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Why Mobile Is the Key to OTT SuccessBy: Candace Bryan and Brian Kline

Q4 2019

Why Mobile Is the Key to OTT Success | Q4 2019 2

Table of Contents

1. Mobile Video Is Growing In Popularity 3 - 5

2. Mobile Is The Converged Media Device 5 - 6

3. Obstacles Remain For Mobile Viewing 7 - 8

4 The Customer Perspective 8 - 9

5. The Solution 9 - 11

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Mobile video viewing is growing in the U.S. and around the world. In 2019 the smartphone became the primary device where people watch online video globally, surpassing computers, smart TVs, and tablets (Limelight). It makes sense: nowadays people around the world can’t live without their phones and tablets, relying on mobile for a variety of work and leisure activities.

In fact, 48% of adults now say they’d be unable to give up their smartphone even for a single day, so it’s clear why mobile video’s growth seems unstoppable. Mobile phones are becoming critical tools transforming almost every aspect of our lives, and video is an enormous piece of this equation.

At the same time, modern viewers are increasingly cutting the cord, opting out of cable entirely for digital OTT video content.

Mobile Video Is Growing In Popularity.

4.5

4.0

3.5

3.0

2.5

2.0

1.5

1.0

.5

0

4.023.68

3.102.81 2.83

Mobile phone

Desktop or laptop

Tablet Digital Assistant

Wearable device

● 5 = I would not be able to stop using this device● 4 = I would be able to stop using it for one day● 3 = I would be able to stop using it for one week● 2 = I would be able to stop using it for one month● 1 = I would be able to stop using it permanently

The smartphone has became the primary device where people watch online video

Source: Limelight, 2019

“In fact, 48% of adults now say they’d be unable to give up their smartphone even for a single day, so it’s clear why mobile video’s growth seems unstoppable.”

How difficult would it be to stop using the following devices?

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There is huge growth in streaming across the board: Q2 2019 saw 130% growth in streaming year-over-year, and in 2019, it’s expected that people will actually spend more time on their mobile phones overall than they will spend watching traditional TV (eMarketer).

With mobile, viewers are no longer restricted to watching video on their television sets. Now they can consume video content anywhere they go, and people are relying on this convenience more and more.

In fact, the average US adult now spends 34 minutes a day using mobile video apps alone, a number that is expected to grow even higher in 2020 and 2021, according to a report from eMarketer.

For OTT providers planning for future subscriber growth or chasing valuable audience demographics, it is important to note that mobile video growth is especially high among younger viewers. In fact, 26-35 year olds are the biggest consumers of digital video around the world, with 51.4% downloading and streaming on a daily basis, and 81.7% doing so weekly (Limelight). Meanwhile, a separate study shows that younger viewers—Gen Zers—have even higher preferences for mobile video than millennials. Sixty-one percent (61%) of Gen Zers say watching on mobile is just as good as watching on TV, and mobile is their preferred way to watch Netflix, YouTube, and social media videos (Whistle).

26-35 year olds are the biggest consumers of digital video around the world.

“In fact, the average US adult now spends 34 minutes a day using mobile video apps alone, a number that is expected to grow even higher in 2020 and 2021.”

How often 26-35 year olds stream and download content

Daily

Weekly

Monthly

2-3 times a year

Never

51.7%

30.3%

2.5%4.4%

11.3%

Source: Limelight, 2019

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Given the rise in mobile video’s popularity, OTT providers are increasingly prioritizing mobile features for their viewers. Mobile faces bigger challenges than connected TVs: when it comes to mobile video, OTT apps aren’t competing with just TV and other video providers. They are also battling all the other mobile apps that can capture a user’s attention. That’s why so many providers of OTT video are adding features that improve the in-app experience. Earlier in 2019, Netflix launched a mobile-only subscription tier in India. Quibi is even releasing mobile-only content, with a horror series from Steven Spielberg that will only be available when a user’s smartphone knows it’s dark outside. Plus, countless providers are incorporating mobile-only features like video download into their offerings.

Mobile Is The Converged Media Device.

