In 2019, Verizon and Snap Inc., the creator of Snapchat, forged a first-of-its-kind partnership to leverage Verizon’s 5G ultra-wideband technology to support Snap’s augmented reality, visual communications, and content experiences. As 5G innovation partners, the companies used Verizon’s 5G Labs to create new experiences for consumers, including opportunities to experience live events in new ways through Snapchat.
Verizon 5G ultra-wideband’s low latency, fast speeds, and high bandwidth have enabled Snap’s AR innovation through cutting-edge live and interactive platforms that create location-based entertainment experiences as well as unique in-stadium experiences during games.
Such strategic moves from OTTs such as Snapchat have cemented its position in the market with an ever-increasing subscriber base.
With the world getting increasingly connected, the content consumption trend has gone through the roof. The global OTT market size was valued at $121.61 billion in 2019 and is projected to reach $1,039.03 billion by 2027, growing at a CAGR of 29.4% from 2020 to 2027. According to recent market research, Video on Demand (VoD) market was valued at around $38.9 billion in 2019 and is expected to reach over $87.6 billion by 2026, growing at a CAGR of around 12.3% during the forecast period from 2020 to 2026.
Players entering this relatively new market are in for bigger opportunities; however, the market landscape is not without challenges that they must override to achieve their goals.
Primary challenges
Since the OTT business model involves a high volume of transactions every single day, managing varying billing cycles and payments of clients is something that OTTs players must be prepared to handle.
In this space, there are no guarantees of consistent or normal traffic, especially with live streaming. OTTs must be able to scale quickly with reliable service delivery and transaction processing. It helps to be proactive rather than reactive and planning for these activities spikes in advance.
A new and ever-changing industry like OTT requires the ability to quickly change the structure of how best to sell products to meet customer demands. Creation and development of smart plans or smart bundles by providing different levels of access and different ways to package content are key. The bundles need to be flexible by providing a package of services that directly meets the needs of consumers.
The inability to provide the right downgrades in subscription models can cause customers frustration and confusion, leading to attrition while not providing the right upgrade can lead to revenue loss. OTTs must ensure that they are providing the flexibility to customers to upgrade and downgrade easily given the complexity from a billing standpoint.
For subscriber growth, it is important to target new segments and maximize sign-ups or encourage previous subscribers to reactivate their accounts. This is easy when dealing with a small number of subscribers, but targeted marketing and customized promotions can be cumbersome with a huge growth of subscribers.
With such a high volume of transactions and high velocity of credit cards transactions, involuntary attrition due to credit card declines and non-payment can contribute to revenue loss. Moreover, fraudulent clicks on digital advertisements are one of the major challenges faced by OTT players globally. ‘Malvertising’ spreads malware through the use of malicious code into online display ads via online advertising networks, exposing user networks and connected devices to the potential risk of infection.
Digital transformation frameworks
Over-the-top (OTT) digital media services companies exploring the Middle East market must bear a few things in mind when they go about promoting their offerings. Digital solutions providers can collaborate with telecommunications companies to offer viewers access to on-demand content, games, and entertainment channels. With telcos betting big on data, partnerships with telcos are also emerging as an important medium to reach a large user base. OTTs work closely with telco operators for connectivity as well as payment services. Hence, a collaborative relationship with telcos and third-party service providers is important. For instance, Netflix rolled out its mobile games globally to members with Android devices, exploring new ground amidst stiff competition from the likes of Disney and HBO. Users will only require a Netflix subscription to play those games and there will be no additional fees or in-app purchases. By offering games for free, Netflix aims to retain the existing customer as well as attract new customers.
Regional content focus
Market findings suggest significant interest in regional content among the region’s young generation, indicating a cultural shift in the media and entertainment industry. Untapped demand for local Arabic content could be an important business growth driver, allowing regional media players an opportunity to reorganize their business models and explore investments in high-quality local content. OTTs can work with local content providers and creator communities to continuously deliver fresh and relevant content for regional subscribers in addition to the global audience.
Partnership with digital players
To develop innovative customer experience within the digital media space, Middle Eastern countries are also experiencing partnerships between customer management service providers and SVOD service providers. For instance, in August 2021, OSN picked Evergent to help with monetization and customer management for OSN’s new streaming video service in the MENA region. Moreover, the company is the exclusive distributor of new Disney+ Originals in the Middle East and has long-term partnerships with major studios, including HBO, NBC Universal, FOX, Paramount, MGM, and Sony. Importantly, securing content at the source helps limit the instances of security breaches. Hence, adopting end-to-end content protection technologies such as intrusion detection systems, audit trails as well as technologies that control physical access to server facilities are critical for organizations.
Introduce automation and tech for frictionless support
OTT players need to act quickly when it comes to getting up and going with the subscription platform. As the industry is changing quickly, laxity in internal office operations can drastically hamper customer experience. By introducing automation such as robotics process automation (RPA) to core functional departments, companies can reduce expenses, improve compliance, and increase overall productivity. Further, cloud computing allows for easy processing and inter-department movement of data. Data as a service along with mobility solutions enable employees to access data anywhere anytime, which in turn enhances employee productivity and helps the company scale its back-office operations. Additionally, artificial intelligence and cognitive computing are also being leveraged to contain rising costs.
Utilize data efficiently to deliver personalized experiences
It is difficult to innovate without the knowledge of what is working and what is not. To drive
audience engagement, understanding every aspect of the consumer’s interests and dislikes is of massive importance. Hence, the role of data analytics to answer these questions is vital, and organisations need to effectively leverage consumer data to achieve near-accurate decision-making processes. Further, advanced analytics combined with a flexible subscription management platform to measure the success and performance of different bundles, price points, and other subscription tactics is important to feel confident about testing and reiterating. OTT TV market has seen a fair share of growth in the Middle East. To provide the best viewing experience for its subscribers, OTT service providers can utilize advanced analytics and churn prediction metrics to adjust to their customers' preferences and reach more audiences in the MENA region.
The Middle East market environment is highly competitive with increased mobile penetration and internet subscriptions and a huge number of social media users. The market presents opportunities for growth, which is expected to drive the competition further. Without a doubt, the OTT space will witness significant growth soon; however, like any business sector contemplating digital transformation, OTT players must constantly monitor and assess the dynamic digital pathway to realize their full potential by keeping pace with technological innovation, changing customer perspectives and embrace the spirit of organizational agility as an intrinsic business strategy.