. Local programming can find a global audience […] when there’s quality there’s an international market.”

Discoverability – via voice-activated assistants – will be a priority for providers

OTT services have radically changed the broadcast and pay-TV industries, and will only continue to create huge change, but the panelists were unable to agree on a single vision of the future of television services. One panelist noted that, with masses of great content easily available across different services and platforms, TV providers will be implementing more advanced discovery services such as voice-driven TV assistants to enhance access to, and delivery of, content.

“The bit that’s most unclear is what people use to stitch together those experiences. Will it be TV assistants? I can see a world where people are giving away TV sets with the interface, instead of the set top box they control. It’s how it gets joined together – that’s interesting.”

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If you are interested to learn more about any of the topics discussed please do not hesitate to get in touch at info@mtmlondon.com, or sign up to our weekly mailer to see what we’re thinking about each week.

About Raniyah Qureshi

A lover of spreadsheets, and all things television and film, Raniyah recently joined the strategy team at MTM, as an intern. Occasionally, she dreams of being Oprah, but only so that she can provide free doughnuts for all.