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April 23, 2015 | Authored by: Vindicia Team

How the CMO can get ahead of the OTT upswell

The dominance of subscription-based services like streaming video on demand is rapidly approaching. It's breached the horizon and is actively moving toward the consumer market at a relentless pace, not without the help of many millennials and Generation Z customers. These consumer demographics have demonstrated a strong preference for on-demand media, cutting the cord with the bundled packages that today's cable and Internet service providers are still upholding as the primary model.

But, as a recent article for Advertising Age contends, that's all going to change. The chief marketing officer of any company that has relied on traditional television or cable viewers to absorb ad respond to their brands' advertising messages has to heed the evolution in behaviors of the target consumer demographics.

A fast and furious rise

According to Visiongain's study, "Over The Top (OTT) Media Delivery Services Market 2014-2019: Strategies for Global Audio, Message, Voice, Gaming & Video on Demand (VoD) Report," revenues derived from companies delivering OTT services were estimated at more than $51 billion worldwide in 2014.

"Consumers in North America and Asia Pacific will likely generate the greatest interest in SVOD."

Moving five years into the future, it's expected that SVOD service providers will be able to generate higher revenues as the number of subscribers increases and the service is offered in an expanding number of consumer markets around the world. This is driven by on-demand video and gaming segments within the broader OTT media category, and consumers in North America and Asia-Pacific will likely be the ones generating the greatest interest in these services. Additionally, many countries in these regions, including the U.S. and China, have strong and improving digital infrastructures to enable broadband connections.

Because demand is high, it's likely going to be in the best interest of the longstanding telecommunication enterprises to embrace the change, understand how it will influence their operations and adapt to gain the most benefit from it.

Bigger players enter the market

Forbes highlighted the fact that Sony recently made available its OTT online video service Crackle. Not only will the service provide subscribers access to on-demand content, but it will also delivery original programming in the same vein as Hulu and Netflix, which has struck gold with shows like "House of Cards."

How substantial is the market for SVOD and other OTT services? Advertising Age indicated that Sling TV, which is operated by Dish Network, has roughly 100,000 subscribers. Les Moonves, CEO of CBS, said that its streaming video service has more customers, but he didn't put a number to that claim. However, it is known that the average age of CBS All Access subscribers is late 30s to early 40s, which skews younger than the TV station's broadcast audience.

The takeaway for marketers

It's time to get to know the customer audience better than ever before. To successfully appeal to the various demographics that are most likely to sign up for SVOD and OTT media, companies need to know the type of content they want and how they can potentially cross sell products and services. Relevance is the key, considering the extent to which customers want to craft their own media playlists, whenever and wherever they so desire.

About Author

Vindicia Team

Vindicia Team

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