The Ultimate Guide to OTT Technology in 2023
Technology without a purpose is useless. When talking about video and streaming technology, we must be aware of the purpose of this technology, the impact on real people, and everyone who is affected by this technology. And the general purpose is simple – entertainment!
Beware of big opportunities
Having that in mind, it is necessary to be cautious about the key indicators of the success of such technologies and services as the end-user's expectations are very high. In recent years, major social networks put a large emphasis on the further development of their video segment which has become a core part of user experience. Questions like “How to engage the user?”, “How to simplify the interaction?”, “How to track user behavior for better conversion?”, “How to keep the user's attention span?”, “How to provide the native experience?”, “How to improve or reinvent the business models?” have become an important driver for further investments in video streaming projects.
Over-the-top and IPTV video - definitions
OTT and IPTV are umbrella technologies that enable end-users to consume video content using the benefits of the Internet's availability and mobility. IPTV services rely on content distribution over private and operator-controlled networks and are, technology-wise, in general, more complex and may provide limited flexibility. The OTT, on the other hand, relies on content distribution over public Internet infrastructure. This approach, by default, requires a high level of technical flexibility, control, and modularity. From the service provider perspective, OTT simplifies the complexity behind the technology, it offers shorter time-to-market and allows for additional focus on innovation.
Growth in consumption, quantity, and quality of video streaming services
The trends show that the global online video service offering is continuously growing. End-users, globally, can choose between the major OTT services (Netflix, Prime Video, HBO Max, Disney+, and others) and their local OTT counterparts. Major and local OTT services are in the same arena - competing for market share and end-user time. While the majors may offer premium content, they can hardly keep up the pace with the popular local content offered by local OTT services. In addition, the content is becoming more accessible, so we see local operators partnering with more and more content providers which enables them to offer premium content as well.
The video entertainment industry has become more complex than ever. The content is still the main differentiator among a growing number of OTT/IPTV services, but there are other differentiators as well!
User experience - an increasingly important part of OTT video
User experience (UX) is becoming more and more relevant in the OTT service. End-users are familiar with the trends and features offered by major providers and they expect a similar experience in their video applications. Feature-wise, the level of expectation is very high. The feature set which was for a couple of years considered a nice add-on is now expected to be a part of the standard feature set. Users expect simplicity, consistency, content discoverability, and mobility.
What should user interfaces in OTT media look like?
User interfaces across media devices need to be simple, unified, and visually attractive and the expectation is that it should offer some kind of surprise and distinctive feature that will additionally engage them to stay with the service.
Two ways the operators build a user interface
Therefore, operators can consider 2 main approaches to building OTT services in regard to the user experience. The first is (re)launching the OTT service using standardized UI, which includes UIs that have the most common features and user experience that is already proven on the market and known to end-users. The second option is building their own custom-tailored UI. This approach might offer additional differentiation on the market, but also holds additional risk in regard to the end-user expectations and might require more complex market preparation and user onboarding.
Content is still the main differentiator among today's OTT/IPTV services. To be successful in the market, operators need to offer users content that will not only engage them to subscribe to the service or consume that content but will engage them to stay on the service. That means that OTT/IPTV operators must find a unique selling point that will make their service attractive and that will differentiate them in regards to local or global competitors.
Evolution of data-based content bundles
Content-wise - to keep users happy, operators should be able to offer content that is carefully selected and regularly refreshed. It is necessary to track the content success indicators and build service around that. It can be achieved by enabling content consumption analytics that provides statistical data on content consumption, interaction, or other data that can help operators properly handle the service and offering.
Global operator brands like Netflix, Disney+, and others are still important but are not as crucial factors for users to stay with the service anymore. Contrary to the previous approach where services had been built around brands or channels, recent market trends show that it is becoming more important to build services around the content. The cause of that is the fact that users expect a high level of content discoverability - meaning, content should be searchable and offered in a single place.
Although a challenging request, this will become more and more available due to the following:
- Content aggregation and deep linking (application diving) – the option to make content from other services searchable and accessible (with specific commercial conditions) is becoming one of the key drivers of how OTT/IPTV operators see the option to make their services content-centric and more attractive to users. Majors also see this as an additional funnel for user sourcing as they still preserve the exclusivity (users are redirected to their service) and can focus on building service around their brand.
- Live content reinvention – the trends show that user habits, related to live content consumption, are changing. Live content is more and more consumed like on-demand content so in the following years, we will see an increased number of services that will offer live content events categorized by different genres or content categories, that enable users' VOD experience. In combination with smart content categorization, content discoverability, and personalization this is becoming the next main thing when talking about live channels.
