The world of video delivery is changing fast: IPTV and DVB now have a new bold competitor in Over-The-Top delivery (OTT) where TV and movies are transmitted to television sets through the public internet. OTT is radically changing the value chain - content owners now have a direct connection to consumers.

 

This has raised questions on the future role of European cable TV operators. The threat is that their role will be relegated to only offering capacity while someone else gathers the revenue from interactive on-demand services. The problem is that consumers can use any IP network to view TV movies through OTT on their television sets and pay for the programming directly to content owners. We at Teleste see that while OTT poses a threat to Cable operators, it is also a huge opportunity for those operators who are ready to embrace the change.

 

OTT is delivering what IPTV promised – high quality and interactive television services through IP connections. The main difference between OTT and IPTV is openness: OTT is open and flexible whereas IPTV is inherently a closed system. IPTV also takes away the freedom of choice from consumers. It seems like the customers have voted and rapidly taken up OTT services.

 

Today, there are close to 100 million household using OTT services. That number is expected to almost triple to 285 million users by 2016 (TDG). It’s not all fun and games for OTT either. Bandwidth is and will in the future become even more a bottleneck for services. 3D TV and upcoming ultra HDTV require such high bandwidth that IP delivery networks will become a limitation.

 

What strategy should European cable TV operators adopt? The future will not be black and white. Fact is that linear TV broadcasts are best suited for traditional DVB delivery.  Fact is that OTT offers such ease-of-use, interactivity, cost and variety that consumers will find hard to resist. Why not have the best of both worlds?

 

 

For cable operators, there are two possible strategies to tackle this change: close eyes and pretend that nothing has happened or see the change as an opportunity and innovate to grab a larger share of the customer’s wallet. The question is not about inventing a killer application, but a killer cocktail. And we believe that this killer cocktail consists of DVB for traditional TV and OTT/IP delivery for other interactive services. Cable is best for high bandwidth TV services and OTT/IP delivery is best for interactive services. The winners will be those who are able to adjust and offer both cable and OTT delivery. Operators not embracing this opportunity are missing a potential revenue stream and alienating customers.

 

We feel that European cable TV operators are ideally positioned to provide consumers both traditional broadcast and OTT services on a market that is splintered along country, language, technology and historical lines because they have two very valuable assets - bandwidth and consumer’s trust. Cable networks have the bandwidth to handle all existing and upcoming TV services. Customers have for years trusted the operators for quality and monthly billing relations. We believe that customers will always appreciate the same things that made cable TV operators strong in the first place: good quality HD video, a wide range of channels, central billing, and most importantly, ease of use.

 

What European cable operators need to complement their offering with OTT is a service platform that will enable them to easily integrate OTT services with cable TV networks. The platforms and solutions are available today and combining OTT to Cable TV offering is very much a reality. The winners will be the operators who have the wisdom and foresight to combine the best from both worlds.

 

For more information please send an email to info.bcn@teleste.com