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Cable & OTT: Do We Hear Wedding Bells?

Craig Leddy
Heavy Lifting Analyst Notes
Craig Leddy
7/3/2014
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As over-the-top (OTT) video streaming services and devices began to attract consumers, they looked like barbarians at the gate, ready to disrupt traditional media and topple the longstanding empires of cable and other television establishments.

Disruption indeed has occurred, but the once-combative stance of cable and OTT players has taken a unique twist, as both sides have come to realize that they can profit by utilizing each other's strengths.

Recently, cable multiple system operators (MSOs) and OTT providers have been joining forces in various ways, notes a new Heavy Reading Cable Industry Insider, "Cable & OTT: New Opportunities for Convergence." The report describes how cable and OTT are converging, and it profiles 10 suppliers with software solutions that support cable-OTT integration.

While cord-cutting and other OTT threats have not disappeared, MSOs are pursuing strategies to become distribution partners of OTT streaming services, utilize OTT device platforms, and add OTT apps to their consumer services. By embracing OTT, cable providers are bolstering their shifting role as they become more broadband-centric service providers, according to the report.

In the most visible sign of détente, MSOs and OTT providers are adding their apps to each other's platforms, the report notes. Netflix recently made deals with Suddenlink Communications and several smaller operators to stream its service on the MSOs' TiVo set-tops. Time Warner Cable subscribers can watch cable TV through an MSO-branded app on Roku and Xbox 360 devices, or purchase a $99 IP-based Fan TV box to receive certain cable and OTT services, including Redbox Instant by Verizon, Crackle, Target Ticket and Rhapsody.

As cable increases its broadband speeds and optimizes its distribution technology for IP video, its capabilities will become increasingly attractive to OTTs, according to Heavy Reading. Comcast's recent interconnection deal with Netflix is an initial example of how an MSO can backhaul OTT video and deliver it directly to the consumer.

Cable's new attitude toward OTTs was exemplified by John Childress, director of product management-residential for WideOpenWest (WOW), during the Light Reading Cable Next-Gen Technologies & Strategies Conference in March. Childress advocated an aggregated user experience in which consumers can easily access linear, video on demand (VoD), digital video recorder (DVR) and OTT content across various devices. "Do we fight it [OTT] or embrace it?" he asked. "For us, it's how to embrace it and pull that experience into a linear and VoD experience."

The report details key challenges that cable and OTT players must overcome to make this burgeoning relationship work, including content management, customer authentication, and monetization. New efforts to improve cable's TV Everywhere initiative also could support the integration of more OTT apps on cable, the report says.

Ultimately, the best thing for consumers is to create a blended experience where they can seamlessly discover and access their favorite TV programming and OTT content. As a result, the report predicts the winners in the broadband future will be those service providers that aggregate, blend, and simplify content access and the user experience.

Are wedding bells in the air?

— Craig Leddy, Contributing Analyst, Heavy Reading Insider


Cable & OTT: New Opportunities for Convergence, a 16-page report, is available as part of an annual single-user subscription (six issues) to Heavy Reading Cable Industry Insider, priced at $1,595. Individual reports are available for $900. To subscribe, please visit: www.heavyreading.com/cable.

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mendyk
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mendyk,
User Rank: Light Sabre
7/3/2014 | 2:37:06 PM
Re: No cords were harmed in the making of this picture
Network operators need to focus on delivering the best connectivity service that accommodates everything customers want, including OTT video. They also have a good opportunity still to provide value-added services like cloud storage. As net neutrality fades to oblivion, OTT providers will become key customers for network operators. There's little reason to continue the animosity.
Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
7/3/2014 | 1:27:14 PM
Re: No cords were harmed in the making of this picture
mendyk - "Us vs. them is not going to get operators anywhere regarding OTT video."

What do you mean? What would be a better attitude for operators to take?
mendyk
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mendyk,
User Rank: Light Sabre
7/3/2014 | 1:00:16 PM
Re: No cords were harmed in the making of this picture
Us vs. them is not going to get operators anywhere regarding OTT video.
Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
7/3/2014 | 12:48:38 PM
Re: No cords were harmed in the making of this picture
Because network operators own and control the network, they're able to deliver services using information and resources not available to independent OTT providers. 
mendyk
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mendyk,
User Rank: Light Sabre
7/3/2014 | 10:03:20 AM
No cords were harmed in the making of this picture
The Ultimate Cord is the broadband connection, which will only grow in importance, while conventional video services will find a diminishing (but still somewhat significant) demand. OTT is the future, and for some it's the present. Delivering OTT services is where all network operators should be focusing attention now.
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