OTT VS Traditional TV is one of the most debatable topics these days. Well, this will continue till one overlaps the other but thinking deeper into it there are numerous reasons on both sides to be intact to either OTT (Over-the-top) or DTH (Direct-to-home).
Traditional Television
This is that time of the day when the whole family reunites to watch their favorite show telecast. Is it a memory for some of us? Audiences who are intact with television for a long time would relate to the fact that cable TV and DTH are the oldest sources of entertainment and information under one roof.
And, the very reason it holds on to its forte even as today. is the reason it has grabbed a major chunk of the population across the globe.
OTT (Over-The-Top)
One of the most in-demand words on the internet is OTT, platform where you can access a bunch of videos and audio content with internet support. In current times, OTT has emerged as the new normal. According to a report from the Insider Intelligence, 47.6 million American households are now “cord cuttersâ€. By the end of 2023, they report that more than half of all Americans (54.4%) will no longer subscribe to traditional cable TV. This is due to major factors like on-demand original content, flexibility and convenience, attractive pricing and offers, device sharing options personalization and recommendation for a tailored user experience, and many more.
OTT or Traditional Television, which is better?
Comparing OTT (Over-The-Top) and DTH (Direct-To-Home) is not a matter of one being inherently better than the other, as they serve different purposes and have distinct characteristics. Let’s dive in a little deeper in this context as we arrive at a decisive point in the argument of this article.
- Content Originality: OTT platforms offer a vast array of highly curated content spanning various genres, allowing users to access it conveniently and flexibly from any location and device. There is a genre for everyone’s taste.
In contrast, DTH services distribute television signals directly to viewers’ homes via satellite, granting them access to a diverse range of TV channels and programming. OTT platforms provide unrestricted content accessibility and genre variety, while DTH services give the linear experience with access to a broad selection of channels and content
- Accessibility: OTT platforms, such as streaming services, offer greater accessibility compared to traditional TV. With OTT, viewers can access content anytime, anywhere, using various devices like smartphones, tablets, and smart TVs, eliminating the need for fixed broadcast schedules. In contrast, traditional TV requires viewers to adhere to scheduled programming, limiting accessibility and flexibility in content consumption. OTT’s on-demand nature provides convenient access to a wide range of content, making it more accessible for modern viewers.
- Cost and Contract: The selection of platforms is influenced by this crucial factor. OTT platforms commonly adopt subscription-based models with different pricing plans, allowing users the flexibility to cancel or modify subscriptions without being bound by long-term contracts. On the other hand, DTH services necessitate the installation of a satellite dish and a set-top box, usually entailing a one-time expense.
- Personalization and Recommendation: OTT platforms revolutionize the viewing experience through personalized content recommendations, leveraging user data and algorithms to offer tailored suggestions. With customizable profiles and advanced recommendation systems, OTT platforms curate content based on individual preferences, ensuring a highly personalized and engaging experience. In contrast, traditional TV relies on programmed schedules and lacks the dynamic personalization offered by OTT platforms, limiting viewers’ ability to receive personalized content recommendations.
- Quality: OTT platforms provide high-quality content streaming, often supporting HD and even 4K resolution, delivering a visually immersive experience. They leverage internet connectivity to ensure consistent quality, buffering-free playback, and adaptive streaming based on network conditions. In contrast, traditional TV broadcasts are subject to signal reception issues, limitations in resolution, and occasional disruptions due to external factors, which can impact the overall viewing experience and video quality.
- Tech Savvy or Luddite: Younger customers, particularly millennials and Generation Z, tend to gravitate towards OTT platforms as they are more comfortable with digital devices and prioritize on-demand, personalized content whereas older customers, especially those from older generations, may still prefer traditional TV. They may be accustomed to the linear programming schedule and find comfort in the familiar channel line-up.
Selection between OTT and Traditional Television depends on individual preferences, viewing habits, internet availability, and the desired range of content options. Many users today opt for a combination of both, utilizing OTT platforms for on-demand content and DTH for live TV and scheduled programming.
Role-played by ads for the boom of OTT:
Advertisers look for fresh markets to enter and focus on engagement with larger sections of audiences. When Traditional Television was in high demand, advertisers uses that platform to interact with viewers by following different strategies like Ads with popular characters of one show or producing the high demanded shows / Reality shows with the motive to get noticed.
