10 OTT Trends to Watch in 2022
BlogOct 19, 2021
The 10 OTT Trends That Will Impact the Future of the Video Streaming World in 2022
When it comes to over the top (OTT) trends, the year 2020 was big, with an unprecedented rise in demand for video streaming services. As millions of consumers spent more time at home due to the COVID-19 pandemic, the Motion Picture Association reported that revenues from video streaming and online rentals reached $61.8 billion through 2020 – more than a 30% increase from the previous year.
And despite expectations that 2021 might be a “cooling off” year for the video streaming business, growth has continued, with increases in overall viewership and record investments in original content creation from leading OTT platforms. Widespread adoption and growth in video streaming has been happening for years, but the way COVID accelerated this trend begs the question:
What other OTT trends are picking up steam right now, and how will those trends shape the future of the OTT industry? How are video streaming services investing their resources to improve platforms and win subscribers from their competitors? To find out, we combined our own expertise with the newest data and compiled a list of the top 10 OTT trends to watch in 2022. Here’s what we found:
1. Media Companies Will Streamline Back Office Functions with Process Automation
A 2021 survey conducted by analysts at Ernst & Young asked media and entertainment (M&E) executives to identify their top priorities for enhancing business resiliency in a post-COVID world. The survey found that automating processes to reduce costs was considered a priority for 58% of executives, while 43% viewed outsourcing back-office functions as the path to cost savings and simplified operations.
With cost savings and simplified operations identified as top priorities for the coming year, we expect that media organizations in 2022 will invest in process automation to increase their operating efficiency and address skill gaps, especially in areas like data normalization and analysis.
As media organizations strive to become more efficient and competitive, automating workflows drives down costs and liberates human resources that can be reallocated to more valuable tasks, making automation one of the top OTT trends to watch this year.
2. Content Creators Will Experiment with New Monetization Strategies
When the COVID-19 pandemic caused cinemas to close down, media organizations quickly pivoted to new monetization strategies that were less dependent on the box office.
One example is Disney’s new purchasing option Disney Plus Premier Access, which allows subscribers to pay a one-time fee of $30 to stream a movie on the same day as its theatrical release. Disney field-tested this monetization method with Mulan in September 2020, and has since repeated the strategy with Raya and the Last Dragon, Cruella, Black Widow, and Jungle Cruise.
Industry giants WarnerMedia and Universal have negotiated new deals with theater chains AMC and Cinemark, shortening the theatrical exclusivity windows for new releases from the standard 90 days, down to 45 and 17 days respectively. This change signals the leverage lost by cinemas in the post-COVID world, and the desire of content creators to maximize revenue by delivering content directly to consumers via OTT platforms.
Another shift in OTT monetization strategy is the rise of ad-supported models like AVOD and FAST, especially as a way to mitigate subscriber churn. As a result, AVOD is projected to account for almost as much revenue as SVOD in 2022.
Growth in ad-supported streaming will bring in new licensing agreement terms, monetization tactics, and data formats that could be disruptive to content providers who are not equipped to adapt. The Revedia platform is revenue model agnostic, enabling our clients to effectively analyze AVOD data alongside additional revenue streams.
3. The Streaming Wars Will Enhance Consumer Choice
OTT services are increasing their overall market share of US video revenue every year, making huge dollars, and enticing a growing number of competitors into the OTT marketplace.
Over the past five years, an unprecedented number of new OTT services have entered the market – a trend we expect to continue into 2022. Data released by market research firm Parks Associates showed that there were nearly 300 OTT services available in the United States as of 2020, representing an almost 250% increase since 2014. 46% of US broadband households now subscribe to four or more OTT services.
OTT service proliferation means that viewers now have more access to a greater variety of content than ever before, including mainstream movies and television, sports, and niche content.
These figures illustrate the saturation of the OTT marketplace and the intense competition for viewership. New entrants to the OTT industry are competing successfully by catering to niche audiences and leveraging AI-driven solutions to make smart decisions and maximize profits.
4. Mainstream OTT Services Will Compete by Investing in Original Content
When it comes to OTT trends, few advances will hit bigger in 2022 than original content. Mainstream OTT services like Netflix, Amazon Prime Video, Disney+, Hulu, Paramount+, HBO Max, and Apple TV+ are competing aggressively for viewers and seeking to differentiate their respective platforms with original content that appeals to their target customers.
ViacomCBS says it is investing $5 billion in original content and plans to release a new movie on its Paramount+ platform every week in 2022. Netflix has told investors that it will spend $17 billion on content in 2021, and is expected to budget another $15 billion for Netflix originals in 2022. Apple is signing movie deals with Hollywood Stars like George Clooney and Brad Pitt while planning to release a new TV show every week on Apple TV+ in 2022. Amazon is also pouring billions into original content, including $465 million into a multi-season adaptation of Lord of the Rings.
OTT service providers will use analytics software for content valuation and performance analysis, giving them the ability to forecast demand and efficiently allocate original content investments to maximize their profits.
5. Competition for OTT Supremacy Will Drive Market Consolidation
Market consolidation has been a longtime characteristic of the media and entertainment industry, so it shouldn’t come as a surprise that leading OTT services are snapping up media properties and licensing rights and acquiring competitors to secure new content, subscribers, capabilities, and data.