In the past 12 years since the introduction of the iPhone, mobile devices have become a primary place that we store and interact with media, and updates to modern hardware have made it so that the mobile experience doesn’t sacrifice quality. Our smartphones are often the best cameras we own, and certainly the best camera that’s always on us. Thanks to advancements in screen capability, mobile viewers can now watch high definition 4K footage, while audio technology often meets or exceeds what we have in our homes. Many smartphones today have Dolby Atmos technology embedded, which means listening on headphones can be a better, more immersive video experience than even TV.

Storage has also greatly improved on mobile devices. The first generation of iPhones had storage options of 4GB and 8GB, hardly enough for your photos and music. The new iPhone 11 will be available with up to 512 GB, and Samsung’s recently released Galaxy S10+ even offers an option with 1TB of storage—as much as a premium laptop computer. We can now store and enjoy our personal photos and videos as well as our favorite games, apps, music, movies and TV shows.

In fact, storage has alleviated the one challenge that regularly interrupts immersive mobile experiences since the first mobile phone networks were rolled out: consistent connectivity.

“In fact, storage has alleviated the one challenge that regularly interrupts immersive mobile experiences since the first mobile phone networks were rolled out: consistent connectivity.”

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With all of this hardware in the hand, how do we use our phones everyday? Photos and personal video are captured, stored, and organized on phones, with cloud syncing storage that ensures they won’t be lost or deleted. Spotify and Apple Music not only allow users to stream music, but also allows them to manage personal music libraries and download their favorite songs to listen on-the-go without WiFi. Plus, users also can watch premium video on their phones, since every major video provider now has a mobile app. The smartphone has become as powerful as the computer, and users are increasingly treating their devices as entertainment hubs for video, music, social media, games, books, and the news.

For OTT providers, this means a clear mobile strategy is more important than ever.

You want to reach your customers where they are, and where they are looking to be entertained and informed. These days, they’re on their phones no matter where they go. Ten years in to widespread smartphone usage, customers now expect a flawless user experience, and migrate to the apps that give them one.

Yet, data shows that even in 2019, OTT providers are failing to meet these expectations, and viewers remain frequently frustrated by mobile video streaming.

“Yet, data shows that even in 2019, OTT providers are failing to meet these expectations, and viewers remain frequently frustrated by mobile video streaming. “

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Obstacles Remain For Mobile Viewing.

Despite the increasing importance and value of mobile video, there remain obstacles for delivering a perfect viewing experience. Unfortunately, some of the biggest issues are not in OTT providers’ control.

One challenge is cellular coverage. Despite advances in cellular technology, coverage is far from perfect and networks are not always able to support the constant bandwidth needs of video streaming. And, as network traffic increases, especially during popular viewing hours, the increased load on networks means mobile viewing is often rife with delays, dips in video quality, or dropped streams.

In the U.S., the mobile video experience falls short, according to Open Signal. Its July 2019 analysis of wireless operators found that on average the US mobile video experience rates only as 50 on a scale of 1 to 100. Other countries have an even worse mobile video experience, including India whose wireless providers get an average score of 37 out of 100. 5G won’t immediately alleviate these issues. 5G brings more speed, often over shorter distances, but anyone who has ever sat on a crowded train or in traffic trying to load email or a simple web page knows that when mobile networks are overloaded, not even the simplest applications work. That was true of 2G, 3G, 4G and that will be true of 5G.

US Mobile Video Experience Satisfaction Ratings56.1

51.7

46.3

47.5

Fair Good Very Good ExcellentPoor

0 40302010 80706050 10090

Source: Open Signal, July 2019

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Further, cellular data plans continue to limit customers’ ability to stream video, especially longform content. In a 2019 report from Statista, less than a quarter of respondents reported having unlimited data plans, while others face varying levels of data restrictions, from 1GB to over 12GB. To put that in context, streaming 60 minutes of video on Netflix in HD uses about 3GB of data. That means most people need an internet connection to watch video without worrying about incurring costly fees for exceeding their mobile plan. But, for mobile viewers on-the-go, there’s not always a reliable WiFi network even available.

The Customer Perspective.

88% of viewers said they experience streaming frustrations in surveys of viewers across the US, EU, and LATAM conducted by Penthera.

