Is OTT Video Peaking?

KANSAS CITY -- IP Possibilities 2011 -- Has the online video trend already peaked? Or has it just been overblown by the (oh, no, not us again) media?

It seems the same The Nielsen Co. ratings that show a continued increase in the number of hours spent watching online video also reveal much slower growth in the number of people watching video online. If you look at the January 2011 Nielsen Three-Screen Report, for example, the headline cites a 45 percent increase in online viewing, but the report shows only a 3.1 percent annual increase in unique viewers.

Numbers like that lead people like Madeline Forrer, VP of Video Services for the National Rural Telecommunications Cooperative (NRTC) , to conclude that it's possible "the people who like online video have found it and are using it a lot, but the pool of people watching is not really changing all that dramatically."

Forrer's opinion counts more than most because her organization is the top provider of programming rights and video support services for rural telcos. A lot of those telcos are looking at over-the-top (OTT) video as not just a threat but a reason not to offer their own video services. Forrer believe that failing to include a video offering in a service bundle puts rural telcos at greater risk from the competition.

Forrer told an audience here this week that the impact of OTT video might not be as great as expected, as the largest percentage of American video viewers are still watching their TV sets -- albeit with much more time-shifting of video to meet their personal schedules. Rather than being swept up in OTT mania, she advised, "the important thing is to pay attention to what consumers actually watch."

Nielsen found that online viewers watched four hours and 39 minutes of online content in January, Forrer pointed out, but that is dwarfed by their 154 hours of regular TV viewing -- a fact that pay-TV providers need to keep in mind.

Forrer also schooled the rural telcos in attendance on the realities of video content ownership, pointing out that major studios have actually pushed back the window of opportunity for Netflix Inc. (Nasdaq: NFLX) to distribute their content. Those who own the content -- and 80 percent of it is owned by the six major studios -- remain in control, and that the industry expects theatrical releases to remain a major source of revenue through 2019, she said. Sales of DVDs have fallen, but that revenue is not shifting to digital formats.

"Content suppliers are still driving and will defend the pace and availability of content, not technology," Forrer said.

— Carol Wilson, Chief Editor, Events, Light Reading

yarn 12/5/2012 | 5:07:26 PM
re: Is OTT Video Peaking?

You'd think that in rural areas a lot of folks are using satellite or over-the-air to watch TV. Hard to see how OTT video can compete there, esspecially because high speed Internet tiers are not a given.

As for OTT in general I think that content owners are seeing the Internet rather as a way to make even more money from their content, in addition to revenues from Cinema, TV, DVD releases and such. Of course this requires a very well controlled windowing strategy so that these different delivery channels won't compete and cannibalize eachother.

For sure the Internet is very cost efficient to monetize some yesteryear content that is otherwise just moldering away in some contentvault. The Over the peak (OTP) ocntent so to say, with exception of special interest content that can't be economically monetized through existing media delivery channels because the audience is very small and dispersed as well.

paolo.franzoi 12/5/2012 | 5:07:25 PM
re: Is OTT Video Peaking?


I think the issue is completely different.  I think that it is a generational thing.  My son watches TV but watches a LOT more Internet video both Netflix and other things.  My habits are completely different.  So, it does not surprise me at all that there is slow growth in viewers.  I think they need to be born.  As older viewers pass away, so will their habits.

Look at it this way...Let's suppose their is a video availble from Netflix but only in PC streaming and DVD not TV streaming.  Do you order the DVD or stream it to your desktop?  Do you DVR things or watch them on Hulu?  I think there is a lot of habit associated with the way content is viewed as much as anything else.


cnwedit 12/5/2012 | 5:07:25 PM
re: Is OTT Video Peaking?

I agree it is generational -- my son and his friend all cut the cable cord and do their TV viewing onlnie, although that has a lot to do with the fact taht  they are all recently out of college and can'f find jobs that pay an adult wage.

But there is still a lot of content NOT available on line and Storer's point about content owners controlling the flow can't be discounted. They need to see the revenue stream develop first. Hulu has yet to recapture the viewing base it had before it went to a paid model.

yarn 12/5/2012 | 5:07:24 PM
re: Is OTT Video Peaking?

Sure, user habits do play a role and the Internet may be a more logical choice for the Youtube generation. But ultimately it's still the content that determines success for a delivery medium, and content owners decide which options will be available when. This is why Netflix is still shipping some content per DVD-rental only, rather than streaming it to your PC or TV. All being equal you'll pick the delivery medium that's most convenient, cheap/best, expedient, available. Some content is so cool you can't wait to watch it on the big silver screen, other stuff you'll just catch on TV or DVD rental whenever it's available.

paolo.franzoi 12/5/2012 | 5:07:23 PM
re: Is OTT Video Peaking?


I am on Comcast and have no issues with Netflix.




Stevery 12/5/2012 | 5:07:23 PM
re: Is OTT Video Peaking?

I'm surprised nobody has yet brought up:  Viewing over netflix et al is a lower-QOS experience.

I would happily ditch everything else, but the halting/skipping video of hulu, nflx etc is just too annoying for, say, watching with guests.  (The crappy resolution probably falls into the category of "movie aficianado", but it is also noticiable to me.)

And this is over a fios line.  God help you if you're on something slower.

paolo.franzoi 12/5/2012 | 5:07:23 PM
re: Is OTT Video Peaking?


Content owners want to make as much money from the content.  I love the ads telling me that I might have to wait 30 days to get a movie from Netflix.  Frankly, who cares?  If I really wanted to see it that much, I would have seen it in the theatres.  If you believe that OTT has peaked, I would say good luck with that.  It is going to increase constantly over time.  Other forms are likely to decrease over time.  Won't happen in 1 year but 15.

The only thing that could save DVD (like) sales is higher quality (like say Blu-Ray) available in that format than in streaming.  Now the issue for me personally is really simple.  I go to the movies to see special effects.  If its a drama or a comedy, I will wait.  Now maybe I am harsh, but I see no point in going to the movies (and pay extra) for an experience that is no better than what I get at home.

Now, does this impact content owners - absolutely.  But if nobody shows up to any movie releases, they will stop or will focus on those who still show up (like teenage girls for Twilight and similar things).  The whole point of content consumer driving this is back to the point of content owner wanting to maximize content value.  As the user's change their behavior, value of the content format changes.  If nobody goes to the theatres, then there will be no releases to theatres.



paolo.franzoi 12/5/2012 | 5:07:19 PM
re: Is OTT Video Peaking?


Nothing special on the Comcast.  I think it peaks at 16 Mb/s but normally I see 8 Mb/s when I test it.  I have not looked at Netflix when it streams in specific, since it works fine.  I recognize that it is not 1080p, but looks fine on my screen.  I am using a PS/3 as my client.  Could that be the difference?



Stevery 12/5/2012 | 5:07:19 PM
re: Is OTT Video Peaking?

> I am on Comcast and have no issues with Netflix.

7:  What speed?  (And what speed is your silverlight pulling down at?)

I guess I should have added that I can downgrade the connection settings to get rid of the latency issues (skipping of video) but it just seems wrong to throw away resolution when I have fios speeds.

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