Media & Entertainment Industry Trends, Technology and Research

Over the Top (OTT) – Is it for Real : Part II

Posted In Featured, Future of Media, OTT - By Nitin Narang on Monday, February 28th, 2011 With 1 Comment
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 II, let us review opportunities and envisioned future of OTT.
OTT as a concept is not new but had been synonyms with low quality content and largely restricted to PC audience but more recently OTT has started to make it presence felt while simultaneously opening new monetization opportunities and to an extend challenging existing Pay TV models. Future of OTT seems quite opportunistic with several research publications like in-stat research predicting two-thirds of US broadband households to access OTT video, generating over $20 billion in revenue in next 5 years and similarly MRG research anticipating OTT video services to grow from $1 billion in 2010 to over $20 billion by 2014. With increased availability of HD content, newer Over the top service launches and growth in numbers of connected devices (like game consoles – Xbox, blu-ray player, tablets, Set top boxes, connected TV and smart phones) capable of content consumption, OTT is enjoying exciting interest among consumers and  ecosystem players.
Over The Top Video Ecosystem

Over The Top Video Ecosystem

OTT as a platform is changing user’s consumption pattern by offering convenience of On-Demand and Catch-up TV coupled with lower cost which is testing dominance of video providers in cable, satellite and IPTV based delivery channels. While OTT services are positioned to benefit consumers, it has also opened newer business models and revenue streams for content creators, aggregators and distributors to directly deliver video programming to consumers.  A quick overview of key players in this landscape are
1. OTT Content Providers: Paid OTT content available as bundled on-demand packages through providers like Netflix, Amazon VOD, Hulu Plus, Play On etc has seen tremendous growth which offers unlimited streaming at a great value compared to traditional Pay per view subscription. Netflix crossed 20 million subscribers with more than 7.7 million net subscribers added in 2010 alone and projected subscription base of 31 million by end of 2011. Netflix recent addition of TV shows on demand – mostly a day after they air on traditional outlets is also expected to create new waves and increased consumer interest. For consumers married to free service, Hulu offers streaming OTT content with embedded ads which has also found large subscribers
2.CE Devices: With advent of internet connected devices with seamless access to OTT content providers like Netflix etc the platforms are getting more established. While newer devices like Roku, Boxee, Google TV, Apple TV,  Sony Bravia connected TVs are generating demand existing devices (Xbox360, PS3,Blu-ray player etc) are also been repositioned to act as OTT content consumption hubs
3.Broadcasters: OTT bundled packages enabling online content is increasingly seen as an opportunity to get premium content to customers whenever they want it and on whichever connected device, thereby enabling higher consumption. Broadcasters and studios are also working aggressively to make their free-to-air programming available via internet catch-up TV services
One of core concerns of OTT sustenance had been monetization and revenue potential through advertizing. Nielsen Media research which plans to incorporate monetization potential data from tracking videos viewed on TV portals on mobile devices into its C3 ratings reports in 2011 may help alleviate this concern. Direct controlled advertizing is something broadcasters have not been able to largely benefit and OTT can bridge this gap with advanced advertising and interactive capabilities.
Although OTT landscape is maturing, in it current state it is still not established enough to meet service and comfort of Pay TV for majority of customers; but the momentum is getting built for the platform to become mainstream in days to come.  As discussed in Part 1 there exists several dependent factors which are critical to OTT success for conventional consumption with access to quality content, business model among service provider and content owners, ability to search and consume desired content, customer service arrangements, network neutrality, device cost, content ubiquity and quality assurance among others. In short, OTT has huge potential to alter the current TV business model and bring greater value for money to customers; it is only a matter of time when this change starts to become more real.

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

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