We’ve seen several examples of market consolidation in the OTT space in recent years. Amazon acquired MGM studios for $8.45 billion in May 2021, taking ownership of its catalog of 4,000 movies and 17,000 television shows.
AT&T recently announced a deal to create a new company by merging its WarnerMedia content operations with Discovery. By joining forces, the two companies hope to establish a streaming service that will reach 400 million subscribers by rivalling Netflix and Disney in original content spending.
While Netflix says it is not planning any large-scale acquisitions, the company continues to strategically acquire content, including through its recent purchase of the Roald Dahl Story Company, which gave Netflix the rights to classic tales like Charlie and the Chocolate Factory and James and the Giant Peach.
As streaming video providers calculate the ROI potential of future mergers and acquisitions, data will play a key role in valuation and dealmaking.
6. High-Speed Internet Will Expand the OTT Marketplace
New innovations in telecommunications technology and internet connectivity have the potential to expand the market for OTT services in 2022. That’s exactly what we might be seeing with the upcoming release of Starlink, Elon Musk’s satellite Internet service. Starlink is still in open beta testing, but has been confirmed to deliver download speeds of up to 100 Mbps.
Starlink will expand access to high-speed Internet for subscribers in remote areas that are difficult to reach by wired Internet, improving their ability to enjoy OTT and streaming content. Amazon, Samsung, and Vodafone are now planning to create satellite Internet systems that will compete directly with Starlink to deliver high-speed Internet access in underserved areas.
Additionally, the continued growth of high-speed connectivity in the U.S. and global regions expands market and audience opportunities to OTT providers. As these new viewers subscribe to OTT platforms for the first time, OTT service providers will look to technology solutions that can help them quickly understand and predict the content preferences of potential audiences and personalize content, promotions, and offerings to maximize the value of emerging and expanding global markets.
7. Media Organizations Will Shift to Behavior-based Audience Analysis
Media and entertainment providers have historically grouped audiences according to demographics like age, gender, and income in hopes of understanding their habits and preferences. But research now suggests that behavioral segmentation could be a more valuable tool for OTT service providers seeking to deliver personalized content recommendations on their platforms and maximize customer lifetime value.
Behavioral segmentation leverages insights that come from the actions of real consumers as they engage with the platform. Data collected from viewers, such as their video streaming frequency and other viewing habits, the devices that they use, and even payments can be used to drive predictive audience insights and content recommendations.
OTT trends to watch: Service providers will depend on AI-driven solutions to make sense of complex user data and deliver behavior-based insights, including measuring content affinity and identifying causes of customer churn.
8. Synchronized Watching Will Become an Essential Feature
In addition to significantly increasing traffic on OTT services, COVID-19 elevated demand for synchronized watching and other co-viewing features that inject a communal or social element into the OTT streaming experience.
This OTT trend led to the emergence of third-party plug-ins and services to support synchronized watching, after which streaming services began to integrate proprietary co-viewing capabilities into their platforms. Major OTT services Hulu, Amazon Prime Video, HBO, and Sling TV have all launched co-viewing features.
Even with things getting back to normal after the pandemic, OTT subscribers have now experienced the value of sharing their viewing experiences with friends and family around the world. As a result, we expect synchronized watching to become a standard feature, expected by consumers across all OTT services in 2022.
Streaming platforms looking to capitalize on co-watching will develop capabilities to accommodate and analyze new data inputs. Understanding how audiences behave and how well content performs in a synchronous consumption model can reveal new opportunities to drive subscriber acquisition and retention.
9. Mobile Streaming Grows, but Smart TV Still Leads the Way
Conviva’s State of Streaming Report, released in Q2 of 2021, documents a 13% overall growth in OTT viewing time since Q2 of 2020. Growth was propelled by a 30% YoY increase in overall viewing time on mobile devices, along with a whopping 46% YoY increase in viewing time on Smart TVs. We expect an ongoing trend towards increased Smart TV viewership, as consumers migrate from traditional pay TV services to service stacking and aggregation.
As it becomes clear that consumers are moving towards Smart TV as their primary streaming devices, competition is heating up for control of the lucrative Smart TV marketplace. Roku TV currently commands the greatest market share, followed closely by Amazon Fire TV, Samsung TV, LG TV, and a handful of others.
Amazon recently released a new line of Amazon-built televisions designed to compete with Roku by offering robust features like hands-free voice control, Dolby Digital sound, and Alexa integration at a low price point.
Content owners licensing to both mobile and Smart TV platforms will evolve licensing agreement terms and acquire tools that can accurately assess revenue generated from device software and hardware providers to assure compliance and revenue recognition across a growing number of platforms.
10. Data-Driven Insight Will Drive Competitive Differentiation
As streaming platforms and content providers search for any advantage in the competitive OTT marketplace, we anticipate increased adoption of AI and data-driven tools that deliver strategic content, audience, and financial intelligence.
Automated predictive insight will streamline and accelerate data analysis processes in place today, enhancing the ability of media organizations to anticipate and influence the variables that impact revenue.
AI-powered platforms like Revedia OTT Video Solutions will enable OTT service providers to normalize data from a variety of sources, track the performance of content assets across distribution channels, forecast revenue performance, manage distribution deals, automate customer segmentation, and monetize content more efficiently.
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