A new study suggests just how popular, and disruptive, over-the-top delivery is becoming.
According to IMS Research, the increasing popularity and adoption of OTT video by consumers will create substantial challenges for telcos who provide IPTV, as bandwidth usage per household is forecast to increase 50 percent by 2016. And, said IMS Research in its Global Bandwidth Utilization Model report, telcos that are IPTV providers will struggle to adapt their networks--already at 44 percent capacity--to accommodate the onslaught of OTT video.
"OTT video-capable devices are becoming ubiquitous, and within a few years all but the lowest-end televisions and Blu-ray players will include OTT video capabilities," said Paul Erickson, an analyst with IMS Research's Consumer Electronics Group. "These new devices are forecast to supplant game consoles as the dominant OTT video client over the next few years."
A report earlier this month from DisplaySearch said shipments of connected TVs alone will exceed 138 million units annually by 2015.
In May, Fox Broadcasting told ad buyers it would start counting online viewers as part of its TV audience and begin mirroring its ad load for online episodes of its programs.
"This is what our business is becoming," said Fox's President of Ad Sales Toby Byrne. "There shouldn't be a different commercial experience by virtue of which way you choose to watch our content."
IMS Research, meanwhile, also said pay OTT subscription services will generate a cumulative $32 billion in revenues globally over the next five years and will account for a larger part of the market than pay-per services, which enable users to rent or purchase videos on an ad hoc basis.
"What we have now is a situation where the telcos are actively seeking solutions to optimize bandwidth," said analyst John Kendall. "OTT is here to stay, and the telcos have accepted that."
Telcos, said Kendall, are seeking cost effective solutions to maximize their legacy infrastructure. As telcos position themselves to meet the rapidly growing consumer OTT demand, they are reducing crosstalk across copper bonded pairs using the ITU-T G.vector standard (G.993.5), introducing software solutions to maximize network logistics and using caching in the network.
In addition, Kendall said, operators are considering deploying local content delivery networks to keep their traffic local, reducing costs of bandwidth transit.
"In a country with pronounced OTT content demand like the United States, average data usage by an IPTV household will rise to nearly 25 Mbps in 2015, up from the current 19 Mbps," Kendall said. "While the increase may not seem significant, IPTV households are expected to double, creating a need to address possible congestion issues." Kendall said regions with lower broadband penetration, like Eastern Europe and Latin America, are even more likely to face bandwidth issues.
So, what do you think? As one popular conference title asked... OTT: Friend or Foe?--Jim