Monday April 26, 2010 – Antonette Goroch
Over-the-Top (OTT) content, referring to content delivered to the TV over the Internet, exclusive of any pay TV content package was as hot a topic as was 3D at the recent NAB show and well it should have been. The trend is causing plenty of hand wringing and opportunity searching – a sure sign of big business shifts to come.
The trend was well illustrated with the current wave of Internet connected CE devices, such as TVs, STBs and virtually every other device with some connection to the television, on display on the show floor. Fear of piracy and lost revenues had previously kept content providers from allowing quality brands and shows outside the walled gardens of pay TV systems, but with the convergence of TV and Internet now a mainstream reality, attitudes are changing—and threatening those very same walled gardens with new competition.
Indeed, over the past year, major content providers, such as NBC Universal, Fox Broadcasting Co., CBS Corp., and ABC Inc. have shown themselves to be both willing and able to take advantage of OTT through sites such as Hulu and YouTube, as well as content hosted through their own sites via services such as Veoh Networks--pushing Internet video usage to new heights. Many in the industry are quick to brush this “threat” off, saying that OTT content isn’t an adequate replacement for multichannel pay TV packages in either breadth or quality of service.
But such pronouncements miss the point: The landscape for the delivery of television content is changing, and both business models and value chains will change along with it, like it or not.
There are a handful of pay TV operators rising to the challenge, seeking to forestall their own obsolescence through initiatives that integrate OTT as part of the pay TV experience. Examples include several European operators, such as BSkyB (DTH satellite) and Free Telecom (IPTV), who offer “catch up” TV and on-demand access via the Internet to subscribers.
Most of the mature multichannel markets are all ready fairly stagnant in terms of new subscribers, and even a small decrease in subscribership will be costly to pay TV operators already scrambling in a competitive multiplatform environment. It is likely that success will ultimately come to those who can see OTT as a competitive opportunity—not a threat.
