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But all is not lost for ISPs, at least for those who are able to offer content delivery services across their networks. Some of the limitations listed below may actually lead OTT providers to increasingly contract with operator content delivery networks (CDNs) for video delivery: New HD TVs and tablet PCs with high resolution displays have users hungering to watch equally high definition content on these devices. Over the top video is subject to fluctuating quality common to content streamed over the Internet, however. As such, it imperfections become more pronounced with HD devices. The rise of longer-form OTT content (see prediction #4) will also change the current dynamic. Its one thing to watch a 60 second video that suffers from latency, jitter and frozen frames; its another to be subjected to those conditions for 60 minutes.
Implications:
2013 may be the year when a commercially viable OTT model emerges that is equitable and sustainable for both content owners and ISPs and allows service providers to actually profit from their infrastructure investments. ISPs can leverage their last mile advantage, utilizing their homegrown CDNs to serve video much closer to the end user, greatly improving quality of experience (QoE) in the process. This benefits content providers because: They can finally provide advertisers with consistently high picture quality and a suitable environment to showcase their products and services. This is essential because advertisers will not accept poor QoE that diminishes viewer engagement and tarnishes their brands. They can increase their subscriber base by delivering higher quality, uninterrupted programming. They can use the Internet to deliver more live, linear programming and on-demand services which, in turn, will help them reach more screens within the home and provide popular services such as catch-up TV.
Read more: How Telcos & ISPs Can Learn to Love OTT
Mobile data traffic will grow 10-fold between 2011 and 2016, mainly driven by video
(Ericsson Traffic and Market Report).
Implications:
The continued shift toward consuming video over IP-enabled devices puts Communications Service Providers (CSPs) in a precarious position. Sales are tumbling for once reliable sources of business like landline telephone service. In fact, if current trends hold, the last landline phones in America may be disconnected in little more than a decade (The Economist). So, CSPs urgently need to replace lost income from waning legacy businesses with new revenue streams. At the same time, service providers are being forced to make enormous infrastructure investments to keep pace with the insatiable OTT video demand on their networks; investments that can not be recouped through monthly ISP access fees alone. These declining revenues from legacy businesses and increased costs from network build out are creating a real double whammy for service providers, with unbridled growth of online video traffic poised to significantly aggravate the situation. To free themselves from this bind, CSPs must leverage their core strengths as network operators to create new revenue streams and reduce capital investments (realistically, cost reduction will come first, followed by new forms of revenue.) To that end, many operators are launching their own content delivery services as an essential tool to more effectively deal with the onslaught of online video traffic. To successfully compete in delivering video content, they will need advanced analytics and reporting to help them harness these advantages, optimize quality and precisely provision capacity.
Implications:
Online video advertising is maturing to the point that advertisers are allocating it ever larger media spends, confident that the viewer experience and overall environment will befit their brands. This could create a virtuous cycle in which increased ad dollars support more long-form online video programming delivered with higher quality levels, which in turn attract even more ad dollars.
Implications:
Consumption of longer-form online video will continue to rise as viewers watch increasing amounts of OTT content over connected TVs. This bodes well for OTT subscription and video on demand (VOD) services likes Netflix, Apple iTunes and Amazon Prime but poses a considerable threat to Pay TV offerings from cable, satellite and IPTV providers. These legacy Pay TV providers are digging in for a battle. Many of them have launched OTT video services and can leverage network assets to successfully compete against the raft of newcomers; or in some cases, to work with the competition. Because they own the last mile, operators can cache OTT video deep in their networks and deliver it much closer to the end user. That results in a more reliable, high quality viewing experience. This capability positions service providers to be valuable partners for over-the-top content providers; witness Netflixs initiative to place its caches within ISP networks. Operators have long standing relationships with content owners. They can improve their standing further by offering content owners with guaranteed levels of quality. Those carriers who have launched IPTV services can also draw on that expertise and apply it to OTT. They can market varied offers to their ISP subscribers and, eventually, to the subscriber bases of other ISPs.
Implications:
A combined CDN - Transparent Caching solution offers service providers the best balance of flexibility and cost savings. The CDN can provide the most extensive, reliable caching of content from participating content owners, while Transparent Caching can cache the unmanaged OTT content. However, harnessing the power of such a hybrid solution will require a single, unified view into all caching activity. By doing so, operators can compare performance and quality across both platforms, identify which kind of traffic is routed by which type of caching system, and track quality improvements and savings trends over time.
Read more: Combining CDNs & Transparent Caching into a Dynamic Duo
Implications:
For all its benefits, adaptive bitrate streaming also introduces a significant drawback; it makes measurement exponentially more difficult. It wasnt long ago that an entire movie delivered over IP could be measured as a single file. With adaptive streaming, that same movie can introduce tens of thousands of 2-10 second file fragments that need to be measured. Extrapolate that to a network with 150 channels and the number of separate files for a single bitrate could easily be in the tens of millions. At that scale, separating the signal from the noise becomes very difficult. Going forward then, capturing meaningful data from online video streamed via ABR will require an analytics and reporting solution that can identify, re-aggregate and report on actual content assets.
Read more: What is Adaptive Bitrate Streaming and Why is It So Difficult to Measure?