OTT TV - Television's Sticking Plaster or a Major Operation?

By Ved Sen & Geof Todd

Picture this ... a patient is anaesthetized by fentanyl, and rendered unconscious by propofol. An endotracheal tube is inserted and mechanical ventilation kicks off. His chest is cut open through the sternum. The clotting is suspended ... an aortic cross clamp is placed on the aorta and the heart is cooled, and slowed down...

Sounds dreadful, intrusive and incredibly dangerous, doesn’t it? And yet, it's a part of a life-saving procedure, otherwise known as the bypass surgery . While not as dramatic, the OTT TV could be a life-saving bypass surgery for television as we know it, even though it looks like a traumatic disruption to most people, and a threat to existing models and commercial frameworks. Lifestyle changes come to us all and it’s appropriate that at 60+ the TV is feeling these effects too.

The Internet is here and it thinks it’s the next big thing in TV. The Internet gurus would have us believe that they own the future of all Digital Media. But just because Google, Facebook and Apple are riding high on their own rather spectacular waves, surfing across the TV screens has just not happened, for all sorts of good technical and business reasons . At present, most Internet connections cannot do justice to Television content. However, it’s abundantly clear that this is going to change. The only question is when. When will we have superfast broadband, that allows a throughput of over 4-6 mbps? It could be in the next 5 years, and very likely in the next 10. When it does happen, it will disrupt the broadcast business just as it continues to disrupt the print and music business.

Of course, there is always the spectre of piracy – the Internet is a great distribution medium, but it’s even better at re-distribution. The internet is also global, and there will always be a (virtual) community of people who will look to circumvent the legitimate revenue generation by uploading and distributing content illegally. This isn’t new. It’s happened with vinyl, books, audio tapes, CDs and DVDs. Although the ability of industry and governments to track this has gone up significantly, it’s a game of one-upmanship and will continue to be so. One of the key implications of this for music has been the shift to live performances as a primary source of revenue, over recorded content. What will the audiovisual equivalent of the concert be? Will we see a return to more live events like http://www.itunesfestival.com/?

The bigger and more radical impact is probably the disaggregation. Just as we buy single songs or the ones we like, without the burden of having to buy the album, or we skim a few articles across a dozen online publications, the notion that we need to subscribe to an entire channel in order to gain access to even a single show on it will vanish. This will be a massive boost for consumers, although it is likely that we will end up spending similar amounts for the content we want to watch. On the other hand the market will disproportionately reward good content over bad. There will be no hiding place on a schedule. In fact, there will be less and less scheduling and more choice of both content and how to source it. This too changes the nature of the PayTV aggregator - when you can go direct to the content source, why subscribe when the ‘Twitterati’ are also helping you to know what to watch and quite possibly for free?

Of course this is not an overnight change – you can still buy newspapers (but not the NoTW!) and CDs – but the economics are shifting enough to tend to tip business models beyond viability. Faced with this tidal change, the broadcast industry can either choose to ignore the warning signs, till it collapses under the onslaught of the Internet, or it can make the early moves to embrace this change and create new commercial models. OTT Television is such a change.

Put simply, OTT TV is TV delivered over the public Internet. Yet it is neither TV nor the Internet as we know it. When the Persian rulers started to invade India from the 10th century AD onwards, it led to the creation of the Urdu language, which was initially a confluence of Persian and Hindi. The word Urdu itself comes from “camp” as it was in the army camps and trenches that the language was spoken. The word ‘Television’ itself is a fusion of Greek and Latin and it looks like the Internet invasion of broadcasting will create OTT TV which borrows heavily from both but over time creates a new grammar. Point and click, QWERTY keyboards and URLs are basic tools of the Internet experience but we don’t know if they will work on TV – remember that there’s both a 3 metre gap in living room between the remote and the TV and a business model divide to traverse. Channels, schedules and passive viewing are staples of traditional TV which may need to be jettisoned in favour of context aware searches, collective recommendations and impulse viewing.

One of the key differences between OTT and IPTV is the QoS (Quality of Service) management. IPTV assumes a dedicated and managed network whereas OTT relies on the public internet. This is anathema to most broadcasters. But as pointed out by Andrew Ladbroke of Informa in his research, QoS issues are becoming less important for video, especially given the expectations around OTT services. Besides, in a few years, with enough bandwidth, the difference between OTT and IPTV may disappear for the lay viewer. For now OTT can mean real-time streaming, FTP-like downloads to your hybrid PVR or caching and trickle-down streaming – it’s whatever it takes to get the content on the TV.

The second big difference is that IPTV replicates the TV model. For the user, most IPTV services don’t feel any different to existing cable or satellite TV. This is not true for OTT, which is almost entirely a VOD environment, with little or no schedule. Neither OTT nor IPTV is currently geared up for handling live events. And although IPTV with multicasting will make a big difference, in the long term infrastructure evolution will see the pendulum swinging back in favour of OTT Television. We are in for an era of ‘video snacking’ along with full format viewing where we want the option to consume a whole series in one sitting.

What we haven’t yet seen is the device evolution to take advantage of OTT. Samsung have been early movers in this space, with their Smart TV offering, which bundles a content portal into the device. This feels like a short to medium term strategy, rather than the end game. It also turns them into an operator with a localised billing platform too, indicating that it is as much about a technology shift as it is about reinventing your role in the business food-chain. More innovations will surely follow. Podcast style automated updates, with the most recent episode of your show downloaded as and when it’s available, more interactive and gaming capability to enable new formats, and many more ideas to come.

And of course, we will soon be swamped by apps on TV, apps on connected TVs will probably provide a much wider range of apps compared to those on IPTV environments where the provider will always be a gateway or a bottleneck, and typically the app environment is less open. There is also much more screen real estate to play with, but the iTV 2.0 shift needs a better interface paradigm than we have today. Apps sprinkled around a grid is just so iTV 1.0.

So what will be the advertising or commercial model for connected TV? The consulting firm Strategy Analytics have argued that PayTV revenues will give way to content and advertising revenues. It is likely that the revenue base will shrink in the medium term until more successful advertising models start to mature on connected TVs. There could also be a lot more T-Commerce to support, along with product placement and sponsorship.

Many people argue also that social networking, a la Facebook, would never work on TV because they are essentially personal, rather than family experiences. This is exactly the point. They were not designed for TV. I would bet that in the connected TV world, there will be plenty of innovative social networking products which are actually designed for the television screen and family environments. Melding Broadcast with Broadband-delivered services looks like the next evolutionary stage for TV. Just like Steve Austin, OTT TV needs to go ‘Bionic’.

Notes: 
This description of the bypass surgery is from Wikipedia and we do not recommend that you try it at home.

This is part two of a series of three blogs from the authors.
Originally posted on Videonet

Part One
The Problem of IPTV is TV

Part Two
OTT TV - Television's Sticking Plaster or a Major Operation?

Part Three
The Connected TV exploiting the service opportunities