What is OTT? Your Comprehensive Guide for 2023

In today’s dynamic digital landscape, where technology continually reshapes how we consume content, keeping up with viewer habits is paramount to your digital strategy’s success.  

In this blog, we’ll explore the concept of OTT, its impact on media consumption, and why staying attuned to viewer habits is key in the digital era. 

What is OTT, What Does it Stand For, and How Does it Work? 

OTT stands for over-the-top, referring to devices that deliver content over the internet, like mobile phones, tablets, smart TVs, game consoles, laptops, and more. Watching content across OTT has gained popularity due to its flexibility, convenience, and ability to access content on-demand. 

Like traditional cable services, OTT delivers audio, video, and other content including movies, TV shows, live events, sports, and original content. However, since over-the-top devices connect to the internet, viewers can watch anything (with relevant subscriptions) at any time.  

Since audiences have unparalleled flexibility and control over their entertainment choices with OTT, traditional cable services are losing traction. 

The Technology Behind OTT

With OTT, content providers prepare their movies, TV shows, live events, and other media, storing them on servers optimized for streaming. When a user selects content to watch on an OTT platform, the platform retrieves the content from the server and sends it to the user’s device as a continuous data stream.  

Adaptive streaming adjusts the content quality based on the user’s internet connection, ensuring a smooth viewing experience. The content can be enjoyed on various devices, offering users greater convenience, flexibility, and control over their entertainment choices. 

What is Streaming? 

If you’ve made it to 2023 without using a streaming platform, you’re one in a million. According to recent data, about 83% of U.S. households have used subscription video-on-demand (SVOD) service in 2023. That percentage is staggering and will only increase over the years as more platforms like Netflix implement ad-supported subscription plans. 

In its simplest form, streaming refers to transmitting and receiving data, usually multimedia content such as audio, video, or even video games, over a network or platform. This allows viewers to access content in real-time without downloading an entire file before watching. 

Examples of OTT Streaming Platforms  

Some of the most popular streaming media services include: 

• Netflix 
• Hulu 
• HBO Max (or MAX) 
• Spotify 
• Disney + 
• Amazon Prime Video 
• Paramount + 
• YouTube TV 
• Sling TV 
• Apple TV+ 
• Tubi 
• Peacock 
• Pluto TV 

What’s the Difference Between OTT, Streaming TV, and CTV? 

Although distinctively related, OTT and streaming TV, and CTV have a fair share of differences. 

OTT platforms deliver video content over the internet to viewers, bypassing traditional cable. It includes various types of content, such as movies, TV shows, and even live events, that are accessible via devices like smartphones, smart TVs, tablets, and computers. These services can be subscription-based (like Netflix and Hulu) and ad-supported (like YouTube). 

Streaming TV delivers television content over the internet, including live TV and on-demand streaming services. Live TV streaming services (like Sling TV and YouTube TV) provide access to live broadcasts of traditional TV channels over the internet. On-demand streaming services (like Netflix and Amazon Prime Video) allow viewers to choose and watch content whenever they want. 

Essentially, OTT is the technology that enables streaming content over the internet, while streaming TV refers to consuming television content via streaming services, which can be either live TV or on-demand content. Streaming TV is a form of OTT, but OTT is not always Streaming TV. 

Connected TV (CTV) falls under the OTT umbrella. OTT, as we’ve discussed, contains an array of platforms and devices that stream media over the internet. CTV is similar in that it delivers content over the internet, except it refers to the specific device(s) that displays content. 

CTV devices have access to online content, streaming services, and apps. Connected TVs are often called “smart TVs” and come with apps and platforms pre-installed, making it easy to stream content from various services. Apple TV, Amazon Fire TV, and Google Chromecast can turn traditional TVs into connected TVs by enabling internet connection and access to streaming services. 

Understanding the difference between OTT and CTV is crucial for crafting effective marketing campaigns, reaching the right audiences, optimizing content delivery, and making informed business decisions in a rapidly evolving media landscape. 

Cord Cutters and Cord Nevers 

Reaching individuals through over-the-top platforms is easier than you’d think. Some were either never interested in traditional cable services or have already made the jump to streaming their favorite content over the internet. 

The rise of ‘cord-cutters’ and ‘cord-nevers’ has significantly reshaped the overall consumption of television and dynamic of the media industry.  

Cord-Cutters: These individuals opt to “cut the cord” by disconnecting from traditional pay-TV services and instead rely on internet-based solutions to access the TV shows, movies, and other content they want to watch. 

Cord-Nevers: Cord-nevers have grown up in an era dominated by digital media and streaming options without the need for traditional pay-TV services. Cord-nevers are often drawn to the convenience, flexibility, and personalized content options provided by streaming services. 

As cord-cutters and cord-nevers continue to exert their influence, the traditional TV model faces ongoing challenges, prompting the media industry to adapt to the evolving landscape of entertainment consumption. 

How is OTT Delivered? 

OTT content is delivered directly to users’ devices through the internet, allowing them to access and stream video and audio content without traditional cable TV services. Here’s how OTT content delivery works through various devices: 

Mobile OTT Devices: Content is delivered through mobile devices, such as smartphones and tablets, via dedicated apps or web browsers, allowing viewers to stream their favorite shows and movies on the go. 

