Over-the-top content, or web content offered over a broadband connection, is growing in popularity. With traditional service providers asking what this means for them, we look at two recent developments, at set-top box maker Amino and Netflix partner Roku. We also wonder what Google's up to in this market, besides its popular video-sharing site YouTube.
Amino has announced a set-top box based on the new CE4100 processor from Intel that it will make it possible to link OTT content to the TV set. The CE4100 is a processor that combines web content with broadcast content, while also offering a good picture (including HD and 3D) and sound quality. Extensive user interfaces and electronic programming guides can also be added. The CE4100 can even be built into TVs, removing the need for a set-top box.
Rival Roku, a partner of online DVD rental service Netflix, is also preparing a new service. Originally Roku planned a box for bringing Netflix's streaming service to the TV, but the amount of available content hasn't stopped growing. Now downloads from Amazon.com can be viewed using the box, and Roku announced a Channel Store, where a dozen or so websites will offer content compatible for TV viewing. These include sites such as Flickr, Facebook Photos and Pandora. Roku also plans to release a software development kit (SDK) for content owners to develop their own 'channels' on the Channel Store.
The OTT market is developing quickly, with numerous boxes on the market or in testing. Familiar names are active on the market, such as Apple, Microsoft and Sony, and Philips is among the parties making a box-free TV. Newcomers are also hitting the market, such as Roku, Sezmi, Boxee and MyBroadbandTV. In the Netherlands alone, three companies are active: UCD, Stream Group and Metrological. Metrological (see our Research Brief 'Connected TV') works with a similar Intel chip (the CE3100) to Amino, while its widget channel is comparable with Roku's Channel Store.
The above developments have a number of implications for the telecom and cable world. First, providers of linear broadcasting, especially cable operators, will face increasing competition from OTT content, as it's available not just online but also on TVs. We also can’t forget that especially cable is already very strong on the VoD market: not OTT content, but also not linear broadcast TV. Second, these developments put growing demands on networks. Currently network use comes in ‘bursts’, where a large amount of use in a short period is common, namely while a download occurs. Streaming OTT content is of a completely different nature. As non-linear video grows in popularity, streaming video will become more common. This type of traffic is not ‘bursty’ in nature; watching an HD channel requires continuous bandwidth of around 10Mbps. Third, this all means good news for the existing providers, as their broadband services will grow in popularlity and subscribers will have to upgrade to services with higher bandwidth.
So if OTT is both good and bad news, what’s the bottom-line result? If viewing behaviour is shifting from broadcast to non-liner, then the current players can best move with the market and help facilitate the trend. Cooperation with a STB-maker allows them to keep a piece of the pie and share revenues. Developing a box also ensures differentiation on the triple-play market. The broadcast product is only very slowly losing viewers, while in the meantime the broadband product grows more popular. As the built-in Intel processor in TVs makes set-boxes redundant (the viewer covers the cost by buying a ‘connected TV’), OTT offers a net positive result for operators.
As a final question, we ask which box maker will lead the market, and what happens when the technology is built into TVs. The answer to this is still unclear. Roku is in the running, with hundreds of thousands of boxes sold so it claims, but Apple has a strong name. Microsoft, with its Xbox 360, already has a big installed base with 34 million units sold worldwide. Sony’s PlayStation 3 has also sold over 10 milliom units. However, Amino has the advantage of already being a key player in the cable industry, which gives it an advantage over newcomers. For users of Intel technology, such as Amnio and Metrological, there is the advantage of outstanding quality and time to market for Intel produts, but of course, the competition won’t stand still. The winner will likely be the player that does not focus so much on a box, but on a software version of the technology. Metrological is ready for this step.
And finally, a player we can’t forget: Google. Google is currently focused on securing the mobile connection, underlined by its recent takeover of AdMob, the development of the Android operating system for phones and Chrome OS for netbooks and expansion of Google Voice and other applications such as Google Maps. After the computer and smartphone, the final screen, TV, is unlikely to escape the company’s attention.
