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OTT Video Services & Forecast—2008-2012: Best Practice, ROI, & ISTB Analysis

Multimedia Research Group, Inc.
August 1, 2009
138 Pages - SKU: BFAQ2418694

Abstract Table of Contents Related Reports

Executive Summary

As video content on the Internet (or OTT/Over-the-Top Video) grows in popularity and also increases in quality, the burning questions become: How can IPTV, Satellite and Cable Service Providers (SPs) benefit from this? How and why will these services play out in North America, Europe, Asia and Rest-of-World Markets? What business models work best for the SP in both the short-term and long-term, and why? What platform works best for consumers in North America, Europe and Asia? How does the OTT service differ from the hybrid service model described in MRG’s earlier report(1)? This report aims to answer these questions or at least to provide the tools necessary to answer them. These answers are especially important in an uncertain economy because Service Providers must find new services that can be deployed quickly, with low cost, and with some predictability about ROI.

What is Over-the-Top Video (OTT) Compared with IPTV?

There are many answers to this question. The answers tend to vary depending on what type of company is involved and by its region of operation. One definition relates to how content gets to the TV set, and with what kind of quality. In this report, OTT is a video service delivered over the unmanaged Internet to the TV set. IPTV, on the other hand, is video distributed (mostly to TV sets) over a managed IP network, complete with QoS (and sometimes, QoE) built in. In this report, OTT service includes at least one STB (called an “ISTB” or Internet STB) and at least one TV, connected to the Internet.

In this report, use of the term “unmanaged” network refers to an unmanaged video network. In this report, therefore, a “managed network” refers to a managed video network such as the configuration described above for IPTV. While OTT video typically is on a “managed IP network” (the Internet), the network has not been controlled by the same video test, measurement and monitoring technology used in IPTV networks.

