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From OTT Video to Multi-Screen: Global Forecast & Strategy Review 2010-2014

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A lot has happened in 2010 for the Over-the-Top (OTT) market. There have been major developments in the retail segment, the Service Provider (SP) segment and the Internet segment. Some of these developments have been successful, while others have yet to get to the point where it can be seen whether they will be successful or not. The new MRG forecast estimates that global growth of OTT video services will exceed US$1 billion in 2010 and US$20 billion in 2014. 

Figure 1 shows the evolution from standalone to hybrid OTT Internet set top boxes. There has been an overall expansion of "smart" Internet Video services and devices including tablets, phones, game consoles, smart TVs, hybrid Set-top Boxes (STBs) and Internet STBS (ISTBs). This figure shows the beginning of the Internet set top box revolution starting with DVRs on the market to multi-broadcast and IPTV set top boxes. OTT hybrid standardized boxes will eventually transition to triple broadcast plus IP set top boxes in 2014.

The two demographics who are OTT customers are technology savvy families and 14-to-25-year-olds (gen x'ers/millenials). Tech-savvy families tend to have a good income level and the younger folks typically have not subscribed to a traditional Pay-TV service, so it is reasonable to assume that cord cutters will not automatically become

OTT subscribers (instead of finding free sources of content).

OTT content preference by consumers is also probed, based on international consumer research. Besides stating their favorite OTT viewing devices, consumers clearly express their preference for recent movies & TV shows and other kinds of niche video content, reflecting how quickly consumer preferences are changing. Some of the more telling results include why smart device usage varies significantly depending on which rooms of the home they are in and who is using them.

Figure 2 shows a variety of OTT models and consumer acceptance in 2010. Revenue," "Cost to Deploy" and "Consumer Acceptance" ratings are based on surveys of Vendors, Service Providers and Consumers. "Revenue" and "Cost to Deploy" reflect the SP's perspective. Rental models, such as CinemaNow, and subscription services, such as Netflix, have the highest consumer acceptance ratings. 

OTT services were previously segmented into two categories: add-on services and replacement services. Netflix is a good example of an "add-on" service as it does not offer content such as live TV, nor does it offer early-release movies on its OTT platform. Netflix customers typically have some form of traditional video service as well.

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Figure 1 OTT Internet STB: Evolution - From Standalone to Hybrid Source: Copyright 2010 MRG, Inc.

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Figure 2 OTT Consumer Service Ratings (2010) Source: Copyright 2010 MRG, Inc.

 In Europe, the hybrid offerings, such as the one by Netgem, is a good example of a "replacement" ("Pay-TV") service as it does offer enough content so customers do not need a traditional video service.In the U.S., Sezmi would also be considered a "replacement" service. 

The notion that is put forward in this report is that some services are better suited for an individual, while others are better suited for a family. Apple's new Apple TV service is a good example of an "individual" service. If a family were to use this service, then costs could add up during the month depending on the number of family members and how many unique shows they each watch. The Netflix subscription service is a good example of a "family" service. For the same monthly rate family members can watch as much as they want even at the same time. 

While cord cutting now is real, it is not primarily due to an OTT service. A number of Service Providers are reporting that the majority of people that turn off their video service do so because they simply

cannot afford it anymore and are not replacing it with an OTT service. However, a small percentage of cord cutters are replacing (traditional) Pay-TV services with OTT service, and it is expected that this number will grow.

Multimedia Research Group Inc. (www.mrg.com) publishes market analyses of new technologies for the communications industries, and provides market intelligence and strategy consulting for its client companies. From OTT Video to Multi-Screen: Connected Home & Mobile Video Device & Services Global Forecast & Strategy Review-2010-2014 (November 2010) is 145 pages and is available in a printed English language edition for $2,995 USD, a PDF single-departmental license for $3,495 USD, and a PDF corporate license is available for $4,495 USD. For more information or to order the report, contact Rob Smith at 1-408-453-5553 orrsmith@mrgco.com. 

 
 
 
   
   
   
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