OTT : A New Market Already Maturing?

By Alan Arolovitch.      We read with interest the recent ‘Prospects for Premium OTT in the USA’ report – conducted by research firm MTM and sponsored by video technology company Ooyala and payment service provider Vindicia.

The report predicts a decrease of Netflix OTT video market share from 85% to 50% in 2018. To us, this highlights both the pending maturation and potential fragmentation of the OTT video market as new players enter it, increasing consumer choice and competition. Indeed, it seems like there is a new announcement every day recently! A good summary of the activity is here.

New OTT video market entrants come from different backgrounds compared to the Web companies like Netflix and Google that blazed the OTT trail. Thus, the report expects multichannel video programming distributors (MVPDs) to have a “major impact on the dynamics of the market”. Online video niche services are expected to grow strongly in the next few years as well. One can easily imagine MVPDs and niche content providers each exercising different business strategies, as it comes to service positioning, distribution and content delivery.

When it comes to content delivery, each OTT provider’s content delivery strategy - IP peering, private caching programs, use of SSL, multi-CDN sourcing – should be seen is an extension of its business strategy, and is a key to achieving desired cost and quality goals. As a member of the Streaming Video Alliance, we are keen to work towards the goals of deeper ecosystem collaboration and creation of an open architecture for OTT video delivery.

In view of these market trends, PeerApp believes strongly that “last-mile” network operators need to prepare now for a much more fragmented OTT video market, and look for unified and open solutions when it comes to video caching and content delivery. Solutions such as those described in our whitepaper about the evolution to Local Content Delivery.

In addition, we believe that for the OTT market to scale and to reach cost and quality efficiencies strategies need to become more cooperative with, and less adversarial to, network operators. We see the start of a cooperative trend in distribution agreements being struck between online video distributors and operators, as done by HBO Now and Hulu.  Open architectures are key to this sort of collaboration, of course.

It continues to be exciting “out there”!

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