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1 Executive Summary: 1.1 What is Over-the-Top Video (OTT) Compared with IPTV?; 1.2 Key Findings
2 Background on the Video Service Industry: 2.1 Business Overview; 2.2 Failed OTT Businesses — Why Did They Fail?; 2.3 Legal Issues
3 Architecture Overview: 3.1 Wireless and Wireline — Home Networks; 3.2 QoS/QoE — How Acquired and Maintained on OTT; 3.3 Unicast vs. Multicast; 3.4 Downloading, Progressive Downloading and Streaming; 3.5 Traditional CDNs, P2P and P4P; 3.6 Transcoders — And Why They Are Needed; 3.7 Bandwidth (HD vs. SD) — How to Enable HD; 3.8 ISTBs/Game Consoles; 3.9 PC-centric IPTV Over Managed Networks; 3.10 UI/EPG/Middleware — The Value of a Superb UI; 3.11 Navigation Devices — Mice, Keyboards, and Remotes
4 Business Models for OTT Services — What's in it for the SPs?: 4.1 Pure Models - Rent, Buy, Subscription, Ad Sponsored; 4.2 Mixed Source Models; 4.3 OTT Consumer Service Ratings; 4.4 Traditional VOD Content Models — Revenue Splits; 4.5 Traditional DVD Business Models; 4.6 Break-even Analysis for OTT Service (SP Perspective); 4.7 Case Study: Toledo Telephone and VUDU
5 Forecasts: 5.1 What Do We Know?; 5.2 Global Forecasts; 5.3 Cable/Satellite/IPTV Operators; 5.4 Cinema Theater Business; 5.5 DVD Sales — U.S.; 5.6 Western Europe DVD Sales; 5.7 U.S. Online Video; 5.8 Online Video Ad Revenue; 5.9 Internet Set-top Box (ISTB) & OTT Service Forecast; 5.10 Marriage of OTT, Hybrid & IPTV
6 Recommendations and Conclusions for Service Providers: 6.1 Ratings for OTT Service; 6.2 Paid Versus Free Content; 6.3 Importance of Device Types; 6.4 General Recommendations; 6.5 Recommendations for Cable or IPTV Operators (For Adding OTT Service); 6.6 Recommendations for Internet Service Providers (ISPs and BBSPs); 6.7 Recommendations for Retail Chains; 6.8 Conclusion
7 Addendum #1: 7.1 Company Profiles - Platforms; 7.2 Company Profiles — OTT Service Providers; 7.3 Company Profiles — CDNs (Content Distribution Network)
8 Addendum #2: Test Installations: 8.1 Product and Service Reviews; 8.2 Testbed Parameters; 8.3 Product Section; 8.4 Service Review Section
9 Addendum #3 Glossary of Terms
10 Addendum #4 — Miscellaneous Specifications: 10.1 Appendix A: PC to TV Models; 10.2 Appendix B: ISTB Specifications; 10.3 Appendix C: Internet Survey Demographics; 10.4 Appendix D: Break-even (ROI) Analysis Data—Tier-1, 2, 3; 10.5 Appendix E: Condensed Break-even Analysis Data
11 Index of Companies
Table of Figures: Figure 1-1: HDTV: Rear Panel Connections Simple OTT/IPTV Installation; Figure 2-1: U.S. Revenue in 2008 with Movie Release Windows; Figure 3-1: Zuegma's QoE Diagram for OTT Service; Figure 3-2: Comparison of a Traditional CDN with P2P and P4P; Figure 3-3: Rhozet's Architecture for Webcasting; Figure 3-4: RipCode's System Overview for Transcoding; Figure 3-5: Roku Screen Shot; Figure 3-6: The Roku Remote Control; Figure 3-7: The Hillcrest "Loop" Remote Control; Figure 3-8: The Logitech MX Air; Figure 3-9: The Logitech 1100 Universal Remote Control; Figure 3-10: HDTV: Rear Panel Connections Simple OTT/IPTV Installation; Figure 4-1: The DVD Business Landscape; Figure 5-1: Audience Demographics By Age Groups; Figure 5-2: U.S. DVD Sales for 2008 and 2009 ($USD, Millions); Figure 5-3: U.S. Domestic Home Video Transactions (Millions); Figure 5-4: U.S. Online Video Ad Revenue; Figure 5-5: Ad-supported Online TV Revenues; Figure 5-6: Net Advertising Revenues; Figure 5-7: Internet-to-TV CE Devices (ISTBs)(000); Figure 5-8: Share of Market By Internet-to-TV (ISTB) Device - 2008 to 2012; Figure 5-9: Market Share By Region; Figure 5-10: Revenue Growth By Region: 2008-2012; Figure 5-11: ISTB Evolution — Assumptions From Driving ISTB Forecast; Figure 6-1 Ratings for OTT Services (Phone Survey); Figure 6-2: Viewing Habits of Internet Viewers (Internet Survey); Figure 6-3: Ratings of Paid Versus Ad Based Content; Figure 6-4: Ratings of OTT Devices By Type (Phone Survey); Figure 6-5: Usage of Device Types (Internet Survey); Figure 7-1: 2Wire's MediaPortal Software Interface; Figure 7-2: 2Wire's MediaPoint ISTB; Figure 7-3: The ADB "Set-Back Box"; Figure 7-4: The ADB "Set-Back Box" Installed; Figure 7-5: Screen Shot of Mariner's frostt Product; Figure 7-6: Mariner's HomeVu Product; Figure 7-7: The Netgem ISTB; Figure 7-8: The Roku Player ISTB; Figure 7-9: Sling's SlingCatcher Product; Figure 7-10: The Apple TV User Interface; Figure 7-11: Blockbuster's Ad with 2Wire's MediaPoint ISTB; Figure 7-12: YouTube's XL Interface; Figure 7-13: Sony PS3 with Screen Shot; Figure 7-14: The VUDU XL Product; Figure 10-1: Internet Survey Age Demographics
Table of Tables: Table 1-1: IPTV vs. OTT STBs; Table 3-1: Comparison of IP Delivery Techniques; Table 4-1: Basic Cable/TiVo (Monthly, $USD); Table 4-2: France OTT — One Movie + DTT ($USD); Table 4-3: U.K. OTT — One Movie + DTT ($USD); Table 4-4: Comparison of OTT Services in the U.S., France and the U.K. ($USD); Table 4-5: OTT Consumer Mixed Source Model Comparisons (Per Month Payment, USD); Table 4-6: OTT Consumer Service Ratings; Table 4-7: Tier-1 Break-even Analysis ($USD); Table 4-8: Tier-2 Break-even Analysis ($USD); Table 4-9: Tier-3 Break-even Analysis ($USD); Table 5-1: Global Active Digital Media Universe; Table 5-2: U.S. Cable, Satellite and IPTV Operators; Table 5-3: DIRECTV's Business Overview ($USD); Table 5-4: DISH Network's Business Overview ($USD); Table 5-5: Sky's Business Overview ($USD), Subs Are Millions; Table 5-6: U.S. Cinema Theater Revenue, Admissions and Ticket Prices ($USD, Billions); Table 5-7: U.K. Cinema Theater Revenue, Admissions and Ticket Prices (£'s and $USD, Millions); Table 5-8: Western Europe DVD/BD Sales By Percentage; Table 5-9: Western Europe DVD/BD Revenue ($USD, Millions); Table 5-10: Top U.S. Online Video Properties By Unique Viewers; Table 5-11: Global OTT/ISTB Forecast (Thousands): Installed Base (ISTB vs. PC Devices); Table 5-12: OTT Video Service Revenues: Global ($USD); Table 5-13: Regional Share of OTT ISTB Market (%); Table 5-14: Regional Share of OTT Service Revenue ($M USD); Table 10-1: Tier-1 Break-even Analysis ($USD) (PC-to-TV); Table 10-2: Tier-2 Break-even Analysis ($USD) (PC-to-TV); Table 10-3: Tier-3 Break-even Analysis ($USD) (PC-to-TV); Table 10-4: ISTB + STB + DVD/Blu-ray General Specifications; Table 10-5: Internet Survey Respondents By Region; Table 10-6: Input Data for ROI Analysis ($USD) (Section 4.6 Above); Table 10-7: Condensed ROI (Break-even) Analysis for Added OTT Video Service ($USD)

OTT Video Services & Forecast—2008-2012: Best Practice, ROI, & ISTB Analysis

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