A year ago, conversations with telcos about over-the-top delivery and content generally revolved around Netflix, Hulu and YouTube, and it usually was a pretty short discussion.
Friend or foe? A serious threat or an opportunity? Aside from a few operators who offered customers an IPTV product, the issues created by over-the-top content was pretty thin.
Fast-forward to the TelcoTV show in Las Vegas this past November, and the tone changed-dramatically. OTT took center stage, as more operators weighed their IPTV investment, and questioned how it would be impacted by the surge in consumer adoption of OTT services.
For some in the industry, OTT delivery is perceived as a threat.
"We definitely see over-the-top as the enemy of the operator," said Steve McKay, CEO of Entone. "Over-the-top, by definition, means the consumer doesn't have a relationship with the operator, aside from the broadband they're providing, they have a relationship with whoever is providing that video service."
Of course, others are in the position to see OTT content as an opportunity. Consumers, most analysts agree, are poised to be the biggest winners as choice expands and the price of content becomes more competitive.
And the companies that handle that content, like transcoder Elemental, should see strong gains.
"In 2008 we had six figures of revenue," said Sam Blackman, CEO of Elemental. "In 2009-2010 we've had seven figures of revenue, and I think there's a very good change we'll have eight figures of revenue this year. An order of magnitude every other year... if we can keep that run rate up we'll be all right."
Sam Rosen, an analyst with ABI Research, says OTT content reaches 780 million users worldwide, with 106 million households in the U.S. alone. He added that research points to 250 million U.S. households watching OTT content by 2016, with revenues from subscriptions and advertising reaching $20 billion in North America alone.
And, he said, that's a conservative estimate.
"Right now, Asia is a pretty small piece of our forecast because of the difficulty of monetizing it," Rosen said. "But if you look at the number of consumers, even though there's fewer dollars per consumer, the potential there is astounding."
The space is continuing to evolve, and that evolution has lead to an online video revolution in the making that is changing the industry quickly.--Jim
Click here to download a free Fierce eBook that takes a look at that revolution and what it means to the industry.