The State of OTT 2021

Similarly, in February 2020, Comcast acquired Xumo—with its 5.5 million monthly users and 10,000-title library—to exploit the opening in the streaming landscape for ad-supported, premium content. In addition, Pluto TV, one of the largest global AVODs, had around 30 million sign-ups by December 2020, according to Bob Bakish, CEO of ViacomCBS, which owns the service.

YouTube continues to rack up 2 billion viewers a month, and in Q3 2020, it saw global ad revenues soar 32% year over year to $5.04 billion. It risked the wrath of content creators by saying it has the "right to monetize" all content on its platform, including putting ads on videos from channels that are not in its Partner Program, which shares ad revenue with creators.

With what it claims is "the largest-ever content offering of any new streaming service," Discovery+ launched globally on Jan. 4, 2021. In the U.S., Discovery hopes Verizon will accelerate the adoption of Discovery+ (as it did with Disney+) with an exclusive offer that makes original programming and on-demand favorites available to Verizon's 5G customers. The platform will look to establish itself as the go-to streaming destination for factual, lifestyle, and reality content. But with consumer appetite for streaming services reaching the saturation point, it could be the ad-funded version of Discovery+ that attracts most households.

Pay TV Must Act on Super Aggregation

None of this activity should hide the fact that, according to Futuresource Consulting, pay TV "dominated consumer spending at 58% ($100 million) of the global home entertainment market in 2020." In addition, "Overall spending reached $172 billion, which included pay-TV, SVOD, [transactional video on demand], electronic sellthrough, DVD and Blu-ray Disc. SVOD spending reached $55 billion, with Netflix capturing about 50% of all global subscription revenue." By 2024, Futuresource Consulting expects that more than a third of home entertainment spend will be on SVOD.

In response, a growing number of operators are reinventing themselves as content aggregators offering, say, Amazon Prime and Netflix alongside their own linear and VOD channels. "We'll see more operators following the lead of one of our largest customers and supersizing their ambitions by aggregating up to five or six streaming services, all supported by a supersized universal search capability to make it easy for viewers to find something to watch," predicts Peter Docherty, founder and CTO of ThinkAnalytics.

But the time to act is short. According to Omdia's Begum, "Pay TV operators must act quickly to retain their customer bases and drive the value of their offerings and services. The [set-top box] represents a key connected device in the home, one that is managed by the pay TV operator and is a key driver of value perception for pay TV against OTT services. … Timing is everything, because cord-cutting is now spreading beyond the US and will be increased by the pandemic."

Gaming Blends With the Mainstream

Few industries were more prepared to exploit the new online normal than video games. A 2019 SuperData study of U.S. preteen gamers found that one of the main reasons kids ages 7–12 played games such as Roblox, Minecraft, and Fortnite was to spend time with friends after school. COVID-19 has propelled this trend.

According to Nielsen, digital game spending in the first half of 2020 jumped 12% year over year ($61.3 billion versus $54.6 billion in 2019). In its Q2 2020 earnings call, Activision Blizzard revealed that half of its 400 million players are female. Time spent in the company's games grew 70% in the quarter, with engagement and player investment at historic highs.

"Consumer leisure time has been shifting to more interactive forms of entertainment for many years, and that has just accelerated in the recent months," says Daniel Alegre, president and COO of Activision Blizzard. "We expect that as new players engage and form in-game connections with existing or new friends, many of them will stay engaged for the long term, and we see this as a really big opportunity."

Consumers have been spending more time watching games too. Facebook Gaming's monthly views leapt 238% year over year in April 2020, according to data compiled by StreamElements. YouTube Gaming Live was watched for more than 4.3 billion hours between January and September 2020; this was 38% more than in all of 2019.

But Amazon's Twitch takes on all comers, with 76% of the live-stream market. Overall hours watched on Twitch grew 123% year over year from March through June 2020. According to Nielsen, "Viewers weren't just coming to Twitch because of a lack of alternative entertainment options. Using the platform is also a communal experience. Livestream viewers can use text chat and emotes to interact with fellow watchers and the streamer."