Personal Computers: Content reaches personal computers through web browsers or dedicated applications, enabling users to access a wide range of entertainment directly from their desktops or laptops. 

Smart TVs: Smart TVs receive content through built-in applications or external streaming devices, bringing a world of on-demand entertainment directly to the big screen in living rooms. 

Gaming Consoles: Gaming consoles provide access to content via downloadable OTT apps, offering users a seamless way to stream movies, TV series, and more from their gaming systems. 

What Are the Benefits of OTT? 

Over-the-top content delivery offers several benefits that have revolutionized how people access and consume media. Here are some key OTT advantages: 

Flexibility and On-Demand Access: Allows viewers to watch content whenever and wherever they want. This flexibility fits modern lifestyles, as users can choose to watch their favorite shows, movies, or videos at their convenience. 

Wide Variety of Content: Platforms offer an extensive range of content, including movies, TV shows, documentaries, original series, and more. This diverse selection caters to a wide range of interests and preferences. 

Personalized Recommendations: Services use algorithms to analyze user preferences and viewing habits, enabling them to provide personalized content recommendations. This feature helps users discover new content they might enjoy. 

Device Compatibility: Content can be accessed across various devices, such as smart TVs, smartphones, tablets, laptops, and streaming media players. This allows users to switch between devices seamlessly. 

Global Accessibility: Platforms can be accessed globally with an internet connection. This expands the reach of content to a worldwide audience, making it possible for creators to connect with viewers around the globe. 

Overall, OTT has transformed the entertainment industry by giving consumers control over their viewing experience while offering content creators and providers new avenues for distribution and monetization. 

What Are the Challenges of OTT? 

Internet Infrastructure and Quality: OTT relies heavily on a reliable and high-speed internet connection. In regions with slow connectivity, users may experience buffering, disruptions, or poor video quality, affecting their viewing experience. 

Content Discovery and Personalization: The vast amount of content available on OTT platforms can make discovering new shows and movies challenging. While personalization algorithms aim to recommend content based on user preferences, they might not always hit the mark. 

Subscription Fatigue: The rise of OTT services has led to subscription fatigue. Users may find themselves subscribing to multiple platforms to access specific content, potentially surpassing the cost of traditional cable subscriptions.  

Content Fragmentation: Different OTT platforms hold exclusive rights to certain content, resulting in fragmentation. Users may need to subscribe to multiple services to access all their preferred content, leading to a fragmented viewing experience. 

Data Privacy and Security: OTT platforms gather user data to enhance recommendations and tailor the viewing experience. However, this raises concerns about data privacy and security. Users are increasingly conscious of how their data is being used and whether it’s adequately protected. 

Can You Measure OTT Advertising? 

OTT advertising effectiveness can be assessed using various metrics and analytics tools. Here are some key ways to measure OTT advertising: 

Impressions: Similar to traditional advertising, OTT ads generate impressions, which count how many times an ad is shown to viewers. Impressions provide a basic measure of the ad’s reach. 

Viewability: Viewability metrics determine if an ad was viewed by the user. They assess whether a certain percentage of the ad was visible on the screen for a specified duration. 

Completion Rate: Completion rate measures how many viewers watched an entire ad. It’s an indicator of engagement and the quality of the ad’s content. 

Click-Through Rate (CTR): CTR measures the percentage of viewers who clicked on the ad after seeing it. It reflects the ad’s ability to generate interest and prompt further action. 

Conversion Tracking: If the goal of the ad campaign is to drive specific actions, such as signing up for a service or making a purchase, conversion tracking can measure how many viewers took the desired action after seeing the ad. 

Engagement Metrics: These metrics gauge user interaction with the ad, such as hovering over the ad or interacting with interactive elements within the ad. 

Audience Demographics and Behavior: OTT platforms often provide data about audience demographics that viewed the ad, including age, gender, location, and viewing habits. This data can help advertisers understand their target audience better. 

Frequency and Reach: Tracking the frequency at which an ad is shown to the same viewer and the overall reach of the ad campaign provide insights into how effectively the message is being conveyed. 

Attribution: Attribution tools help link conversions or actions back to specific ad exposures, enabling advertisers to understand the impact of their ads on consumer behavior. 

A/B Testing: Testing different versions of ads and measuring their performance against each other can help refine ad content and strategies for better results. 

Return on Investment (ROI): By correlating ad performance data with the costs of the campaign, advertisers can calculate the ROI of their OTT advertising efforts. 

Ad Fraud Detection: OTT advertising also faces ad fraud risks, such as non-human traffic and invalid impressions. Ad fraud detection tools help identify and mitigate these risks. 

How Division-D Makes OTT Easy to Use 

Division-D’s partnerships with industry-leading OTT/CTV publishers, specialized targeting tactics, and array of captivating ad formats are bound to place your brand in front of highly engaged audiences. 

As traditional TV viewing gives way to personalized, on-demand streaming experiences, understanding OTT is essential to navigating the future of entertainment. 

Our team of experts is ready to shape your digital strategy, visit divisiond.com to learn more! 

Other OTT FAQs