Cozying Up to OTT

1:00 PM -- Cable operators and other pay-TV service providers are starting to embrace over-the-top (OTT) video, but let's not kid ourselves here -- there's still plenty of tension between the incumbents and the scrappy streaming upstarts.

And many operators are only willing to go so far in order to make it easier for customers to obtain that content via service provider's own pay-TV platforms.

A study of 100 global service providers, OTT players and consumer electronics companies by Coleman Parkes Research and commissioned by Amdocs Ltd. (NYSE: DOX) found that 66 percent of global service providers and just 33 percent of those based in North America said they must own the customer in any partnering agreement. In comparison, just 13 percent of the device guys and 14 percent of the over-the-toppers said they'd consider ceding control of the customer experience to an outside party.

The surprising part to me is that more service providers don't see giving up control of the customer as a deal-killer. Time Warner Cable Inc. (NYSE: TWC) President and COO Robert Marcus recently said that the MSO would be open to letting customers access services via alternative platforms from the likes of Apple Inc. (Nasdaq: AAPL) -- a pretty big concession from the cable guys -- but stressed that giving away control of that customer relationship would never be on the table. (See TW Cable Open to an Apple-Flavored Guide.)

While the Amdocs study indicates that the door is at least unlocked, it likely won't be swung wide open unless the OTT side offers extremely favorable terms ("free" is probably a good starting point). And some service providers apparently won't budge on the customer-control issue no matter how much sweetener is added to the mix.

It's also becoming clear that the pay-TV stance on OTT video is softening, as 70 percent of those surveyed viewed the newcomers as potential partners. After all, customers are going to seek out the content they want with or without the help of the operator, so it makes some sense to integrate the OTT guys where possible so the customer stays engaged on the pay-TV platform.

And that attitude might be different based on the type and size of service provider. Historically, big U.S. cable operators have been relatively resistant to OTT, while some telcos, particularly those in the Tier 2/3 category, appear to be a bit more accommodating.

And I suspect we'll get a better sense on how much more accommodating that group is at TelcoTV (Oct. 24-26 in Las Vegas). And one more plug: If you're joining us there, please join me as I moderate a panel dedicated to the OTT topic on Wednesday, Oct. 24.

— Jeff Baumgartner, Site Editor, Light Reading Cable

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