April 24, 2014

'OTTnado' - Streaming TV's Breakout Year-in-Progress


While hardly as scary as a shark storm, strong winds of change are sweeping through the over-the-top (OTT) TV services space. That’s because several pay-TV providers appear to be adopting a, “if-you-can’t-beat-them-join-them” strategy that harnesses huge growth in high-speed Internet subscribers – growth that blows away any gains in new TV subscriptions.

This approach can be traced to Verizon teaming with kiosk movie and game renter Redbox to launch a streaming service last March. Then it bought CDN Edgecast and Intel Media. Just a few months ago, DISH Networks also announced plans for an affordable OTT service with movies TV and sports content from ABC Disney and more content owners.

Only days ago, AT&T announced the possibility of delivering 1Gbps broadband to 22 major metro areas, followed by a $500 million commitment with The Chernin Group to deliver online video offerings via a joint venture. Now AT&T has revealed a gigantic first quarter for broadband, reporting over 600,000 new subscribers in three months. AND it added roughly 200,000 new u-Verse TV subscribers in this same period. Connect the dots.

OTT Pioneers Advance

But pure-play OTT service providers are hardly standing still as is evidenced by Amazon’s exclusive deal with content giant HBO to add punch to the e-tailer’s Amazon Prime video service in the form of current and past original series – the most coveted content – movies and more. This comes after the company announced its multi-faceted $99 Amazon Fire TV set-top box, through which multiple OTT services are available.

OTT pioneer and innovator Netflix  also announced a $2 a month price increase for new subscribers, citing original series such as House of Cards as the reason.

Taken as a whole, this evolving trend promises a break of the logjam that’s leading to the widest and deepest selection of OTT options to date for consumers

And being this is the TV/video industry, change seems to be a daily constant.

Aereo? TBD

In fact streaming disruptor/upstart Aereo and the TV broadcasters that want it gone for using it’s over-the-air local market TV transmissions without compensation as the core of their popular $8 a month service, had their first day in front of the Supreme Judicial Court Tuesday to be followed in weeks by a ruling that itself portends to redraw the TV landscape for decades to come.

While countless experts say the outcome is too close to call, one industry forward thinker is thinking beyond the highly anticipated court decision,

“If Aereo is successful, their business as it exists today, won’t last long. I believe the technology would be acquired quickly by Netflix or Hulu so that they could add in live streaming TV capabilities to enhance their content library,” said Jeff Heynen, principal analyst, Broadband Access and Pay TV at Infonetics Research, Inc. “At that point, Netflix clearly becomes a direct threat to existing pay TV providers. And then the next round of court cases will occur wherein Comcast, AT&T and others will argue that Netflix, because it can reach every media market in the US, which gives them an unfair competitive advantage.”

If the ruling goes against Aereo, TV broadcasters will still need to embrace innovation and change rather than cling to an outdated model certain to be threatened again or rendered less relevant as evolution encircles the status-quo vertical industry. It’s that approach that got them into their current predicament with Aereo in the first place.

More TV Choices, Finally

While it appears that OTT content choices make the customer king of choices in a fast-expanding field of TV viewing options, it’s often the courts who are king in deciding/ or passing on the future or fate of the participants as players. That has been the case in the past, will be the case with Aereo, and will factor with the DOJ in determining whether Comcast will be allowed to acquire its closest U.S. cable rival Time Warner Cable and become more of a media conglomerate with ownership of content (NBCU), distribution, sports programming and much more.

OTT Time Machine

Though it doesn’t take folks back as far as its hot tub counterpart, the OTT time machine need only bring consumers back a few years ago when the list of OTT subscription/ad supported/free choices  included Netflix, Hulu and Hulu Plus and Amazon Instant Video and Amazon Prime.

It was possible then to make you own OTT sundae as an alternative to traditional pay-TV services as offered by cablecos, telcos and satellite service providers. Although the resulting dessert was far less expensive, it lacked key ingredients such as live sports matches and local-market TV channels. And until Netflix launched its $100 million House of Cards original programming series starring Kevin Spacey, the most coveted non-sports content – series – was missing as well.

Fast Forward

What the TV landscape will look like two years from now is anyone’s guess. What we have been witnessing in recent months is accelerated advancement of OTT offerings from those who initially banked solely on traditional pay-TV subscriptions packages such a DISH, AT&T and Verizon.

Concurrently, the pure-play OTT services are off to the evolution races, innovating at a pace largely unachievable by its legacy service competitors. Then there are wildcards such as Aereo and mergers that will likely be decided on before June. Politicians and judges will also play a role in the re-scaping of the TV industry landscape.

Conspicuously absent from the OTT discussion are key cable companies. While Comcast offers Streampix, it’s a $4.99 a month add-on designed as part of a TV Everywhere strategy to stem cord cutting. Online TV initiatives from largely newer, non-cable competitors could result in a cable view of online video as part of a customer acquisition play.

In the meantime, the need for Internet speed at levels unthinkable a few years ago, continues to fast forward, providing a rock-solid foundation for a growing broadband economy. That super high-speed foundation will support a widening and broadening OTT services industry providing consumers the choices for which they have long wished and waited.

The future is bright and coming fast. Grab your shades and stay tuned.




Edited by Stefania Viscusi



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