IPTV services are primarily focused on STB as a device that provides premium hardware for the TV experience. In OTT services, there are multiple user device touchpoints that require a unique approach when building the premium TV experience. In general, users expect a native and flawless experience on all devices they use. On the other side, operators focus more on the recognition of which device is the primary for content consumption, and they are putting additional effort to provide the best experience on that particular type of device.
Research of the streaming market shows that mobile devices have a slight increase in the user's content-consumption time, but traditionally the big screens are still defined as the main devices for content consumption. Mobile, tablet, or web devices, which are more flexible, are used for occasional use and content discovery, while big-screen devices still have the lead in the context of the user's content consumption duration.
In the market share of the “big screens”, STB still has a significant impact. However, a slight decline in the share can be seen in favor of Smart TV devices which are becoming increasingly popular. This is not a surprise, as operators are trying to decrease the operational cost of the services (such as STB maintenance costs). Nevertheless, it is expected that the STB will still remain the most popular "big screen" device due to its possibility to provide an excellent experience on the optimized hardware.
What OTT devices should the operators focus on?
Device market shares are something operators should predominantly focus on in the coming period. The operators should be aware that the most important device to build the user experience around is the device where the user spends the most time watching.
Detection of that device type is not a straightforward thing as it depends on the type of service, offered content, target users, and market tradition. Different markets have different user expectations, so it is necessary to understand what is the best fit for the specific market.
Of course, operators should be aware that in the following period, besides the most common types of devices (mobile, tablet, web, Android STB, Smart TV) they should also actively monitor the growth trends and market shares of the devices like Chromecast, Fire TV, Apple TV, Roku, and others.
Flexibility of IPTV/OTT broadcasting technology
Service and UI flexibility is a very important segment when planning IPTV and OTT services. As mentioned, IPTV and OTT services are primarily used for entertainment making them a part of the entertainment industry where expectations of flexibility are always high. The term flexibility primarily refers to:
- UI flexibility
- Technical flexibility
- Business flexibility
What is UI flexibility?
UI flexibility means that operators need applications that are flexible with regard to the: UI interface, screen layouting, configuration options, and UX flows. They also need to enable different modes that can be assigned to different profile types of the same subscribers (i.e. adapted for children, younger audiences, older people, etc.). UI flexibility also means that the service needs to be easily controllable by the operator, and it should allow the operators flexible management of the service (application UIs) without the need for significant investments of time or money. UI flexibility also means application and UI modularity which means that applications should be built modular and flexible, enabling easy activation of different application layers or options, and integrations with third-party services that allow additional levels of user experience. Of course, when talking about UI flexibility operators should keep in mind that if they are building a product or a service for everyone, the product will probably be for no one.
What is technical flexibility?
Technical flexibility is something that fuels UI and business flexibility. Operators should focus on building relationships with technology providers that offer high levels of flexibility and transparency so they can avoid becoming technical hostages of legacy solutions or technical components.
What is business flexibility?
From the operator's perspective, business flexibility should be the main key point to building successful service as it offers operators the ability to build flexible business models and flexible offerings for end-users. From a technical perspective, the IPTV/OTT market is unique as it depends on user interactions and user habits. Interactions and habits need to be taken into consideration when building an application, meaning you should know what are industry trends and what are basic UI elements and interactions the user is expecting. The challenge is that sometimes it is very hard to anticipate the market behavior influencing user habits or to be very precise with the potential costs. Recent global events show that it is becoming even more challenging to anticipate long-term projections or future business trends. That is why, in the next period, the operators will insist more on flexible business models, transparency, and partnerships with reliable partners.
The companion mode is an increasingly popular feature in the OTT landscape. To simplify, a companion mode is a list of features that combine different aspects of using multiple devices at the same time, sometimes with different options. In general, in the OTT video streaming ecosystem, the companion feature, in general, refers to the ability for users to easily move between different devices and continue watching their favorite content. For example, a user might start watching a movie on their phone and then continue watching it on their TV using casting technology like Chromecast or AirPlay. More advanced services also offer proprietary casting protocols, which are not related to Google or Apple technology which allow them even better flexibility in controlling different devices (e.g. STB).
What are the companion features in OTT technology?
Recently, OTT services have also begun using the companion mode as a tool for user onboarding. By offering cross-login capabilities, these services are able to simplify the user validation and device authentication process, making it easier for users to access their content on multiple devices.
The future of companion features
In the future, we can expect to see even more innovation in the area of companion mode technology. For example, some OTT services are already experimenting with augmented reality (AR) and virtual reality (VR) to create even more immersive and engaging user experiences. Additionally, the use of artificial intelligence (AI) is likely to become more prevalent, as OTT services look for ways to improve user engagement and keep users coming back for more.
