WTH is OTT?

April 23, 2010 – 5:22 pm

Boxee what's new screen

A coworker recently hassled me for my use of acronyms without explanation. It’s something that I try not to do, but the various acronyms of our industry boil down large concepts into just a few letters, so sometimes it’s unavoidable.

This posting is intended to address the big topic behind the small acronym “OTT”.

OTT is video content delivered “over the top” of Internet access, without association with the Internet access provider themselves.

Examples of OTT video include online services like Netflix On Demand, Hulu, MLB.TV.  The OTT video label can be extended to any video content, so I suppose YouTube might count, but generally OTT refers to episode or feature length content, positioned as an alternative to conventional television.

OTT video is the anathema of those who offer subscription television, and it’s one of the core items that drives the debate around network neutrality and usage and speed caps.

Most service providers have created “triple play” bundles of Internet, telephone and television, and each of these three revenue streams make up an important part of the total revenue stream for these operators. For the video portion, the national average household spending for television is nearly $75 (source: Centris, 2009 data.)  OTT video threatens this, which is particularly painful for system operators because the video component is generally the most expensive of the three components of the triple play.

If your broadband provider is also selling you TV, their concern is that if they provide you with “too much” broadband, that OTT video will flourish and you will stop buying expensive TV in favor of a less expensive broadband only service.

There is an inherent conflict of interest here, and it is clear that industry wide, OTT video influences the choices by providers to limit speed and cap consumption. This is particularly obvious for cable providers, who have the most video customer and revenue to lose.

The debate about network neutrality is quite clear in the dialog about OTT: why would a provider who sells you TV want to give you enough bandwidth to replace that TV service?  This is particularly interesting in light of recent decisions by the Supreme Court, which found that the FCC does not have the authority to censure a major cable provider for tampering with their customers Internet traffic, in this case Bittorrent, which is presumed to be mostly television and movie downloads.

So, all of that aside, is OTT ready for prime time?

The biggest issue in OTT video seems to be delivery to the sofa rather than the desktop. It is getting much easier today, with multiple solutions to address this problem.  A few of of the key enablers:

Faster Wi-Fi. 802.11N appears to finally deliver enough bandwidth for HD content streaming to the living room without cables.

Netflix on demand can now be viewed on a growing list of devices, some of which you might already have connected to your own TV. Samsung Bluray players, the XBox 360, Playstation II, and even the Wii will stream Netflix today.

Dedicated hardware solutions like the Apple TV, Roku, Popcorn Hour, and the new Boxee from Dlink all promise more powerful and easier access to OTT content. Most TVs today also offer a VGA connection for easy hook-up to a laptop, so buying a couple cables (video and audio) to connect your laptop to your television can be a low cost way to get started.

Finally, TVs are becoming far more connected themselves, which in the long run may eliminate the need for an external box. Samsung, LG and Sony all have connected television products today in various states of usefulness.

What about content? Can I watch my shows?

Maybe.

Today there are more and more OTT video offerings, and more mainstream content. For movies and many television shows, there is good availability from Netflix and iTunes (Apple TV). Sports are becoming available, for example the subscription offerings from MLB.tv.

Hulu is worth some discussion because it provides some great current television content, but it’s tough to view on your television.  In my household there are five different devices that will stream Netflix (no kidding!), but only the laptop will play Hulu.  This is because Hulu content is licensed for PC playback only, so they are restrictive. This means that one OTT hardware solution won’t let you view all content – you may need to seek out different solutions for different types of content.

Boxee may solve some of these problems – it behaves just like a web browser, and Hulu today can be viewed on Boxee, but that seems to be a constant game of cat and mouse, with Hulu shutting out Boxee playback and Boxee making changes to allow playback again. End-users are the pawns in this game, and it can be frustrating.

As a result of all of this confusion, I think that most users first experience with OTT will probably be Netflix, but once viewers get a taste for content on demand without a $75 cable bill, I suspect that more and more of us will jump through the hoops required for a relatively complete OTT video viewing experience.

Finally, OTT video isn’t always free. There are free services like Hulu, though they announced today that the most recent five episodes of shows will be free, but full access to all archived shows will cost $9.95 monthly.  MLB.tv is $19.95 a month. Apple’s iTunes store for Apple TV offers shows ala carte for $2 to $3. You can also buy tv and movies from Amazon as downloadable content.

There is also lots of free content, and solutions like the Roku and Boxee make it easier to find it. You can also play most content that you download to your PC, plus videos you make yourself, because these hardware boxes will play back a multitude of video file types.

Some interfaces to OTT video are also bringing a social component, allowing you to connect with friends, recommend and rate shows and share comments. This may turn television viewing into a much more engaged activity. (Today the theme seems to be watching live TV while fondling a smartphone and reading and writing tweets with others watching the same show live. Tweets fly during live shows; “Can you believe that outfit! #oscars”.  OTT with a social component may make this more useful and interesting.)

So in summary – what’s the “do it all” viewing solution? Today there is not one standalone set top box that will view all content. The upcoming Boxee hardware from D-Link may come close, but meanwhile you’d need at least two or three devices in order to access all the OTT content that is available. A laptop with a video and audio cable is a great start though if you aren’t sure what solution will be a fit for you.

I’ll predict that in five to ten years, subscription television as it is today will be suffering, and content providers will move wholeheartedly to OTT.  The Internet has disrupted industries from retail to travel, and the only barrier to it doing the same to television has been bandwidth.

  • David

    Speaking of OTT Video, does Sonic.net plan to offer Espn3.com (formerly ESPN 360) access?

  • Brad Allen

    Dane,

    This is a good article. Consider if it is appropriate to publish it someplace with wide audience, since it represents good work.

  • Hank Roberts

    acronyms without explanation

    also known as “AWE” for the googly-eyed amazement caused in the naive user

  • Rich

    My 42″ TV has a PC monitor port, so all things from the PC can be displayed on the TV. The best of all worlds.

    [Would like to have access to ESPN3.com]

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  • Nitin Narang

    With the convenience of anytime, anydevice viewing through catch up service, Video on Demand (VOD) and TV extending itself as a connected device, content consumption landscape is definitely on threshold of change. OTT does bring a tremendous potential as with anything been free, but as we know nothing comes long for free. Apart from monetization, I consider quality of service, ownership of customer care/ issue resolution and service delivery during peak traffic hours as some of the challenges which still need to be resolved. What remains to be seen is – can OTT replace the normal subscription TV service or does it remains confined to a complementary service for majority of audience