The expanding market for over-the-top (OTT) services continues to reshape the consumer-video landscape, putting increasing pressure on traditional pay TV providers while creating an ever more crowded and competitive field of newer players. In the following Executive Insights, L.E.K. Consulting sizes up some of the top platforms vying for online video supremacy, including perspectives on how the current pandemic will impact key players, as well as strategies for entrants seeking streaming success in the years ahead.

The past decade brought a seismic shift in the world of video as consumers increasingly opted out of pricier pay television packages in favor of lower-cost (and in some cases, free) OTT services. At last count, top providers Netflix, Hulu and Amazon Prime Video had a combined U.S. subscriber base of around 130 million and counting. But the “Big 3” of OTT have plenty of company — today, there are well over 100 different streaming services, covering niche topics like indie films and auto racing as well as vintage TV programming and more.

Some big names are set to launch imminently, including NBCUniversal’s Peacock and HBO Max. They join recent entrants such as short-form specialist Quibi, Apple TV+ and Disney+, the latter of which is already making a major splash with its well-stocked library of back-catalogue feature films and TV shows (including Disney classics) and original titles such as “The Mandalorian.”

Though the market may appear overextended, such services are in fact more popular than ever: According to Leichtman Research Group, roughly three-quarters of all domestic households currently maintain at least one OTT service, a nearly 45% increase in the past five years. L.E.K.’s own research found the average U.S. household now subscribes to approximately 2.8 subscription video on demand (SVOD) services, up 9% from a year prior. The COVID-19 crisis and associated lockdowns are further fueling demand — in a recent analysis by Morning Consult, 19% of respondents stated they would spend more on movie and TV streaming due to the pandemic.

OTT gains continue to come at the expense of traditional multichannel video programming distributor (MVPD) services: Recent data from MoffettNathanson shows approximately 81 million MVPD households in 2019, down roughly 17% from more than 98 million just five years ago, and many analysts, as well as L.E.K.’s proprietary consumer research, suggest there are more declines to come. Convenience, breadth of content and compelling value continue to drive OTT consumption, with demand stemming in large part from younger viewers, who continue to tune out pay TV in favor of OTT — according to our estimates, millennials currently subscribe to 4.6 different SVOD services, not counting the various free ad-based video on demand (AVOD) services they use.

Netflix still reigns supreme

With over twice as many subscribers as Hulu or Disney+ and at least 20% more than Amazon Prime Video, Netflix remains the streaming king, serving approximately 61 million U.S. viewers as of year-end 2019. How has the company managed to maintain its edge? By keeping consumers satisfied with both high-quality content and a large selection of options. Our recent TV/OTT Consumer Study found that 58% of subscribers with multiple SVOD services considered Netflix the least expendable (see Figure 1).