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The 2018 OTT Revolution

What 1.3 billion consumer data points can teach you
about scaling your audience and succeeding with OTT
TV Is Having
an OTT Revolution

TV Is Having an OTT Revolution 2

TV is dead? Long live TV.

The death knell for television has been ringing for years. Meanwhile, the future of video
is here and evolving. OTT (over-the-top) streaming video is how video content is now
shared, viewed, and monetized.

OTT has emerged as the new generation of TV — driven by the ever-expanding array
of connected apps and devices, the rapid pace of tech, and insatiable demand for new
content.

We dove into the viewing patterns of consumers on the Vimeo OTT platform across 1.3
billion data points. This report tells the story of today’s OTT audience, how and where
they consume video, and how they make decisions about where to view it.

Methodology
Vimeo maintains data on 3.6 million OTT subscribers across 230 countries and
territories, including information about platform, location, and content. Data is
anonymized and used for product improvements and analytics, such as the data
provided in this report.

To determine user behavior, we connect these events via unique identifiers and leverage
traditional statistical models where applicable to determine correlation of variables.

TV Is Having an OTT Revolution 3

State of OTT

State of OTT 4
The growth of services in the OTT space has been immense. According to Digital TV
Research, SVOD (subscription video on demand) revenues are predicted to soar from
$11.13 billion in 2015 to $25.71 billion in 2021. The global OTT market — primarily
comprised of subscription-based video on demand (VOD), transactional VOD, and ad-
supported VOD — has gained significant traction in the last year.

To date, there are nearly 100 subscription platform providers in the U.S. and Canada,
with a variety of strategies for OTT:

• Viacom International Media Networks, Time Inc, Entertainment Studios, and

CenturyLink have all launched subscription video services in 2017.

• AT&T announced plans to launch a “wireless-centric” direct-to-consumer video

offering in 2018.

• Disney will be rolling out an ESPN OTT streaming service in 2018, giving subscribers
access to 10,000 live sporting events that would otherwise not be available on
ESPN’s traditional TV networks.

• Disney also plans to launch a stand-alone branded movie and TV streaming service
featuring 500 Disney films and 7,000 episodes of Disney TV shows.

For us the future is OTT. The thing we

have to be careful of is millennials. They
don’t watch TV, they don’t have TVs or
subscribe to cable. So we have to bring
that audience in. Over-the-top is a great
opportunity.
Robert Kraft
Chairman, New England Patriots

State of OTT 5
Overall, the marketplace is set for 53% of U.S. broadband
growth worldwide. The combined size
of the OTT market is expected to grow
households subscribe
to over $64 billion by 2021, compared to both a pay-TV service
to $29.4 billion in 2015, a compound and at least one OTT
annual growth rate of over 14%.
According to Digital TV Research’s
video service.
report, of the $35.37 billion extra
Parks Associates
revenue between 2015 and 2021, Asia
OTT Video & TV Everywhere: Partners,
will contribute $12.65 billion, North
Alternatives, and Competition
America $9 billion, and Western Europe
$8.25 billion.

The success of future OTT services will hinge on several factors: operational flexibility,
creativity with business models, and technical agility, as demonstrated by heavyweights
such as Netflix, Hulu, and Amazon. With rapid changes in technology and increasingly
demanding user expectations, a laser sharp focus on the user will be a key differentiator:
enabling personalized experiences and focusing on multi-screen are just some of many
ways to provide a value-added experience for your viewers.

State of OTT 6
Cord Cutters Are Transforming
into OTT Subscribers

Cord Cutters Are Transforming into OTT Subscribers 7

Consumers are ditching cable TV en masse.
Research firm eMarketer estimates that 22.2 For the better part
million Americans will have cut the cord on their of fifteen years,
cable, satellite, or telco TV service by the end
of 2017, a 33% increase from 16.7 million the pundits have
previous year.
predicted that cord-
Audiences are moving their attention away from cutting was the
traditional television to OTT and digital video
future. Well, the
platforms. Ericsson ConsumerLab’s TV and Media
report found the average consumer watches future has arrived.
four more hours of mobile video every week
Craig Moffett
than they did four years ago, while traditional
MoffettNathanson
TV viewing time is down by 2.5 hours
per week. “Considering these trends, we see
consumers moving away from traditional distribution and embracing digital video
platforms,” eMarketer analyst Paul Verna told Forbes.
About 51 million U.S. households today engage in OTT streaming of video content.

New platforms will

prevail in the mobile
and virtual worlds and
will allow advertisers
to easily and efficiently
target well-defined
groups or even
individual consumers
across various channels.
Igor Mali
COO, iPROM

Cord Cutters Are Transforming into OTT Subscribers 8

 We are looking to
attract a new generation
of fans who really are
demanding a greater
flexibility to be able to
decide the time and
place they tune in to
watch their favorite
content.
Chris Kermode
Executive Chairman, ATP

Retaining millennials has been a continuing challenge for cable TV operators. “Younger
audiences continue to switch to either exclusively watching OTT video or watching
them in combination with free-TV options,” said Chris Bendtsen at eMarketer. A
survey by Parks Associates confirms that 61% of U.S. millennial heads of household
are both pay TV and OTT subscribers.

