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Is OTT Video Peaking?Is OTT Video Peaking?

Hours of OTT viewing are still going up, but the number of unique viewers is not, which should encourage telco TV efforts

April 15, 2011

2 Min Read
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

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