Another trend in 2023 will be the growth of the second-screen experience features, which can be used to enhance the way users watch sports, live events, or VOD content. It is expected that in the following period more and more OTT services will offer features like live data and analysis, and match statistics. Such features will allow users to get a more immersive and engaging experience while watching their favorite games. This will be particularly useful for fans of sports like football, basketball, and baseball, who want to stay up to date on the latest scores and stats, or who want to get a closer look at the action on the field. The operators are also very interested in including features like video highlights or multicam service within the second screen experience. They see that that could be a great benefit for end-user engagement as it could positively affect how users watch the most important parts of the game.
In addition to traditional sports, OTT services are also likely to offer second-screen experiences for other live events, such as music concerts, awards shows, and political debates. These experiences will allow users to engage with the content in real-time, share their thoughts and reactions with other viewers, and get access to exclusive behind-the-scenes content and interviews. For example, users might be able to participate in polls, quizzes, and other interactive features during a live event, or chat with other viewers to discuss the action in real-time.
It is expected that second-screen features will also be more and more used for VOD type of content as this could be particularly useful for fans of movies and television shows, who want to learn more about the characters and the making of the film, or who want to get a closer look at the action on the screen.
In terms of innovation, it is also expected that on some levels second-screen experience features may combine augmented reality (AR) and virtual reality (VR) – for example both AR and VR are already used in traditional broadcasting (AR with real-time overlays of graphics stats on top of the actual stream, VR with more immersive perspective on the action on the field (e.g. VAR technology in football). As the data is already available for traditional broadcasters, it is expected that technology will be more and more used in the end-user market.
Content enhancement features and tools
The market shows that there are lots of investments in content enhancement features and services. As OTT technology is constantly evolving, operators continuously look for ways to make their content more attractive, and to offer better features to engage end-users and prevent churn.
Trends show that in the following period operators would probably invest in integrations with third-party services that aggregate the metadata from third-party services which are used to enhance the available content. This includes integration with different EPG providers which offer extended metadata for live content, but also an integration with third-party services that specialize for the VOD metadata (e.g. IMDB, Rotten Tomatoes, etc. ).
There are more and more features powered by artificial intelligence (AI) to enhance the user experience. Usually, these features include AI-driven content recommendations based on content consumption, user profiling, and comparison. It is also noticeable that the most effective recommendations are the recommendations that are created because of statistical analysis of the consumed content, specifically within some region or demographic.
In addition, we see more and more AI technology that focuses on processing video content, even real-time, which is then used to solve the most common challenges such as selecting the best images for video previews, finding the best scenes within content, creating custom trailers, or map the content based on the music, tone or mood of the characters. In addition, this data can be used for character mapping and actor detection which can be used for more advanced filtering or content discovery.
Features like these can provide an immersive and personalized viewing experience for OTT users.
Advertising is becoming an important business model in the OTT services domain. Some OTT services, like Hulu, rely heavily on advertising to generate income. However, recent developments show that video service providers will put more emphasis on advertising, and this will be additionally boosted by the fact that even Netflix just started using advertising as a revenue source in their ad-supported subscription packages.
There are several different types of advertising used in the OTT industry: AVOD (advertising-based video on demand), FAST (free ad-supported streaming television), and the use of advertising platforms like Google Ads or Facebook Ads. In addition, mobile advertising and interactive advertising are becoming more popular as OTT content consumption increases on mobile devices.
The key benefit of advertising for OTT providers is that it can help to offset the cost of producing and acquiring high-quality content. By using targeted ads, OTT providers can generate revenue from users who may not be willing or able to pay for a subscription, allowing them to offer a wider range of content to a larger audience. The model is very popular in emerging markets that have high population rates.
In addition, OTT providers can use advertising as an additional tool to improve user experience by providing relevant and useful information to users, such as product recommendations and special offers.
Another benefit of advertising is that it can help OTT providers to better understand their users and their viewing habits. By tracking user behavior and analyzing data, OTT providers can gain valuable insights into what types of content users are interested in, and how they are interacting with apps and platforms. This can help OTT providers improve their content offerings and make better decisions about engaging and retaining users. Overall, advertising is an important part of the OTT industry and is likely to continue to play a key role in the future.
As the world continues to recover from the COVID-19 pandemic, the OTT industry has been experiencing significant growth. One of the key drivers of this growth is the increased focus on social connectivity.
OTT providers are now offering more options for users to watch content together, such as the ability to chat and leave video comments while streaming, which was basically an adaptation of the technology already used in the gaming industry.
Additionally, some OTT providers are now offering "watch parties" where users can invite friends to watch a game, a show, or a movie together. This allows users to feel connected and engaged with their friends and loved ones, even if they are physically apart.
