The current surge in OTT is lending a unique opportunity for pay-TV operators to partner with former rivals to boost their relevance.
Responding to the surge in over-the-top (OTT) viewership is a dilemma for cable companies everywhere. Many of them provide the very broadband infrastructure over which OTT services such as Netflix are actually delivered to homes.
There’s no doubt that OTT video options have been gaining ground on traditional cable packages. According to Nielsen, the share of US households with TV and/or broadband access that also subscribed to at least one OTT service rose from 36% in 2013 to 40% in 2015.
“Playing catch-up with OTT providers (ie, directly competing with them) has been the most common strategy for dealing with the ongoing change in media consumption habits,” said cable TV security and content aggregation firm Evolution Digital, in a blog.
“However, a smarter plan of attack may be to embrace OTT content and become, in effect, an aggregator of viewing options for your end users.”
Becoming the main portal for all video sources has a number of back-end advantages. For one, offering OTT plus traditional TV provides a huge set of options to customers. But also, many of the same broadcast and cable channels seemingly threatened by the rise of Netflix et al are also among the biggest sellers of content to those OTT providers.
Meanwhile, hybrid STBs/media hubs can provide both regular TV service and OTT options, offering an opportunity for differentiation. Plus, by adding in OTT alongside standard TV, cable providers can begin the gradual migration away from legacy STBs. Hybrid IP STBs feature a QAM tuner alongside an IP port, allowing for cable and OTT services to exist side by side, and pave the way for shifting from legacy delivery models build on QAM etc to more modern ones that use the versatile Internet protocol suite.
“These [legacy] devices make up a large chunk of operators’ CAPEX on customer premises equipment,” Evolution Digital said. “Plus, they are usually only equipped to transmit via QAM, and have rigid, clunky user interfaces, which do make them very future-proof in a world in which end users have come to expect OTT-like experiences.”
Overall, adding OTT into the mix can translate to reduced churn, a superior user experience/interface and the ability to lower CPE-related costs such as maintenance and extensive development cycles – all of which are good for the bottom line.
There are numerous advantages to switching to IP, including the ability to target a variety of desktop and mobile devices, use software-based network controls and provide a better interface on hybrid STBs.
“Moreover, IP is what OTT video services and many other popular applications (eg, ones for VoIP telephony and instant messaging) already use to ensure the fastest and most efficient distribution of their content,” the firm concluded. “Acting as an aggregator of cable TV and OTT enables cablecos to keep pushing their IP transition initiatives forward, with the hybrid STB a crucial step en route to all-IP distribution down the road.”