Content selection appears to be a key reason for cord cutters making the switch. OTT
services are also more likely to appeal to binge watchers, a group of dedicated consumers
who are looking to consume specific content — players such as Netflix are leveraging that
trend by producing original content. By making all episodes of its new series available at
once, Netflix has changed the landscape for how viewers consume videos.

Cord Cutters Are Transforming into OTT Subscribers 9

5 Key Data Points from 3.6M
Vimeo OTT Subscribers

5 Key Data Points from 3.6M Vimeo OTT Subscribers 10

 1 The Netflix effect: apps can grow your
audience by 50%

Web 44%

iOS 31%
Even though apps
Android 11% account for only one-third
of subscriptions over half
Roku 10% of the Vimeo OTT wide
audience watches some
tvOS 4%
content on apps.

Netflix has trained consumers to expect that your content should be available for
consumption on every platform and device, which was evident in our findings.
Although apps account for just about a third of Vimeo OTT’s subscriptions, over 50%
of subscribers watch videos on apps, reflecting a growing appetite to consume
content on various screens in different ways.

This growth of time spent on apps is significant. On Vimeo, OTT subscribers collectively
spend about 10,823 hours a day watching video on their apps. Research conducted
by analytics firm Flurry found that time spent on mobile apps has increased 69% year-
on-year. Having your brand appear in a platform’s app store can also increase your
visibility to prospective subscribers. If they’re looking for the type of content you offer
— whether it be original programming, fitness, or instructional videos — being present
in app stores is a great way to get discovered.

Apps can help retain customers too. Customers who sign up via an app platform are
less likely to churn because their card expired since they use those accounts for other

5 Key Data Points from 3.6M Vimeo OTT Subscribers 11

purchases. Apps can also help improve the lifetime value of your customers. 58% of
customers who sign up via the web eventually add mobile or connected device viewing
to their watching habits.

Takeaway: The average OTT viewer is highly mobile and expects your content to keep
up with them. Introducing a suite of apps to your marketing and distribution strategy can
potentially grow your audience by 50% or more and reduce churn.

Vimeo was our original launch platform

and was there for us day one. They
have been great partners, and we have
now built our own custom apps and
interfaces. The team has supported
us and always been responsive and
dedicated. We are lucky to have great
partners in Vimeo and IAC.
Gabe Tanenhaus
Cheddar

5 Key Data Points from 3.6M Vimeo OTT Subscribers 12

 2 OTT free trials are essential for driving
conversion

Web 68.4%

iOS 69.6% All free trial conversion

rates on Vimeo OTT
Android 62.7% are above 60% but
iOS and Roku perform
Roku 69.4%
exceptionally well.

Android TV 64.7%

50 55 60 65 70

In a competitive space, free trials are a great way to entice potential customers and
give them a taste of what your OTT service has to offer. Vimeo found that 60% of people
who sign up for a free trial become paying OTT customers. In addition, our data
shows that customers who start a free trial on Roku (69.4%) and iOS platforms (69.6%)
are most likely to become subscribers.

If you’re offering a free trial, having an app can help increase your customer conversion
rate. People are 33% more likely to sign up for a free trial via an app then they are
on the web. Vimeo OTT customers have seen up to a 72% conversion on these
platforms.

Industry-wide, over a quarter of U.S. broadband households signed up for at least one
free trial on an OTT service in 2017, ranging from Netflix to Amazon Prime, HBO Now,
and Showtime. Of those users, 47% subscribed to at least one service after the free
period expired. “Free OTT trials are effective in converting a sizable portion of trial users
into subscribers,” said Glenn Hower of Parks Associates.

5 Key Data Points from 3.6M Vimeo OTT Subscribers 13

Only 1% of consumers are “serial trialers” who take advantage of free trials to avoid
paying for services. “Most consumers use trials for their intended purpose of trying out a
service before deciding whether or not to continue as a paid subscriber,” said Hower.

Takeaway: Free trials are a win-win for providers and viewers, over 60% of free trial
users could end up becoming paying subscribers on your service. Expect users on iOS
and Roku to be most likely to convert.

Vimeo’s OTT technology came when

we absolutely needed to monetize and
wean ourselves off of crowdfunding.
Their attention to detail and care around
the customer experience won us over.
When we converted to a subscription
on-demand platform, their attention to
detail and care in building the backend
kept us as a customer.

Dennis Dortch
Black & Sexy TV

5 Key Data Points from 3.6M Vimeo OTT Subscribers 14

 3 Even customers who subscribe via the web will
watch on mobile

Signup platform Viewing platform

Android TV 0.4% Android 5.69% AppleTV 1.21% Android 19.87%

tvOS 1.87% iOS 13.81% Roku 2.43% iPhone 31.88%

Roku 2.82% Web 75.4% iPad 3.31% Web 41.12%

We pulled data from the hundreds of OTT services powered by Vimeo and found an
interesting pattern: in 2017, over 73,390 customers subscribed via a web browser (on
a laptop, tablet, or phone). Of that, 76% (55,684) went on to watch videos through one
or more apps via their iPhone (nearly 32%), Android (19.8%), iPad (3.3%), and Roku
(2.4%). Consumers are moving beyond typical video on demand websites and seeking
out apps, by downloading and consuming their OTT content there.

