Service providers are decreasing marketing on their cable, satellite, and IPTV products that offer managed quality of service in favor of new products that use over-the-top (OTT) technologies to compete with Amazon and Netflix.
With OTT competition significantly increasing in mature pay-TV markets, live linear OTT video services will grow to approximately USD 7 billion dollars of worldwide revenue by 2021, from a little more than USD 1 billion in 2016, according to ABI Research. The most recent OTT service launch is DirecTV Now, an AT&T national product with live linear TV.
These services meet the consumer demand for anytime, anywhere programming, and mobile-centric viewing while targeting a larger national audience. The services fit within carriers adopting mobile-first mindsets as mobile subscriber bases and revenues exceed fixed-line revenues, largely due to per-consumer as opposed to per-household connections. This helps win the battle for exclusive content rights but poses strong technical challenges.
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. Quality of service assurance, network congestion management, content protection including analytics-based protection, such as modules which limit password sharing, and business analytics are some of the technical challenges to offer mobile OTT services. As mobile video consumption increases, mobile operators are exploring policy-based approaches to meet customer expectations and manage the effects of video services on mobile data caps.
The technical challenges are so significant that many operators have made significant investments in technology platforms. AT&T/DirecTV purchased Quickplay Technologies to gain better control of its OTT launch. Even so, some outages occurred as the platform scaled. Despite the 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. Live OTT services, particularly sports packages, continue to gain the most traction, as they allow customers to watch the same live programs that they receive through pay-TV services at a fraction of the cost.