The State of OTT Content Delivery 2013
Is there a place for over-the-top (OTT) delivery beyond the living room? Yes, and 2012 marked a dramatic shift in the market that OTT has created, enough so that OTT may soon become indistinguishable from TV Everywhere -- or even television delivery itself.
Elsewhere in this Sourcebook, you will read about mobile and multiscreen delivery, but here we're going to focus on a few key points regarding the "why and wherefore" of OTT content delivery. We'll look at how the definition of OTT has changed in just a few years, and what the implications of that change are. Finally, we'll look at what the near future holds for OTT.
You Define Me
First, what exactly is over-the-top content delivery? When the term first started to gain traction, the idea was that OTT bypassed the cable, MSO, or satellite provider -- collectively called pay TV operators -- to deliver online video content directly to the consumer.
In the words of TDG Research, OTT was originally defined as "delivering online video directly to the living room TV, bypassing or going ‘over the top' of incumbent pay TV operators." That definition held for a time, at least until the rise of Hulu and Netflix. With the advent of Hulu's "catch-up" model, the OTT definition began to shift, and by the time Netflix entered the streaming world en force, that definition of OTT began to look a bit dated.
These days, OTT refers to any content not delivered as specifically programmed linear channels from the pay TV operator, although that definition may encompass even on-demand content provided as TV Everywhere by the pay TV operator. Further, OTT has the component of running on the "open internet" or an unmanaged network. Wikipedia's ever-morphing definition also notes that OTT delivery over broadband connections are outside of the "control" of the internet service provider (ISP) network it is delivered on.
"The provider may be aware of the contents of the IP packets," a December 2012 Wikipedia entry notes, "but is not responsible for, nor able to control, the viewing abilities, copyrights, and/or other redistribution of the content, which is the nature of the internet. . . . OTT in particular refers to content that arrives from a third party, such as Netflix, Hulu, or MyTV, and arrives to the end user device, leaving the Internet provider responsible only for transporting IP packets."
Neutral or Responsible?
One of the stated implications of this definition, though, is the inability of the ISP to control the content, acting merely as the "dumb pipe" that transports the bits. This altruistic vision, in which Net Neutrality rules and ISPs turn a blind eye to content being delivered on its pipe, is easily shattered. Not only are ISPs being asked to monitor for copyright infringements, but they are requesting the ability to use deep-packet detection to do so.
The latest solution -- decided among the ISPs and representatives from the Motion Picture Association of America (MPAA) and the Recording Industry Association of America (RIAA), after public backlash to congressional support for SOPA -- requires the ISPs to monitor for copyright infringements.
Initially intended to launch in mid-2011, then delayed to the end of 2011, then delayed to mid-2012, then again to late 2012, the new policy is called the Copyright Alert System (CAS). CAS was set to go into effect on Nov. 28, 2012, the latest delayed launch date, but the Center for Copyright Information (CCI) pushed off the start date again, citing a hurricane as the reason.
"Due to unexpected factors largely stemming from Hurricane Sandy," wrote Jill Lesser, executive director of CCI, "which have seriously affected our final testing schedules, CCI anticipates that the participating ISPs will begin sending alerts under the Copyright Alert System in the early part of 2013, rather than by the end of the year."
The CAS will result in verbal and written warnings to ISP customers, purportedly escalating from nice to nasty, and the sixth infraction will incur . . . something. What it will incur is up to the individual ISP, and there may be little more than bandwidth throttling from ISPs that don't have "skin in the game" when it comes to content ownership. For those major ISPs such as Time Warner Cable, Inc. (TWC) that also own premium content, the infractions could lead to an ISP user's account being terminated.
The "six strike" policy is based on a similar "three strike" model that went into effect in New Zealand in which notices move from detection to warning to enforcement.
Interestingly, ISPs reported lower traffic when the new law went into effect in late 2011, with Orcon -- a local New Zealand ISP -- noting that its international traffic had dropped by around 10%.
Yet the first case brought by the RIANZ, the New Zealand equivalent of RIAA, was dismissed in court in October 2012, after the accusation against the ISP user proved to be unsubstantiated. Apparently a student, who shared a flat with other students, had signed up for an ISP account, and someone in the flat -- or accessing the unsecured Wi-Fi network -- used file-sharing software to download copyrighted content. It turns out the student didn't even know what file-sharing software was, as Tech Liberty NZ noted in its request for dismissal of the student's case.
"The law is meant to act as a deterrent to infringing copyright," Tech Liberty notes, "but the way it is written it is actually an incentive. ‘Just use a connection that doesn't have your name on the account and they'll be the one who is penalised!' The only deterrent is to becom[e] an internet account holder."
TV Everywhere, or Nowhere?
Another approach to OTT is to define it in terms of TV Everywhere, where a pay TV subscriber is allowed to view content on a tablet or mobile device. During the 2012 London Olympic Games, subscribers to several major U.S. cable television operators were met with an authentication challenge when they attempted to log in to NBCSports.com to view live, nonbroadcast Olympic coverage. These users were asked to provide their billing information for either their ISPs, their pay TV subscriptions, or both.
NBCSports.com’s delivery of the 2012 London Olympic Games showed the effectiveness— and limitations—of authentication strategies for OTT content.
There was no two-factor authentication in place, meaning that those viewers who knew their neighbors' or friends' cable subscription information could easily receive authentication to view content; for others it was not so easy.
Mobile device adoption, security requirements, and the rapid growth of premium OTT video will all challenge CDNs in the coming year.
An in-depth survey of over 750 media industry professionals looks at the growth of cord-shaving, the importance of rights management, and the continuing problem of bandwidth limitations.