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OTT’s impact encompasses how consumers interact with content; what they expect in terms of choice, flexibility, and navigation; and the competitive context in which incumbents and upstarts now operate across the value chain.We have extensively detailed the history of these changes and the technology advances that have enabled them.Finally, OTT and traditional TV are further differentiated by the content creators that participate in the space.By eliminating constraints on content distribution and space, OTT has introduced new types of content creators to the market.Apple’s i Tunes Store, the Maxdome store in Germany, and Amazon Instant Video are transaction-based services. For a monthly fee, services in this group offer access to a library of content, which typically includes a mix of movies and TV shows.Video is usually distributed via streaming, which requires an active online connection.For example, Facebook Live, which is supported by advertising revenues, streams video content.Consequently, the traditional VOD moniker no longer wholly applies.
In the past, the online value chain has included three primary video-on-demand (VOD) business models, known as AVOD (advertising-based VOD), TVOD (transaction-based VOD), and SVOD (subscription-based VOD).The OTT market is better defined now by the following four player types, each of which competes in—and is disrupting—a value pool within the traditional home video stack of services: advertising-supported services, transaction-supported services, subscription-supported services, and digital multichannel video programming distributors (DMVPDs). These services offer free access to large libraries of movies, TV shows, clips, and other live or on-demand content from professional as well as amateur content creators.As with traditional free-to-air (FTA) TV, content and other costs are offset by advertising revenues.A digital revolution is putting more than half a trillion dollars into play.Television and filmed entertainment, especially traditional broadcast TV, is being transformed by the big and fast-growing inroads of internet and over-the-top (OTT) video platforms.