The “OTT Decade”: Moving from Appetizer to the Main Dish
When Over the Top (OTT) first appeared on the broadcast scene about ten years ago, it started a revolution that would take nearly a decade to mature. In the early days, companies like Hulu, Prime Video, and Netflix recognized OTT’s potential as a way of augmenting consumers’ TV content. A few years later, TV networks and Pay TV providers started using OTT to deliver their service and content to consumers’ “second screens” – and every operator and network out there launched their own “go” service: Sky Go, HBO Go, etc.
In the last couple of years, OTT has moved from being a complementary offering to becoming a replacement of the traditional TV experience: Sky Go became Now TV and HBO Go became HBO Now. These skinny bundles were the first step in making OTT services an alternative to TV, at least for certain segments like cord cutters.
Looking Beyond OTT – the Cloud TV Decade
Now that the OTT decade is behind us, our industry is bravely marching toward new frontiers: where OTT will completely replace the legacy television experience. For OTT to be at the core of today’s $475 billion consumer video market[1], it needs to further mature. This, I believe, is what’s ushering in the decade of what we call Cloud TV: the combination of the best qualities of OTT and Pay TV. Media companies and service providers are going to have to find a solution that embraces both the reliability, scalability and robustness of legacy Pay TV with the personalization, multi-screen delivery and flexible monetization and agility (not to mention the operational and financial benefits) offered by OTT.
Three Steps Toward a Cloud TV Transformation
The primary driver behind Cloud TV is the realization by both video service providers and media companies that they need to transform their legacy TV distribution business. Here are three areas that need to be transformed to make Cloud TV successful:
- Operational: This means operational agility, with the capability to launch fast and adapt the service quickly in response to consumer feedback and market dynamics. But speed alone isn’t enough; it’s about the operational process and the ability to gather data, understand consumer behavior and act on it as an integral part of the service evolution.
- Balance Sheet: Telcos and media companies must take a new approach in their balance sheets to remain competitive. They need to reduce operating costs and improve efficiency at all levels.
- Consumer Experience: If you want your Cloud TV solution to work, you’ll have to meet and even exceed consumers’ expectations, providing users with a truly superb user experience. Viewers have new, much higher standards for the video services they are willing to pay for; they now expect a service that collects all traditional linear programming, OTT content and on-demand/time shifted TV content in an easy-to-use manner with advanced discovery and personalization functionalities that ideally remove the need to constantly proactively search for appealing content.
Ensuring Your Company’s Up to the Cloud TV Challenge
Over the past decade, this industry has matured and now it’s time to get over the OTT hype and take TV services to the next level with Cloud TV. Anyone can launch an OTT service, but launching a Cloud TV service that truly transforms your business at all levels: cost, experience, and operations – while far from easy – is truly the way to transform your TV service.
And, I’m pretty sure that this is just the beginning, given that Cloud TV means that the innovation and agility of OTT is now merging into the mainstream television business. This move, I believe, has the potential to transform the way hundreds of millions of “traditional” TV consumers experience TV, and will have a significant impact on the way we consume TV in the decade ahead.
[1] Strategy Analytics Report: How Operators Can Capture a Share of the $700 Billion Global – (Video Market 2018)
