ABI: Service Providers Embracing OTT Video
According to ABI Research, service providers are decreasing marketing on their cable, satellite, and IPTV products that offer managed quality ...
According to ABI Research, service providers are decreasing marketing on their cable, satellite, and IPTV products that offer managed quality of service (QoS) in favor of new products that use over-the-top (OTT) technologies to compete with Amazon (NASDAQ:AMZN) and Netflix (NASDAQ:NFLX). With OTT competition significantly increasing in mature pay TV markets, ABI forecasts that live linear OTT video services will grow to approximately $7 billion dollars of worldwide revenue by 2021, from a little more than $1 billion in 2016.
The most recent OTT service launch is DirecTV Now, an AT&T (NYSE:T) national product with live linear TV. "These services meet the consumer demand for anytime, anywhere programming and mobile-centric viewing while targeting a larger national audience," said Sam Rosen, managing director and vice president at ABI Research. "The services fit within carriers adopting mobile-first mindsets as mobile subscriber bases and revenues exceed fixed line revenues, largely due to per-consumer as opposed to per-household connections. This helps win the battle for exclusive content rights, but poses strong technical challenges."
Among those technical challenges are developing robust content management systems, video transcoding and storage pipelines, application ecosystems, and piecing together adequate video distribution networks. Others include QoS assurance, network congestion management, content protection including analytics-based protection, such as modules which limit password sharing, and business analytics. As mobile video consumption increases, mobile operators are exploring policy-based approaches to meet customer expectations and manage the effects of video services on mobile data caps.
The technical challenges are so significant that many operators have made significant investments in technology platforms. AT&T/DirecTV purchased Quickplay Technologies to gain better control of its OTT launch. Even so, some outages occurred as the platform scaled. Disney took an equity stake in BAMTech (formerly MLB Advanced Media) to have better strategic control over its syndication platform.
"Despite the technical challenges, OTT services help pay TV operators attract cord-cutters with a cheaper pay TV alternative, as well as next-generation customers who never planned to subscribe to a traditional pay TV service," said Khin Sandi Lynn, industry analyst at ABI. "Live OTT services, particularly sports packages, continue to gain the most traction, as they allow customers to watch the same live programs that they receive through pay TV services at a fraction of the cost."