Over-the-top (OTT) video services across the world have seen a continued rise in popularity over the past few years, driven by consumer access to connected devices and continually rising broadband speeds fuelling consumer appetite. This rate of uptake has, for many broadcasters, resulted in the requirement to rapidly adapt and upgrade existing systems often with time and budget constraints.

The impulsive growth of smartphone and Internet users has fuelled the OTT markets. Apart from this, an increase in social networking users appeared to be a catalyzing factor in increasing the demand for OTT services. With the growing need for content platforms, the market scope of OTT global markets has been increasing. n just a few years, the OTT TV video category in 2016 is pegged at USD 25 billion. Although this represents only 5 percent of the global industry, OTT is growing by more than 20 percent annually and winning share over traditional TV, whose revenues are growing at a far more subdued rate of 2 percent. This swing is expected to shoot up much higher by 2020 and revenues are expected to touch USD 62.03 billion, at a 17.2 percent CAGR.

Lack of infrastructure and frameworks to float these services has emerged as the biggest roadblock in meeting the demand. India being ranked 128 in terms of Internet speeds comes as a big hurdle to explore OTT capabilities.

Providers Gearing up OTT Services

With OTT competition significantly increasing in mature pay-TV markets, service providers are decreasing marketing on their cable, satellite, and IPTV products. This allows them to compete with various OTT services, such as Amazon and Netflix. These services meet the consumer demand for anytime, anywhere programming, and mobile-centric viewing while targeting a larger national audience.

Delivering these services comes with many technical challenges. Developing robust content management systems, video transcoding and storage pipelines, application ecosystems, and piecing together adequate video-distribution networks are just the beginning.

Despite technical challenges, OTT services help pay-TV operators attract cord-cutters with a cheaper pay-TV alternative, as well as next-generation customers who never planned to subscribe to a traditional pay-TV service.

Bottleneck Checks

As OTT viewership has increased, Internet limitations have become bottlenecks. The first solution was to move content closer to the users or the edge, using private content-distribution networks, or CDNs. Last-mile bandwidth choke points are another issue. The solution has been the use of dynamic adaptive streaming over HTTP, or DASH techniques. These employ racks of servers to create versions of the content, at different resolutions, bitrates, and frame rates that can be switched out dynamically, depending on bandwidth availability to the client device.

In parallel, there have been improvements to video and audio compression that allow for lower bitrates. However, there has also been an increase in demand for higher-quality video, up to 4K as well as in high-dynamic range, and high-frame rate. While CDNs and DASH have improved streaming performance, the demand for live streaming and 4K content will continue to challenge OTT delivery. As video streaming over the Internet load has increased, IP switches and routers have mitigated this increase by increasing the port line rate, up to 10 to
25 Gbps, as well as adding additional buffering to prevent packet loss. However, buffering increases the end-to-end delay or latency, which degrades the quality of service of the video delivery. Higher port-line rates require higher internal router and switch bandwidth, as well as faster processing speeds. Higher video data rates require more processing power for compression, more fiber capacity, and more energy.

Potential solutions have been proposed to reduce the overall Internet loading due to video streaming, reduce latency, and increase video quality of service. One potential solution is to use multicasting techniques. Multicasting is a mode in IP protocols that uses reserved IP addresses to publish a common data stream. This technique has been used within the closed private data networks, but has yet to be done effectively for Internet delivery of OTT services.

Indian Scenario

The latest government initiative, Digital India, looks very promising and positive in terms of assuring the availing stringent digital infrastructure, which would be a great foundation for OTT services to be floated across and revolutionize the vast digital media market scope and generate massive revenues. Above all, it would be a great challenge for aspiring OTT players to come up with flexible and robust frameworks, architectures, and models to catch up the need. Though many leading corporate giants are making sincere efforts, the efforts are not up to the mark to catch the need of the hour. Service and solution providers spanning the broadcast, cable, and broadband industries are focused on the same goal: delivering revenue-generating offerings like OTT in the most efficient and cost-effective manner possible. With upsurge in OTT platforms, vendors are constantly demonstrating and launching services and solutions that are leading the wave of innovation in this area.

