2022 is set to be a pivotal year for video streaming. Countless new services have launched over the past couple of years, and for viewers subscription fatigue is really setting in. In fact, a recent study from Accenture found that 60% of viewers around the world are frustrated by having to navigate so many services to find the content they want.
The oversaturated OTT market is likely not sustainable in its current form, meaning it is more critical than ever for services to stand out. Most viewers will only subscribe to a few services, and OTTs who want to survive the long haul need to ensure ease of use, no interruptions, a good ad experience, and desirable content. Cultivating viewer loyalty is an uphill battle, and data shows that churn rates are extremely high—impeding not only viewership but more importantly revenue.
OTTs need to be keenly aware of what’s going on across the industry to stay ahead of trends, as viewer behavior and expectations evolve at an increasing pace. Here are some of the biggest lessons from the past year that OTTs need to keep in mind for 2022.
Re-buffering is increasingly a huge problem.
In 2021, more viewers reported being frustrated when streaming than in 2020. The top culprit? Re-buffering. Re-buffering is the most common cause of stream abandonment, and 40% of viewers in the U.S. say it’s the main reason they stop watching.
Often re-buffering is caused by factors that OTTs can’t actually control, such as connectivity issues. But 2021 also saw the launch of creative new technologies that allow OTTs to take control of eliminating re-buffering for their viewers. Learn more about these solutions here.
More viewers doesn't always mean more revenue.
Despite the fact that streaming viewership is higher than ever, OTT revenue hasn’t skyrocketed across the board. Several factors cause this: high rates of churn, ad failures, even increased cost of delivery when more people watch. When subscription costs stay flat, that means revenue can stagnate—yet increasing costs for viewers can be risky if they are already feeling subscription fatigue. OTTs can combat this by ensuring a good experience to decrease churn, minimize ad failures, and more.
Offering premium features is essential
Another way to boost revenue is to entice viewers to pay more for your service through premium features. We increasingly see this strategy across many OTTs. In addition to reduced-ad or ad-free tiers, streaming companies like HBO Max and YouTube TV have made the ability to download content a premium feature that incentivizes users to pay a bit more each month.
4K streaming and access to certain desirable content are also features many OTTs reserve for more high paying customers. Premium features like these improve a user’s experience, adding value for those who can afford it and increasing the likelihood that they’ll stay subscribed. Plus, a tiered approach casts a wider net, as more budget conscious viewers can still afford to watch.
Ad-supported streaming platforms are losing money.
The streaming ad experience has long been fraught with problems, causing a lot of frustrating experiences for viewers such as buffering or repeating ads. But there’s a bigger problem for OTTs: ad failures lead to the loss of millions of dollars of potential revenue. In fact, according to some estimates, ad failures represent up to 40% of all potential impressions, which equates to very significant opportunity costs.
This is because there is a somewhat delicate balance between the ad decisioning process and the need for immediate playback. Often, the sophistication of ad decisioning is sacrificed to prevent startup delays for users, which leads to ad repetition or other issues, and a failure to monetize for OTTs. In this piece, Penthera's VP, Ad Products + Biz Dev Scott Halpert explains the issue more and offers potential solutions.
These are just a few of the big issues that OTTs need to focus on in 2022. There are many more factors at play, and as we’ve seen in recent years, viewer behavior is constantly evolving and new technologies can shake up the game. To stay abreast of important OTT news in the coming year, subscribe to Penthera’s blog for weekly updates.