It used to be called an idiot box. It was literally a clunky box which took up an enormous amount of space. Some had flimsy knobs to control the channel and volume. From that, we now have a 4k television with 4.9mm thickness at its thinnest point.
Linear TV, or programming that has to be watched at a particular time, has been around for awhile. It’s the conventional way to watch programming like sports matches or the news. For the generation who is less Internet-dependent, this method is still a primary source of entertainment. Some viewers still sit in front of the large screen and wait for their favorite show to start at a scheduled time.
The industry is clearly headed toward a technology shift. All of the traditional media broadcasters are quickly making an entry into the OTT and VOD space (the on-demand space). Since the cost of content reaching a consumer was much higher with linear TV than the OTT and VOD space is now, it was essential that they scaled accordingly and kept up with where the millennials were consuming content. Also, the user data available is now substantially higher through the OTT and VOD space.
The data the on-demand space provides ranges from what age group is watching a particular show to what their preferred time of watching that show is. The range of devices they consume the content from or even the number of viewers who watched a particular program is now quantifiable (this was never available in the past; it was always an estimate). This is an opportunity for advertisers too.
The media ad space always relied on the television rating point (TRP) to judge where to buy ad space. Since they were run by several third-party agencies, it was not always reliable. The third-party agents, since they were run by human brains, were always influential. This is not the case for the OTT and VOD industry. The data available is more reliable with many analytic tools available and the technology backing up those data points. It is even possible to analyze when a consumer stopped watching a particular video and when they came back to finish it. Or how many videos were skipped before they finished watching the video.
The adoption rate for the OTT and VOD space is very high. OTT providers are also finding success in their own produced content. Owning content provides other advantages like licensing, and reduces the cost which is directly paid for pay-TV.
Linear TV will struggle if the broadcasters don’t find exclusive content and if they aren’t the first to provide that content. If they don’t, naturally consumers will incline towards OTT. There are some industries like sports and journalism which will continue to strive in conventional linear TV programming because of the existing large networks and the infrastructure that allows them to provide live content quickly. OTT will take a few more years and will wait for ISPs to provide a better infrastructure and bandwidth to ensure that high-quality videos are streamed without any struggle.
It is too early to pick one side and say which is going to thrive. In the meantime, we’ll enjoy their coexistence while it lasts.
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