This is my finding as an update to the one of a year ago in “Microsoft entertainment as an affordable premium offering to be built on the basis of the Xbox console and Xbox LIVE services [Feb 13, 2013] OR create interactive content as a premium offering together with partners using Kinect technology as a starter OR moving Microsoft Xbox 360 to ‘entertainment console’ OR leaving the good quality commodities to others and going for a premium brand with Xbox as well”.
One cannot understand the Microsoft solution without first looking at:
Cable and satellite video market (U.S. only)
Pay-TV market (cable and satellite, IPTV, terrestrial)
The overall TV market (home video, on demand video, linear TV)
IPTV—AT&T U-verse TV and Verizon FiOS video in particular
OTT (Over-the-top content)
Then the Microsoft solution could be presented as follows:
6. Microsoft’s live TV solution on Xbox
7. Preliminary information on the upcoming products from Xbox Entertainment Studios
8. Xbox Music and Xbox Video services for other devices
Before all that, however, we should also understand a key trend that the Installed Base of Internet-Connected Video Devices to Exceed Global Population in 2017 [iSuppli press release, Oct 8, 2013] which is also showing the immense difficulty for the Microsoft effort:
More than 8 billion Internet-connected video devices will be installed worldwide in 2017, exceeding the population of the planet, according to research from the Broadband Technology Service at IHS Inc. (NYSE: IHS).
The installed base of video-enabled devices that are connected to the Internet—a category that includes diverse product such as tablets, smart TVs, games consoles, smartphones, connected set-top boxes, Blu-ray players, and PCs—will expand to 8.2 billion units in 2017. This will represent a nearly 90 percent increase from 4.3 billion in 2013, as presented in the attached figure.
With the world’s population amounting to 7.4 billion people in 2017, this means that there will be 1.1 Internet-connected video devices installed for each global citizen.
“On average every human being in the world will possess more than one Internet-connected video device by the year 2017—a major milestone for the electronics market,” said Merrick Kingston, senior analyst, Broadband Technology, at IHS. “In practice, ownership of Internet-connected hardware will be concentrated among users whose homes are equipped with broadband connections. We’re quickly approaching a world where the average broadband household contains 10 connected, video-enabled devices. This means that each TV set installed in a broadband-equipped home will be surrounded by three Internet-connected devices.”
Asia-Pacific gets connected
The number of connected devices in the mature North American and Western European regions will grow at a relatively modest compound annual growth rate (CAGR) of 10 percent from 2013 to 2017.
In contrast, Asia-Pacific will expand at 20 percent during the same period. Driven largely by Chinese demand, Asia-Pacific will add 1.9 billion connected devices to the global installed base between 2013 and 2017.
On the other end of the regional spectrum, sub-Saharan Africa will contribute 145 million net additions to the total installed base during the next four years.
Challenges and opportunities
In order to cash in on this massive growth in Internet-connected devices, media companies across the operator, broadcast, consumer electronics manufacturing and over-the-top (OTT) businesses have embraced Internet protocol (IP) video distribution. Big names making a foray into IP video include HBO, Microsoft, DirecTV and Netflix.
However, all of these companies face a major challenge: how to wrap consumers into their ecosystems, given the proliferation of platforms, high switching costs and strong incentives for consumers to stay with their existing services.
Back in 2005, PCs comprised 93 percent of all connected devices. By the end of 2017, the base of connected devices will diversify dramatically, with PCs comprising only 23 percent of the connected installed base. Other devices will account for the rest of the market, including smart TVs at 5 percent, consoles at 2 percent, and smartphones and tablets collectively representing 67 percent.
“Addressing the full breadth of the device landscape, and recuperating the development cost of doing so, will pose a major challenge for a number of media firms,” Kingston added.
1. Cable and satellite video market (U.S. only)
Let’s start with a list of cable and satellite video providers in the U.S.:
The chart is from Would a DirecTV-DISH Merger Still Make a New Pay-TV Media Monopoly?
[24/7 Wall St., Oct 10, 2013]. Note that Newco is the DirectTV-DISH merged company
just imagined by the article. The actual Top 5 companies represented 75.4% of the U.S.
cable and satellite video subscribers: 35.6% satellite (newco) and 39.8% cable.
Relative to that Verizon FIOS video IPTV had 4.7M subscribers and
AT&T U-verse [IP]TV 4.5M by the end of Q4’12 (see below).