Takeaway: Just because your customers come to you through a desktop browser,
doesn’t mean they will stay there. Content creators and distributors need to diversify
their platforms to keep up with viewers across devices to drive engagement.

5 Key Data Points from 3.6M Vimeo OTT Subscribers 15

 4 Invest in top notch content and user experience
to avoid churn

Subscriber lifetime

Roku Android TV Android iOs Apple TV

A customer can vary in the amount of time they stay subscribed depending on how
they sign up. iOS and Apple TV subscribers have the longest customer lifetime.

Despite the surge in OTT adoption, managing churn should be a concern for any
business. In 2017, 19% of U.S. broadband households cancelled an OTT service,
compared to 20% in 2015, according to Parks Associates, which shows “there is quite
a bit of experimentation occurring right now.”

OTT platforms that invest in providing exceptional user experience will reap the rewards and
avoid churn. In 2015 and 2016, Apple TV announced sweeping improvements for viewers,
and upgrades to the viewing experience. It’s likely these changes have paid off: Vimeo found
that OTT audiences on iOS and Apple TV devices stayed subscribed the longest.

Another common reason for customers to cancel subscriptions is because they don’t feel
there is enough new content. Ultimately, knowing why your customers leave is important
— keeping a pulse on their feedback can help you grow and improve your network in the
future.

Takeaway: We found that iOS and Apple TV subscribers have been OTT’s most valuable
customers yet, demonstrating the longest lifetime value across available apps. But churn
prevention should be a number one priority.

5 Key Data Points from 3.6M Vimeo OTT Subscribers 16

 5
Consider the length of your content with your
audience in mind

Minutes watched/ Number of

session sessions

Android 87.2 297, 756

Apple TV 72 98,869

iPad 35.4 295,373

Web 22.1 1,583,834

iPhone 21.9 406,037

TV apps have generally longer watch times. Short form content is more popular
on mobile devices.

Audiences today aren’t just watching on a single device; they’re accessing content
on multiple devices, and have different habits for each. We found that Vimeo-powered
TV apps get higher engagement rates through services with long-form content
such as MHz Choice and Love Nature. Correspondingly, we also see that services
featuring short-form content (Yoga with Adriene or Black&Sexy TV, for example)
are more popular on mobile devices.

We also looked at how content length affects completion for OTT services on Vimeo.
On average, a 30-minute video saw a completion rate of about 80% while
a two-hour video saw an average completion rate of 65%.
Different lengths work for different audiences. Long-form video offers more focus on
entertainment and storytelling, while short-form content is more “snackable” and easier
to complete.

5 Key Data Points from 3.6M Vimeo OTT Subscribers 17

Takeaway: There are industry advocates for both short-form and long-form video content.
For maximum engagement, tailor the length of your video content to the app in which your
content will live. Consider mobile apps for shorter content and TV apps for longer videos.

Vimeo empowers creators to be

everywhere at once, providing live and
other immersive experiences to engage
with their audience. As the SVOD
market continues to explode, consumer
expectations and the tyranny of choice
will rise in turn. Creators will need to be
ready to meet this demand with quality
content and dependable technology.
Anjali Sud
CEO, Vimeo

5 Key Data Points from 3.6M Vimeo OTT Subscribers 18

Conclusion

The OTT marketplace has seen unprecedented growth as falling barriers to entry are
allowing creators to build ever larger audiences. It’s clear from these data points that
to thrive in a crowded market, creators and distributors must make sure their content
experiences are as accessible, mobile, and user-friendly as possible.

Having your OTT content in an app store will aid discovery and churn prevention as well.
Finally, consumer choice drives everything, which means distributors and creators must
craft user experience, free trials, and content with their viewer in mind.

5 Key Data Points from 3.6M Vimeo OTT Subscribers 19

 The Vimeo OTT service has completely
transformed our business. The system
is a pleasure to use and the quality of
video streaming is the best we’ve found.
Our member satisfaction is now through
the roof and our time spent on customer
service has dropped by over 90%. We
love Vimeo!
Chris Sharpe
Find What Feels Good-Yoga with Adriene

State of consumers 20
Considering moving your content to
an app or OTT platform?

For a creator to grow their personal brand to its full potential, a branded app on all
devices isn’t just an exciting bonus — it’s a requirement. OTT apps give viewers a fully
branded experience for watching content, make subscriptions and payments seamless,
and turn an audience into a community.

Vimeo’s app technology includes development for every device, plus customization,
regular updates, analytics, and more. Our team even takes care of the difficult and time-
consuming process of launching an app in various marketplaces. All creative control
stays with the creator, so you’re able to produce content and nurture your audience,
while Vimeo handles the technology.

To explore how you can grow your business with OTT video apps, contact us at
ottsales@vimeo.com or visit ott.vimeo.com/pricing

5 Key Data Points from 3.6M Vimeo OTT Subscribers 21