Their most common pain points with streaming are buffering and the video taking too long to start. When they encounter these types of frustrations, viewers tend to respond by leaving. While most global viewers will tolerate a single rebuffer before they will stop watching, after a second rebuffer 66.3% of people will stop watching (Limelight). This illustrates a critical point: when OTT providers fail to provide a seamless mobile experience, they lose valuable views and drive increased churn.

“88% of viewers said they experience streaming frustrations in surveys of viewers across the US, EU, and LATAM conducted by Penthera.”

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Though the causes of mobile streaming issues are out of the control of OTT video providers, there are steps that can be taken to mitigate them and to perfect their mobile offering.

The primary solution to streaming issues is letting customers do what they’re asking for: to download videos to their phone.

The Solution.

There are more than 1400 streaming video providers globally, a number that is continuing to grow. Even as the biggest media companies launching compelling OTT services, users are not going to subscribe to every single service out there, and they will be quick to cancel if they struggle to watch or face other frustrations. In fact, on average, viewers in the U.S. only subscribe to 3.4 OTT apps (Vindicia). Preventing churn is as important as acquiring new users, and in the competitive OTT arena, providing a seamless user experience is the best way to ensure users don’t jump ship or give their money to a competitor.

That’s why more and more providers are including a download feature as part of their mobile apps: so that users can watch seamlessly regardless of connectivity.

That’s why more and more providers are including a download feature as part of their mobile apps: so that users can watch seamlessly regardless of connectivity.

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Among viewers, downloading video is a popular alternative to streaming. According to research from Penthera, 59% of users in the US expect a streaming service to provide the ability to download, and 67% would even pay a premium of $1 to $5 a month to have the feature added. Plus, Limelight’s international study showed that globally, 26% of viewers actually primarily download videos instead of streaming them. Download is especially popular in Asian countries, with 38% in India, 34% in Singapore, and 45% in South Korea preferring video download to streaming.

Given the frustrations and issues involved with streaming, the popularity of download is no surprise. Innovative companies like Netflix, Amazon, Showtime, and Starz are giving their users the ability to download videos on their mobile devices, freeing users from having to worry about an imperfect experience, streaming on cellular racking up their bills, or dips in quality or delays like buffering.

With video downloaded, viewers can engage with content truly wherever and whenever they want.

The primary way consumers watch movies or television episodes.

France

Germany

India

Italy

Japan

Singapore

South Korea

U.K

U.S.

0% 25% 50% 75% 100%

Download to watch offline Stream OnlineRent or Buy DVDs

“With video downloaded, viewers can engage with content truly wherever and whenever they want. “

Percent of people surveyed.

Source: Limelight, 2019

Global Average

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There are countless other solutions to the mobile video issues that plague users as well. Improving streaming, and working to reduce startup buffering, can help create a smoother viewing experience even when viewers aren’t downloading. Also, it’s important to make other facets of the video experience as seamless as possible: many OTTs have invested in impressive content discovery algorithms, for example, and it’s crucial to have a good mobile interface for this feature as well. Plus, mobile video advertising has a lot of potential to be innovated and perfected to give viewers a more palatable and engaging mobile ad experience.

Perfecting mobile video is one of the biggest opportunities for OTT providers right now to retain their existing customers and serve the younger viewers of the future. By ensuring their mobile offerings include the ability to watch without frustrations, providers can create seamless, immersive experiences that keep mobile viewers coming back for more.

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Learn more.Website: Penthera.comLinkedIn: /PentheraTwitter: @WeArePenthera

Press inquiries: Jodi Susman, CMO, Penthera | jodi.susman@penthera.com

About Penthera:Penthera is a global software company that develops and deploys products that remove friction and improve the mobile video experience. With tools that include video download, content subscriptions, and buffer-free streaming technology, Penthera helps OTT providers compete in a crowded marketplace and improve key business metrics such as viewer engagement, increased revenue, and churn-reduction. Penthera works with leading media and entertainment brands around the world: CBS, Fox, HBO, Liberty, AMC, Globo, Showtime and many other streaming providers. Led by Michael Willner, Chairman and CEO, and Dan Taitz, President and COO, Penthera is transforming how the world accesses mobile video.