The Impact of OTT on the Walled Garden

Google's announcement of its web-connected Google TV product adds a heavyweight contender into the battle for control of media consumption in the living room. The role of gatekeeper has long been viewed as important, since it is assumed that whoever owns the point of access to the connected home environment will control the viewing habits-and wallets-of the consumer. Any move would of course be potentially damaging to broadcasters who rely on revenue generated by audiences watching their content.

Yet unleashing unfettered internet access into the living room may cause all sorts of quality of service (QoS) issues detrimental to the customer's experience. So to what extent should broadcasters, network operators, content owners, or device manufacturers embrace over-the-top (OTT) video delivery?

We put the question to a range of leading industry developers.

Can you provide some perspective on how we should view the jostling between network operators, broadcasters, content owners, and CE manufacturers to provide the home gateway to the internet?

Steve Morris, Systems Architect, ANT Software (SM): The notion of a single device acting as a gateway for all media consumed in the home faces a number of challenges. Each of the devices used to access content in the home has different strengths and weaknesses that require different content delivery mechanisms, different media formats, and different quality levels-trying to address these issues through single a home gateway is likely to be problematic for CE manufacturers.

Open standards will reduce fragmentation and initiatives like HbbTV are already making headway in addressing this issue. There will still be differences in platforms, but I think we will see core standards emerging that will give a common platform where "progressive enhancement" is available for devices that offer more advanced features.

Yonatan Sela, VP Marketing, Tvinci (YS): Pay-TV providers understand they need to have presence in OTT, although the vast majority of their revenue originates from their cable/satellite pay TV. They are interested in expanding their content offering to OTT as a complementary service, understanding that one day this will be their main source of revenue. This is a defensive move required as a long-term strategy.

Other network operators (particularly multi-play operators) recognize the opportunity for securely delivering paid content in high-quality OTT, and understand this is their chance to take a slice of pay TV operators' pie. They leverage similar advantages that any operator has, yet obviously find it harder to be recognized by users as an alternative to the pay-TV providers. Tvinci has implemented such an integrated solution for multi-play operator Orange, when it launched its VOD shop that includes Hollywood and local content sold under various business models to PC/Mac users. This project's next step is a TV experience delivered to Orange subscribers (Orange nowadays functions as a mobile operator, ISP, and telco).

Content right holders/content owners recognize the opportunity of becoming the future pay-TV providers: over-the-top. In theory, they no longer need to rely on infrastructure of the pay TV operators in order to deliver premium content and charge for it. Therefore, they require an end-to-end solution which enables them to encode, manage, present, deliver, and charge for content OTT on a variety of devices.

Jim Lomax, Executive Vice President, Sales & Marketing, AirTies (JL): Everyone needs to remember that the key to success is directly relative to the amount of desirable content available and at an acceptable price to the consumer. 

Any new product will need to connect to an existing gateway or router. This will be an issue for consumers as it will mean extra cost of wireless equipment, or running a new Ethernet cable through the home. The issue of content also arises here; consumers won't pay for additional technology to add new services unless they are desirable, affordable and the equipment is not too expensive.
Operators and broadcasters are still in a strong position if they are able to add some of these new desirable OTT services to their existing hybrid platforms. They have existing equipment installed in the home and the ability to retro-fit a connection to the broadband service. Those who do not have a fully hybrid service will surely consider this as a key requirement in their next generation products. Broadcasters with a large installed base have the opportunity to monetise some of the pay-OTT services and content owners should look at this as a new opportunity to target customers via OTT, but who are already used to paying for content.

What are the key challenges that these players face?

Yann Courqueux, Chief Marketing Officer, Netgem (YC): The main challenges that CE manufacturers face relate to the access to premium live content and customer billing. If CE devices access the internet and some premium content portals, they will have to strike deals with pay-TV operators who often own and manage the live content channels and enjoy exclusive rights to them.

In addition CE manufacturers need to integrate their devices with conditional access systems and often need to customize the UI so as to integrate the pay-TV portal into one user experience.

Portal navigation needs to be easy to stimulate consumption. It needs to be consistent, so that whatever the source of content the user experiences the same navigation scheme, the same identification scheme, the same search scheme, the same payment scheme. This should be the case whether the content is from YouTube, the end-user's own library, the operators' VOD catalogue or the broadcaster's catch-up TV service.

David Bloom, Commercial Director, IP Vision (DB): Each party faces different challenges. For the platform operators it is the balancing act between enhancing the offering for their existing customers while taking advantage of the new opportunities that OTT provides. Unlike the CE industry, they are very well versed in managing the customer relationship and providing a true service, not just the basic functionality. Since the inception of FetchTV, we have always looked at the single account route as preferable. It is important not to leave the user in a no-man's -and when something goes wrong. Who do they go to - the content provider? the retailer? the manufacturer? These are tough questions which until addressed will hold the sector back.

Steve Morris: Consistency is vital. One of the biggest challenges for service providers, when delivering a service across multiple platforms with different capabilities, is to ensure that the interface and user experience remains consistent but is also designed to the strengths of each platform. At the same time, service providers need to retain enough commonality across their target platforms to retain the strength of their brands ensure a consistent user experience.

Stef van der Ziel, CEO, Jet Stream (SZ): Obviously, the challenge is to give consumers one box that does it all.  Today, there are multiple set-top boxes for multiple services. Several OTT services are in operation today, and they all use different technologies. I don't expect to see a lot of standardisation in the next year that can address this challenge. Consumers want choice, and they don't want to be locked into a single service. The downside of the walled garden is that it doesn't give consumers any choice. A platform that provides a high level of choice will win over consumers.

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