Level 3 is finding that as its OTT video providers have matured beyond the development stage, the next steps will be focused on providing richer content and ensuring a favorable user experience.
Given the array of choices and pricing package that users have for online video, consumers are not shy about trying out various services.
A recent Parks Associates study revealed that 20% of U.S. broadband households had cancelled at least one OTT video service in the past 12 months as consumers experimented with new services.
One way established OTT providers like Netflix and Hulu are retaining customers is to add more original content offerings.
Already a well-known Content Delivery Network (CDN) and broadcast player, Level 3 provides transport and other related services are seeing its customers converge on two main grounds: using multiple CDNs and providing targeted content.
Jon Alexander, senior director of product management at Level 3 Communications, told FierceOnlineVideo that their OTT provider customers’ expectations for quality and content are escalating.
“Service quality feels like the main battleground within OTT,” Alexander said. “There’s a very fierce battle around who can deliver the best user experience, picture quality, and fastest startup times and that’s how our customers are measuring us as a vendor.”
Alexander added that its customers want to know if it is delivering the right performance and if it sustains that in the geographies where it operates.
“It’s definitely a key buying criteria across our customer base,” Alexander said.
Multi-CDN use growing
Despite being an established CDN player, Level 3 is a supporter of the growing multi-CDN movement. Multi-CDN is the practice where OTT providers user various CDN providers as way to improve global latency and service uptime.
Nearly half of the respondents to a recent Level 3/Unisphere study said they will employ multiple CDNs, up from 40% in 2016.
This means that Level 3 and other CDN players have to provide the best service day in and day out.
“We’ve been a big supporter of multi-CDN as an industry best practice,” Alexander said. “Our view is if we’re doing a good job, we’ll get more share of traffic and if we don’t do as good a job as someone else we’ll get less share.”
Still, there’s plenty of CDN revenue Level 3 can chase. According to Market Watch, the CDN market will grow to $12.6 billion by 2019, with North America expected to be the largest in terms of revenue contribution.
Alexander said that Level 3 continues to make investments to improve its CDN capabilities for its OTT and broader video industry customer base.
“Typically, where we see customers using multiple CDNs, we’re getting a big share of traffic so it’s paying off for us,” Alexander said. “It’s that virtuous circle where we are investing, our customers are happy and we get more business as a result of it.”
Migrating to segmented content, live TV
As OTT providers grow beyond just being another SVOD source, these providers are developing and aggregating content for specific audiences —independent foreign films, comedy or sports.
Large traditional film houses like Turner are introducing new services like FilmStruck, a streaming movie service focused on appealing to film aficionados. The service provider has been broadening its reach by making its service available on popular platforms like the Apple TV platform and Google Chromecast.
Level 3 has also been positioning itself to help its OTT providers. “OTT democratizes service choice and it’s much easier to reach a targeted audience,” Alexander said. “Things like niche types of things like foreign film services, you can find an audience online much easier than through a traditional broadcasting medium.”
Besides segmenting content, more OTT providers are migrating from just offering VOD, which was the entry point, to also provide customers live TV services online.
Level 3 said that established providers are demonstrating an affinity for live-linear OTT, either today or as a planned offering within the next two years.
“As some of these OTT providers have matured, they have moved to offer live streaming as well,” Alexander said. “It’s a lot more challenging to make it work technically and commercially, but have seen over the last 18 months our customers launch these OTT streaming services and try to replicate a true television experience online.”