Authored by Damien Lucas, Co-Founder and CTO
You may like it, you may hate it. Either way, OTT has become a key aspect of the TV delivery equation, with heavy implications for all operators both from a business and technical stand point.
This means all players in the field (content owners and producers, as well as delivery networks and Internet service providers) are now facing some strong new challenges that will have a direct impact on their business models.
No strings attached
What is OTT ? In a nutshell, the acronym refers to all situations where users access online services that they select independently from those offered by their service provider. Think WhatsApp for text messaging, Skype for VoIP, as well as Youtube, Netflix or Molotov for watching video. By cutting the cord and looking beyond their service provider’s selection of TV channels, replays, and pay per view content, users are often opening up a world of possibilities for themselves.
This means new business opportunities for content owners (think USA’s Netflix or France’s Canal Plus with its myCanal on-demand TV offering) but new issues to face for distribution networks and service providers who may see their customers gradually shy away from their packaged Internet + TV + phone offerings and prefer the cheaper basic Internet only plans, as they increasingly decide to purchase their TV content separately.
Content is king
For service providers, this means jumping into the content arena and developing their own original and competitive offering, to keep up with the legacy content owners. This battle started years ago, with service providers developing their TV offering such as France’s Orange with its OCS (Orange Cinéma Séries) package, available over satellite, cable, IPTV and OTT. OCS started as early as 2008 with content licensed from networks like HBO or Sony Pictures Television and it is now producing original content just like Netflix, Amazon or Hulu are doing. This ongoing movement is now leading to huge deals. In 2015, ATT acquired DirectTV for as much as $50 billion. And Apple has recently put $1 billion on the table to produce at least 10 new TV shows in the coming year (over the same timeframe, Netflix will spend $8 billion and Amazon $4.5 billion).
The same dynamic can be seen in the way operators are competing to acquire exclusive sports rights.
So is multiscreen
But the battle goes beyond content alone. Indeed, OTT carries massive opportunities for both content owners and service providers to differentiate by providing advanced on-demand TV services such as multiscreen (viewing content from a TV, as well as laptops, smartphones and tablets), replay, pause, program bookmarking, etc. These services alone have proven to offer a business model of their own, even without original content ownership, as France’s Molotov (now one of Apple’s number one app downloads) has successfully demonstrated.
For content providers, the challenge is also a marketing one. To attract customers faced with a fast growing selection of content delivery plans to choose from, providing a one size fits all proposition is not enough. Neither is offering basic variations, with a sports or entertainment flavor.
Operators must ramp up and leverage their online marketing resources to gain full understanding of their customer base and target individual customers with personalised propositions fitting their exact tastes and needs. This includes the movies and series a user prefers, even on an episode by episode level. This also leads to initiatives such as the Weather Channel’s personalised weather reports, covering a specific selection of users locations.
With the adequate underlying OTT server software running the show, possibilities are endless for operators who will have selected the right infrastructure.
In this next article, we look into the technical implications of leveraging the new frontier that OTT has now become.