Crystal Ball Prediction: OTT Inevitability

Say you're a Telco and you have a few million subs, and are confident you could offer them subscription video services if you could achieve three milestones:

1. Secure licensing rights to a list of live channels and VOD content.
2. Establish a solution quickly to distinguish yourself from the competition.
3. Package a service that is at least break-even on a per-sub cost basis.

Welcome to the future.

Licensing agreements with content providers are possible in the near term as long as platform and geography terms can be reached. OTT infrastructure takes advantage of existing CDN, co-location and other third-party components, allowing for comparatively rapid implementation. A per-sub cost that allows for enough margin to make your offering attractive on the bottom line is the real challenge, though certainly building this monster yourself isn't going to provide more attractive margins.

In my opinion, OTT television is as inevitable as the displacement of satellite distribution by IP alternatives. It just makes sense from a service provider perspective. Centrally managed, monetized and measured offerings, which bring the lion's share of any PPV, subscription and even ad based revenue home to the service provider are attractive on many fronts. OTT offerings are nimble, allowing for quick implementation of new content offerings, revenue models and more. OTT offerings require less intensive architecture to maintain, monitor and support. OTT offerings can also remain "screen agnostic" where end devices are concerned.

For the viewer, there are also potential key benefits of OTT services vs. traditional. OTT offers me the opportunity to order from the alacarte menu every time I "eat" your content. Instead of the laborious task of actively managing my own viewing experience, your solution instead will fashion a content meal for me that is relevant to my tastes, habits, preferences, geography, socio-economic status and other data points. Hence, the content engagement experience becomes highly enjoyable for each individual viewer. Eventually, OTT will usher in the demise of television networks as we know them today. Instead, there will be millions of networks playing any day of the week-networks created by individuals from a clearinghouse of content. Oprah has her own network...why not you? Imagine a huge pool of content that is already highly relevant to you based on the criteria mentioned above. Now, imagine you can play program director with that content, fashioning your own linear channel, which includes several live events throughout the week. Now, imagine that while you're watching one of those live events-a music performance for instance-you see on your screen that three of your buddies are online. Asking them to join you is as simple as clicking an "Invite" icon. This is instantaneous viral audience growth that isn't widely adopted today, but is totally possible. OTT offers not only the delivery...but the inherent behavioral, contextual and demographic back channel that the internet has enjoyed for more than a decade.

I'm lucky enough to work for a company spearheading much of the innovation where OTT is concerned. A quick look at some of our clients like TV2Moro (www.tv2moro.com) will show you where this is all headed. In their case, it helps that their point of origin from an audience perspective was a clearly defined vertical target.

How do your per-sub margins improve as you add revenue streams that were heretofore impossible? My prediction is that soon, they will be attractive enough to justify the expenditure on OTT as an augmentation to and in some cases a replacement for traditional cable television. Crystal Ball indeed.