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At NAB: OTT vs. IPTV

At NAB this week, the large amount of premium video content moving online is finally causing some to say it could disrupt the take-up of IPTV services by companies such as AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ).

Veoh Networks Inc. CEO Dmitry Shapiro, whose online video aggregation site serves more than 40 million hours of content a month, sees the trend toward online video viewership firsthand, and claims that more than 40 percent of all views on Veoh occur during prime-time TV viewing hours. (See Veoh Claims Growth.)

"The dynamics have changed dramatically. Look at NBC Universal , Fox Broadcasting Co. , CBS Corp. (NYSE: CBS), and ABC Inc. They're all making content available for free on the Internet," Shapiro says.

As a result, he says, "I don't think that IPTV initiatives will be as big as [the carriers] hoped that they would be when they started down this path."

Kevin Wirick, Motorola Inc. (NYSE: MOT) VP of marketing for the IP Video Solutions business unit, also says "over-the-top video could be a challenge" to existing models of television delivery.

Wirick believes Internet video could have the same sort of disruptive effect on TV delivery among telcos and MSOs today that DBS (direct broadcast satellite) providers had on cable TV providers just a few years ago, causing providers to rethink business models and adapt to new usage trends.

Despite the growing amount of professional video content on the Web, telcos seemed unconcerned about losing potential users to over-the-top offerings.

Terry Denson, Verizon's VP of programming and marketing for FiOS TV, doesn't see that over-the-top content is an adequate replacement for regular TV. "TV consumption may be reduced by a certain percentage, maybe 10 percent," he says. "But are people still going to subscribe to multichannel services despite the ubiquity of content in other areas? We think so."

AT&T VP of programming Dan York says, "I think folks are still going to subscribe to a closed-network video provider for their television experience. We're a long ways from an intersection where folks will forgo that because they can get it online."

While a vast number of households will continue to subscribe to pay-TV services, York admits there's a certain demographic of users that might choose not to.

"For younger audiences with a high-speed connection and a mobile phone, in increasing numbers, that's all they'll need. That's because they'll watch shows online and use their mobile phones for voice communication," he says.

— Ryan Lawler, Reporter, Light Reading

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