Media & Entertainment Industry Trends, Technology and Research

Over the Top OTT ; Is it for real? Part I

Posted In Future of Media, New Media, OTT - By Nitin Narang on Monday, January 17th, 2011 With No Comments »

Is OTT becoming a reality? Are customers ready to switch off their Pay TV subscription and jump on the OTT bandwagon or is it seen more as a complementary service. In this Part I, let us understand the current landscape, what exactly is OTT and its current set of challenges

Over the Top Ecosystem Players

Over the Top Ecosystem Players

Current Landscape: With the convenience of anytime viewing through catch up service and Video on Demand (VOD) gaining widespread acceptance, consumers are increasingly using online services like watching movies from Netflix , Amazon VOD, YouTube, iTunes and Hulu to satisfy their media consumption needs. Internet is fast becoming a preferred content delivery medium for all types of video content including catch-up TV shows, movies-on-demand and user generated content.  In addition the new entrants like Google TV, Boxee , Roku and other connected TVs are opening newer and hassle free avenues for faster and wider online media consumption.  In summary Internet TV is bringing a change in our viewing habits and reducing dependency on time bound, passive and broadcaster mandated viewing to user controlled, active and anytime viewing. Leading research also estimate exponential growth in this segment with Cisco’s Visual Networking Index (VNI) predicting that by 2010 the global online video community will surpass 1 billion users and by 2014  the sum of all forms of video (TV, VoD, Internet video, and peer-to-peer) will continue to exceed 91 percent of global consumer traffic.

But what is OTT? Anything delivered over the Internet but not as a part of the carrier’s video service (but on the public Internet) is defined as Over-The-Top – In other words it is same old Internet TV but making its mainstream entry with consumption targeted for video consumption (using IP connected TVs, hybrid set tops, game consoles, blu ray players, smart phones etc). At a broad level OTT can be characterized under consumer paid and ad-sponsorship based categories with services like content purchasing (e.g Amazon VOD, iTunes etc), rental (CinemaNow etc) and subscription (Netflix etc) under consumer paid business model while ad embedded services like Hulu, Movielink falling in the later

OTT Challenges: On one hand the rapid growth in OTT is facilitating increased media consumption while on other it is increasingly adding more IP traffic which presents significant economic and performance challenges having profound impact on Network infrastructure and established content delivery business models. A recent estimates establishes that 20 percent of all Internet traffic during the typical American evening is been driven due to Netflix service which is largely an OTT service. Few challenges which continue to plague OTT are

1. Quality Assurance

Over-the-top service cannot provide quality guarantees, as they have no control over the quality of service provided by the networks that carry their services to the consumer.  While this may work for free services it puts serious issues for paid consumption. In this regard OTT differs from institutionalized IPTV service (or Telco TV) which operates in a walled garden ecosystem ensuring reliable and quality service.

2. Revenue and running expenses through ad supported syndication is still a challenge for free service providers. 

Although network service providers incur cost and play a significant role in content delivery, they are bypassed in terms of revenues in the over-the top delivery model, this had resulted with issues in the past between Video Content distributors and Network service providers e.g. Comcast and Netflix . Hence some logical understanding and revenue share among the key player will be essential to ensure service continuity

3. Lack of Live Programming

OTT is largely associated with on-demand content (replay of aired content), movies and TV shows through content aggregators and vast user generated content but faces limitation with absence of live (linear) programming

4. Content Repurposing and Device Support
Repurposing  of content for multiple connected devices is a critical concern area for publishers, media companies and application developers

About - Digital Media Technology Consultant. I have passion for TV technology, digital convergence and changing face of Media and Entertainment industry.