It seems there are diametrically opposed opinions about “Over the Top” (OTT) Video and the effect it’s having on the broadcast industry. Some are adamant that OTT video is already having a major impact. They point to stats that show cable companies have lost subscribers the last two quarters, which they say is a clear indication of consumers cutting the cord in favor of watching free TV over their broadband connection. Others (especially in the cable industry) say cord-cutting is not a reality. They claim we’re seeing the effect of an economy where many customers have either lost jobs or been forced to take pay cuts, forcing a cutback on non-essential services.
I personally don’t think OTT video is having a big impact–yet. There are certainly some on the bleeding edge that have figured out a way to stream Internet TV to their big-screen, and have now cut the cord for good. Other folks much younger than me are satisfied streaming movies from NetFlix and watching TV shows on their laptop. This is not, however, where the masses are yet. The majority that have left pay TV have done so because of the economy and the high price of the service. And, yes, while there is definitely savings with OTT, whether or not those who have cut out cable have since hooked their TV to the Internet is another question. Some likely have, but most probably have not, and are waiting out hard times. Also, while the industry lost subscribers as a whole in Q2, there is evidence of a modest comeback in Q3. Unfortunately for cable companies, they were left out. It looks like many last quarter left cable for competitors like ATT, Verizon, and DirecTV, who saw growth, while Comcast, Time Warner and Charter lost subscribers.
What does the future hold? Where customers get their video content in the coming years will depend on who controls the content that consumers want, and the ease of use in getting to that content. The big providers will not give up their hold on the video consumer easily. The cable companies have been introducing “TV Everywhere” as a way to counter the effect of OTT Video. So, if you are a cable subscriber, you can watch your favorite programs whenever you want, on any device you want, in addition to getting TV on your big-screen with no hassles. Verizon has also jumped on that bandwagon with the launch of their Flex View service, and AT&T’s U-Verse service can now be accessed via an Xbox 360 or a Windows 7 phone. Clearly, the major pay TV providers have a lot of leverage as they strive to hold on to their market.
The other factor affecting broad acceptance of OTT video as an alternative to traditional TV is how easy it is for consumers to connect OTT video to their big-screen. There are more options all the time, like Google TV, Apple TV, Roku and Boxee. But, while the technology is getting easier, there are still drawbacks. The current plight of Google TV, for example, shows that content is still king. Broadcasters, who are unsure at the moment of where they fit in the OTT video world, have decided to block their content for now. Major networks like NBC, CBS, ABC, FOX, and Viacom have all decided not to allow their content to stream over Google TV, and Hulu has also blocked its site from OTT platforms. This has led consumers to wonder what they are actually getting when they buy an OTT box. They want more than free YouTube videos and the ability to buy and stream movies from NetFlix.
This will all change, however. As the broadcasters and content providers discover that there are revenue opportunities available from OTT, they will unblock their content. Also, those facilitating OTT to TV viewing will be striking deals with content providers, which will help move things along. Roku, for example, now has deals to stream live content from the NHL, MLB, NBA and Ultimate Fighting.
Certainly, 2011 will be an interesting year for Internet video and traditional TV. What are your predictions?