See also (in order to understand the challenges cable operators are facing everywhere):
- TWC rebuffs Charter’s latest takeover bid [[IHS] Screen Digest commentary, Jan 14, 2014] with “The saga to create the nation’s second largest cable operation is moving into a new phase … With so many sharks circling TWC, IHS believes that it will be a matter of not if but when TWC accepts a bid.”
- Time Warner Cable prepares for its business future [[IHS] Screen Digest commentary, Oct 8, 2013] with “TWC and other cable operators are in the unenviable position of seeing their primary product, pay TV video, declining. Coupled with encroachment from IPTV, and potential upstart OTT technologies, cable operators are pushing to grow other business lines. … Staying ahead of the technological curve is a problem for all pay TV operators, and cable more than IPTV, with Satellite experiencing the worst of it.”
- Netflix added to Virgin’s TiVo platform [[IHS] Screen Digest commentary, Sept 10, 2013] with “UK cable company Virgin Media has signed what is effectively an OTT carriage deal with Netflix to bring the streaming service onto the Virgin TiVo platform. Groundbreaking move is the first deal of its type and indicates a change in the positioning of Netflix and the competitive positioning of OTT against ‘traditional’ pay TV. … that more firmly positions Netflix as a content aggregator (read: channel) rather than a platform and opens the door for similar deals internationally. Move vindicates our long-held view that this was the correct way to position Netflix and other OTT content aggregators.”
Cable takes the fight to OTT [[IHS] Screen Digest commentary, Oct 28, 2013]
After years of subscriber losses, Comcast announced on October 25, 2013, the first widespread test of a cable network lite bundle, the combination high-speed data (HSD) and broadcast basic video and premium channel. The trial is slated to run a minimum of one year, the operator plans to have stepped increases in the starter $49.99 per month price at 6 months ($60-$70) and again at one year ($70+).
This is not the first such offering however. In August of 2013 Time Warner Cable (TWC) initiated a similar promotion targeted at transitioning college students back toward video products, including HBO and HSD. TWC partnered with nine colleges in this limited trial, again the term is likely to run for a year or less. TWC is charging $79.99 per month for one year, but did not list a non-promotional price.
In the following analysis IHS makes two assumptions: 1) That cord-cutting and cord-never households will likely buy HSD from pay TV providers, and that it will skew toward higher speed tiers. 2) The price for bundled 25-30Mbit is ~$55 and unbundled ~$60.
Our take
The fact that the business of pay TV is changing is no longer in doubt, but the business has insulated itself well and is preparing to weather the storm. Comcast and TWC are not the first to experiment with new offerings, Cox recently concluded its flareWatch trial, the first pay TV OTT trial. The difference between the Cox effort and Comcast and TWC is that the two latter companies have price efficiencies working on their side.
That’s not to say that IHS believes that the Cox trial was ended because of price, more likely Cox received valuable customer feedback and experience. The Comcast and TWC deals are predicated on completely different foundations. Both offerings provide significant perceived value, and combined monetary value to subscribers.
Both deals compare to a HSD and Netflix and/or Hulu+ plan. The Netflix/Hulu+ plan will likely cost $68 to $76 depending upon HSD tier and number of OTT subscriptions, compared with Comcast’s year one monthly average of $60 and TWC’s $70. Another significant point of difference is the depth of offering.
Both pay TV providers share four common features, 25-30Mbit HSD, local broadcast channels, HBO, HBO GO – Comcast also includes StreamPix (Library title Subscription VOD). IHS believes that both Comcast and TWC are at a minimum matching Netflix on a like-for-like price content offering when considering HSD and HBO versus HSD and Netflix/Hulu+. The addition of broadcast local channels as well as SVOD in the case of Comcast, signal that cable is not going to give up the fight.
2. Pay-TV market (cable and satellite, IPTV, terrestrial)
Then, according to Worldwide pay-TV Subscribers to Exceed 1.1 Billion in 2019 with Increasing IPTV Market Share [ABI Research, Jan 22, 2014]
Worldwide pay-TV market reached 903.3 million subscribers in 2013, generating $249.8 billion in service revenue. IPTV operators enjoyed significant growth (18.5% YoY) in 2013 to 92 million subscribers with a total of $37.2 billion in service revenue.
