Conviva’s Keith Zubchevich recently sat down at the Streaming Media West conference in sunny Huntington Beach, California with representatives from M-GO, Verizon Digital Media and Fox Networks to discuss key OTT industry trends. The team talked about the industry’s traditional bundled TV model and how it could evolve in the next few years due to changes in consumer behavior, proliferation of devices, and the growth in OTT subscription models.
There is a major shift in consumer behavior to where people are now more willing to pay to access great content, and they need simplicity to watch when, where and how they want. During the panel, Zubchevich mentioned two data points that support this trend.
1. In 1960, only 7% of homes had cable (the rest got a handful of free channels via free-to-air broadcast), and today, over 80% of all homes subscribe to a pay-TV service.
2. Only 5 years ago, less than 5% of homes had a DVR. Today, more than 50% of homes use a DVR.
These points help illustrate that consumers are willing to pay for differentiated content that’s easily accessible on their own schedule, making OTT very compelling. And OTT providers are delivering. For example, M-GO is developing applications that allow the customer to see personalized content recommendations, share on social and have unique profiles for family members. For OTT services, it’s relatively easy to continuously develop and test anything from new bundles to features and capabilities, to see what the consumer prefers. However, as the popularity of OTT video services grows, consumer expectations are increasing rapidly. Leading the industry, OTT providers likeAmazon and Conviva customer M-GO are pushing the technology envelope, each recently announcing their launch into 4K, which will further strain the unpredictable Internet infrastructure.
Christophe Louvion, CTO for M-GO, believes it’s a good time to be in the OTT business, as Americans’ viewing habits are changing rapidly. Viewers enjoy more binge-watching, and have significantly higher bandwidth to stream their favorite content. Christophe noted, in 2009, over 99% of videos viewed were on TVs, delivered through the standard channels (Nielson). Today, only a few years later, on a given Friday night Netflix is 40% of traffic on the internet. Meanwhile, bandwidth in the U.S. is steadily growing. Louvion mentioned, “We just broke 7.5Mbps average per household. A lot of people have access, if not to FIOS, … to 30 to 60Mbps; and yes, it changes the distribution of bandwidth.”
However, a common misconception is that if there’s high capacity across the internet and high bandwidth into your home, that means a high-quality video stream, but that’s simply not the case. Even though bandwidth is increasing, so is consumer video viewing, as well as HD streams with higher bitrates. There could be a ton of capacity in the home, but between the provider and the viewer, there are many variables and congestion points on the network. The only way to deliver video across the variable, volatile internet is by utilizing a central control platform that uses diversity to reduce complexity and gives the content publisher control of the viewing experience.
Further complicating quality delivery is the fact that people increasingly are using more video-enabled devices within the living room. Louvion said, “Things are changing extremely fast. You have binge watching, you have a plethora of devices coming out every day.” This is especially true for the younger generation, who watch less on TV and more on tablet or mobile as devices are becoming more commonplace and less expensive. In fact, 45% of people under 40 are considering not having a TV or set-top box at all. Conviva’s value is that we ensure video is playing at the highest quality on any and all devices. We help our publishers and service providers deliver a consistent experience so that their viewers enjoy their favorite shows in the same quality whether it’s on a flatscreen or mobile.
So, as the industry works through the changes and challenges in the video delivery model, will OTT become the future of TV? If the goal for OTT is to become mainstream, and not just a side business, quality and scalability must become a priority. Currently, video on the PC or iPad isn’t always in HD, and the panel believes the tipping point for OTT to reach critical mass is quickly approaching. Across the board for un-optimized streams, Conviva typically sees high buffering or otherwise, low, variable bitrate, where you can’t see facial details or a game scoreboard. When the OTT industry prioritizes quality, it will finally be driving towards becoming a successful, lean-back experience, with HD quality on the biggest screens. Conviva is continuously helping this evolvingmarket as it grows, enabling content publishers to get viewers to watch more.
You can watch the full panel from Streaming Media West 2013 here. Take a look and let us know what you think the future of TV will look like.
Digital Marketing Team