OTT Trends and Future Predictions

The streaming industry is bigger than it’s ever been. Countless people around the world are cord-cutting, opting for OTT services over linear TV (as you’ve likely heard, streaming viewership surpassed cable for the first time in history in July 2022, largely thanks to Netflix’s season four of Stranger Things).  

However, this size may be unsustainable. There are now dozens of platforms with content that was once consolidated on early competitors like Netflix and Hulu. Consumers today need to have at least five different services to watch what they were once able to. Plus, these platforms keep increasing their prices, meaning consumers are paying just as much if not more than they were for cable TV. This pattern opens a new question — will streaming cannibalize itself?  

Streaming itself won’t, but its future may look like a hybrid of the services we’ve come to love with the linear TV model we used to know. Despite Netflix surpassing cable in terms of viewership minutes, it also lost net subscribers for the first time, and all the other platforms in the OTT ecosystem are trying to find new ways to monetize and expand their audiences.  

The OTT and VOD world is at a precipice, so it will be interesting to see the directions it jumps in. Here are some of the current OTT trends and my future predictions.  

   

FAST Will Continue to Grow

As streaming services compete and pull consumers in multiple directions, many viewers are relieving themselves of the tension and turning to Free Ad-Supported Television (FAST). FAST services include platforms like Xumo, Pluto TV, and Tubi. Rather than pay a fee like $12.99 a month for content without ads, consumers, it seems, don’t mind ads if they can still watch VOD content via streaming.This also saves them from paying multiple subscriptions.  

Hub Entertainment Research conducted a survey in 2020 and 2022 that asked participants how they felt about ads. The results were interesting because a third of even the most ad-intolerant individuals said they would rather watch content on an ad-supported platform instead of one without ads that was only $4-$5 more. These answers indicate that part of what viewers hate about advertising is the experience: they resent interruptions, overlong ad breaks, and irrelevant messaging. Consumers are more amendable to ads if more relevant ones are placed strategically before and after their shows and movies.  

How fast is FAST growing? NScreenMedia found that FAST viewership had doubled between 2019-2021. The market leader, Pluto TV, is expected to surpass $1 billion in revenue by the end of this year. However, it’s critical to note that FAST viewers only watch about 20 minutes per day. Despite the increase in audience, consumers don’t let shows and movies play endlessly like they do on other streaming platforms, so it will be intriguing to see how viewership minutes grow in 2023 and beyond.  

 

 

Big Companies Will Invest More in FAST

Big entertainment companies are noting FAST’s growth. Bigger FAST platforms like Xumo, Tubi, and Pluto TV don’t exist on their own; Comcast, Fox, and CBS own them, respectively. These organizations recognize consumers’ willingness to use ad-supported services and will continue to develop and invest in these products accordingly. The FAST industry as a whole may reach $4 billion by the end of this year. 

Hybrid models will also become increasingly popular. Peacock, for example, offers a $10 monthly ad-free plan and a $5 ad-supported one. Hulu, likewise, has long offered reduced monthly fees in exchange for ads at the beginning and end of content, and Netflix is exploring the same option. No one wants to deal with too many ads, though — it risks overwhelming the entertainment experience — so smaller monthly fees subsidizing limited ads, I predict, will become more common.  

Plus, big streaming services will need a place to put older content. Every month we read the list of what titles are leaving Netflix as more media companies try to launch their own platforms. As these services prioritize original content, titles not released within the past few years will need a place to live — but seeing as they’re not as in demand anymore, consumers aren’t willing to pay as much, so FAST channels will likely be a convenient home for classics and other titles produced less recently.  

 

 

Advertising Is Tricky

Despite FAST’s growth and potential replacement for AVOD and SVOD, finding ads to fill space is turning out to be tricky. Streaming platforms and publishers often expect more for slots than advertisers are willing to spend. As the number of FAST channels grow, ad inventory isn’t keeping up. Consumers could be watching the news and end up seeing the same ad twice in a row followed by a slate. Such an incident would indicate the broadcaster couldn’t find an ad to put in, at least at a price they were willing to accept— so in this case, where would the broadcaster’s ad revenue come from?  

