i3 | April 20, 2017

Re-Inventing Over-the-Top

Gary Arlen

The panelists on the CES/Digital Hollywood session "Next Generation OTT" unanimously agreed that the term "Over-The-Top" has become a meaningless and counter-productive name in the new era of streaming, on-demand, targeted internet television.

But coming up with an alternative word poses a challenge, as "cloud DVR," "broadband video," "open caching architecture" and "Facebook TV" are part of the expanding picture. Figuring out what to call the ever-growing internet video ecosystem is complicated by the deluge of deals that show how OTT is being restructured. Whether it is technology (such as the creation of the SDVoE (Software Defined Video over Ethernet) Alliance or platform-poaching (Jerry Seinfeld’s popular Comedians in Cars Getting Coffee moves from Sony’s Crackle to Netflix later this year), the online video world is awash in an on-going overhaul of its features.

"'OTT' just confuses the situation," says Xavier Kochhar, founder and CEO of The Video Genome Project, a metadata company recently acquired by Hulu. "It's not the content, it's all about the experiences." Kochhar expects that as "anyone can create a digital portal" for distribution of content, a new generation of DMPVDs ("Digital Multichannel Video Program Distributors" - an update of today’s cable/satellite MVPDs) will evolve.

He cites the growing video content on YouTube, both professional productions and do-it-yourself clips ("user -generated content"), as evidence of today’s easy access.

There are almost no barriers to entry, Kochhar says, and hence, the gatekeeper function – the choke point of previous eras – is reduced, bringing TV to anyone almost anywhere.

Meanwhile, the value and availability of TV keeps growing. Groups such as the Streaming Video Alliance are working with Major League Baseball Advanced Media, Viacom and other content creators to establish technical specifications that assure a "broadcast quality" experience for online video. AT&T's recently acquired DirecTV has accelerated the release of its streaming DirecTV Now, which John Stankey, CEO of AT&T's entertainment group, calls "the foundation for what we do in the future."

Beyond Its Roots

OTT originally got its name about ten years ago when viewers began tuning into streaming video content such as iTunes, Netflix and Hulu programs, via the broadband capacity of their cable systems. To cable operators' utter dismay, such viewing was above and beyond (i.e. over-the-top) their revenue-generating pay TV channel profit centers.

Suddenly, some of the most popular programming was out of their control. Apple TV, Roku, Amazon Fire, Chromecast and countless other hardware options enabled cable cord-cutters to watch Netflix, Hulu, Amazon Prime and other video content online: no conventional TV or subscriptions needed.

Fast-forward, today the entire video ecosystem is in flux. Mainstays of the cable pay TV world, Home Box Office, Starz, ESPN (to a limited degree) and Discovery, offer on-demand streaming options.

Allison Dollar, CEO of the ITV Alliance, established as an interactive TV association 20 years ago, OTT was a useful term "in a Wall Street context” as the industry took shape. Now, in a “chaotic industry in rapid transition," Dollar sees the need for a better way to deal with "transactional touch points and targeted advertising" which the new platforms enable.

Dollar says what's now called OTT is part of a cluster of digital elements, including content, technology, advertising and distribution. Parks Associates, a research firm, recently confirmed that nearly one-third of U.S. broadband households subscribe to multiple OTT services and pay an average of $29 per month for incremental video-related entertainment, beyond their core cable TV fees.

Which reinforces a point made by Kochhar of The Video Genome Project: someday it will all just be called "television."

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