HR Survey: OTT Experience Could Drive ISP Choice
Heavy Lifting Analyst Notes Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation 10/17/2011
Based on the survey, OTT video has become a mainstream activity, with the vast majority of respondents having viewed online video, and more than one in five viewing video several times a week. This growth is a concern for service providers for two reasons.
Firstly, most service providers are also ISPs, which means they have to cope with the increased traffic generated by OTT video. The bad news for service providers is that high-bandwidth, professionally produced content is increasingly popular, marking a significant shift from user-generated content (UGC). In fact, almost half of all respondents to the Heavy Reading survey picked some kind of non-UGC content as their most viewed genre of online video. A poor experience viewing this kind of video could affect ISP selection. Almost one in five respondents saw a poor Internet video experience as a reason to switch ISPs, while approximately the same percentage was “much more likely” to pick a provider that integrated OTT services into the pay-TV lineup.
The second concern for service providers is “cord-cutting” – that they could lose pay-TV subscribers to OTT services, and their substantial investment in IPTV would be pointless.
On this front the news is more encouraging. Opinions on cord-cutting are very mixed and few have done it to date. However, OTT services could well affect premium pay-TV options. This “cord-shaving” is much more likely than a complete termination of pay TV, but would still affect service providers since the margins on these premium services do help drive the pay-TV business model.
What can operators do? Well, there are some options. They can look at network solutions like transparent caching to handle the traffic increases on their networks, or even launch a commercial CDN and perhaps generate new revenue from delivering OTT traffic. They can extend their pay-TV services to additional platforms to cater to consumers who are looking at OTT today. They can also look for ways to integrate Web content on their TV lineup, as well as add interactive features to bring some of the more attractive features of OTT video to the TV experience. (See What's Holding Back the SuperCDNs?.}
I’d be the first to acknowledge that implementing this is considerably more difficult in practice. In fact, even identifying which of these approaches makes sense for any individual service provider would be a challenge as all options won’t work for all operators. However, we will attempt to get a little deeper into these issues during the various sessions at Telco TV. Specifically, we at Heavy Reading will be presenting our survey findings on Oct. 26 at 9.35 a.m., and we hope we can help move this discussion a small step further.
— Aditya Kishore, Senior Analyst, Heavy Reading