Over-the-top services (OTT) is a method of providing video services over the Internet. The term OTT means the delivery of a video signal from a content provider to a user’s device (set-top box, computer, smartphone, etc.) “over” data networks, often without direct contact with the telecom operator. The key feature of OTT services is the ability to provide a service to any Internet user.

Unlike IPTV, the OTT model is open to any entity holder of rights, because everyone can publish globally available information. The publisher can be either a traditional TV or film company or an amateur.

In the OTT model, the publisher has a direct channel of communication with the consumer, regardless of the ISP or cable operator. The OTT approach tends to be as independent of the user equipment as possible. A consumer’s access to TV is not limited to their TV in the living room. And most importantly, OTT can work today on existing infrastructure, including ADSL, broadband, Wi-Fi, cable, and satellite channels. OTT uses a global accessibility model where video and television services can be physically provided on one continent and available on another, as long as it does not conflict with content distribution rights. 

OTT is a perfect platform for the marketing and distribution of media products. It has the following benefits:

  • Not being limited to a specific provider, thus being available anywhere in the world where there is the Internet;
  • High-quality content, the ability to adapt to the Internet channel speed;
  • Wide selection of interactive services;
  • The ability to watch videos on mobile devices;
  • Any owner of media content can broadcast.

Types of OTT

There are various ways of monetizing an OTT business. Some businesses offer content for free (Hulu), focusing on advertising, some operators focus on PCs, some on ISTB (Internet set-top boxes). There are quite unusual models when sharing DVDs is combined with online viewing (Netflix). Typically, these services work by subscription. 

According to the classification of Informa Telecoms & Media, a leading telecommunications and media market analyst, the monetization models of OTT providers operate can be divided into the following categories:

  • Linear programming – broadcasting TV channels over the Internet (sometimes this type of content broadcast is called web TV). In this case, OTT providers most often receive income from giving users access to channels (a model similar to that used by satellite, cable, and IP TV operators). This is similar to the traditional way of watching TV exactly at the time when the program or series are broadcasted, only per Internet.
  • AVoD model (advertising video on demand) – video is accompanied by a certain number of advertising messages and/or video inserts. OTT providers give free access to their content, typically in SD format. Platforms that use this model: Pluto TV, Xumo, Vudu, Crackle, Tubi, YouTube.
  • TVoD (transactional video on demand) model – includes payment for viewing each piece of content, the so-called pay per view (PPV). Purchasers of content can get it for so-called temporary use. For example, Apple TV offers subscribers the following purchase restrictions. You can start watching within 30 days after purchase; if you have already started watching, then you must finish watching within 24 or 48 hours, depending on the country.
  • SVoD (subscription video on demand) model – includes the ability to access all content from the OTT provider’s catalog for a certain period (day or month) with an ad-free experience. Platforms that use this model: Netflix, HBO Go, Amazon Prime, Disney+.

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The market structure of OTT is as follows:

  • Online cinemas – content aggregators that provide the ability to watch videos both through their websites and through service apps for mobile platforms and Smart TV.
  • TV channels – TV broadcasters who primarily monetize their content on the Internet by using a paid or advertising model.
  • Operators – paid TV operators who have implemented services for viewing paid video content on set-top boxes (STB) in the form of VoD or cinemas on dedicated channels.
  • Digital distribution platforms – video content aggregators that provide apps for mobile platforms and Smart TV with the ability to view without being tied to a particular provider’s network.

Benefits of OTT Apps

OTT apps are beneficial both to businesses and consumers in the following way:

  • Advertising in OTT apps has a higher engagement rate. With the exception of the Super Bowl, most users ignore ads when watching cable TV. They get up, walk around the room and fast forward when looking later at the DVR. With OTT, there are short ad breaks that users should watch. You get a more engaged audience, and this, of course, can mean better results. Additionally, OTT ads offer better targeting than standard TV ads that focus on location, time of day, and channel. OTT ads can help target different demographics, target interests, and can even use retargeting.
  • More detailed user segmentation. The target audience of your app may be very diverse, and it is important to reach each group of users. OTT apps automate user segmentation and make it more precise. For example, podcasts differ from radio in a way that they make it possible to choose the target audience for the podcast based on device types, geolocation, etc.
  • Cost efficiency. Consumers of OTT apps can choose what they can watch and pay for it accordingly, instead of paying for a bundle of TV channels most of which remain unwatched.

How to Improve Your OTT App

Here are some strategies that can help you improve your OTT service and engage more users:

  • Onboard new users. Your existing users already know how to search for videos to watch, but it is crucial that you guide your new users through an onboarding journey towards watching their first video.
  • Encourage newbie users to activate push notifications. This will give you a chance to run personalized ad campaigns that highlight relevant video content while encouraging subscription purchases and social sharing.
  • Build a community around your app. OTT apps typically have activity feeds where users can see the comments, likes, and other types of interaction with content from their friends. Users can also host watch parties that can increase the engagement of community members. High engagement rates are a sign of an active community and thus of a successful app. Learn how to build a community for your OTT app with GetSocial!
  • Drive conversations around in-app content. For instance, OTT app users can comment and post content on movies, podcasts, and TV shows, mention their friends, write movie reviews, etc. This will attract even more users to your app and boost user engagement.
  • Personalize the content. Based on the user’s tastes and preferences, your app can recommend featured content that they may like.
  • Use influencer marketing. OTT apps also collaborate with influencers. For example, in January 2021, to advertise the new season of Cobra Kai, Netflix collaborated with TikTok where influencers could show off their karate skills under the special hashtag. 

The Bottom Line

Over-the-top services are typically video and audio streaming apps with various monetization models. OTT apps have a wide range of benefits, such as more detailed ad targeting and user segmentation as well as cost-efficiency. Strategies such as building a user community, driving conversations in comments, personalized content, push notifications, and influencer marketing can help you make your OTT app even better.