The Role of AI in OTT: Transforming the Future of Streaming Platforms

Have you ever wondered how Netflix or Hulu knows what kinds of shows or movies you’ll love? It is the technology behind the scenes. Now, OTT platforms are utilizing technologies such as machine learning, behavioral analysis, and others. All credit goes to the Artificial intelligence that empowers OTT businesses to personalize content delivery and enhance viewers’ experiences.

The role of AI in the OTT industry is driven by the growing demand for personalization from users and the need for streaming businesses to target potential customers. OTT companies and businesses are leveraging it in real time. In terms of market growth, global OTT growth is skyrocketing, and by 2032, the market value is expected to reach $229.97 billion at a CAGR of 16.0% (2024-2032).

Missing this wave of transformation is the most considerable risk, and businesses that leave behind may risk watching their competitors lead the industry.

Alongside overall industry growth, the number of subscriptions is estimated to reach 4.9 billion by 2029. One of the key reasons behind this growth is the adoption of AI in OTT platforms, now users are getting personalized recommendations matching with their interests and intent.

From a business perspective, AI is helping businesses optimize content recommendations, predict user behavior, and improve ad targeting. Overall, AI/ML are transforming the OTT industry, and its growth is rapidly rising.

As an entrepreneur, you can seize more opportunities by utilizing emerging technologies (AI, ML, and Automation). Still, before you make any move, it is essential to understand the role of AI in streaming platforms.

Your competitors are already using AI to boost viewer engagement and retention, so don’t get left behind.

Here, we have created a blog for you that will walk you through some interesting information on how Artificial Intelligence is transforming the future of digital streaming. If you are looking for a custom mobile app development services, The NineHertz is the leading AI-Powered live streaming app development company.

So, instead of a pause, let’s play the blog!

What is OTT? A Quick Overview

OTT is known by various names, including over-the-top media services and over-the-top television, and is also synonymous with video streaming platforms. From a definition perspective, it refers to providing content, such as movies, shows, and live videos, over the internet, which viewers can access through their smart TVs, mobile devices, and web accounts.

Users can access video and audio content from diverse content providers instead of one provider.Subscription plans include monthly and annual options. Device limits can be set for apps like Netflix, Prime Video, and Hulu.The most significant advantage of OTT platforms is that content is only delivered upon request, allowing users to choose and stream content conveniently.

Traditional cable TV and D2H services bind viewers to scheduled programming. Conversely, using an OTT app allows users from various backgrounds to enjoy a wide range of content, whether it’s a yoga tutorial or an exciting spy thriller.

According to a recent survey, 99% of U.S. households use at least one over-the-top (OTT) streaming app. For example- Netflix is counted as one of the biggest OTT service providers in the USA and Canada and is also counted as the top OTT app worldwide(260.28 million subscribers). The other key players are Amazon Prime(200 million), Hulu(48 million), DisneyStar+(164), and HBO Max(96 million). You might like to read these ultimate guides on how to create an app like Netflix or build an app like Hulu.

Understanding AI (Artificial Intelligence) in the Context of OTT

Over-the-top streaming services have completely revolutionized how we consume content online, offering ultimate flexibility. Here, AI in OTT is playing a pivotal role.

How?

Let’s simplify it through some basics.

What is Artificial Intelligence?

Artificial Intelligence refers to the technology that mimics human intelligence, with the goal of making machines act, think, learn, solve problems, and behave smarter like humans. AI comprises technologies such as Machine Learning, Natural Language Processing, Predictive Analytics, and Automation.

In terms of the use of AI in OTT platforms, it is a game changer. AI drives innovation in content distribution, personalized recommendations, user engagement, and distribution.

Here is how key AI technologies are reshaping the OTT landscape:

• Machine Learning– empowering systems to learn through data for tailored recommendations, content optimization, production insights, and more.
• Natural Language Processing– understanding and interpreting global languages to empower OTT apps for voice search, customer support, content moderation, subtitle generation, and others.
• Predictive Analysis– Analysis of historical data for churn prediction, content demand forecasting, personalized marketing, and more.

The Synergy Between AI and OTT Platforms

From the synergy perspective, understand it as – AI makes OTT platforms smarter. The synergy between AI and OTT is creating a better experience for the viewers and for platforms it is like how digital content is created, distributed, and consumed.

Here is the breakdown how this powerful synergy creates wonder:

From the synergy perspective, understand it as – AI makes OTT platforms smarter. The synergy between AI and OTT is creating a better experience for the viewers, and for platforms, it is like how digital content is created, distributed, and consumed.

Here is the breakdown of how this powerful synergy creates wonder:

Enhanced User Experience Through Personalization
Through deep analysis of user data, AI algorithms offer tailored recommendations to the users and refine search results, ensuring users get what they want to watch.

