Today, millions of Americans prefer to stream shows, movies, and other content via over-the-top media (OTT) thanks to the lower costs and wide range of choices — there’s truly something for everyone. In fact, according to Business Wire, the OTT market is expected to more than double to $194 billion by 2025. 

Here’s a look at the state of the OTT market, what it means for advertisers, and what we can expect in the near future.

Where Is OTT Media Today?

OTT consumption accelerated during the pandemic. In 2021, 82 million households streamed an average of 100 hours of content per month, an increase of over 20% since January 2020. This is almost equal to the 83 million households that subscribe to cable TV, and the number is projected to dwindle to 73 million by 2024.

Here are the key trends and developments impacting the industry.

Viewership hours continue to increase, and the field is getting more crowded.

The average 18- to 24-year-old American watches over 1 hour and 40 minutes of subscription video-on-demand (SVOD) services each day. Meanwhile, a typical 55- to 64-year-old spent 50% more time viewing OTT between Q3 2019 and Q3 2020. 

Intuitive and easy-to-use AI-powered user interfaces continue to drive positive viewing experiences that increase OTT adoption. Additionally, more content investment is prioritizing streaming channels. Major players in the ad-supported space, such as Disney+, HBOmax, Peacock, Hulu, Paramount+, etc., all have substantial budgets for original content. OTT media is now where the best entertainment is, which is also contributing to the significant increase in consumption. 

However, the competitive landscape is getting more crowded. OTT media services must contend with the challenge of subscriber fatigue by continuously producing fresh, original content to attract viewers and advertisers while staying profitable.

For advertisers, addressable targeting is on the rise.

OTT media allows advertisers to leverage a data-driven approach to reach specific audience segments and optimize their ad spending. We’ll see more targeted advertising based on IP address or device location to deliver geographically-relevant content and offers.

Additionally, sophisticated performance-based pricing will attract more budgets for programmatically, targeted ads. For example, advertisers can use a hyper-localization strategy to reach households and neighborhoods with a higher-than-average household income (HHI) and attract audiences more likely to turn into customers with a higher lifetime value.

Interactivity is another key for advertisers.

Interactivity is the key to driving audience engagement in various online and offline media. OTT media’s ability to deliver content across many devices, such as smart TVs, smartphones, tablets, and computers, can help advertisers improve audience interactions, gather more consumer data, and glean granular customer insights.

This capability can support a robust omnichannel marketing strategy and help improve overall targeting for ad campaigns. Brands are excited about the potential of these new developments, and the trend will only grow as our ability to analyze data and leverage new technologies, such as machine learning and predictive analytics, increases.

Looking to the Future of OTT Media

The upward trajectory of viewership, supported by advances in data science and analytics technologies that has been built out by Ocean Media to help measure business impact, will make OTT media an indispensable component in any broad reaching video media plan. Brands can take advantage of this trend by developing exciting new content, using localized targeting to reach high-quality prospects, and adding interactivity to campaigns to drive audience engagement and conversions.

See how Ocean Media can help you incorporate OTT into your media plan to optimize your ad budget.