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134% Rise in Content Consumption Impact of COVID-19 on OTT Platforms

Impact of COVID-19 on OTT Platforms
Published on Jun 25, 2020

The Coronavirus pandemic has impacted businesses and industries in unparalleled ways. It’s been nearly four months and people are mostly still stuck at home, schools are closed, and public gatherings and events like professional sports games have been postponed in order to curb the spread of Covid-19. During this quarantine, people have formed new habits and, businesses have started to diagnose relevant approaches to connect with their customers.

While some of the important sectors are facing adverse impacts of the continuing crisis, streaming media usage has experienced significant surges. There has been a noticeable increase in online media consumption since the last few months as people across the world have been housebound. The appetite for content consumption has been increasing among consumers and OTT platforms have been experiencing uptrends in viewership. Entertainment companies like Netflix, Amazon Prime etc. are so much in demand in the present scenario that YouTube and Netflix had to reduce their standard video quality to assist internet providers to cope with the soaring demand for bandwidth.

Viewership Growth By Content Category


Shift in ad spend trends and consumer behavior:

The streaming services are altering their media plans daily or weekly based on the fluctuations in the customer buying patterns. Simultaneously, there has been a major revision in the advertisement spend pattern. The group that heavily relies on physical surroundings like automobile, travel, retail has dropped predictably. Whereas the products that can be used indoors and purchased online like a subscription to OTT platforms have been proliferating.

Shift in ad spend trends and consumer behavior


Let’s take a look at some substantial high-impact points of COVID-19 on OTT:

• Streaming has more than doubled during the pandemic. According to Brian Fuhrer, SVP, Neilsen, on April 4, Americans watched 27 billion minutes of streaming content on TV that is 50,000 years of content in just one day, versus about 70 billion per week a year ago.

• Consumers have been exploring new entertainment options while stranded at home, and several content-related business owners are making the best of this shift in consumer attitude.

• The lack of live sports is stimulating consumption with over 54% monthly growth in news, a 60% spike in gaming, and a 134% rise in content consumed for entertainment (Variety).

• What OTT businesses need to pay attention to is these three factors: economic uncertainty with unemployment rates being at an all time high, the rising struggle for attention, and bounce on content production pipelines.

• The coalescence of greater video usage and elongated viewing session times had risen on a gigantic scale up to 380% (Variety) in March. According to Stefan Lederer, CEO & Founder, Bitmovin’s said that while such a surge was a big challenge for network providers, there has only been a 15?cline in average download speeds over the same time period.

• There have been tremendous changes in video-compression technologies used by businesses that provide content. This has helped them to gain more competence and reduce bandwidth consumption in the last few years. There will be some shifts in streaming behavior post-pandemic and video streaming service providers should invest in operating expense optimization to cope with changes in consumer streaming behaviour. Lederer said that this will assist them to lay the foundation for a bigger shift from linear broadcast to OTT.

• OTT platform is currently in a stable position but still must broaden the future perspective.

OTT Platform Stabiltiy Graph


Are OTT platforms the future?

It is anticipated that streaming platforms will maintain the forward growth momentum they are presently experiencing. Among the wide array of available streaming services, free and ad-supported content will experience newer heights, along with platform exploration and diversified content discovery. As people now have maximum time to stream content, free or low-cost subscription platforms have come up as a budget-oriented alternative for new entertainment. As a stand-in for wide theatrical releases, the privileged release on OTT platforms such as Amazon Prime and Disney+ is expected to acquire strength as a trend from 2020 onwards. This would be directed by a massive number of displaced film releases and by the need to cut down the expenditure by OTT players on content production.

Final thoughts

Some cases of losing exclusive external content are found across all streaming platforms that are supposed to weather a crunch in terms of TV and film content in 2020 and beyond, considering the limit of content licensing periods. While a novelty factor for already existing television and film content exists, the budgets of major OTT players do not match with the shares of subscribers wishing for new original viewing material. This is exemplified by Netflix, which is about to lose 4 million subscribers in 2020, even as debt levels almost touched USD 14.8 billion the last year (USNews).Thus, by securing exclusive rights from production houses at a reasonable premium, OTT platforms can overcome subscriber losses with an increasing content library and lowering the pressure on profit margins