CUSTOMERS ARE FLOCKING TOWARDS ON-DEMAND STREAMING APPS MORE THAN EVER. IS IT THE END OF PAY-TV? HERE’S WHY OPERATORS OF ANY SIZE CAN LAUNCH AN AFFORDABLE AND COMPELLING HYBRID TV SERVICE THROUGH THE CLOUD.
The beginning of on-demand streaming.
Just 15 years ago, TV content was mostly available through analog or digital linear/Live TV distribution via tunable TVs or STBs. There were minimal Video on Demand (VOD) offerings available to subscribers, and these were mainly through their Live TV providers on hybrid STBs in managed regional networks.
Streaming VOD content began to take off globally in early 2010, once providers such as Netflix, Hulu, HBO, and Amazon prime launched their internet streaming services. While Netflix launched its streaming OTT Video on Demand service in 2007, subscribers really began to grow from 6M to 20M only by 20101. Hulu launched their service in 2007, reaching 1.5M subscribers in 2010(1), while HBO launched in 2010 and Amazon Prime Video in 2011.
Hundreds of other streaming services quickly followed. Today there are over 300 OTT service providers in just the United States alone.(2)
The rise of OTT dominance
A perfect storm of converging technologies has helped the success of OTT streaming services:
- Streaming technologies that supported efficient and adaptive delivery of unicast content over the unmanaged internet were developed.
- Wi-Fi/Mobile internet speeds increased dramatically, and at the same time, the costs for those services decreased.
- New powerful mobile devices and tablets that offered excellent quality and on-the-go viewing experience to users became popular.
OTT streaming services also took advantage of new viewing habits. They first offered popular films and series on-demand, letting viewers watch at their leisure and from any place. They locked in this behavior by investing and producing new movies and series that they owned the rights to. This strategy hooked in viewers, and binge-watching is now the norm. The number of available hours of content and its quality can be an important consideration when signing up for a video service.
Extensive support of devices is essential; when you can access content on any device anywhere via an easily installable app (e.g., iOS, Android, SmartTVs) as OTT streaming services have done, you can quickly reach a larger audience.
There is no doubt that the popularity of OTT streaming services has played an essential role in the decline of Pay-TV subscriptions:
“From the peak of pay-TV subscriptions in 2014, 23% of households have now cut the cord."(3)
Furthermore, cord-trimmers and cord-nevers may have led to declines in Pay-TV revenues and also shrunk the market.(4)
Meanwhile, the OTT market is projected to grow:
The Over the Top (OTT) Market was valued at USD 85.16 Billion in 2019 and is expected to reach USD 194.20 Billion by 2025, registering a CAGR of 13.87%, from 2019 through 2025.(5)
Today the ubiquity of OTT streaming and the ability to watch content anywhere and anytime is something we take for granted.
What happens to pay-tv now?
Does OTT streaming sound the death knell of traditional TV providers?
No. TV Service providers have several aces in their sleeve – brand recall in their markets, still-affordable broadcast, cable, satellite, or terrestrial distribution networks, and therefore access to under-served regions in need of a service. They have rights to a large catalog of popular and unique regional content (E.g., sports) produced 24/7.
TV service providers must take advantage of these strengths and adapt to the changing behaviors of viewers. The answer may be in a TV service that marries Live TV and VOD content.
Yet, this alone is not enough. The service must be offered on as many devices as possible, with "on the go", “bingeable” on-demand type features for live TV such as pause-live, restart/catchup, Cloud DVR.
There is evidence that customers are willing to stack-up multiple video services (6) so offer high-value skinny bundles to woo cord-nevers(7). Flexibility business models to offer replay/catch-up/VOD content - whether as advertisement, transactional purchases, or subscription add-ons, allows further monetization opportunities.
As an operator, viewer insights – the "what, when, how" subscribers view content is fundamental to prioritize and fine-tune expensive content rights. It is also critical to secure the content during distribution and during playback on all devices to combat piracy and meet broadcaster requirements.
Finally, the technology underpinning this entire solution must be nimble to respond to continuously changing behaviors and flexible to add or trial new features quickly as the market demands it. Rather than making sizable initial CAPEX and resource investments that soon may become outdated, a managed subscription service can be less risky, deliver lower TCO and allow you to be profitable from day one.
New technologies such as virtualization, containerization, public/hybrid cloud services, artificial intelligence, and machine learning support these new OPEX models and business insights for operators to launch a new service quickly. It is also feasible to reuse or extend existing video processing infrastructure, yet deploy this service separate from existing legacy broadcast or IPTV deployments that may be inflexible, expensive, and difficult to manage.
How Stratos can help you launch a compelling service
Stratos offers a managed Cloud TV or TVaaS (TV as a service) solution to Broadcast Video Operators/ISPs/Telcos.
Industry experts Nordija and Verimatrix bring you a pre-integrated video platform and video content security (CAS/DRM) that runs in the cloud together. Along with a list of pre-integrated, secure STB solutions from EKT and a comprehensive set of pre-integrated Video Headend and Video Distribution partners, you can launch an outstanding new video service in weeks!
Stratos supports all distribution networks including broadcast, so even if you want to offer a pure multiscreen OTT offering, a multicast IPTV solution, or a hybrid broadcast offer via Android TV, AOSP, or a Linux STB, we have a ready and secure solution for you.
Stratos offers industry-leading features such as a multi-op-co UX, a robust unified search capability across live and VOD content for viewers, and deep insight into user viewing habits through Verimatrix’s operator analytics. The powerful backend supports various business rules and models as well as extensive offer management. Content is secured during transit through Verimatrix’s globally trusted conditional access and DRM solution as well as through their anti-piracy watermarking solutions.
Stratos takes advantage of the continuous development and continuous integration (CD/CI) model and regularly releases new product features, allowing you to stay ahead of a changing market. We manage the solution 24/7, so leave the uptime and upgrades to us, while you operate the system to grow subscribers.
The solution offers an extremely low initial investment and an attractive subscription pricing based on active households. This price includes 24/7 support as well as an ongoing roadmap of new features.
Stratos makes a TV service compelling.