These social connectivity features are helping OTT providers foster a sense of community among their users and are playing a key role in driving the post-pandemic growth of the industry. As more and more people turn to OTT services for entertainment and connection, we can expect to see even more emphasis on social connectivity in the future.
Social video integrations
Another trend in the OTT landscape is the integration of social video into OTT services. This involves combining content from major social networks within the OTT services, allowing users to access a wider range of content from a single location.
One example, which still doesn’t have a big impact, is the integration of social network videos within OTT services. Although the idea behind it is to allow users to access and watch videos from their favorite social networks within the OTT app, this approach is not so convenient for content discovery especially as social networks nowadays offer advanced video options and features.
Furthermore, OTT services are also integrating their platforms with social networks. This allows them to share content on social networks and interact with users on single or multiple channels. Such cross-integration creates a seamless and engaging experience for users and helps drive traffic and engagement for both the OTT provider and the social network.
To conclude, the integration of social video into OTT services is supposed to be helping create a more connected and engaging viewing experience for users. As the trend continues to grow, we can expect to see even more social video integrations in the future.
Security will make a difference
As the OTT landscape continues to grow and evolve, security is becoming an increasingly important issue. OTT providers have legal obligations towards content providers to ensure the security and integrity of their content to prevent any breach or copyright infringement. This is especially important as legal OTT services compete with illegal services, which often offer a quality user experience but usually with significantly lower subscriptions or even for free.
The key aspect of OTT security is the use of digital rights management (DRM) technology. DRM helps protect content from unauthorized access and distribution and is an essential tool in the fight against piracy. By implementing robust DRM solutions, OTT providers can fulfill their legal obligations and ensure that their users are only accessing legal and licensed content.
In addition to protecting content, OTT providers must also address the payment concerns of their users. As more and more users turn to OTT services for their entertainment needs, it is important for providers to offer secure and reliable payment options. This can help to build trust and confidence among users, and ultimately drive revenue for the OTT provider.
The security of OTT platforms is a key factor in the success of the industry. As legal OTT services continue to compete with illegal services, it is crucial for providers to invest in premium user experience and security measures to protect their content and their users.
Green technology and sustainability
Due to geopolitical trends, it is expected that in the next period operators will be forced to build environmentally friendly services, not only on the system level but also on the device and application level. With the rise of streaming services, there is a growing need to address the energy consumption of OTT platforms and devices.
Operators have the main goal to build sustainable OTT services which combine the infrastructure level (the scalable cloud services are becoming more and more popular) and application level (handling of different power states, offline mode, standby, idle). On the application level, the most significant impact is on big screen devices (e.g. STB, Smart TV, Android TV,…) which should have energy optimization mechanisms that help reduce the carbon footprint and contribute to a more sustainable future.
Green solutions as a source of marketing success?
OTT providers also have legal obligations in some parts of the world to provide eco-friendly services. For example, in Europe, there are strict regulations in place to ensure that OTT providers are meeting environmental standards. Due to mentioned, OTT providers should have a responsibility to educate the market on the benefits of eco-friendly technology and user experience. By promoting sustainable practices and raising awareness, OTT providers can help drive the adoption of green technology policies in the industry in general.
Trends in OTT technology
As the OTT industry continues to grow and evolve, we can expect to see a number of exciting innovations in the coming years. Here are some possible trends we may see in 2023:
- Greater emphasis on security, with more robust DRM solutions and secure payment options to protect content and user data.
- Development of new and innovative monetization models, such as subscription-based, advertising-based, and hybrid models.
- The development of companion options for OTT content, such as casting control, second-screen and interactive features that enhance the viewing experience.
- The continued growth of social connectivity, with more options for users to watch content together and interact with friends and loved ones.
- Increased use of AI and machine learning to power advanced features and personalized experiences.
- Integration of augmented and virtual reality into OTT platforms, allowing users to experience content in new and immersive ways.
- The incorporation of gamification elements into OTT platforms, allowing users to earn rewards and compete with friends while watching content.
Overall, the future of the OTT industry is filled with exciting possibilities. As technology advances and user expectations evolve, we can expect to see even more innovation in the coming years.
In conclusion, the OTT industry is an exciting and rapidly-evolving space that offers endless possibilities for innovation. With the further evolution of social networks and the increasing emphasis on user experience, OTT providers must be prepared to offer advanced features and personalized experiences to compete in the market. Furthermore, security and sustainability are key concerns that must be addressed, and new monetization models are emerging to provide a diverse range of options for users and content creators.
Overall, the future of OTT looks bright, and we can expect to see even more exciting developments in the coming years.