It’s a question the FAST industry will have to answer quickly. TV advertising is almost reverse auction-style now (with advertisers producing commercials and putting the word out, “Here’s an ad, here’s what I’m willing to pay, give me a time slot”), which won’t sustain FAST if platforms get too greedy. FAST offers a lot of savings potential for consumers, but only if advertisers and streaming services can agree on how much an ad should cost.  

FAST services will also need to solve its ad relevancy problem. The more FAST content there is, the more vertical channels become, which means platforms will face challenges finding pertinent ads to fill space. Ads for sports vehicles would gain much more traction on a sports channel that streams NASCAR races than they would on the FAST version of The Food Network.  

 

 

New Monetization Methods Are on the Horizon

Another trend on the rise is shoppable video and subscriptions. Amazon Prime is already the forerunner in this field; members enjoy discounts on products as well as access to everything on Amazon Video. Now, it looks like Disney+ is doing the same: along with an ad-supported tier for a reduced price (no surprise there), subscribers will soon be able to enjoy similar discounts for Disney merchandise. You won’t have to go to the shopDisney page, either — you’ll be able to find products through QR codes right on title detail pages.  

This practice also makes ad targeting easier than ever: the platform knows what shows and movies you watch and how many times, so it also knows exactly which products you’ll be more inclined to buy. If your children watch Frozen on repeat, it’ll be easier than ever to buy that Elsa doll they want for their birthdays.  

This trend will turn into a whole new way of monetizing streaming. I wouldn’t be surprised if we were one day able to pay for subscription services by purchasing products. What if your Disney+ or Amazon Prime monthly fees were waived if you placed enough orders or reached a minimum monthly value? As e-commerce and streaming become more entwined, we’ll see new ways of paying for our content.  

   

Cross-Platform Discoverability Will Be More Essential

This current trend is no one’s favorite: content’s lack of discoverability. With so many titles between so many services, it can be difficult for people to find what they want to watch. RuPaul’s Drag Race is on Hulu — but only seasons four through 10. Marvel’s Defenders series like Luke Cage and Jessica Jones are on Netflix — wait, not anymore, now they’re on Disney+. You want to watch Father of the Bride for a movie night with your partner; is it on Amazon, HBO Max, Apple TV+, Paramount+, or any other media conglomerate with a plus sign? Do you even have a subscription to the one it’s on? If not, time to find something else to watch if you’re not okay with ads.  

OTT is trending toward subscription fatigue. Consumers are tired of paying for excess platforms to watch what they want. Another trend is on the horizon to address this issue, and it may be the norm within a few years: content search aggregators. Online versions like JustWatch are convenient for finding which platform the show you want to watch lives on, but such apps will soon be automatically available on devices like smart TVs. This way, you only need to search the title, not one platform at a time.  

Consumers will expect this cross-subscription search feature unless services start consolidating. However, the difficult part about making this happen is that the industry needs more standardized metadata or perhaps more integrations to services like Gracenote and IMDB for all titles (unless consumers don’t mind linking all of their accounts, which is unlikely). Startups are already trying to make this happen, but it will be a while before this technology is integrated into devices themselves instead of only functioning through third-party apps.  

 

 

Bundles Will Be the Norm

Regarding consolidation, it’s unlikely streaming platforms will ever decide there are too many of them and some need to bow out of the race for consumers’ sake, but I predict service bundles will become even more common through ad-ons. For exampleHulu offers additional channels like AMC and Showtime for extra fees that are less than what each charge for their subscriptions individually. Hulu is also easily bundled with Disney+ and ESPN. Consumers appreciate having more in one place for less (which also improves the search experience).  

There are many deals to be made — it’s already possible to get , Disney+, ESPN+ and Hulu with Verizon — so companies will jump on this trend more significantly in the near future. On the other hand, they’re still a hassle for consumers to manage and keep track of which account is attached to which (if you forget to update payment information on one, you might temporarily lose access to several and forget which account is the master), so platforms will need to make bundles more accessible and streamlined as well.  

 

Conclusion

The OTT industry is reshaping itself. People once thought linear TV was fading away, but FAST’s growth proves that consumers still enjoy “lean-back” viewing. However, with so much choice of what to watch, being able to make those choices is becoming increasingly difficult with a saturation of platforms and subscriptions. The industry’s overall revenue is trending upward, though, so it will be fascinating to see what media companies do to monetize their content further, make it more accessible, and keep viewers engaged.