Global OTT Video Services & Forecast—2008-2012:
Best Practice, ROI, & ISTB Analysis
Published by MRG, Inc.
Author: Mike Galli
Research Director: Gary Schultz
August 2009, 138 pages
Hard Copy Print Edition $2,995 USD
PDF Single-Departmental License $3,495 USD
PDF Corporate-Wide License Contact Rob Smith for Quote
The report is available free as part of MRG's IPTV Tracking Service
California orders please add 9.25% sales tax
To order click here or contact Rob Smith at rsmith@mrgco.com
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.
IPTV vs. OTT STBs
Hybrid
IPTV STB |
Full Broadcast Service
+ Managed IP (IPTV Video)
(e.g. BT, Verizon) |
Used mostly in Europe,
North America and Asia. |
Standalone
OTT ISTB |
Internet Interface to IP (unmanaged)
(e.g. Apple TV, Roku, VUDU) |
Gaining popularity in
North America and Europe. |
Hybrid
OTT ISTB |
Full Broadcast Service
+ Internet Connection to IP (unmanaged)
(e.g. Netgem) |
Starting to appear as an
alternative to hybrid IPTV. |
Source: Copyright © 2009 MRG, Inc.
In the U.S., a Cable MSO or IPTV Operator looks at OTT as an addressable source of content at a certain price. After all, most consumers don’t really care if content is coming over the Broadband connection or their video connection. Smaller MSOs may look at OTT as a possible way to add VOD using a different, pay-as-you-grow, business model. The “standalone” or “independent” OTT Video Service Providers look at it as a way to gain entry into the video market and compete with the traditional Operators. In this report, use of the term “standalone” or “independent” refers to an OTT service that is delivered over a Broadband connection without a formal business (shared revenue) arrangement with the host ISP or Operator. ISPs themselves are also looking at OTT as a way to enter the video market. Retailers also are looking at OTT as a way to increase revenues in tough economic times and to extend their brand more fully with consumers.
HDTV: Rear Panel Connections Simple OTT/IPTV Installation
Source:
Copyright © 2009 MRG, Inc.
(1) Hybrid IPTV Set-top Boxes — Global Market Forecast & Strategy Critique: 2009-2012 (June 2009). For more information visit: www.mrgco.com/iptv/hstb09.html
This report is part of the IPTV Tracking Service published by the Multimedia Research Group, Inc.
Table of Contents
| 1 |
Executive Summary |
| 1.1 |
What is Over-the-Top Video (OTT) Compared with IPTV? |
| 1.1.1 |
Hybrid Services Are Becoming Popular in Various Global Regions |
| 1.1.2 |
Lean Back/Lean Forward? |
| 1.1.3 |
Mobility and Devices |
| 1.2 |
Key Findings |
| |
|
| 2 |
Background on the Video Service Industry |
| 2.1 |
Business Overview |
| 2.1.1 |
The Movie Business & "Release Windows" |
| 2.1.2 |
The TV Business |
| 2.2 |
Failed OTT Businesses — Why Did They Fail? |
| 2.2.1 |
Movie Beam (1,800 Subscribers After 4 Years) |
| 2.2.2 |
Akimbo |
| 2.3 |
Legal Issues |
| 2.3.1 |
Net Neutrality |
| 2.3.2 |
The Fair Use Doctrine |
| 2.3.3 |
The Digital Millennium Copyright Act |
| 2.3.4 |
Viacom's Lawsuit Against Google, YouTube (U.S.) |
| 2.3.5 |
Pro-IP Act of 2007 |
| 2.3.6 |
The Napster, Grokster Decisions |
| |
|
| 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 |
| 4.1.1 |
Rental OTT Models |
| 4.1.2 |
Purchase OTT Models |
| 4.1.3 |
Subscription OTT Models |
| 4.1.4 |
Ad Sponsored OTT Models |
| 4.2 |
Mixed Source Models |
| 4.2.1 |
U.S. OTT Services ("Skinny" Basic) Cable/TiVo (SD Only) |
| 4.2.2 |