Optimized Content Delivery and Streaming Quality

Wondering how Netflix or Amazon Prime adjusts the video quality while you watch your favorite show? It is an AI that dynamically adjusts the video quality aligned to your network conditions. It covers various aspects such as CDN(content delivery network optimization), video compression, and bandwidth utilization.

Targeted Advertising and Monetization

AI helps in streaming the ads that are relevant to the content viewers watch, such as during travel documentary ads of travel accessories or ads relevant to the user demographics.

Enhanced Content Operations

AI takes care of important tasks related to content, like tagging, creating metadata, and moderating content, which makes things run smoother. It also helps with making subtitles and dubbing, making content easier for everyone to access.

Predictive Analytics for Strategic Decision Making

AI empowers analyzing historical data and forecasting future trends in user behavior, content demand, and potential churn. It empowers OTT businesses to make strategic decisions.

Content Security

AI helps in preventing unauthorized access and sharing of content(bypassing traditional distribution methods), including safeguarding intellectual property rights.

How AI is Revolutionizing OTT Services

AI is revolutionizing OTT services in real terms, from content curation to hyper-personalization and from content optimization to content security. The OTT giants like Netflix, Disney+, HBO Max, and Hulu are already leveraging customer engagement, and as competitors, you also do not want to miss it.

So let’s have a closer look at how AI in OTT brings revolution.

Personalized Content Recommendations

It is such a surprising fact that Netflix’s AI recommendation engine delivers recommendations at more than 80% success rate. Using Machine Learning Algorithms, users’ data (history, search query, ratings) is analyzed, including collaborative (what other users watched) and content filtering (genres, actors, and preferences).

Through machine learning and deep learning algorithms, OTT platforms offer hyper-personalized content recommendations that keep users hooked. This results in a reduced churn rate and more watchtime.

Enhanced Search Functionality

AI significantly improves search on OTT platforms. How does AI understand the context of a search query? It utilizes machine learning, natural language processing (NLP), and semantic search to provide users with relevant answers to their search queries.

NLP enables the system to understand the query itself, machine learning processes information from past queries, and semantic search helps the system understand the user’s intent. It allows users to easily search for movies by their favorite genre or actors and even for specific scenes, such as “a scene where Tom Cruise jumps from a plane.”

AI also improves the content library through automated tagging and metadata generation that helps users to find niche based content.

Dynamic Pricing and Subscription Model

Artificial intelligence (AI) enhances pricing methods by analyzing vast amounts of data and forecasting trends. The companies can evaluate market conditions, consumer behavior, and competitor pricing to determine the best price points.

Here, machine learning models help segment customers and target diverse groups with custom pricing to capitalize on revenue generation opportunities.

AI’s Role in Content Creation and Curation

The entire game of content creation revolves around creative thinking and brainstorming ideas. However, on paper, things appear to be quite challenging. It is not just about creating content; the content must also match the audience’s preferences, genre, and engaging storyline to thrill them. AI in OTT platforms makes things easier.

AI-powered tools, especially Generative AI, assist content creators with script writing, video editing, adding effects, generating visuals, and more. Overall, it delivers significant benefits for audiences, creators, and platforms. Here is how-

AI-Driven Content Generation

In today’s world, you can’t satisfy your audience with the bare minimum content. Now, eye-catching graphics, spine-chilling storylines, and engaging storytelling are the criteria for success in the OTT and entertainment industry landscape.

AI tools are now assisting content creators in content creation, automating repetitive tasks such as adding effects, creating stunning visuals, and editing. AI-powered tools can automatically generate subtitles in multiple languages, making content accessible to a broader global audience.

Generative AI platforms like OpenAI’s Sora, Lumeira (Google), and Runway’s Gen-3 Alpha offer a multitude of ways to make your storytelling interactive. Using tools like ChatGPT and the help of prompt engineering, you can save time in creating the next blockbuster script.

Automating Content Curation

From the previous sections of this blog, we’ve explored how AI in OTT facilitates content personalization by analyzing watch history, search behavior, and clicks. It also empowers OTT platforms for content curation. It helps in curating content libraries dynamically and responding in real-time based on trends, user feedback, and regional preferences. It keeps content offering fresh and relevant content.

On the business side, AI is just as valuable. It identifies patterns in viewer behavior, which helps platforms decide what content to produce or where to invest. It also brings attention to smaller, lesser-known titles, giving emerging creators a better chance to reach their audiences.

AI in Video Quality Enhancement

Almost all top OTT apps share a common feature: high-quality streaming and smooth playback. Wondering how? Yes, there is an AI for that. AI technologies enable OTT platforms to enhance video quality.

For video quality enhancement, Machine Learning algorithms are pivotal. Intelligent upscaling occurs through the analysis and learning from data, prediction, generation of details, and frame-by-frame enhancements. Learning from pixel patterns, AI/ML algorithms analyze pixels and frame information to identify missing details and produce high-resolution videos.