In September 2020, Twitch rolled out a general release of Watch Parties, a feature that allows its communities to "come together to watch, react, and discuss any movie or TV show that is available with their Amazon Prime or Prime Video subscription, directly on Twitch." Erin Wayne, Twitch's director of community and creator marketing, says, "Because Twitch's desire is to build communities around interactive experiences, we were already set for success when it came to products like this. We were already on track to launch these types of things ahead of covid-19. It just happened to coincide with all of the things that we were doing."

This trend won't suddenly reverse once real-world events become safer. "Brands that previously reached consumers in real-world settings through physical media like billboards will need to plan for more gatherings to happen inside video games," says Carter Rogers, principal analyst at Nielsen. The Biden-Harris presidential campaign even released yard signs for supporters to display in front of their Animal Crossing homes.

Not only have people been playing video games for entertainment, but they are increasingly being used to host live events. Fortnite held a virtual Travis Scott concert and screened several of director Christopher Nolan's films. Celebrities like Selena Gomez have been interviewed in Animal Talking, a late-night show filmed within Animal Crossing: New Horizons. Even business meetings are being conducted in the Rockstar Games titles Grand Theft Auto V and Red Dead Redemption 2 because they offer more variety than a typical Zoom or Skype call.

Cloud gaming will have generated revenues of $585 million in 2020 on its way to reaching $4.8 billion by 2023, according to Guilherme Fernandes, a market consultant at Newzoo. North America will provide the largest slice (39%) of that total. Factors contributing to this include Microsoft adding xCloud to Xbox Game Pass Ultimate for free, which promotes a faster uptake than if a premium were charged.

"Streaming games via the internet is disrupting the games market, echoing how video-streaming disrupted the movie and television markets," notes Fernandes. "However, the sheer scale of cloud gaming technology and the interplay between its players is far more complex. Across the board, cloud gaming service providers are continuing to experiment with their services as they discover how to maximize potential and growth."

According to Gamestream, a B2B cloud gaming service, "The dawn of 5G has led telcos to search for the best use case for this new technology and how to best advertise its potential. Cloud gaming provides a clear and obvious use case." However, Antstream, a B2C cloud gaming service, warns, "The preconceived notion that quality and streaming can't be synonymous still exists and debunking it is one of our biggest challenges."

ATSC 3.0: A Game Changer for Broadcast?

Futuresource Consulting estimates that there are more than 1 billion smart TVs installed worldwide, as consumers become increasingly reliant on TV delivered OTT. The 2020 rollout of ATSC 3.0, which began with stations in Las Vegas in May, gives broadcasters the ability to multicast audio, video, and data on a scale they were never able to before. ATSC estimates that by the middle of 2021, ATSC 3.0 will reach another 61 markets across the U.S., which collectively would mean next-gen TV reception for more than 70% of all viewers.

The transition to ATSC 3.0 is phased and will last several years while the legacy signal is taken off air and broadcasters must adopt spectrum-sharing arrangements. It's an effort in which everyone is apparently united because the benefits to viewers and broadcasters are overwhelming. For the viewer, these include better picture quality (UHD and High Dynamic Range) and interactive content (such as personalized ads, enhanced camera angles, and sports stats). Meanwhile, the broadcaster finally has more of a level playing field to fight off OTT competition.

The true power of the technology lies in its hybrid design, which combines multicast with targeted content (unicast) and services delivered synchronously OTT. Broadcasters could, for example, reach particular communities in their region by transmitting the same content in multiple languages. They could more cost-efficiently air "flash" channels to cover more angles on a live sports event or to give viewers the option of viewing breaking news, such as press conferences, or setting up personalized audio preferences, such as commentator audio.

It's worth noting that in South Korea, the first country to start ATSC 3.0 deployment, its Electronics and Telecommunications Research Institute conducted a trial of 8K delivery in October 2020. It made use of MIMO (multiple-input, multiple-output), an option available in the 3.0 standard, to deliver 113Mbps over the air with 8K encoded in HEVC. This could be used to transmit multiple 4K UHD services, should that become commercially viable.