Evolving OTT delivery launching an online video revolution

editor's corner

Jim O'Neil

Hulu, Netflix, AOL, YouTube, iTunes, Amazon.com and a growing legion of content available online, are changing the way consumers get their video entertainment. Gone are the days when online video meant watching jerky videos on computer monitors.

Adaptive bit rate technology, increasing bandwidth and other technologies now help deliver near-TV quality for videos streamed, or downloaded, from the Internet.

And consumers have embraced it.

Hulu Pus, the subscription service that's a joint venture between New Corp., Disney and Comcast's NBCUniversal, says it's on pace to hit 1 million subscribers. Netflix reportedly just moved past the 24 million subscriber mark; YouTube, already the most visited online video portal in the world, is continuing to expand its original content and movie services.

For Pay-TV providers, online video, once looked at as a non-issue, has become a major topic of debate.

Is it a friend or foe? A challenge or an opportunity?

"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 some 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

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Click here to download a free Fierce eBook that takes a look at that revolution and what it means to the industry.

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