Is OTT online video delivery a game changer or losing battle for MSOs and telcos?

Jim O'Neil

At last week's OTTCon in San Jose there were sessions titled "It's not TV Everywhere, it's Internet Everywhere," which competed with "OTT Strategies for MSO and Telcos," followed by "It's about any TV, not TV Everywhere" and Cable/IPTV and OTT-Friends or Foes." And that was Day 1. And it wasn't just during presentations that speakers talked about the angst cable companies and telcos were feeling as online video delivery continues to ramp up, it was lunchtime conversation and chatter during break.

But the us-against-them talk had a pretty swift undercurrent. Whether you call it cooperation or convergence, the bottom line for many attendees was that the rapid adoption of online video by consumers and the bulge of demand for OTT delivery inevitably would push cable companies and telcos to look hard at, and eventually embrace an OTT offering. And most agreed that, for the most part, TV Everywhere isn't the solution, it's just a piece of the pie.

"The Internet is opening up doors and putting pressure on the old rules," said Mitch Berman, co-founder and executive chairman of ZillionTV. "A lot of over-the-top right now looks like cable. That may be a good model for those companies that are already in the business, but it's not good for the consumer. The consumer is unhappy. We need to be looking for ancillary ways to deliver the content consumers want."

Cable companies and telcos have been aggressive in crossing over into each others space; both have been aggressive adopters of new services that have allowed them to bundle offerings and compete against each other. But, for consumers, the allure of online video content-and that includes reruns of "Lost" and "The Bachelor"-has been, one, it's free, and, two, that they can have it whenever and wherever they want it. That pseudo-Libertarian attitude doesn't exactly fit the TV Everywhere model, which requires you to be a Pay TV subscriber in order to get packaged online video content.

"There's no free lunch in cable and IPTV as far as content," said Kshitij Kumar, CEO of TellyTopia. "It's all about the revenue. Right now, for most of the Pay TV players, OTT is Public Enemy No. 1."

But, he points out, the cable industry has a history of evolving, and it's likely OTT will be an agent of change.

"From an MSO standpoint, it's an "if-you-can't-beat-them,-join-them" situation," he said. "And, they know that they're going to have to leverage the pipe they have. They don't want to say it, but they know that OTT will be the wave of the future for MSOs."

Online video views topped 33 billion in December. Google, of course, owned the category, but Hulu is running strong. For the first time ever, it topped 1 billion views for the month.

Those kind of numbers-which have become almost routine-are prompting more Pay TV providers to sit up and take notice.

Telco Frontier Communications just launched an OTT offering called "MyFiTV," (see associated story) which it's making available to anyone, regardless of whether or not they're a Frontier customer.

"MyFiTV reflects the disappearing lines between televisions, personal computers and mobile devices," said Maggie Wilderotter, Chairman and CEO of Frontier. Exactly.-Jim