Similarly, with the drastic shift of viewership from Traditional TV to OTT, Various ad agencies recognize the potential to reach large section of audience. OTT platforms offer different advertising proficiency, allowing advertisers to deliver relevant and personalized ads to specific user segments. The ability to collect and analyze user data enables precise advertisement targeting, resulting in higher ad effectiveness and return on investment (ROI). Moreover, the flexibility of ad formats, such as pre-roll, mid-roll, or interactive ads, provides advertisers with creative opportunities to engage viewers in a non-intrusive manner.
Advertising is a major source of revenue for businesses and individuals, and it is expected to continue to grow in the future. Advertising revenue is the income that businesses and individuals earn from displaying paid advertisements on their websites, social media channels, or other platforms. It depends on the type of advertising, the target audience, and the effectiveness of the campaign. The revenue generated from the advertisements helps support the cost of the content creation and streaming infrastructure, contributing to the growth and sustainability of OTT platforms.
The global advertising revenue in 2022 was estimated to be $654.9 billion. The United States was the largest advertising market, with a revenue of $253.9 billion.
Look at the Ad Revenue generated by Netflix
As per the reports, Netflix locks at least 10% of its annual revenue from advertisements only. Netflix CFO Spencer Neumann said Netflix would not have entered the ad arena “if it couldn’t be a meaningful portion of our business,” Netflix reported USD $31.62 billion in total revenue for 2022 out of which USD $3.162 billion was drawn by advertisement revenue.
The Future of TV
The rise of OTT content has affected television industry in unprecedented ways to the extent of shows getting canceled due to dwindling viewership. Traditional TV networks are losing viewers to OTT services as they struggle to adapt to the new landscape which results in their medium on OTT as well for instance, Applications like Sony LIV, Disney + Hotstar, and Voot with the aim to promote OTT content but also daily Television content (Daily Soaps).
It is still too early to say what the future of TV will look like, but it is clear that OTT content is playing a major role in shaping it.
According to a report by Allied Market Research, the global OTT market is projected to reach $332.52 billion by 2025, with a compound annual growth rate of 16.7% during the forecast period. Factors such as the increasing adoption of smartphones, rising internet penetration, and the demand for personalized content are driving this growth. Additionally, the shift from traditional TV to OTT services is expected to accelerate, as viewers prioritize convenience, on-demand content, and personalized viewing experiences. This growth is being driven by various factors affecting like:
- Increasing Internet Accessibility: With the expansion of broadband and mobile internet coverage, more people have access to high-speed internet connections, enabling seamless streaming of content on various devices. Improved internet infrastructure, coupled with affordable data plans, has bridged the digital divide and opened up new opportunities for individuals to enjoy OTT services.
- Growing demand for regional content: Viewers seek content that represents their local languages, customs, and traditions, fostering a stronger connection to their regional identity. OTT platforms are capitalizing on this trend by investing in regional content production and acquiring rights to regional movies, series, and documentaries. By catering to regional preferences, OTT platforms are expanding their user base and tapping into previously untapped markets, ultimately contributing to the overall growth of the industry.
- High Rise of Competition: OTT Platforms have witnessed a significant rise in competition as more players enter the market. Streaming giants like Netflix or Amazon Prime, as well as traditional media companies like Sony LIV, and Disney+ Hotstar, are launching their own OTT platforms to capture a share of the growing digital audience. This competition has led to an abundance of content choices, improved user experience, and competitive pricing.
Customers’ attraction toward OTT:
The viewer always looks for everything under one roof which was practically observed by OTT Streaming platforms and leads to massive viewership and growth in the last couple of years.
- The rise of original content: OTT platforms are increasingly investing in original content. This is to differentiate themselves from their competitors and to attract new subscribers.
- The growth of live streaming: Live streaming is another trend that is expected to grow in popularity in the US. This is due to live streaming allowing viewers to watch events as they happen. OTT platforms are increasingly investing in live streaming to provide their users with this experience.
Final Conclusion:
It purely depends on the individual’s needs and preferences. If we are looking for a wider variety of content with more flexibility then OTT is the better choice to go with. On the other hand, if we are looking for a relatively cheaper option with the availability of more channels on a daily basis then traditional TV can be the solution provider.
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