The 10 Over-the-Top Video Commandments

DALLAS -- TIA 2011 -- Over-the-top (OTT) video is changing the nature of the viewing experience in the U.S., where Netflix Inc. (Nasdaq: NFLX) dominates Internet traffic and the pay-TV market is reaching saturation. (See Netflix: The Internet's US Traffic King and Survey: 7% of Pay-TV Subs Will Cut Cord.)

Today, 90 million households worldwide are watching Internet video on their TVs, but by 2016, there will be 250 million OTT households, according to The Diffusion Group (TDG) . It's a trend that pay-TV operators need to embrace or at least recognize.

TDG analysts and senior partners Colin Dixon and Michael Greeson broke down the realities of OTT and what it can teach pay-TV and content providers in a four-hour pre-TIA conference Tuesday. Here are the CliffsNotes:

Follow the rule of three screens
Video today, for the most part, is still consumed on the TV, but that's rapidly changing. In the not-so-distant future, the viewing experience will be a combination of video, data and applications on every screen, in every place consumers go, TDG predicts. That's why if you're in the video business, you must be in the three-screen business, including the TV, PC and mobile. "You'll become irrelevant if you aren't," Dixon warned. (See Monetizing Multi-Screen Mania.)

Optimize, but personalize
Building a three-screen strategy is more than just porting content, however. Every viewing experience should be optimized for that particular screen size, but the one unifying element should be that they carry data about a subscriber to every screen. Every device often has its own user interface, but the experience should be the same.

Embrace tablets
Mobile TV hasn't taken off on mobile phones, but tablets that are built with video as a key usage pattern are a huge opportunity, Dixon said. "In all my years, I've never seen content providers flip like they have over the iPad," he said. And consumers' attitudes become increasingly positive the larger the screen size gets. TDG believes tablets will become a dominant second screen in the home. (See TelcoTV 2010: Apple's Cord-Cutting Fanboys.)

Target niches
Carefully targeted niches are important for any company that's chasing the OTT market. Service providers or content providers with enough brand cache are looking to reach large niches like, for example, the 1.5 million Korean speakers in the U.S. This may require providing more content a la carte, but it's how certain groups of people want to consume relevant material.

Offer pure broadband TV packages
There's a large segment of the population for whom broadband is more important than pay TV, Dixon said. These customers still want TV, but in order to serve them, operators will have to offer pure broadband TV packages. Dish Network LLC (Nasdaq: DISH) has already done this with its international channels -- not as a competitive differentiator, but as a way to go after broadband-only customers with additional services.

Next Page: The Next 5 Commandments

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kateschackai 12/5/2012 | 5:05:02 PM
re: The 10 Over-the-Top Video Commandments

Fantastic list. The future of video is all about dynamic provision, which requires an extremely intelligent back office structure to provide personal recommendations, multiple device management, and flexible packages. Widespread OTT is coming; providers need to be ready. See http://bit.ly/liI6dT

Greg_D 12/5/2012 | 5:03:36 PM
re: The 10 Over-the-Top Video Commandments

Current data structures had concluded that internet traffic mostly video will 2.5 times our current count in volume customers.  That doesn’t take in account of increased daily usage.


We need to pay close attention as we embrace IP transport and still spend countless hours adding capacity to our CMTS's.  Take a close look, what you are doing today, you will do tomorrow and the next, unless you get a real grasp on your customers behavior habits and at least cover yourselves for at least year over year or two growth.


I understand you don't want to build too much capacity because it might end up costing you.  Take a close look a little deeper in your network and get a feel of its behavior and plan.  Better to be proactive then reactive.  That costs you revenue.

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