This is part of a series of articles on the outlook for the technology, media and telecommunications sectors in 2018.
Major companies such as Walt Disney Co., T-Mobile US Inc. and Alphabet Inc.'s entry into the streaming video space means it will be increasingly difficult for smaller players to compete, experts said.
"Every content producer and creator is concerned about the large aggregaters like AT&T, Amazon and Disney, given their power, certainly in the U.S." Ooyala CEO John Huberman said in an interview. Vertical integrations of video assets, such as AT&T Inc.'s launch of DIRECTV Now and T-Mobile's recent deal to acquire internet TV company Layer3 TV Inc., allow the two carriers to sell bundled services. That creates a competitive advantage over players with less integrated offerings.
To survive in an integrated world of OTT products, small service providers should simplify their offerings and create user-friendly interfaces, Jeff Weber, CEO of digital content provider Zone TV said.
Disney is looking at cross-service integration to build a pure-play OTT content strategy. Its recent move to buy a large portion of 21st Century Fox Inc. would put 60% of Hulu LLC under Disney’s control. BTIG analyst Rich Greenfield recently noted expectations that Disney will look to buy out Comcast Corp.'s remaining 30% stake in the platform. Disney is also launching new digital sports and entertainment platforms in 2018. While the programmer does not have a mobile or broadband offering to package with its products, it is creating a large digital content presence and it could bundle across services to provide comprehensive access to programming.
While small players may have difficulty competing with well integrated digital video giants like AT&T and Disney, niche OTT players could find a place in the ecosystem with a targeted audience and a solid go-to-business strategy, operating as an add-on to bigger digital TV bundles, experts agreed. Crunchyroll is an often-cited successful example. The anime-focused service has amassed about 20 million users.
But increasingly important for smaller and middle-tiered players is geographic specialization. For example, companies like Malaysia’s iflix are challenging Netflix Inc. and other global digital video companies with regional content. There are still a lot of green fields for small and middle-tier OTT services to find audiences abroad, Ooyala co-founder and senior vice president Belsasar Lepe said in an interview.
"Regionalized content is going to win the day," he said.
IFlix, which was launched in 2014, is eating up market share from Netflix’s Asia markets. The company said it streamed 10 billion minutes of content in 2017, up 400% from 2016.