OTT Video: What Does the Future Hold?

The new year is fast approaching, and much like the practice of making resolutions, it is time to look ahead for what the cable industry might see in 2016. One challenging area continues to be effectively responding to and competing with the disruptive transformation that has been going on around over-the-top (OTT) video services as well as the increasing number of Internet of Things (IoT) devices in the market.

Cable operators know they currently have an advantage and an opportunity in the OTT realm, and many are in the process of strategizing or deploying their own OTT steaming services, said Bob Hallahan, VP of solutions architecture for Xavient Information Systems. This includes an existing BSS and OSS infrastructure, a sales force with trucks in the field, and troubleshooting diagnostics.

"I don't really see the pure play (companies) going into that level of capital expenditure," Hallahan said. "It is the opinion of folks in the cable space, (those capabilities) are something they need to leverage in terms of a competitive advantage with the OTT players."

What operators have been rolling out is a TV Everywhere service - live and on-demand to IP devices - that still requires a household to be a cable subscriber and have a set-top box. Now, as Hallahan said, they are developing OTT services more like what the pure play OTT providers offer. The target is millennials or cord cutters/shavers.

"Operators know there will be some cannibalization (of existing cable subscribers), but most likely there will be a net gain .... OTT subscribers will be considered a separate line of business," Hallahan said. In other words, even existing pay TV subscribers would have to pay extra for access to the OTT service.

An attraction would be access to any episode of a show at any time and on any device. OTT could come to replace the DVR model since with OTT, the concept can become one of recording everything in the cloud. Everything is on demand, Hallahan said.

So if a complaint of current cable subscribers is having to search out and record episodes in order to have access to every one, one of the biggest complaints from current streaming users is reliability and quality of service and delivery. Operators providing an OTT service would have the advantage of owning the end-to-end distribution pipes that deliver video, whether live or recorded in the cloud.

"They have the ability to monitor the network end-to-end to ensure the quality, bitrate and speed as the data is flowing," Hallahan said. "They have a more accurate picture of what the customer experiences. Hopefully that translates into the ability to bring back customers that have left them because they are attracted to OTT offerings."

Of course, operators are also busy with upgrades to offer more bandwidth and higher quality Internet connections. And another model is to package a Netflix (NASDAQ:NFLX) or other existing OTT services with a guaranteed dedicated bandwidth connection. "This prevents the whole problem of who will they call when there is a problem," Hallahan said.

From the IoT perspective, operators are devising strategies for data mining - what needs to be collected, how to do it effectively, and how to leverage and correlate it to enrich the consumer experience. "It is a classic analytics challenge," Hallahan said. "You need the right data at the right time to react to (an alert) ... to be proactive and know how to head off a potential problem or customer satisfaction issue."

While there are pure play IoT companies, as in the OTT space, operators have an advantage because they have the ability to monitor, manage and configure the network that delivers the IoT service. "Because of that, they have a much higher value proposition," Hallahan said. "There is (a level) of assurance they can guarantee."

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