“Increasing FTTH [Fiber To The Home] subscriber base and bundled subscriber base of telcos are boosting the IPTV market. ABI Research forecasts that the IPTV subscriber base will grow to 161 million subscribers in 2019 accounting for 15% of overall pay-TV market,” comments Jake Saunders, VP and practice director of core forecasting.
The global terrestrial TV market reached 9.5 million subscribers at the end of 2013. A declining pay DTT subscriber base in Italy and Spain had an impact on the overall Western European DTT market which dropped around 5% in 2013. Unlike Western Europe, the DTT market in Africa grew a remarkable 45% to 2.1 million subscribers in 2013. “As African countries start to switch over to digital, digital terrestrial TV has become an affordable alternative to satellite TV service in the region. ABI Research forecasts that Africa will have over 4.8 million DTT subscribers in 2019,” adds Khin Sandi Lynn, industry analyst.
DirecTV maintains its largest market share in terms of pay-TV service revenue. The company had around 20.2 million subscribers in the US with an ARPU above $102 by the end of 3Q-2013. Globally, the pay-TV market is expected to grow to 1.1 billion subscribers with $320.3 billion in service revenue in 2019.
3. The overall TV market (home video, on demand video, linear TV)
Or a broader view representing all other segments of the TV market as well:
Global TV market revenue to grow at a steady pace: up 23% by 2018
[DigiWorld by IDATE blog, Jan 30, 2014] by Florence Le Borgne
Head of the TV & Digital content Practice, IDATE.
At a time when video has become pervasive across all of our screens, most national TV markets are losing steam: shrinking viewership and pressure on advertising markets, especially in Europe. Although pay-TV seems to be holding its own, the fast-growing popularity of OTT offerings is shaking up the traditional pay-TV model, while the demise of physical media is virtually a foregone conclusion.
If the decline of physical media now seems inevitable, television still has a chance to reinvent itself in a way that takes into account changes in viewer behaviour and competition from new online vendors.
Accessing TV
According to IDATE, the number of TV households worldwide will reach 1.675 billion in 2018 (+9.6% in 5 years), with the number of digital TV households worldwide being 1.542 billion in 2018, which translates into 92% of TV households
Cable will the remain the chief access channel (592.3 million households in 2018) but will gradually lose ground to satellite and IPTV which will account for 32.9% and 10.9% of TV households, respectively, at the end of 2018.
Despite the development of hybrid TV solutions, terrestrial TV should continue its decline on the first TV set and drop down to number three spot by 2018, with roughly 21% share of the global market.
The development of hybrid solutions that combine live programming on broadcast networks (terrestrial and DTH) and OTT video services over the open Web is a key variable in the future development of the various TV access modes, and may well shake up current trends.
TV: top money-maker
Breakdown of audiovisual market revenue in 2013
TV revenue
According to IDATE, the global TV industry’s revenue will come to €374.8 billion in 2013 and €459.2 billion in 2018.
Pay-TV revenue will grow by 21.3% between 2013 and 2018, or by an average 3.9% annually, to reach €220.2 billion in 2018.
Ad revenue will enjoy even stronger growth of 27.3% between 2013 and 2018, to reach €201.1 billion in 2018.
Public financing/licensing fees will continue to increase significantly (+7.7% in 5 years) to reach nearly €38 billion in 2018.
Video revenue
According to IDATE, physical media sales will total €16.3 billion in 2018, when video on demand (VoD) revenue will reach €35.4 billion in 2018, which is 90% more than in 2013.
This means that the global market will have shrunk to more than a quarter of what it was in 2013 (-27.2%).
Blu-ray will be the most common format and help temper plummeting physical media sales.
OTT video will continue to be the biggest earner, generating 51% of total revenue.
VoD will still be the dominant model on managed networks. It will generate €6.9 billion in 2018 versus €2.3 billion for subscription video on demand (S-VoD).
American OTT video providers’ footprint in Europe as of 31 December 2013
Source: IDATE, December 2013
American OTT vendors already have a solid foothold in Europe
Netflix is already present in seven European countries: Britain, Ireland, the Netherlands, Denmark, Norway, Finland and Sweden. The service had 1.6 million subscribers in the UK and Ireland at the end of 2013.
LoveFilm was reporting 1.9 million subscribers in the UK and Germany at the end of 2013.
At the end of 2013, iTunes’ VoD rental service was available in close to 110 countries, and permanent downloads in 14 countries, chiefly in North America and Europe.