The India pay-TV market is poised for significant growth, with Frost & Sullivan reporting at least 30 percent of TV households will have access to OTT through their television sets. Witnessing the growth opportunities in the Indian market, manufacturers have launched several broadcast and OTT services ahead of the competition, with better video quality and at lower costs.

Real-time video compression optimization solution has raised the bar for OTT video quality and bandwidth efficiency. Leveraging the function of the human visual system, Harmonic's EyeQ delivers better video quality and bandwidth reduction of up to 50 percent for OTT distribution. Enhanced video quality and minimum buffering cloud-native solutions are speeding up the launch of broadcast and OTT services.

As consumers continue to embrace OTT video services, content providers and video service providers are eager to monetize the advertising inventory for OTT services as there is an opportunity to sell it independently of any legacy delivery. OTT solution providers have designed solutions for personalization and monetization of multiscreen video services.

NFV (network function virtualization)-based application monetization solution identifies all individual data flows on their network, including encrypted data and separately bills or zero-rates data use for any specific service. This solution simplifies the creation and management of new services through OTT partnerships, based on its ability to dynamically identify, manage, and monetize diverse data from apps and streaming services, including video streaming, audio streaming, music, and gaming. As several leading operators around the world explore zero-rated video, this solution gives operators the means to catch up with and go far beyond those capabilities. These solutions are facilitating service providers to generate instant revenue and reduce CapEx for broadcast and OTT applications.

The increase in OTT video user-base could also benefit product brands, with an advantage of directly reaching out customer segments. Businesses based in rural India can reach out to urban customers through OTT advertising, resulting in economic growth in non-urban areas.

Future Outlook

In many ways, digitization could usher in a golden era for content producers. Unlike traditional TV, OTT platforms are not limited to a fixed number of channels. As digitization picks up, broadcasters would be able to spin off as many OTT channels as required to cater to the demands of specific audiences. In a market as diverse as India, this targeting effort could lead to rapid increase in revenues from OTT content monetization.

The rise in popularity of OTT services not typically being matched by their financial return will drive operators to seek greater efficiencies and economies of scale across workflows. Even though the return on investment for OTT service providers is slow and does not justify the business proposition in the short run, competition will spur all broadcasters to consider the OTT business; exclusive content at a competitive price with a sophisticated, user-friendly interface is the way forward. To achieve this, the market will see increasing strategic alliances among ecosystem players. Data collection from OTT viewing will reduce risk of content investment, as acquisition and commissions are more tightly aligned to consumers' viewing preferences.

Chem Assayag, EVP-Marketing and Sales,Viaccess-Orca
Industry Speak
Advanced Technologies Boosting OTT

"Television remains amongst the most important entertainment media in India. The ongoing cable television digitization is bringing a paradigm shift in the overall operations of the TV sector. The process of digitizing the TV medium began with Phase-I in 2012 and has progressed slowly due to persistent challenges. Uncertainty in the market in terms of pending court cases and poor progress of set-top box (STB) installations have adversely impacted digitization across different phases. Phase-IV, in particular, has posed a major challenge in terms of logistics and infrastructure, given the topography and expanse of areas covered under it. This has made reaching people, installing STBs, and activating digital signals difficult.

At the end of 2016, the digitization of cable and satellite (C&S) households was about 70 percent, up from 60 percent in 2015, with parts of Phase-III and a substantial base in Phase-IV, still non-digitized. The ministry of information and broadcasting (MIB) has extended the deadline for Phase-III and Phase-IV of digital addressable system (DAS) to January 31, 2017 and March 31, 2017, respectively. However, major parts of Phase-III and IV still continue to run on analog.

It is likely that digitization would be largely completed by the end of 2017, with related benefits being realized gradually. Once complete, digitization is likely to bring significant long-term benefits in terms of addressability, offering choices to consumers, ensuring minimization of carriage fees, increasing transparency, and plugging the leakages of revenues – which would result in average revenue per user (ARPU) increase across the value chain and higher taxes for the government."

Chem Assayag
EVP-Marketing and Sales,
Viaccess-Orca