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Turning Up the Volume on Over-the-Top Content

As more people cut the cord on cable, over-the-top service providers see opportunity in services like Uber.

Grayson Brulte | Brulte & Company

While the number of traditional cable subscribers continues to decline, over-the-top (OTT) video services – the delivery of film and TV content without a traditional cable or satellite subscription – are headed in the opposite direction.

And now, with the help of Uber, OTT is about to get even bigger.

Nearly 60 percent of U.S. households with televisions pay a monthly fee to subscribe to an OTT service such as Netflix or Amazon Prime Instant Video.

In 2015 alone, more than 180 million individuals – seven in 10 U.S. Internet users – watched a video on an OTT video platform.

In the next five years, OTT subscribers are projected to surpass 306 million, and revenues are expected to climb 50 percent to nearly $27 billion.

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OTT is about to get even bigger.

It’s a different picture for pay TV. Based on data from The Convergence Consulting Group, the number of U.S. households paying for TV peaked in 2012.

There were 97.6 million U.S. households with TV subscriptions in 2012. But that number declined by about 150,000 in 2013 and dropped another 260,000 in 2014.

The trend is expected to continue.

OTT’s growing popularity is in part a reaction to consumers continuing to ramp up expectations that take advantage of innovative technologies, including the use of electronic devices to pay for goods and services.

Now, by allowing third-party developers to build on its platform, the mobile ride-hail company Uber is paving the way for the next evolution in OTT video distribution.

The Next Step in Video Evolution

First television manufacturers partnered with Netflix to offer video streaming in their DVD and Blu-ray players.

Television producers then joined forces with video-streaming services by creating app stores on their TVs.

The next inevitable step for OTT is partnering with automobile manufacturers and transportation companies like Uber to offer streaming on screens inside a vehicle.

This trend will create new subscribers for OTT video-streaming providers, many of whom will be younger customers looking to enjoy content on their own devices without the expense and hassle of a cable subscription.

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The big winners in this evolution are consumers.

OTT video streaming providers know that the average American spends 46 minutes per day in a car.

As OTT video streaming services evolve and driverless cars and new group transportation models come to market, OTT video streaming providers will create customized video streaming experiences based on the location of the automobile and the subscriber.

These in-car OTT experiences could also be based on location, interests or destination.

For example, when someone gets into a driverless car and programs the automobile to drive to the baseball game, the in-car entertainment system could suggest baseball highlights from the previous night’s game.

The growth of OTT will provide automakers the opportunity to develop compelling in-car interactive experiences, which will help car manufacturers differentiate their vehicles in a highly competitive market.

Big Winners

The big winners in this evolution are consumers, who get what they want, when they want and how they want it.

OTT video-streaming service providers will create custom experiences based on each user’s unique location at any given time, increasing their brand’s value.

Transportation companies and automobile manufacturers can offer unique customized experiences through partnerships.

Regulatory bodies overseeing the autonomous car industry are the big hurdles to making this vision a reality.

OTT providers, car manufacturers and technology companies will need to work with the U.S. Department of Transportation to develop consistent policy that puts passenger safety first, while allowing OTT video providers to create innovative, in-car entertainment experiences.

Meanwhile, the race is on to embrace the future of the in-car, OTT video-streaming experience. goldbrown2

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Grayson Brulte is the Co-Founder and President of Brulte & Company, an innovation advisory and consulting company that designs innovation and technology strategies for a global marketplace. Grayson is also a contributing author writing about innovation and technology for General Electric's Reports and MIT Sloan Executive Education innovation@work Blog .

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