More information on TV and new video services market report & database
UK Video Rental Market Plunges in 2013 as Half of Country’s Blockbuster Stores Close [IHS iSuppli press release, April 23, 2013]
The market for Blu-ray (BD) and DVD rental in the United Kingdom is expected to plunge by 22 percent in 2013, as half the country’s Blockbuster video stores shut down in a restructuring initiated by the company’s new management.
The U.K. market for physical-video rental will drop to £202 million in 2013, down £57 million, or 22 percent from £259 million in 2012, according to a newly updated forecast from IHS (NYSE: IHS) . While the market is generally on the decline, 2013 will bring the sharpest predicted annual decrease for the 11-year period from 2007 through 2017.
By the end of 2013, only 264 Blockbuster stores will be open in the country, down 50 percent from 530 in 2012. Blockbuster is the largest video rental chain in the country.
“The year 2013 is set to become a watershed for the U.K. video rental market as a result of the wholesale closure of Blockbuster UK stores,” said Tony Gunnarsson, senior video analyst at IHS. “The massive downturn in the store-based video rental market represents a significant loss to the video market and will result in a major decline and radical transformation of the U.K. video market overall. From 2013 on, the U.K. physical-video rental business increasingly will be dominated by online rent-by-mail subscription services.”
Both DVD and BD transactions are due to decrease across the store-based sector this year. DVD rentals will fall by a steep 53.2 percent to 15.4 million. BD is set to drop by an even larger 61.3 percent to 2.8 million respectively.
Blockbuster gets busted up
After filing for administration in January 2013, Blockbuster’s administrators Deloitte announced two separate rounds of store closures, including some 224 sites. In February 2013, supermarket chain Morrisons purchased 49 of these former Blockbuster stores in its drive to increase its store presence in southeast England.
Out of the remaining Blockbuster stores, Gordon Brothers acquired a total of 264 locations, including a number of Blockbuster outlets earmarked for closure that will now remain open.
Pay-TV killed the video store
In 2012, rental stores were responsible for 41.3 percent of the video rental market based on consumer spending. In the latest forecast for 2013, however, the store-based sector is now projected to generate just 24.7 percent of the overall market. This tilts the market toward the online sector, which will see its share of market increase massively from 58.7 percent in 2012 to 75.3 percent this year.
At the same time, the lost rental business won’t result in customers that used to rent at Blockbusters automatically signing up to become rent-by-mail customers with online providers, IHS believes. Rather, those customers are more likely to turn to a host of other video platforms, primarily pay-TV services.
Video rental market winds down
In the longer view, the U.K. rental market will return to a normal trend of decline after 2013, with spending on renting physical video shrinking at an annual rate of under 5 percent until 2017. By then, the retreat in spending is expected to be slightly more negative at 7 percent.
4. IPTV—AT&T U-verse TV and Verizon FiOS video in particular
As far as the U.S. is concerned AT&T U-verse TV and Verizon FiOS video are the leading IPTV services by far*, having 5.5 million and 5.3 million subscribers respectively, which is 11.7% of the above 92 million subscribers number by ABI Research:
* The next service provider, CenturyLink “Ended the quarter with 149,000 CenturyLink® PrismTM TV subscribers, an increase of approximately 17,000 subscribers in third quarter 2013” according to its Q3 203 report [Nov 6, 2013]. CenturyLink only entered five U.S. markets after acquiring Embarq (2009) and Qwest (2010). In fact no other U.S. providers are in the Top 20 globally according to SNL Kagan Reports World’S 20 Largest IPTV Operators Served 83% of Global IPTV Households at End-2012 [June 6, 2013]. More:
- China’s leading telcos– China Telecom and China Unicom– serve an estimated 30% of the global IPTV subscriber base.
- Asian telcos accounted for 49.2% of the top 20′s IPTV subscribers in 2012, reflecting the region’s large market size and limited telco competition.
- France — the second-largest IPTV market by subscribers after China — is home to four operators ranked among the global top 20. [Note that among Top 5 are Iliad and France Telecom. Iliad’s Freebox TV offering proposes a broad selection of TV channels (over 450, of which more than 200 are included in the basic package), as well as numerous audiovisual services, such as catch-up TV (with 45 channels available on Freebox Replay), and a wide video-on-demand offering. It was actually the largest IPTV deployment in the world with 2.4 million IPTV-enabled customers as of end 2007 (see here).]