France OTT Service |
| 4.2.3 |
U.K. OTT Service |
| 4.2.4 |
Plan A: Internet + Over-the-Air (DTT) to the TV |
| 4.2.5 |
Plan B: Internet + Cable Using TiVo STB to the TV |
| 4.2.6 |
Plan C: DVD Rental + Internet |
| 4.2.7 |
Consumer Pricing Overview |
| 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) |
| 4.6.1 |
Tier-1 SP Break-even Analysis |
| 4.6.2 |
Tier-2 Break-even Analysis |
| 4.6.3 |
Tier-3 Break-even Analysis |
| 4.7 |
Case Study: Toledo Telephone and VUDU |
| 4.7.1 |
Conclusion |
| |
|
| 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 |
| 7.1.1 |
2Wire |
| 7.1.2 |
ADB |
| 7.1.3 |
Amino Communications Ltd. |
| 7.1.4 |
BigBand Networks, Inc. |
| 7.1.5 |
Boxee |
| 7.1.6 |
Brightcove Inc. |
| 7.1.7 |
Cisco (Scientific-Atlanta) |
| 7.1.8 |
Entone, Inc. |
| 7.1.9 |
Irdeto |
| 7.1.10 |
Jinni |
| 7.1.11 |
LG Electronics USA, Inc. |
| 7.1.12 |
Macrovision Solutions Corporation |
| 7.1.13 |
Mariner Partners Inc. |
| 7.1.14 |
Motorola, Inc. |
| 7.1.15 |
Netgem |
| 7.1.16 |
Rhozet (Harmonic) |
| 7.1.17 |
Roku, Inc. |
| 7.1.18 |
Sezmi |
| 7.1.19 |
Sling Media, Inc. |
| 7.1.20 |
Verivue |
| 7.2 |
Company Profiles — OTT Service Providers |
| 7.2.1 |
Amazon.com, Inc. |
| 7.2.2 |
Apple Inc. |
| 7.2.3 |
Blockbuster Inc. |
| 7.2.4 |
Comcast (Fancast) |
| 7.2.5 |
Crackle, Inc. |
| 7.2.6 |
Disney |
| 7.2.7 |
ESPN 360 |
| 7.2.8 |
BBC (I-Player) (PC Now, Multi-platform Later) |
| 7.2.9 |
Fetch TV |
| 7.2.10 |
Google/YouTube |
| 7.2.11 |
Hulu |
| 7.2.12 |
Microsoft Corporation |
| 7.2.13 |
Netflix, Inc. (Online Video Service) |
| 7.2.14 |
Sonic Solutions (CinemaNow) |
| 7.2.15 |
Sony (OTT Service) |
| 7.2.16 |
TiVo Inc. |
| 7.2.17 |
Veoh Networks, Inc. |
| 7.2.18 |
VUDU, Inc. (ISTB + Service) |
| 7.2.19 |
Yahoo! Inc. (Video Service) |
| 7.2.20 |
ZillionTV (Online Service/ISTB) |
| 7.3 |
Company Profiles — CDNs (Content Distribution Network) |
| 7.3.1 |
Abacast, Inc. |
| 7.3.2 |
Akamai Technologies, Inc. |
| 7.3.3 |
Limelight Networks, Inc. |
| 7.3.4 |
IP Vision |
| 7.3.5 |
mirada plc |
| |
|
| 8 |
Addendum #2: Test Installations |
| 8.1 |
Product and Service Reviews |
| 8.2 |
Testbed Parameters |
| 8.3 |
Product Section |
| 8.3.1 |
TiVo HD DVR and TiVo Wireless Adaptor (G) |
| 8.3.2 |
Roku Player |
| 8.3.3 |
Sling Media |
| 8.3.4 |
PC Laptop |
| 8.3.5 |
Netbook |
| 8.4 |
Service Review Section |
| 8.4.1 |
Netflix |
| 8.4.2 |
CinemaNow |
| 8.4.3 |
Amazon |
| 8.4.4 |
TiVo |
| 8.4.5 |
Test Results |
| |
|
| 9 |
Addendum #3 Glossary of Terms |
| |
|
| 10 |
Addendum #4 — Miscellaneous Specifications |
| 10.1 |
Appendix A: PC to TV Models |
| 10.1.1 |
Internet + Over-the-Air to the TV |
| 10.1.2 |
Internet + Cable to the TV Set |
| 10.1.3 |
Break-even Analysis for the PC 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) |
Index of Companies
| 2Wire |
Macrovision Solutions Corporation
(All Media Guide Holdings, Inc. (AMG), Cryptography Research, Inc. (CRI), Gemstar-TV Guide) |
| A&E Television Networks |
Magna |
| Abacast, Inc. |
Mariner Partners Inc. |
ABC
(Disney-ABC Domestic Television) |
McDonald's |
| ADB Group |
Media Week |
| Adobe Systems Incorporated |
Mediacom |
| Advanced Digital Broadcast (ADB) |
Metacafe |
| Akamai Technologies, Inc. |
MGM |
| Akimbo |
Microsoft
(Media Center, MSN, Xbox, Xbox 360, Xbox Live Gold) |
| Amazon.com, Inc. |
mirada plc |
| American Express |
MoCA |
| Amino Communications Ltd. |
Morgan Stanley |
| Amino Technologies PLC |
Motorola, Inc. |
| AOL |
Movie Beam |
Apple Inc.
