As traditional broadcasting channels lose ground to emerging competitors, all signs point to over the top services as the future of streaming television. The $46.5 billion in revenue that OTT channels earned over the course of 2017 is projected to grow to $83.4 billion by 2022, and OTT growth is second only to virtual reality in the media industry.
Of course, the OTT future isn’t perfect, and viewers were right to be critical of Hulu after the company’s live subscription service cut off the last climactic moments of the 2018 Super Bowl. It’s one thing to experience buffering during your 15th viewing of “Caddyshack,” but it’s quite another to be a diehard fan watching a live sporting event only to have the coverage end right before the pivotal final moments of the game.
Clearly, sports OTT services will have to overcome growing pains and deliver a reliable viewing experience. Services will have to scale like never before, and everyone from content distributors to network operators and broadcasters alike will face some level of change.
The OTT Future
If OTT is to be the future of streaming TV, all aspects of the experience must be able to scale, including the business processes underlying the subscriber experience. In addition to delivering very low levels of latency, OTT providers must contend with multiple purchase types such as pay-per-view for one-off events and subscription passes for season-long viewing. They’ll also need to accept multiple currencies for a global audience and a slew of payment methods that include credit cards, PayPal, mobile carrier billing, and more. And for major events such as the Super Bowl or World Cup finals, they will need to authenticate and check entitlements for tens of thousands of subscribers each second immediately before the big game.
OTT providers must also put forth a significant effort to combat churn each season and to keep their audience coming back in spite of the growing range of viewing options. To minimize churn, companies will need to come up with smart offers and promotions based on the viewing habits of users. And bundling OTT subscriptions with other services will help ensure it remains a default viewing option.
As live sports streaming is made possible by OTT technologies, sports broadcasters are experiencing declining ad revenue. Instead of controlling coverage with an iron fist, they must compete with new opponents for the rights to broadcast. For example, Amazon offers streaming coverage of the NFL’s Thursday Night Football games, and Facebook has exclusive rights to air 25 Major League Baseball games on its platform. By all accounts, the age of the linear-only broadcaster is receding into the past.
Breaking Away From Broadcast
Viewership for broadcast sports has been declining across multiple markets. In 2018, both the Super Bowl in the U.S. and the Olympic Games in South Korea saw fewer viewers than expected, and the NFL’s drop in ratings over the past few years has been widely reported. An increase in options for streaming are a big part of the decline, and there are more ways to watch the NFL for free than ever before.
In addition to streaming Thursday Night Football, Amazon has bought the rights to 10 Premier League soccer matches that will occur over one bank holiday, plus another 10 games occurring during the middle of the week. While 20 games is a far cry from complete coverage in a season that can contain as many as 200, the matches will be the first to be licensed to a company besides Sky or BT, breaking a duopoly that Premier League fans have grown accustomed to. Still, Amazon’s live sports TV streaming service has so far received largely poor reviews, illustrating the difficulties associated with the endeavor.
It’s the “live” part of live sports that presents the greatest challenge. These events include inherently high concurrency because thousands of viewers tune in to each game at the same time from locations around the globe.
Case in point: Turner Sports’ “The Match.” The live, winner-take-all golf match between Tiger Woods and Phil Mickelson was sold to consumers as a pay-per-view event for $20. It was streamed live via Turner’s Bleacher Report and carried on services including DirecTV, Roku, Comcast, and AppleTV on Nov. 23, 2018. But when it came time for the golfers to tee off, consumers were unable to purchase or log in due to a glitch in the purchase and authentication systems. As a result, a last-minute decision was made to remove the paywall and stream the event for free. Providers have subsequently offered refunds to consumers, resulting in millions of dollars in lost revenue.
According to comScore, about 51 million households in the U.S. currently use OTT streaming, and that number is on the rise. Especially when it comes to PPV scenarios, OTT systems with huge, global audiences require the scalability and agility of cloud-based billing and subscriber management software in order to deliver the kind of experience that viewers demand.
OTT streaming is a complex undertaking for providers, but viewers don’t care. They want streaming solutions that allow them to watch their favorite movies, TV shows, and live sporting events from wherever they are, without the expensive broadcast TV packages that are falling by the wayside. Without a doubt, we’re entering an OTT future, but how long this age lasts depends on the efficiency of the business processes surrounding the service.