- Nine operators out of 20 are located in Western Europe and seven in Asia.
From AT&T Reports 20 Percent Adjusted EPS Growth, Record-Low Fourth-Quarter Postpaid Churn, Solid Smartphone Gains and Continued Strong U-verse Momentum in Fourth-Quarter Results [Jan 28, 2014]
U-verse® Drives Wireline Consumer Growth and Broadband Gains
Wireline consumer revenue growth of 2.9 percent versus the year-earlier period
Total U-verse revenues, including business, up 27.9 percent year over year, now a $13 billion annualized revenue stream
10.7 million total U-verse subscribers (TV and high speed Internet) in service:
630,000 high speed Internet subscriber net adds; record annual net adds of 2.7 million
194,000 U-verse TV subscribers added, lowest churn in product history
Continued U-verse broadband gains in the business customer segment, up 78,000, nearly doubling year-ago net adds
Strategic business services growth accelerates with revenues up 17.4 percent year over year, now more than 25 percent of wireline business revenues
…
Record-Low U-verse TV Churn. Total U-verse subscribers (TV and high speed Internet) reached 10.7 million in the fourth quarter. U-verse TV had the lowest-ever churn in its history. U-verse TV added 194,000 subscribers in the fourth quarter with an increase of 924,000 for the full year to reach 5.5 million in service. AT&T has more pay TV subscribers than any other telecommunications company.
…
U-verse TV penetration of customer locations continues to grow and was at 21 percent at the end of the fourth quarter.
From AT&T Fourth Quarter 2013 Earnings Slide Presentation [Jan 28, 2014]
Note that after AT&T Extends TV Watching to More Devices with Launch of U-verse TV on Xbox 360 [press release, Oct 11, 2010] and even after New U-verse Internet Customers Can Take Their Pick: A Free Xbox 360, SONOS PLAY:3, Kindle Fire or Nexus 7 Tablet [press release, March 18, 2013] that Xbox tie-up ended with AT&T U-verse TV To Drop Support For Xbox 360 on December 31 [Multichannel, Nov 26, 2013]:
“We’ve made this decision due to low customer demand,” an AT&T spokeswoman said via email on Tuesday. AT&T declined to say how many customers currently use the Xbox 360 as a set-top. … AT&T, the spokeswoman added, currently has no plans to support U-verse TV on the Xbox One. Verizon Communications FiOS TV is the first, and so far only, U.S. pay-TV provider to offer an authenticated app for the Xbox One during its initial launch phase.
From Verizon 4Q 2013 Quarter Earnings Conference Call Webcast [Jan 21, 2014]materials:
In FiOS video we added 92,000 new subscribers in the quarter. Total FiOS videos customers reached 5.3 million, representing 35% penetration.
…
As far as the OnCue acquisition [from Intel, i.e. the Intel Media operation], look, the focus here is really to accelerate the availability of the next-generation IP video service which we will integrate into the FiOS video service. And really what we are trying to do is differentiate this even more so with fiber to the home versus others with the TV offerings and reducing the deployment costs. And this really accelerates us from if we were trying to build IP TV versus buying the IP TV technology.
From an FiOS customer perspective, we expect the benefits that they will have more elegant search and discovery activity and cost stream ease of use. But also keep in mind, with the acquisition of Verizon Wireless and becoming 100% ownership of that we also plan to take that platform and integrate it more deeply with our Verizon Wireless 4G LTE network. So that really was the strategy behind this.
As far as would we enable this platform to take us over the top, obviously we have our video digital media services that we have been working on for 2.5 years. We’ve just made two acquisitions related to that platform. So, look, we are positioning ourselves strategically to be in a position to competitively compete around the whole mobile first world and video, so I think that is where we are.
Pay-TV Operators Can Stave Off OTT Threat with Multiscreen and CDN Investments [iSuppli press release, April 17, 2013]
Despite the dire competitive threat posed by over-the-top (OTT) services, pay-TV operators can thrive by investing in additional service offerings that should include multiscreen services to more than make up for the erosion in their customer base, according to the IHS Screen Digest TV Intelligence Service from information and analytics provider IHS (NYSE: IHS).
