What’s Behind the OTT Revenue Crisis
The OTT industry has a huge problem: despite skyrocketing viewership, revenue is lagging behind. In fact, a recent report from Unisphere/Streaming Media shows just how serious this discrepancy is. Surveying traditional broadcasters, content owners, and OTT providers across verticals, the survey found that while one-third of respondents reported having more than 10,000 monthly viewers, the same number also reported annual OTT revenues of below $100,000.
There are a host of reasons OTTs lose out on revenue. Churn, ad failures, stream abandonment, and more lead directly to loss of viewership, fewer subscribers, and less ad monetization, which means video providers miss revenue targets. Plus, increasing viewership actually causes increases in cost of delivery for OTTs with a flat monthly subscription fee.
Revenue growth is expected to improve for OTTs in 2022, but solving the above issues is critical for streaming providers who want to be a part of the growth. Here are a few ways you can make sure your OTT is part of the upcoming revenue surge.
1. Eliminate startup delays and re-buffering.
A poor experience doesn’t just frustrate viewers, it causes them to abandon streams and sometimes even cancel their subscriptions. In fact, when choosing which OTTs to use, viewers in the U.S. say ease of use and videos not re-buffering are their top two considerations (ahead of both content and affordability).
Ensuring your service can be used easily across devices, from CTVs to smartphones—without long load times or the dreaded spinning-wheel interrupting viewers’ content—will have a tangible impact on revenue. Better experiences lead to less churn and stream abandonment, and helps make sure viewers will keep paying to watch your content or will continue engaging with ad-supported content.
Plus, when your viewing experience doesn’t frustrate users, you’ll have better app store reviews that will incentivize new people to sign up for your service. Learn more about how you can reduce re-buffering for your viewers here.
2. Offer premium features to boost subscriptions.
Having subscription tiers is a win-win strategy. You can get budget-minded consumers to sign up with a lower fee that is a basic experience or subsidised by advertising. On the flip side, you can get loyal subscribers to pay more by offering premium features that enhance their viewing on your apps. This can also help offset the additional cost of delivery OTTs face as viewers watch more content.
A popular example of a premium feature is downloading capabilities, which OTTs like Paramount Plus offer to viewers willing to pay a bit more each month. Other services also offer early access to popular content or Live TV viewing to premium subscribers. Learn more about premium features in this blog post we wrote early this year.
3. Improve the ad experience.
For AVODs specifically, nailing the ad experience is crucial. Of course, everyone knows that repeating ads are a huge buzzkill, and Penthera’s 2021 U.S. viewer survey showed that 43% of viewers say annoying or repetitive ads will make them stop using an AVOD service.
However, in the same survey, a similar number of viewers (40%) said that they’d stop using an ad-supported OTT because of startup delays or re-buffering. Solving this problem is crucial for AVODs who don’t want to lose viewers and ad revenue.
Yet it’s also more difficult for ad-supported services to solve, as not only must viewers’ shows and movies not have issues, but the ads themselves need to play seamlessly. This can be tricky when the ad decisioning process often causes delays or leads to duplicate ads that annoy viewers. But the services who can solve these problems will reap the benefits of higher revenue.
OTT revenue has continued to struggle despite video streaming surging to become the most popular form of entertainment across the globe. As forecasts predict we will see better revenue for OTTs in the upcoming years, there still won’t be enough money to go around for everyone. It’s a critical moment for streaming providers to differentiate themselves if they want a piece of the pie.