Growth of OTT Audience Drives Network and Ad Changes

TV still accounts for over 50% of paid advertising. But that format is feeling pressure as more consumers turn to connectedtvdifferent media. Of particular concern is the younger generation, according to NPD. An increasing number of 18–34 year olds are watching video content with the help of over-​the-​top (OTT) devices instead of tuning into programming delivered by pay or broadcast TV service.

Consumers have multiple ways to access entertainment through their TVs. Traditional programming is delivered through cable, satellite or telecom providers. Or, they can attach an OTT device to access programming online from providers like YouTube, Netflix or Amazon. About 75% of 18–34 year-​olds say they now watch OTT video. Only 60% of consumers who are 55+ do so. Consumers are using the following devices to access their broadband content through their TVs:

  • Streaming media player 81%
  • Blu-​Ray disc player 77%
  • Video game console 73%
  • Direct-​connect 66%

John Buffone, director of devices, NPD Connected Intelligence, notes that younger consumers want the broadband experience on all of their viewing screens. As more consumers connect TVs to the web, TV networks will feel increasing pressure to upgrade their online presence. “The pace by which networks develop their digital services for the TV screen will increasingly drive brand equity,” says Buffone.

As TV networks transition to streaming, they can offer a wider range of content to their viewers. The question is how marketers will figure into this picture. Currently, some streaming operators like Amazon Prime don’t serve ads while others like YouTube and Hulu do. If younger viewers reject video content that contains significant advertising, marketers may have to shift their messaging to other formats, like mobile.

What's your prediction?

Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-​owner of several small businesses in the health care services sector.