Posted on June 26, 2019 by Media Culture
The number of people “cutting the cord” and moving away from traditional cable and satellite TV options continues to rise.
As a result, many marketers are paying more attention to alternatives like OTT and CTV. With these options gaining more attention from viewers and seeing increased support from content providers, should they become a significant part of your marketing plan?
What are OTT and CTV?
In many circles, the terms OTT and CTV are used interchangeably.
There are differences between the two, however, and as a marketer it is important that you understand what these differences are.
OTT, which stands for “Over-the-Top” television, is content that’s delivered via streaming which is independent of a cable or satellite subscription. OTT content is accessible on a number of internet-enabled devices, including:
- Desktop and laptop computers
- Mobile devices such as tablets and smartphones
- Smart TVs
- Set-top boxes designed for streaming content
- Gaming consoles that feature streaming media channels
CTV, which stands for “Connected TV,” is a subset of OTT content. CTV content is consumed specifically on large-format televisions that are connected to the Internet. For the purposes of identifying CTV content, it applies specifically to content accessed through the following devices:
- Smart TVs with embedded streaming software
- Third-party devices connected to a television that allows for digital streaming content
The distinction between the two types of content is important because while all CTV content is OTT, not all OTT content is CTV. Knowing the difference between the two is helpful to understand where the content is being consumed and how performance can differ across devices.
Creating an exclusive audience
Looking at the numbers, 2018 was a turning point for OTT providers as it marked the first year that more households in the U.S. had OTT than traditional cable or satellite services.
Around 69 percent of U.S. consumers subscribed to one or more OTT services, while only 65 percent of consumers had an active cable or satellite subscription. There was notable overlap, of course, as 43 percent of U.S. consumers had both an active cable or satellite subscription and one or more OTT subscriptions.
In addition, OTT consumers tend to be both younger and more affluent. The majority of OTT viewers are under 34 years of age and are 30 percent more likely to have annual household incomes of over $100,000.
This affluence and younger age are part of the reason why marketers are taking more notice of OTT, as it gives them a greater chance of targeting this valuable demographic.
OTT category growth
These shifting changes in consumption represent an opportunity to take advantage of a market that is still in early stages of growth.
In 2018, OTT ad revenue saw an increase of 73 percent as compared to the previous year, and an additional 25 percent growth is projected for 2019. This represents a potential $2.6 billion in revenue for the year, up from $1.2 billion in 2017.
In addition to the revenue shifts, the growth of OTT can be evidenced by the number of media companies and tech giants who seek to expand into the OTT market. AT&T (owner of satellite service DirecTV) acquired Time Warner in 2018 and is actively exploring ways to expand its new WarnerMedia brand into the streaming space.
Other shake-ups include Viacom buying the streaming startup Pluto TV in January and Disney laying out plans for its upcoming Disney+ streaming service. As if that wasn’t enough, Disney also reached a deal with Comcast giving Disney full operational control of Hulu (a joint venture) and allowing Disney to buy Comcast’s remaining stake in the streaming service as soon as 2024. Not to be outdone, Apple announced its own streaming TV service called Apple TV Plus, a subscription service with original content from the likes of entertainment heavyweights such as Steven Spielberg and Oprah.
Differing business models and platforms
As providers race to claim market share, several business models have arisen, with not all being ad-supported. Netflix and Amazon Prime Video, for example, currently have over 250 million subscribers combined, but neither supports advertising. In the ad-supported video on demand (AVOD) space, Hulu reigns supreme, albeit at a fraction (28 million) of the subscriber count of Netflix and Prime Video. Then there are the free, ad-supported providers like Tubi and Pluto TV, which have gained market share by providing free, licensed content from major TV and movie studios.
In addition, several technology companies have created their own content delivery devices, often selling hardware at a loss to ensure the continued growth of their ecosystems. These streaming devices, including Amazon’s Fire TV, Roku’s streaming devices, the Apple TV and Google’s Chromecast, have over 111 million active users combined, a number that will only increase as new services roll out and OTT content continues to gain traction with consumers.
Optimizing your marketing spend
This trend toward OTT content cannot be ignored. To get the most out of your marketing spend, it’s important that you optimize your marketing strategies to include both linear and OTT platforms. This will position you to take full advantage of the trends of the coming years, giving you first-mover advantage in a market that is guaranteed to grow over the next several years.