An estimated 50% of US households are expected to opt for streaming services over traditional pay-TV services by 2024. Currently, up to a third of these households are expected to cancel their multichannel subscriptions offered through traditional pay-TV services, a phenomenon referred to as cord-cutting.
Thus, 2024 is the likely tipping point when streaming services are expected to eclipse traditional pay-TV services. The continuing adoption of technology, especially in households through connected devices and the Internet of Things (IoT) has also fueled the rise of streaming services, which bypasses the need for cable, satellite and broadcast TV, hence the name over-the-top (OTT) media services.
Internet-connected streaming services provide subscribers with a vast library of content across several channels. The industry is fast-growing with Roku TV, Fire TV from Amazon, and Apple TV. With more subscribers opting for OTT streaming services, the industry players continue to record huge revenues. In 2018, Roku’s advertising revenue exceeded its revenue from the sale of devices like streaming sticks and set-top boxes. This revenue is projected to double, with growth fueled by ads on its streaming platform.
Targeted Advertising
More often, companies have sought to learn the behavior of their customers to learn more about the preferences of the customers and improve their products to meet customer demands.
However, with technology, learning consumer behavior has resulted in easier targeted advertising using complex analytics of internet users’ behavior while online. Streaming services opt for advertising as a way to complement their revenue and it is proving to be an effective model for these firms.
Just like other large social media platforms and search engines, streaming services track their users’ behavior to evaluate the streaming patterns and determine the users’ preferences and send targeted ads their way.
OTT streaming services have resorted to making hardware affordable, aiming to monetize their operations through ads. The streaming platforms support third-party applications and allow trackers from these apps to track users’ viewing habits. From these trackers, a virtual profile is made from the viewer’s habits and used to deliver ads that would most likely be relevant to the viewer. However, little is disclosed by the streaming platforms about how much data the trackers collect.
The Tracking Process
Until recently, there was little research on the OTT streaming platforms’ tracking ecosystem. One research by Princeton University and the University of Chicago in 2019 focused on Roku TV and Amazon Fire TV’s extensive tracking activities. The streaming platforms allow trackers on various channels to send data to apps regarding the viewer’s activities. For instance, in the research, one of the channels offered on Roku TV sent the device’s ID and the title to the video watched by the viewer to an online video ad platform.
Amazon Fire and Roku TV combined have the largest market share of the OTT streaming platform industry. Like websites and apps, these platforms have resorted to collecting users’ information and sharing it with little regard for your privacy.
This was the case when SmartTV manufacturer, Vizio, was fined and settled the lawsuit for $17 million for spying on users’ watching habits. In the study by Princeton University and the University of Chicago, each streaming service had 1000 of its channels tested for viewer tracking. In the results, 69% of traffic was identified to be known trackers on Roku’s platform and 89% on Fire TV’s platform.
Reviewing the trackers’ prevalence, Google’s doubleclick.net was identified in 975 of the 1000 Roku channels tested, while Amazon’s amazon-adsystem.com was in 687 of the 1000 channels tested. At least 18 known trackers appeared in 100 or more channels of the 2000 channels tested for both platforms. Among the information collected by these trackers include the device serial number, Ad-ID, MAC address, device name, and even your WiFi’s name.
Data Privacy Efforts
Both Roku and Fire TV offer options for viewers to limit tracking while using their devices. The options to limit tracking are initially set off until opted in by the user. The findings of the study also revealed that when Amazon’s option to “Disable Interest-based Ads” is turned on by the viewer, the device reduced the number of requests to its ad system. Also, trackers collecting Ad IDs reduced significantly. However, the trackers continued collecting other information as before. This means that WiFi SSID, device serial number and other important information could still be collected by the trackers.
For Roku TV’s “Limit AD Tracking”, turning on the option did not show any significant restrictions to tracking activities as the number of contacted domains by the trackers increased and leaks with device serial numbers remained the same as before opting to limit ad tracking. Both major OTT streaming platforms are showing little regard to their users’ data privacy, providing vague options to decline or limit tracking on their viewing behavior. Despite these companies viewing the tracking as significant and a convenient way of tailoring ads for viewers, the process exposes users to more threats in the cyber world.
More Studies, More Worries
Another research by Northeastern University and Imperial College London assessed the extent of lack of privacy for consumers using IoT devices. The study evaluated the level of consumer privacy between the US and UK, providing similar findings to the Princeton University and University of Chicago findings.
However, the level of privacy was higher in the UK due to stricter regulations on data protection. One shocking surprise in the second study was the consistent contact of the devices with Netflix even without the TV being configured with any Netflix account. This finding shows the pervasive nature of third-party apps and trackers on OTT streaming platforms.
Looking Forward
The streaming service industry is undergoing steady growth and with the expected growth of new subscriptions, it is essential to incorporate data privacy regulations for market players to help protect users.
Web browsers offer various privacy options including private browsing, and with regulations such as the European Union’s general data protection and regulation (GDPR), data privacy is greatly improved. Implementing similar regulations for players in the streaming service industry will provide users with simple and clear ways to opt-in or out of intensive ad tracking.
By offering better controls over users’ data privacy, these streaming platforms gain the public’s confidence in the product. Most of the current market players are looking to monetize their businesses based on advertising. However, sooner or later, one player is likely to bring an edge to competitors by offering privacy-focused OTT streaming services. How the market reacts to it will show the demand for privacy-focused services.
Conclusion
Streaming platforms are finding new and affordable ways to make revenues off their operations. Advertising has proven to be very profitable for service providers who offer barely any effective privacy controls for their users.
The dire need for a privacy-focused platform will cause either the players to redesign their operations or cause a new entrant into the market to offer such services. These streaming service platforms must continue to adapt to market demands and offer services that viewers are willing to purchase. Not only will the market fully eclipse traditional pay-TV but also offer the market with value-added TV viewing, that is secure, convenient and more affordable.
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Last Updated on February 3, 2021.
