Service Provider

Leveraging Over-The-Top Content and Solutions For Enhanced Business Value

Aunindo Ghosh
April 21, 2015

Over the last decade India has seen rapid growth in broadband penetration to more than 6%, boosting the uptake of internet-based solutions and applications. With over-the-top (OTT) video delivery, the PC, smartphones, tablets, gaming consoles and other consumer electronic devices are emerging as additional screens for consumption of content & content-centric applications. Options to view Time Shifted Content and on-demand videos are now available. The recent inclusion of ultra-HD content and efficient compression technologies like 4K/HEVC will ensure that more content flows through the IP pipe than ever – and one can watch TV on any IP-connected video playout device.

The expansion of OTT video delivery also offers operators the flexibility to expand subscription packages by bundling online and out of home viewing content for increased ARPU and reduced churn. It has created a scenario where operators can now extend their reach into regional and global markets and also leverage advertising to create additional revenue streams.

Prospects for the Broadcasting Industry

OTT service is a superb tool for creating a ‘personalised TV’ experience where relevant content and services can be tailored to the needs and personality of the individual consumer. New service and business models will emerge, facilitated by the integration of products and technologies in the area of DRM and multi-device connectivity, changing the way operators compete for consumer spend on content.

Operators with premium content will experiment with multiple delivery engines alongside traditional methods, whereas operators without content differentiation will focus on strategies to gain this advantage by partnering with content enablers and aggregators.

Opportunities for Pay-TV Service Providers

The changing technology landscape holds immense potential for telecom operators who may already have existing pay-TV solutions (like IPTV). They may respond to the multi-platform OTT opportunity in a similar way as satellite or cable operators, or some may consider switching their service from IPTV to an OTT video solution. This is a cheaper alternative that can extend beyond their managed network while freeing up capacity to sell more voice and broadband services, the primary offerings of Telcos.

Alternatively, mobile operators who do not have a well-established pay-TV business may see the OTT space as their main route to market video entertainment services, in many cases looking to offer Free-To-Air channels alongside pay-TV content.

The Way Forward in India

The current lack of infrastructure is the key challenge to the introduction of OTT content in India, alongside a lack of high-speed broadband services. The limited number of internet connections to TV screens and STBs and bandwidth-limited video quality are two other important factors which will need to be dealt with in the long run. The latest encoding and compression technologies like HEVC will play a big role here, but it has to match up with the growth in bandwidth-hungry applications and content consumption growth.

On the business model side – while we will continue to see content providers launching branded and standalone OTT services, there will be challenges in terms of content-variety they can provide, and subscriber acquisition costs incurred. The Telcos and pay-TV Service Providers, on the other hand, will face challenges in terms of rising content acquisition cost and ability to recover that cost from subscribers. Targeted and personalized advertisement could be a silver lining here, as both broadcasters and telcos have the consumer data, and more and more advertisers are shifting parts of their broadcast & offline ad budget towards targeted advertisement as it gives more marketing ROI. Trends therefore point towards the development of closer partnerships between the operators and content enablers and aggregators. This will create a sustainable model where more content is available for consumption on multitudes of devices, and for which content consumers will have the choice to consume ad-supported content with minimal payment, or ad-free content with higher subscription charges. In summary, newer revenue streams, innovative Go-to-Market models and a solid growth in targeted advertising revenue on OTT services, are key to a long term win-win OTT ecosystem.

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