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What is OTT?

What Is OTT? The Future Is Here

July 11th, 2016   ||    by Susan Kuchinskas

According to Page Six, at a recent advertising industry conference, CBS chief executive, Les Moonves, stated, “We believe OTT is our future.” While industry insiders at the conference understand this reference, if you asked most consumers, “What is OTT?” you’d get a blank stare. Whether the consumer knows it or not, however, the consumption of over-the-top video, or OTT, is growing fast.

More and more consumers are cutting the cord and dropping cable TV service, notes eMarketer. The research firm said that by 2018, one in five US households will not subscribe to cable or satellite TV. There might be a lot to learn about OTT, but it’s continuing to gain popularity.

OTT Then

OTT refers to video content streamed over the internet, rather than via broadcast or cable television, according to DigiDay. This includes viewing on a regular TV connected to a third-party device like a Roku player, as well as viewing on laptops or other mobile devices.

Over-the-top content is not the same as cable providers’ video-on-demand (VOD); it includes:

  • subscription-based services like Hulu and Netflix, known as SVOD
  • free, ad-supported services such as Crackle and Hulu’s free version
  • and pay-to-watch streams offered by services including iTunes and Vimeo on Demand

The term “OTT” came into existence around 2007, the same year that Netflix launched its streaming service, notes Ars Technica. But YouTube, launched in 2005, is arguably the first over-the-top video service. In the beginning, OTT included other services available on mobile telephones, such as third-party messaging apps, but with the rise in video consumption, it’s been embraced by the TV industry.

OTT Now

CBS launched its own digital subscription service, called CBS All Access, in 2014. Moonves of CBS is not the only television executive who is preparing for changes in consumption. Every sector of the industry is responding with over-the-top services. Most recently, Warner Bros. formed its own OTT division, reports Variety.

While the majority of OTT services are not ad-supported, they do provide an opportunity for programmatic advertising. At this point, Roku is one of the few OTT services that offers a programmatic buying platform. Scott Rosenberg, vice president of advertising for Roku, told Streaming Media that ad-supported content is one of Roku’s fastest-growing segments.

Programmatic TV ad buying may become especially important for broadcast and cable companies as they move into the world of OTT. One benefit of this type of programming is that it allows for addressable ads. Broadcasters and cable companies will be able to offer advertisers’ audiences that are better segmented using actual data rather than proxies. Programmatic will also speed the ad-buying process.

While Videa does not currently offer the ability to buy ads against OTT content programmatically, we are certainly planning for this shift.

To find out how we enable buyers and sellers of advertising to increase ad effectiveness while finding the right price for inventory, contact Videa today.

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