Operational Benefits of AI for OTT Platforms

AI has simplified things for various industries, and OTT is no exception. The advantages of AI in OTT platforms are marvelous. Let’s explore what are these:

Streamlining Content Delivery

High-quality streaming is in demand due to easy access to modern devices that support 4K video streaming. AI algorithms adaptively optimize the bitrate and video quality compatible with the device’s capability and internet bandwidth. It also ensures optimal compression, maintaining the quality.

Integrated Artificial Intelligence in OTT platforms, optimizes content caching, and leverages edge computing. Simply put, predicting the content popularity in a specific area, pre-positioning the content to the server located nearby. In turn, it reduces latency and buffering and delivers content promptly. Other benefits are identifying content delivery errors and minimizing disruptions.

Predictive Analytics for Content and User Engagement

For business success and improvement in existing practices, it is essential to know how the audience interacts with your OTT platform. AI applications in OTT help monitor real-time user behavior, including actions such as skipping, replays, playback/pause, and early exits. This predictive analysis helps in gaining user preferences and tailoring content offering that matches the intent of users.

One of the best examples is platforms like Disney+ that leverage AI algorithms to analyze user behavior, engagement metrics, content interactions, heatmaps, and more.

Reducing Operational Costs

Automation is one of the top benefits of using AI applications in OTT. Although AI works behind the scenes, it reduces significant operational costs (up to 50% compared to manual operations) via automatic tasks such as content tagging, adding subtitles, localizing content through automated dubbing, monitoring video quality, answering user queries through chatbots, and more.

AI in Improving User Experience and Engagement

There are a myriad of entertainment options available and people can choose any one of them. To stay competitive in intensified OTT market competition user experience and engagement can’ be ignored in any case. That is where AI comes into play, improving the experience and engagement.

Voice Recognition and Smart Assistants

When you say, “Play the next episode,” your smart TV obeys your command. The science behind this obedience is AI-powered voice recognition, where NLP (natural language processing) enables OTT systems to understand what users want. What’s cool is that, with time, smart assistants don’t just get sharper—they start picking up on your accent, what you like, even when you’re probably asking for the same thing again.

Real-Time Content Customization

AI/ML algorithms learn from the data generated by what you watch, when you pause, where you drop off, and when you replay the scene. All the data generated from these actions is enough to enable the system to learn and tailor the content to match your preferences.

Predicting and Preventing Churn

AI helps in retaining customers by reducing churn, and that is a silent exit. AI in OTT identifies the pattern when a user stops ignoring notifications, stops logging into their account, leaves their favorite movies or shows without watching them completely, and there is no sign of any activity by users in their account.
Once you identify all these, you can send tailored discount offers and personalized messages and improve your platform to reduce churn rates. After all, retaining the existing one is beneficial instead of finding new users.

Challenges and Ethical Considerations in AI for OTT

Now we have seen the brighter side of integration of AI in OTT platforms. But, in reality there are certain challenges associated, which need to be addressed. The pitfalls include:

Data Privacy and Security

AI systems are data-hungry, and they need vast amounts of data, whether for predictive analysis or hyper-personalized content recommendations. The OTT apps contain sensitive data, such as email IDs, contact numbers, payment information, viewing habits, payment methods, and others. In the absence of data privacy and security, data collection may raise critical issues, and handling such data presents a significant challenge.
A data breach could expose sensitive data to unauthorized use and compromise the trust between the platform and its users. High-grade encryption and data security are essential to mitigate data privacy risks and should be considered your top priority.

Algorithmic Bias and Fairness

AI systems function by learning through data, and what they consume is essentially data for them. Suppose data reflects societal biases based on race, gender, and community; it can break the harmony. It is a challenge to mitigate the biases and maintain fairness. Through careful attention to the training data, identifying potential biases, monitoring outcomes, and implementing techniques for complete transparency and bias mitigation is the only solution.

Balancing Automation with Human Creativity

AI can help you automate tasks such as tagging, generating automated subtitles, content localization, identifying trends, optimizing streaming quality, and more. Still, human creativity is irreplaceable.

Using AI in streaming platforms, you can incorporate ingredients into your script or content that have a core connection with your native culture or community. Maintaining a good balance between AI and creativity is the only solution, as creativity originates from people, not algorithms.

The Future of AI in OTT: What’s Next?

The AI in OTT platforms is an evolving landscape and there are several emerging technologies that have the potential to revolutionize how content is delivered and consumed. So, here are some aspects that you should know about the future of AI in Over-The-Top platforms(OTT).

Emerging AI Technologies to Watch

Don’t be surprised after knowing that your top competitor Netflix uses AI in 20 different ways. It is just one example, other top platforms are also focusing on emerging technologies to be the next wave of innovation.

