What is OTT and why does it matter?

Digital Marketing Technology

“OTT(Over-the-top)” is the hottest term in the entertainment industry right now. But what exactly does it mean and why does it matter? And, will it affect the digital advertising industry? 

In this article, we will answer these questions and introduce major OTT platforms in Southeast Asia which marketers should keep in mind.

What is OTT?

OTT stands for over-the-top, initially named in reference to devices that go “over” a cable box to give the users access to TV content. In OTT channels, content is delivered via an internet connection rather than through a traditional cable/broadcast provider.

Source: blog.pixalate.com

In short, OTT media is a streaming media service offered directly to viewers via the Internet. Some well-known services include Netflix and Amazon Prime Video.

OTT media can be accessed through computers, smartphones, or through smart-TVs or conventional TVs connected with an OTT streaming device, like Apple TV, Chromecast, and Amazon Fire.

OTT media have become more popular with Netflix’s sharp growth in the last few years. Furthermore, STAY HOME, the new habit cultivated during the global pandemic have given positive impact to them, such as increasing usage time of OTT media. According to a study by Media Partners Asia, total OTT video streaming minutes on mobile grew 57% to reach 107 billion in Q2 (Apr.-Jun. 2020) versus 68 billion in Q1 (Jan.-Mar. 2020) across four Southeast Asia markets (Singapore, Thailand, Indonesia and Philippines)

Why has OTT spread wide?

There are three factors that have contributed to today’s popularity of OTT. The first is faster internet, the second is the evolution of devices, and the third is change of people’s lifestyle.

Faster internet

First of all, broadband and optical lines have become common ground thus high-speed network infrastructure has been built. This has made it possible to deliver high quality video via the Internet, which requires very large communication signals.

The Evolution of Devices

The evolution of hardware devices, supported by the evolution of network infrastructure, is another major factor in the spread of OTT services. For example, smartphones and tablets have evolved to not only provide faster Wi-Fi connections, but also to handle the video playback process smoothly.

For those who have not adapted to using smartphones, a variety of devices are now available that provide an easy way to view videos by connecting the set-top box or stick mentioned above to the TV.

Change of Lifestyle

Another important factor is the change of people’s lifestyles. With the availability of a wide range of information today, individual users’ preferences have diversified hence their lifestyles have changed dramatically.

Under these circumstances, the business model of existing media, in which broadcast schedules are determined by the providers’ convenience and strategy, is no longer working.

OTT Media in Southeast Asia

Which OTT platforms are popular in Southeast Asia?

The chart below shows comparison of top OTT platforms by paid subscribers in Southeast Asia (*).

*The study covers Indonesia, the Philippines, Singapore and Thailand.
Source: media-partners-asia.com

In first place is Netflix, second is Viu which delivers Asian content, mainly from South Korea. From third onwards, the names of the local platforms are listed except HBO GO.

The image below also shows poplar OTT services (including free plan) in each of the Southeast Asian countries. 

Why does OTT matter for the digital advertising industry?

The answer for this question is that ad inventory is available in some of OTT media. According to a report by ABI Research, the OTT video market will surpass US$200 billion by 2024, with 90% of that value fueled by subscription and advertising revenue.

OTT advertising enables brands to advertise in full episodes of popular TV shows. In many cases, ads on OTT are non-skippable and 100% viewable on screen. And, since they run in real-time before, during or after video content, completion rates for those ads often exceed 90%.

Nowadays, detailed audience targeting is concerned due to privacy issues, and the quality of ad placement has become important again. For marketers, OTT can be an important placement to be included in their media strategy.

FreakOut ad platform is also expanding the ad inventory on OTT media in Asia. For more information on FreakOut OTT, please visit the product site: https://freakout.net/lp/ott/

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