CES shows this is the year OTT becomes a player

Jim O'Neil

Count Entone CEO Steve McKay as one of the skeptics regarding cord cutting... sort of. At last week's Consumer Electronics Show in Las Vegas McKay, whose company sells a hybrid TV product for pay-TV operators that allows them to provide subscribers with a melding of programming that includes OTT content, told an audience during a Parks Associates panel discussion that "cord cutting is an overblown reality," with a caveat. While most cord cutters seem to actually be cord switchers, he said, flitting from operator to operator, the threat that they'll potentially defect to an OTT play like Roku is a little too real to ignore.

"I say to operators, if you don't offer an alternative, somebody else will," he said. "If you don't offer it, somebody will buy a $70 Roku box and ravenously consume over-the-top content."

McKay isn't alone in his belief that OTT is taking off (see this interview with Sonic Solutions' Mark Ely who contends 2011 is the year OTT and alternative deliver really accelerates), the rush by CE manufacturers to get connected TVs and other devices into the hands of consumers this year is another indication of how aggressive the market is becoming. LG, Sony, Panasonic, Samsung, almost all of the CE manufacturers who play in the TV space had a multitude of Internet ready models on the show floor, and yes, 3D still was a big player, although it played second fiddle to connected TVs.

Connected devices made up some 25 percent of TV sales last year; Parks Associates vice president and principal analyst Kurt Scherf anticipates they'll make up three-quarters of all sales by 2015, about 350 million units.

"Content options are finally catching up to the hardware innovations, and growing libraries of on-demand movies and TV available are starting to unlock the potential of connected TV devices as multifunction online entertainment and communications platforms," Scherf said.

That growth, and the increasing numbers of connected homes create immediate opportunities for service operators. "About 10 percent of U.S. households already connect their computers to the TV, that's a mass market," he said.

With more content coming online--Scherf forecasts transactional revenue from online video will increase to $8 billion by 2015--more consumers will be looking for OTT content.

The New York Times weighed in on Sunday, saying this year's CES made it obvious that a blending of the Internet and television was ongoing, and asking whether it would be "in concert with the major cable and satellite distributors, or in spite of them?"

That's a question we'll see answered over time, but it's becoming increasingly obvious that the timeline is becoming shorter. -Jim