Speaking here today at the IHS PEVE Entertainment 2013 Conference, Guy Bisson, research director for television at IHS, noted that although European cable operators have lost 1.4 million households, they have gained 17.8 more revenue-generating units (RGUs), during the five-year period from 2007 through 2012.
While cable operators in Europe and other regions are expected to lose more households in the coming years, RGUs will continue to increase, driving revenue growth for the industry. The below figure presents the IHS history and forecast of cable households and RGUs for the 27 countries of the European Union.
5. OTT (Over-the-top content)
OTT and IPTV Integration Increasingly Popular [Pyramid Points, Nov 27, 2012]
How do you plan to spend your evening most times when you order a pizza? You’re very likely to watch a video.
In the UK, Domino’s Pizza Group saw the value of over-the-top (OTT) online video to boost customer loyalty, and back in October launched the Domino’s Pizza Box Office video streaming offer. Customers order a pizza and get a download code to stream a movie at home. This is just another example of how OTT is revolutionizing the way video content is delivered to consumers: Today almost anyone can become a content provider.
Exhibit: Evolving video delivery environment and video platforms
Source: Pyramid Research
Many operators see the proliferation of OTT as a threat to their established IPTV business models. They fear that OTT will subvert their role in the pay-TV value chain and cannibalize revenue. We’ve found, however, that the opposite is just as likely to be true. In our new report, “OTT Growth Sparks Innovation Multiscreen Video Business Models,” we argue that OTT is serving as an innovation stimulus for the pay-TV market, pushing telcos to enhance their IPTV services with more screens. We also find that an increasing number of operators, alongside their managed IPTV services, are directly entering into non-managed OTT environments. This means that more operators are using the open Internet to offer video services to potentially any consumer with a broadband connectivity, being their existing customers or not.
OTT in emerging markets: Challenges and opportunities
Operators are warming up to the idea of launching their own OTT services, especially in emerging markets. While IPTV remains a premium service, which requires subscribers to purchase more expensive bundles, OTT is more flexible and only requires a good broadband connection. This means that in the more price-sensitive markets, where there is still strong demand for online video, OTT is becoming an attractive option for users. Besides, OTT services are typically delivered over a wide range of screens and at different price points, including smartphones, tablets and gaming consoles, making them more accessible to different consumer profiles.
In Colombia, for example, ETB has announced that it will shortly launch an OTT service to complement its upcoming IPTV deployment. In Mexico, the OTT service provided by fiber-to-the-home (FTTH) operator Totalplay, dubbed Totalmovie, has rapidly become the main competitor to Netflix. It offers video content in Mexico alongside the operators’ IPTV platform and across Latin America by using third-party operator infrastructure. As of October, it had 1.9m registered users and 5m unique monthly visitors.
We expect to see more Latin American operators launching OTT services. The second largest regional group, Telefonica, is considering positioning OTT commercial offers in several countries. The decision between managed (IPTV) or unmanaged video delivery (OTT) ultimately depends on each country’s infrastructure, competitive environment and operator position. Telefonica has, however, confirmed that there are already ongoing OTT initiatives outside Spain.
In Turkey, TTNET, the ISP of fixed-line incumbent Turk Telekom, has already been quite successful in combining its IPTV and OTT offerings. TTNET wants to add value to the bundles, which in turns helps increase customer loyalty and reduce churn. This is crucial in preventing the decline of Turk Telekom’s fixed-line base. While IPTV is positioned as a premium service, OTT is priced very competitively. As of August this year, TTNET had over 1.2m OTT and 150,000 IPTV subscriptions.
OTT can provide significant benefits to operators. In the case of TTNET, positioning OTT alongside IPTV is encouraging consumers to break through their broadband allowances, thus creating the need to migrate to higher-value packages. In the case of Totalplay in Mexico, OTT is contributing to the monetization of the operator’s superfast fiber-based network. For both operators, using third-party infrastructure breaks the link between content delivery and network management.
The outlook is positive
In the near future, we expect to see significant revenue-generating opportunities associated with VoD, catch-up TV, and targeted advertising, especially when telcos can integrate their OTT and IPTV offerings with interactive and social media functions.
Using the open Internet for content delivery, however, has its downsides. The main shortcoming with OTT is that the operator is not in control of quality of service (QoS). Especially in emerging markets, quality of service and network speeds vary wildly from country to country, making it challenging to ensure the same quality of experience (QoE) that can be guaranteed through a managed IPTV network. Another challenge for operators is securing in-demand content for OTT platforms. Without doubt content is king, but content is also costly. Unless they are backed by multimedia and broadcasting groups, operators tend to be the weak link in the content production and delivery value chain. But that is a challenge with IPTV too.
