The OTT View-niverse: A Map of the New Video Ecosystem

Television Content Providers Fragmentation
Variety

Watching TV used to be so simple, or at least it seems that way in retrospect. First there were just a handful of networks. Then broadcast TV gave way to cable. But even as the number of channels multiplied exponentially, it was all still easy to understand, not to mention incredibly profitable: The combination of advertising and affiliate fees delivered approximately $90 billion annually to a small group of content companies.

That was then, this is now: Advertising revenues and multichannel subscriptions are endangered by significant ratings declines across the cable TV landscape as audiences — particularly younger viewers — get bombarded by a dizzying array of cheaper programming choices delivered over the Internet. Some, like Netflix, charge viewers a monthly fee; others, like many of the ventures pitching advertisers at this week’s NewFronts presentations in New York, are as free as broadcast television.

Many of these ventures are backed by the biggest companies in the tech sector. Which isn’t to say the incumbent entertainment conglomerates are simply sitting on the sidelines while the challengers eat their lunch. To the contrary, Hollywood’s participation in the likes of Sling TV and HBO Now is something akin to baby Kal-El launching out of planet Krypton in “Superman”: A culture facing the threat of extinction is seeking to find life for itself elsewhere in the solar system.

With so many varieties of programming life to be found, there’s no small degree of confusion on the part of consumers and those in the industry alike as to how to make sense of all this chaos. That’s why the maps below should help (see in one large map or in separate pieces).

Subscription VOD (SVOD)

Subscription VOD is the catch-all term for any streaming service allowing subscribers to watch as much content as they want in exchange for a recurring fee, typically monthly and/or annually. Note in the two smaller circles, at right, that traditional content companies are entering this space as well, in pursuit of the 10 million or so broadband-only homes that represent TV’s last remaining growth market. But if they’re not careful, these services could run the risk of inducing cord-cutting among the 100 million pay-TV homes.

Ad-Supported VOD (AVOD)

Ad-supported VOD provides consumers free-to-access content in exchange for viewing ads. AVOD video tends to be shorter in length and less often premium than SVOD, though there are lots of exceptions. There’s a great diversity of brands in this sector, all looking to ride the wave of advertising dollars flowing into the space. Spending on video ads is expected to reach $7.8 billion this year. That represents 30% year-to-year growth. But to achieve the scale of linear TV would require siphoning dollars from that platform.

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  1. Saad says:

    OTT accelerating the balkanization of TV content, improvements still desperately needed in content recommendation and search algorithms

  2. hartek says:

    Quite amazing. Impressing. Thanks for sharing.

  3. You fail to mention Electronic Sell Thru which is becoming a larger piece of the pie. No mention of VUDU, Ultraviolet, Itunes video sales or any of the others on the market. Your graphic is VERY incomplete!

  4. nerdrage says:

    Cool info graphic, but Netflix/Amazon are not ad-supported. Amazon is an outlier because they have a unique business model, using streaming to attract buyers for their goods…in a way, that’s ad supported because the whole service functions as an ad for Amazon.

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