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OTT Cannibalizing the Traditional TV

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29

Apr, 2016

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Today, consuming video content has become a totally different experience than it was few years before, mainly due to the availability of extra options beyond the traditional TV. For some people, watching videos online is easier, more reliable, and convenient. Over-The-Top services (OTT) now provides a wide variety of content which is legally available over the Internet, such Amazon Instant Video, Hulu, Netflix, HBO Go, and many others.

Due to the greater growth in the number of alternative options, TV viewers, cable subscribers, as well as advertisers are now turning an eye full of critics to the traditional video distribution. Leveraging the new business models,OTT technologies is transforming the cable industry which will create more profitable advertising, happier consumers, as well as a more efficient system overall. The question that comes to mind directly “Is OTT cannibalizing the traditional TV?” which is somewhat true and following points will explain how this can be true:

Traditional TVNeeds To Adapt To the Needs of Marketers and Consumers

Traditional TV companies should revamp their business model completely in order to imitate the needof OTT services by implementing a new system by which programs and channels slots are paid for per-use and browsed via an interface. Ideally, consumers would be able to find out content as they do whilescouting other OTT services instead of purchasing channels in pre-set packages at anearlier time.

Such shift could allow the advertisers a more informed and pointed view of their audience than current models do which is creating a fertile ground for the innovation of the televised ad space. Also, distributors could be able to construct the right pricing models, according to more accurate viewership measures.

OTT Is Changing Consumer Behavior

Now, consumers can access their content reliably wherever they have an access to the Internet, plus that they have shown happiness and satisfaction to pay for the privilege. Viewers are thosewho are choosing what they watch and setting the schedule while there’s still prime times for TV consumption, not like with cable providers.

Based on the increasing number of the legal options, the ever-rising costs of traditional TV, anddevelopment of set-top boxes, thousands of consumers are now severing ties with their cable companies, enjoying all of their media through OTT services.

OTT Enables Traditional TV Free Content

OTT deliversaudio,video, and other media over the Internet without the need offree-to-air broadcaster or traditional PayTV operator to be involved in distributing or controlling the content. OTT services allow consumers to easily watch an episode or asingle program. OTT videos were originally streamed to personal computers, but now they are delivered through set-top boxes likeChromecast, Apple TV, or Amazon Fire TV. Such move happened with the increased consumption of media in parallelon mobile devices.

Cable companies, in the traditional model, sell both distribution and content channels. On the other hand, third-party servicessuch as Netflix,in the OTT model, sell the content and consumers usethe Internet to access it, bearing in mind that they’ve already purchased that internet from a cable company.

Pros and Cons of a La Carte Cable

“A la carte” is a French words which mean “from the menu” and referred to as “pick-and-pay”.There is still a huge force of video consumers who are not abandoning the traditional distribution methods or “cord cutting”, and who are really dissatisfied with the legacy bundling models and cable prices. Many people would still prefer to buy the cable media as “a la carte”, purchasing only the programs or channelswhich they really want instead of paying for a channels bundle which they aren’t interested in.

Is OTT Cannibalizing the Traditional TV?

Although there are fears that new OTT services might cannibalize traditional TV, cablesubscriptions, or satellite, bundles will not just disappear overnight. The difficulty point for some consumers is to maintain several OTT service accounts such as a Netflix account, a Hulu account, and an iTunes account at the same time in order for meeting all their viewing interests and needs. So, if companies couldn’t find solutions to their unbundling dilemma, it will bevery easyother players in the space of OTT will supplantthem. Another point is that advertisers are aimed at which is avery appealing demographic group which is now becoming harder every day to reach with the traditional TV shows or the traditional TV models.

By : Ramakrishna Mashetty

Ramakrishna Mashetty is The Chief Marketing officer of SURE! (a Magnaquest product).SURE! is an internationally acclaimed player in comprehensive end-to-end Subscription Business Solutions for PayTV, Broadband and Cloud Computing businesses – through deployment of Metered Billing, CRM, Service Fulfillment, Value-Added Services, and Managed Services.

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