Deep Learning, Machine Learning and Neural Networks

Future technologies will accurately drive content recommendations, hyper-personalized viewing, dynamic adaptation, and content streaming. Machine Learning and Deep Learning’s continuous improvement will especially bridge the gap between accurate delivery and viewers.

AIGC aka AI Generated Content

AIGC is in its early stages but is rapidly growing, top examples include AI-generated movies like Where the Robots Grow and Next Stop Paris (Rom-Com). In the future, AI will assist OTT content creators with automated trailers, personalized short films, dynamic subtitles/dubbing, and assisted script writing/storyboarding.

Augmented Reality and Virtual Reality

IMAX-like experience at home? Hypothetical now, but a future reality. AR/VR evolution will fully transform viewing, transporting viewers into immersive story worlds where they’re virtually part of the narrative.

Voice and Visual Search

The AI, NLP, and computer vision-powered voice and visual search will elevate the user search experience to the next level, allowing viewers to stream their favorite shows with a simple voice command and play scenes by simply showing stills from the movie.

Blockchain Integration

Although not exactly AI, blockchain technology will be increasingly used in conjunction with AI to enhance rights management, content security, and open communication between platforms, authors, and viewers.

The Long-Term Impact of AI on OTT Providers and Consumers

AI in OTT continues evolving and it is beneficial for all i.e., consumers and service providers.

For Customers

• Hyper-Personalized Experience: Viewers have a myriad of options to watch their favorite content tailored to their preferences.
• Improved Content Quality and Accessibility: AI-powered streaming and localization enable users to have an enhanced viewing experience. Additionally, localization of content through automated audio dubbing makes content easily accessible to a global audience.
• Interactive Experience: The integration of technologies such as AR/VR, voice recognition, and smart search will provide more interactive ways to engage with the narrative.
• Efficient and Responsive Services: AI-driven optimized streaming infrastructure and customer support will lead to smoother OTT services.
• Enhanced Search: NLP-powered search functionality will lead to faster discovery and improved search, allowing viewers to easily find what they want to watch without wasting a minute.

For OTT Providers

• Enhanced Operational Efficiency: AI helps automate more processes related to content creation, curation, and moderation while also reducing operational costs.
• Competitive Edge: Leveraging AI, OTT platforms have a competitive edge by producing and distributing personalized content to a broader global audience. OTT businesses will have high acquisition and retention rates, offering seamless experience.
• Strategic Decisions: Deeper, data-based insights will be offered by analytics driven by AI. This enables OTT brands to strategically scale more quickly and make well-informed decisions.
• New Revenue Streams: Through dynamic ad insertion, targeted marketing campaigns, personalized content offerings, and immersive viewing experiences, OTT platforms will have new revenue streams.

How The NineHertz Can Help You in OTT Platform Development?

The NineHertz is a company focused on creating trendy OTT apps powered by AI, always looking for fresh ideas to lead the market. Our team comprises talented developers, designers, and quality experts who are well-versed in the intricacies of the OTT space.

Our OTT app development services are designed to create high-quality entertainment solutions that focus on personalization and immersive user experiences. Utilizing our proven expertise, we can help you develop an OTT platform that targets a global audience offering localization features.

The NineHertz can help you scale faster with cost-effective OTT solutions. Through years of experience, we have identified opportunities to reduce overhead costs that impact the efficient use of the project’s budget.

Conclusion on AI in OTT Apps

Users make their decisions in fractions of a second, and your competitors are already targeting their audiences. Integrating AI into OTT platforms can help you seize more opportunities and unlock the hidden ones. It can help you create an immersive entertainment experience, automate tasks, improve operational efficiency, and reduce cost to build a video streaming app.

Although there are specific challenges associated with integrating AI applications in OTT platforms, companies like Amazon Prime, Netflix, YouTube, and Hulu are all leveraging AI to enhance user engagement and satisfaction. You can also implement with the help of an experienced OTT platform development services provider like NineHertz.

If you’re looking for OTT app development, we’re your go-to partner. So, when are you planning to launch the next sensational OTT app?

FAQ’s on AI in Streaming Platforms

1. How much does it cost to develop an OTT app?

There is no straightforward answer to how much OTT app development cost, as the price depends on several factors. The factors include the complexity of ideas, features and the integration of technologies such as AI, AR/VR, and others. However, the average cost to develop an OTT app starts from $30,000 to $150,000+.

2. What are the 5 most successful OTT apps worldwide?

The worldwide top-5 OTT apps are:

• Netflix
• Amazon Prime
• HBO Max
• Disney+
• HULU

3. What are the benefits of AI in OTT?

• The potential benefits of AI in OTT are:
• Personalization
• Automated content curation and management
• Improved user experience
• Globalization
• Better operational efficiency and more.