All in all, if telcos are serious about developing a pay-TV offering that can resonate with the demand for multiple viewing platforms at different price levels, they need to seriously consider the opportunity of complementing IPTV platforms with OTT.
— Daniele Tricarico, Analyst
More information from Pyramid Research:
- Is the Arab World Ready for OTT Video? [Sept 13, 2013]
- CDNs Offer New OTT Revenue Hope [Feb 20, 2013]
- Chinese Regulator Opens Up to MVNOs [mobile virtual network operators] [March 15, 2013]
Finally here is a list of Top 10 Online Streaming Video Services [tom’sGUIDE, Jan 1, 2014] in the U.S. in order to understand the state-of-the-art of OTT video services:
Digital video options
Streaming video has just about displaced the DVD on the list of home entertainment options, and it may supersede cable and broadcast TV in the near future. Every modern computer has access to streaming video services, as do most game consoles and mobile devices, and even a growing proportion of televisions. Whether you’re looking to get your feet wet or expand your streaming horizons, check out 10 of the best services for watching movies, TV, music videos, Web shows and more.
Netflix
Netflix is the most popular video streaming service out there, and with good reason. The service is available on just about every platform, including computers, game consoles, set-top boxes and mobile devices, and it hosts movies and TV shows to accommodate every taste. From hit films like “The Avengers” to every “Star Trek” TV series to original programming like “Orange Is the New Black,” Netflix’s variety of content is unparalleled. You can even share an account among five different users to keep recommendations and viewing habits separate. Netflix costs $8 per month.
Inserts of mine:
- Netflix added to Virgin’s TiVo platform [[IHS] Screen Digest commentary, Sept 10, 2013] with “UK cable company Virgin Media has signed what is effectively an OTT carriage deal with Netflix to bring the streaming service onto the Virgin TiVo platform. Groundbreaking move is the first deal of its type and indicates a change in the positioning of Netflix and the competitive positioning of OTT against ‘traditional’ pay TV. … that more firmly positions Netflix as a content aggregator (read: channel) rather than a platform and opens the door for similar deals internationally. Move vindicates our long-held view that this was the correct way to position Netflix and other OTT content aggregators.”
- Netflix passes 38m paying ‘streaming’ subscribers [[IHS] Screen Digest commentary, Oct 22, 2013] with:
Netflix’s total number of paid streaming subscribers increased by 2.4m over the quarter, to reach 29.9m subscribers in the United States and 8.1m subscribers internationally. The international streaming service saw a larger than expected increase of free trialists to 1.1m driven by Latin America and the September launch of the service in the Netherlands.
The third quarter of 2013 is a significant milestone for Netflix, as the quarter in which the Netflix US streaming subscriber count pulled even with the US subscriber count of pay TV giant HBO. The company ended the quarter just shy of 30 million streaming subscribers with estimates for HBO at roughly the same level.
The comparison with HBO is the most appropriate for companies such as Netflix, Amazon and Hulu‘s subscription service, rather than with the pay TV operators. Netflix, as well as Hulu Plus and Amazon, are acting as premium channels in investing in acquired and original content and following in HBO’s early-1990s footsteps. Despite the investment Netflix has made in its own original programming, the company has reported that a greater percentage of overall viewing on the platform is of previous-season TV episodes and catalogue movies. Netflix indicates that it plans to double its investment in original content in 2014, although this will still represent less than 10per cent of global content expenditure.
…
Netflix’s international business remained a loss-making venture as the company struggles to gain profitability without scale and without a legacy high margin physical business. Whereas in the US the company initially bundled its streaming proposition with disc rentals add value to the physical subscription Netflix has not had a preexisting business from which to launch a digital subscription internationally. At present, the international ventures are subsidized by domestic market return and with ongoing market expansions planned by Netflix; IHS does not expect this to change in the mid-term.
End od my inserts for Netflix
Hulu Plus
If you want to catch TV shows almost as soon as they air, Hulu Plus may be right for you. This streaming service hosts a plethora of TV shows and movies. Whether you want to watch “Leverage,” “Family Guy” or “Spongebob Squarepants,” Hulu generally posts new episodes within days of their airing on TV. Hulu Plus costs $8 per month (with some shows available only on computers for free), and provides past seasons of shows along with Hulu’s original programs. It is available on computers, game consoles, streaming boxes and mobiles.