(Apple TV, iPhone, iPod, iTouch,
iTunes,
Mac, OSX) |
Movielink |
| Archos |
MTV Networks |
| ARRIS |
MySpace |
| Ascent Media |
Nagravision |
| AssetHouse |
Napster |
| ASUS |
NASDAQ |
AT&T
(AT&T Broadband) |
National Geographic |
| Audi |
NBC
(NBC Universal) |
BBC
(BBC Worldwide, iPlayer) |
Netflix, Inc. |
| Bell Canada |
Netgear |
| Best Buy |
Netgem |
| BigBand Networks Inc. |
News Corp. |
| BitTorrent |
Nielsen |
| Blockbuster Inc. |
Nintento
(Wii) |
| Boxee |
Nippon Telegraph and Telephone (NTT) |
| Bright House Networks |
Nissan |
| Brightcove Inc. |
ON2 |
| British Sky Broadcasting (BSkyB) |
P4PWG |
| BT |
Panasonic |
| Buena Vista Television |
Paramount
(Paramount Pictures) |
| Cablevision |
PBS |
| Canoe TV – Quebecor |
Proctor & Gamble |
CBS
(CBS Interactive) |
Providence Equity Partners |
| Channel 4 |
RealNetworks, Inc. |
| Charter Communications |
Rentrak |
| Chili's |
RipCode |
| Chunghwa Telecom |
Rogers Sportnet |
Cisco Systems, Inc.
(Linksys) |
Roku, Inc. |
| Cloakware |
Roxio |
Comcast
(Fancast) |
Samsung |
| Comedy Central |
SecureMedia |
| comScore Video Metrix |
Sezmi |
| Consumer Electronics Association |
Shelter Capital |
| Cox Communications |
Showtime Networks |
| Crackle, Inc. |
Sigma Designs |
| C-SPAN |
SingTel |
| Deutsche Telekom |
Sky Italia |
DIRECTV
(Sky Brazil, Sky Mexico) |
Sling Media, Inc. |
| Discovery Channel |
Sonic Solutions
(CinemaNow) |
| Discovery Networks Germany |
Sony
(Bravia, PS3, PSP, Sony Corporation, Sony Corporation of America, Sony Music, Sony Pictures, Sony Pictures Entertainment, Sony Pictures Entertainment Company, Sony Pictures Television, Sony Pictures Television International) |
| DISH Network |
Spark Capital |
Disney
(Disney Interactive Media Group, Disney Interactive Studios, Disney Online, Disney-ABC Domestic Television, The Walt Disney Studios) |
Startz
(Starz Entertainment, Starz Play) |
| DLNA |
State Farm |
| DreamWorks |
Studio Hamburg |
| E! Entertainment |
Swissinfo/SRI, Technicolor |
| Edgeware |
Technologies, Inc. |
| EMBARQ |
Telchemy |
| Entone, Inc. |
Telekom Austria |
ESPN
(ESPN 360) |
Televisa |
| Facebook |
Telmex |
| Fetch TV |
Telstra |
| Firefly3 LLC |
The Digital Entertainment Group |
| Flickr |
The Weather Channel |
| FNAC |
Time Warner Cable |
Fox
(20th Century Fox, 20th Century Fox Television, Fox Entertainment Group, Fox Interactive, Fox Interactive Media) |
Time Warner Inc. |
| Fujisoft |
TiVo Inc. |
| Fujitsu |
Tokyo Broadcasting System |
| FutureSource Consulting |
Toledo Telecom |
| Glowria |
Toledo Telenet |
| GM |
Toledo Telephone Company |
| Goldman Sachs |
Tomante Company |
| Google |
Turner
(Turner Network, Turner Sports, Turner Studios) |
| Grokster |
Twitter |
Harmonic Inc.
(Rhozet Corporation) |
U.S. Department of Defense |
| HBO |
UKTV |
| HD Net |
Unilever |
| Hillcrest Labs |
Universal Music |
| Home Media Market |
Universal Music Corporation |
| HomePNA |
Veoh Networks, Inc. |
| HP |
Verimatrix |
| Hulu |
Verivue |
| IMDb |
Verizon |
Intel
(Intel Capital) |
Viacom
(Viacom Digital) |
Inuk Networks
(Move Networks) |
Virgin Media |
| IP Vision |
Visa |
| Irdeto |
Vongo |
| ITV |
VUDU, Inc. |
| Jinni |
Wal-Mart |
| Johnson & Johnson |
Warner Bros.
(Warner Bros. Entertainment, Warner Music) |
| Keirsey Research |
Weather Channel |
LG
(LG Electronics USA, Inc.) |
Widevine |
| Lifetime Networks |
WSJ |
| Limelight Networks, Inc. |
Yahoo! |
| Lingo |
YouTube |
| Linux |
Zeugma Systems |
Lions Gate
(Lions Gate Entertainment) |
Zillion TV |
| Logitech |
|
Global OTT Video Services & Forecast—2008-2012: Best Practice, ROI, & ISTB Analysis (August 2009) is 138 pages and is available in a printed English language edition for $2,995 USD, a PDF single-departmental license for $3,495 USD, and is available free as part of MRG's IPTV Tracking Service.
For more information or to order the report, contact Rob Smith at 1-408-453-5553
or rsmith@mrgco.com.
Press Release
Order Form
|
