How Does OTT Work? Types And Why Marketers Use OTT Platforms

By Indeed Editorial Team

Published 28 April 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

An over-the-top (OTT) platform allows users to stream video or audio content on their laptops, TVs and other media devices. As a result, over-the-top platforms are slowly changing the way modern advertising works. If you are a marketer, knowing more about OTT is essential to stay abreast with technological development and gain benefits that can help you grow a business. In this article, we discuss what OTT is, answer “How does OTT work?”, explore why marketers are using this platform, learn how the platform makes money and discover the types of OTT content.

What is OTT?

OTT refers to the streaming platform that sends video and audio content over a high-speed internet connection. Rather than sharing content over traditional distributors like cable operators, broadcasters and IPTV operators. Over-the-top content primarily refers to film or TV content consumers watch on their phones, laptops or connected TV. OTT is a different channel through which companies can stream video, audio and messaging content for the end-users.

Using such a platform, marketers can provide content more efficiently and at a much lower cost than traditional broadcasters. Also, this platform can help users or customers stream content on-demand or tune into live streaming broadcasts. OTT allows a customer to watch content:

  • Anytime: A customer can watch the content at their convenience. Also, there is no need for a customer to get locked into a specific timing on a specific channel.

  • Anywhere: Customers can view the content anywhere including, cars, homes, offices, hotels or while travelling. It gives customers a choice.

  • On any device: Unlike traditional broadcasts that customers can view on a TV, they can watch the content on phones, tablets, computers and even gaming consoles.

Related: How To Become A Freelance Digital Marketer: A Complete Guide

How does OTT work?

The answer to “How does OTT work?” is that it works by pre-recording content and storing it in the content delivery network (CDN). The content distributes all over the internet and using the video delivery technology, the OTT streams the video files already stored over a server. When users use the over-the-top app, they request a specific video to play. The OTT sends the request to the local CDN, gets the video and delivers it to the user in video chunks. Also, the platform generates a request through the relevant digital rights management (DRM) server.

The server decrypts the media and presents it to the user as desired media. An OTT works by delivering content only when a customer makes a request. They do this in a unicast or one-to-one transmission method. This means that every end-user device builds a unique connection to the content source. The OTT works by allowing a customer to stream only one video to a single device. The internet service providers (ISPs) through which a customer streams content only provides infrastructure. They are not responsible for content copyright, video delivery and video or content viewing.

Types of OTT content

The various types of OTT content are:

  • Video content: Such content encompasses a range of factual content, entertainment, educational resources and lifestyle content such as fitness, yoga or travel.

  • Audio: Audio or music streaming is possible through the OTT solution. Some famous examples include podcasts and internet radio stations.

  • Voice services: Voice calling platforms operate using internet protocols and are part of the OTT network. They include voice over internet protocol (VoIP) delivered over an internet connection.

  • Messaging: OTT-based instant messaging services helps in connecting users directly through the internet connection and work by bypassing the mobile SMS networks.

Why do marketers use an OTT platform?

Here are a few reasons why marketers use an OTT platform in their marketing strategy:

Guaranteed advertisement viewership

Usually, people watching over-the-top content cannot skip ads, close their browser windows, instal ad blockers or change the channel while viewing content on OTT platforms. This gives marketers an advantage because only interested customers watch the advertisement. It can help in increasing advertisement viewership.

Better audience targeting

OTT allows advertisers to create a hyper-specific audience based on the behavioural demographics of the users. It also gives companies the power to reach the target audience before they need the product or services. This is an excellent benefit because TV commercials serve ads to potentially millions of unqualified viewers.

Related: Top 20 Marketing Skills To Include On Your Resume

Variety of content

Traditional cable or pay-TV viewers lack content quality and variety because of the limited catalogue. An OTT platform provides users with original and licenced content that resonates with their interests. Using this platform, a customer can choose from various video titles and live streams.

Advanced analytics

OTT provides essential data points that can help marketers understand the success of their marketing efforts. As customers consume the OTT over the internet, it gives detailed and advanced analytics on the advertisement's performance. A marketer can optimise ads for better performance based on the analytics result. Understanding what works and what does not can help marketers re-engage their customers.

Geographic targeting

OTT allows a marketer to get specific with geographic targeting compared to broadcast TV. Interestingly, the marketer displays the ad on broadcast TV to the designated market area (DMA). Viewers in the DMA are the target audience, but the marketer may target some customers who are not the target audience. With OTT, a marketer can choose the specific postal code to display the ad. It can help in eliminating unnecessary impressions from low priority service areas.

High-quality impressions

When marketers use an OTT platform, they are likely to generate more impressions than a broadcast TV advertisement. Also, impressions from the over-the-top platform are of higher quality because the audience comes from advanced targeting and data. Such platforms allow a marketer to display the right ad content at the right time to the right target audience.

Availability of new audience

When a marketer uses OTT with social media and search engine optimisation (SEO), a marketer can introduce a business to a new audience. This can positively affect the number of leads a business generates. It can also help in building local brand awareness.

Related: How To Succeed In Your New Job: The First Week, Month And 90 Days

Improved targeting options

When marketers reach their exact audience, they spend every marketing rupee efficiently. OTT allows a local business to narrow the target audience through several things. It also allows a business to target users on different devices.

How do OTT platforms make money?

An OTT platform follows the video-on-demand (VOD) business model. The different types of VOD models that a platform uses are:

Subscription video on demand (SVOD)

OTT companies that use this model can generate business through user subscriptions. The subscription model allows the user to access an entire library of movies and video series for a specific fee decided by the platform. Users can pay the subscription fees monthly or annually based on the platform's policy. Usually, the platform automatically renews the subscription until users unsubscribe from the OTT platform.

Advertising video on demand (ADVOD)

Ad-based video streaming models allow users to access a large range of content with ads. The users can consume the content while watching the small advertisements. The OTT platform or company uses the money generated from the ads to balance the hosting and production cost.

Transactional video on demand (TVOD)

In a TVOD subscription model, the user transacts on a pay-per-view basis. This implies that a user only pays for the content they consume. For instance, if users want to watch a particular movie, they pay only for that movie and not every content available on the OTT platform.

Hybrid model

A hybrid model uses one or two of these models among TVOD, ADVOD and SVOD. In such a model, a user has access to the library but can still pay to watch premium content. Many companies use the hybrid model to generate maximum revenue.

Related: How To Make A Video Resume (With Tips And Example)

How is OTT different from connected TV or CTV?

OTT delivers content over the internet, whereas CTV is a device that connects to a smart TV or TV that facilitates the delivery of streaming video content over the internet. In short, CTV is the device that a customer uses to consume the OTT content. A CTV is beneficial because it allows a marketer to reach customers. It has targeting capabilities and helps expand your audience. Over-the-top content helps you reach many people and ensures viewers watch complete advertisements. Also, an OTT assures maximum viewability because users watch the advertisements on full screens, meaning that 100% of pixels are in view.

Explore more articles