The Science Behind Streaming: How Do OTT Services Work?

So long, cable! Consumers are trading in their cable boxes for OTT services in droves. But why is OTT so popular and how does it work? Read on to find out!

The OTT market is taking the world by storm. In 2018, about 170.1 million consumers were using these services in the U.S. alone. The number of subscriptions will likely exceed 181 million this year. OTT stands for “Over-the-Top.” You might already be using this type of service without realizing it. Netflix, Hulu, and HBO Now are all examples of OTT services. Nearly half of U.S. households connected to Wi-Fi own a streaming box or other similar device. Approximately 37 percent own a smart TV.

Furthermore, experts predict that more than 55 million Americans will stop watching traditional pay-TV over the next three years. These figures show that OTT services are growing in popularity. But how exactly do they work? Let’s take a quick look at the science behind streaming!

What Are OTT Services?

The OTT industry will be worth a staggering $83.4 million by 2022. It encompasses several services that enable users to stream video content to their laptops, TVs, and other media devices via the Internet. What makes these services so appealing is their convenience. All you need to do is download an app, plug in your device, and enjoy your favorite movies or TV shows. Unlike traditional TV, OTT requires no cable or satellite subscriptions.

A growing number of independent content producers are using these services to promote their work. Some have set up Netflix-style websites featuring premium content in exchange for a monthly fee. OTT services deliver movies and other types of video content online, bypassing traditional cable and telecom services.

How Does It Work?

Traditional pay-TV services involve subscribing to a cable provider and choosing from several plans, each covering specific TV channels. Those that include HBO and other premium channels come with a higher price tag. The problem is that customers may not care about all those channels, but they didn’t have the option to pay only for HBO or Cinemax. As a result, they often end up paying a small fortune on something they don’t need or want.

That’s where OTT streaming platforms come in handy. With OTT, you’ll only pay for the media channels you’re interested in. Plus, you can watch anything you want anytime, anywhere. But what’s in for OTT service providers? They do make money, but by other means compared to traditional cable and telecom services. There are three primary revenue models:

  • Advertising-based Video-on-Demand — Service provides generate revenue through OTT advertising. YouTube, for example, offers free music and videos. Its income comes from ads.
  • Transactional-Video-on-Demand — With this service, users only pay for access to specific movies, documentaries, and so on. A good example is iTunes.
  • Subscription Video-on-Demand — Amazon Prime and Netflix are two examples of SVOD, or subscription video on demand. In this case, OTT service providers sell monthly or annual subscription plans that give users access to premium content.

Enjoy Premium Movies and TV Shows Anytime, Anywhere

Have you ever thought how much you’re paying for traditional TV services? Now think about how many times you come home from work and end up going straight to bed because there’s nothing on TV that’s interesting.

OTT provides constant, easy access to classic and new movies, live shows, music, and everything between. On top of that, you can view the content on any device, such as your laptop or tablet.

Sounds cool, isn’t it? Browse the rest of our blog for other helpful guides on media services and gadgets!

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