OTT Technology: How Over-The-Top Tech Works

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Over-the-top (OTT) technologies have reshaped the digital marketing industry, effectively changing the way consumers encounter and digest content. That’s great news, but have you ever wondered how exactly OTT technology works in the first place? 

We’re covering everything you need to know about today’s emerging OTT technologies, so you can use them to effectively connect with your target audience. 

What Is OTT Technology?

In the realm of marketing, “over-the-top” refers to the delivery of video content via the Internet without the need for users to subscribe to a traditional cable or satellite service (“over the top” of cable boxes). 

In other words, OTT technology bypasses conventional distribution methods, allowing consumers to stream content directly to their internet-enabled devices, such as smartphones, smart TVs, video game consoles, and dedicated streaming devices like Roku and Apple TV. 

OTT vs. Connected TV

Connected TV (CTV) refers to any of the devices mentioned above that can link to the internet and allow users to access OTT content. 

With that in mind, you can look at OTT as the delivery method, whereas CTV represents the living room quality device being used.

• Learn more about OTT vs CTV.

Advantages of OTT Technology

The OTT market was valued at $121.6 billion in 2019, and it’s experiencing a compound annual growth rate (CAGR) of 29.4%. Experts predict that the industry will surpass a global value of $1 trillion by 2027. 

The following draws of OTT technologies make it clear why so many people are flocking to them:

Cost-Effectiveness

OTT tech is renowned for its cost-effectiveness. Consumers often save hundreds of dollars a month on entertainment when they cut the cord on cable or satellite. Restrictive contracts or expensive subscription fees no longer tie them down, either — viewers can easily swap subscriptions as their interests change or their favorite shows move from one platform to another. 

Consumers aren’t the only ones enjoying lower prices. OTT services are also cost-effective for marketers, allowing them to run streaming ads for niche audiences and avoid wasteful spending. It’s a move that represents a major change from the traditional TV advertising model, which requires marketers to buy out space in an entire designated market area (DMA).

Flexibility and Convenience

OTT technology allows viewers to watch what they want, when they want. They can also bounce between devices and pick up right where they left off.

Advertisers benefit from the flexibility of OTT technology, as well. You won’t have to lock your ads into a specific time slot or pay a premium for primetime commercials. Instead, you can customize your marketing campaigns to fit your budget and goals. 

Global Reach

OTT platforms can also help advertisers connect with consumers around the world. You can market your products or services to your core audience or break into new regions with geotargeted ads. Expanding your reach is one of the keys to long-term business growth, and OTT technology makes it attainable on TV. 

Disadvantages of OTT Technology 

While the many advantages of OTT technologies are clear, there are a few potential drawbacks for consumers and marketers to be aware of. 

Bandwidth and Data Consumption

Streaming high-quality videos requires high volumes of both bandwidth and data. Users with data plan limits or lackluster internet connections might be unable to watch everything they’d like. 

If you’re trying to reach rural audiences, in particular, OTT ads may have noticeably limited reach. Consider the availability of high-speed internet in your target markets before investing heavily in OTT campaigns.

Technical Challenges and Latency

Similarly, streaming content over the internet can sometimes lead to technical challenges such as latency, buffering, and interruptions. These issues can be frustrating for both users and marketers, as they may disrupt your advertising message.  

Content Licensing and Regulation

The brands behind OTT platforms are navigating complex content licensing processes and regulatory issues. Doing so can sometimes result in limited availability of certain shows and movies in specific regions.

The rapidly evolving nature of OTT technologies means that regulations are continually changing, too. Such frequent changes pose hurdles for users, providers, and advertisers alike.

How Does OTT Technology Work?

Here’s a basic rundown of the OTT process:

• Content Creation: Studios and production companies create content 
• Content Hosting: OTT providers host the content on their servers 
• Delivery: When consumers select a video to watch, the OTT provider streams it from their services to the device 
• Playback: The receiving device decodes the video stream

During the delivery process, providers can also insert ads if their content is ad-supported. A surprising two-thirds of consumers are willing to opt-in for ad-supported streaming to save money; even if a platform offers ad-free streaming, there’s a good chance that your target consumers are using the ad-supported version. 

Types of OTT Platforms

There are several different types of OTT platforms, which include the following: 

Subscription-Based Video on Demand (SVOD)

Netflix and Hulu are perhaps the biggest examples of successful SVOD platforms. They charge recurring subscription fees for unlimited access to their content libraries. SVOD models like these are so popular because they’re affordable, and consumers enjoy a vast selection of shows and movies.

Advertising-Based Video on Demand (AVOD)

AVOD platforms, like YouTube and Tubi, offer free content that features ads. The model allows consumers to access a wide range of content without a subscription fee, though they will have to watch ads to finish their show. With that in mind, AVODs are perhaps some of a digital marketer’s best tools for connecting with consumers while they are engaged with content they love. 

Transactional Video on Demand (TVOD)

Platforms like Amazon Prime Video and Apple TV (formerly iTunes) allow users to rent or purchase individual movies or TV episodes, making them prime examples of TVOD models. These pay-per-view approaches allow users to pay for the content they want to watch without committing to a monthly or yearly subscription. 

Premium Video on Demand (PVOD)

Lastly, PVOD platforms offer early access to new releases, often for a higher price. Amazon Prime Video, for instance, often offers consumers access to blockbuster movies that are still in theaters. However, the cost of renting these videos is much higher than the standard content rental fee. 

• Learn more about AVOD, SVOD, and TVOD.

Types of OTT Devices

OTT devices include:

• Smart TVs
• Streaming devices
• Gaming consoles
• Mobile devices
• Computers

The wide range of OTT devices gives users flexibility regarding when and how they consume content. They can start a program on their TV in their living room and easily finish it later on their tablet or smartphone while unwinding in their bedroom. 

Such is the essence of on-demand content: Users are unplugged from set viewing times or positions and get to watch on their terms. 

MNTN Helps Advertisers Harness the Power of OTT Tech

MNTN Performance TV represents one of the most innovative CTV marketing solutions. Our dynamic platform grants you access to premium OTT inventory from the top streaming networks, like Peacock and ESPN. Get your ads in front of high-intent consumers on the best platforms to smash your overall marketing goals.

And that’s not all — we also provide a wealth of tools designed to help make your campaigns impactful. Our Creative-as-a-Subscription™ service, for instance, can connect you with innovative minds in the digital marketing space, ensuring you’ve always got fresh content for your campaigns. We also provide audience-building tools, reporting capabilities, and granular insights to help you understand your reach. 

Check out MNTN Performance TV and start rethinking the ways you connect with your audience today. Request a demo to get started.

OTT Technology: Final Thoughts 

OTT technology has quickly become one of the key pillars of the modern marketing landscape. Using it alongside dynamic platforms like MNTN Performance TV is a surefire way to build better television marketing campaigns and establish a strong brand presence.