Amazon Prime Instant Video
Amazon Prime Instant Video is a streaming service that comes with an Amazon Prime subscription. In addition to offering free shipping on Amazon orders and free Kindle books to borrow, Amazon Prime allows subscribers to access approximately 40,000 movies and TV shows. In addition to unlimited streaming offerings, users can rent and buy other TV shows and movies a la carte. This makes Amazon Instant Video a good choice for watching newer movies before they touch down on unlimited streaming services like Netflix. Amazon Prime costs $79 per year.
See also: Amazon may hike Prime cost as earnings disappoint and further challenges lay ahead of the company for which it needs to adjust its business model and expand its operations [‘Experiencing the Cloud’, Jan 31, 2014]
M-Go
If you’re not interested in paying a monthly fee for your streaming video content, M-Go might be up your alley. M-Go, which is the default streaming service on Roku boxes and also available on computers and mobile devices, allows you to rent and buy TV shows and movies. Prices range from $2 for individual TV episodes to $20 for HD movie purchases. M-Go excels in offering both HD and SD versions of content, making it an attractive choice if you want a one-off rental.
Blip
Watching big-budget movies and TV is all well and good, but for curated, original Web shows from charismatic creators, nothing fits the bill like Blip. Think of Blip as a more curated, creator-friendly version of YouTube. Individuals create and upload original series, ranging from comedy to reviews to funny pet videos, and Blip ensures that the content has professional production values and that new entries are added regularly. All content on Blip is free, and you can access it via your computer, mobile device or Xbox 360.
Vevo
MTV hasn’t played music videos since the ’90s, but the medium is not dead just yet. Vevo hosts the latest music videos from artists ranging from Katy Perry to Old Crow Medicine Show, but audiophiles would be wise to stick around for its scads of original content. Users can access biographies, retrospectives, behind-the-scenes footage and interviews about their favorite musicians, and curated playlists for both individual artists and entire genres. Vevo is free, and available on computers, mobile devices, Rokus, Apple TVs and Xbox 360s.
MLB.TV
If you’re a baseball fan, you’re in luck: Major League Baseball‘s streaming service is one of the best in professional sports. MLB.TV allows viewers to watch most games during the regular MLB season. (Postseason games are available through the Postseason.TV service at additional cost.) Fans can watch both home and away games from anywhere in the world. Stat junkies can examine each pitch as it happens and compare their fantasy teams in real time. MLB.TV costs $130 per year and is available on computers, mobile devices, set-top boxes, Xbox 360s and PS3s.
Crackle
If you crave pop cinema, Crackle could be the best thing to happen to your TV since afternoon basic cable. The Crackle service offers a rotating selection of a few hundred movies and TV shows, including “Ghostbusters,” “The Cable Guy” and “The Shield.” Crackle also creates and hosts original content, ranging from espionage thriller serials to “Comedians in Cars Getting Coffee” starring Jerry Seinfeld. Crackle is free (though you’ll have to watch some commercials) and available on computers, mobile devices, set-top boxes and game consoles.
Twitch
Watching other people play video games is, surprisingly, almost as much fun as playing yourself — sometimes more so, if you have a good host. Twitch is a platform for gamers to livestream their play sessions. You can find streams of everything from “League of Legends” to “Minecraft.” Whether you want to see tutorials, speed runs or popular Web personalities’ reviews, Twitch has you covered. The service is free, both to watch and to stream your own sessions. Twitch is available on computers, mobile devices, set-top boxes and PS4s.
YouTube
The biggest video streaming service online is just about unbeatable when it comes to variety of content. YouTube is the go-to site to upload short videos: cats, clips from your favorite TV programs, cats, original Web shows, cats, movie trailers, cats and more. The service will be one of the first to support content for the higher-resolution 4K TVs. If you’re looking to watch short-form videos, this is the place to start. YouTube is free and available on just about every device with a screen and an Internet connection.
Discovery to take majority control of Eurosport [[IHS] Screen Digest commentary, Jan 22, 2014]
Discovery Communications has agreed to take a controlling interest in Eurosport International, the pan-European sports channel, from its partner TF1 Group [of France]. … D