An In-Depth Look At OTT And Live TV For 2014

An In-Depth Look At OTT And Live TV For 2014

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OTT, or over-the-top, is a term that encompasses a great many devices these days and it seems like every month a new one is coming to market. On top of that, it also includes the applications and services and the content they all serve to the masses. It was a big year for OTT with highlights including Google’s new entry Chromecast joining the fray and over 1.7 billion OTT devices including set-top boxes, Blu-ray players, connected TVs, game consoles, digital media adapters like Apple TV, Roku, or Boxee, tablets, PCs and smartphones. Pretty much anything that can display streaming video. Let’s take a look at 2013 first so we have some ground work for what 2014 might shape up to be.

OTT In 2013: Online Video Now 50% of Internet Traffic

First off Hulu is booming with a reported $1 billion in revenue and 5 million Hulu Plus account (note, that doesn’t mean they all paid, see my recent article on Hulu average CPM). Netflix is also doing extremely well and was shown in one report to be the top SVOD provider and 61% of its viewers binge on content watching an entire season of a show in a week and 73% don’t feel guilty about it, and why should they!

With online video taking up over 50% of all Internet traffic, and the vast majority of it in peak usage hours, Netflix is 31.6% of that peak period traffic and YouTube is just under 19%. That’s not to say that YouTube isn’t reigning supreme. After all, it’s worldwide where Netflix is still expanding market by market. Outside of Hulu and Netflix things are also picking up. Ultraviolet has a long list of partners including Best Buy, Target, Wal-Mart (VUDU), Universal and Paramount. Digital copies of movies bought on disc can be streamed anywhere at any time and both UV and Netflix have introduced user profiles so everyone can have their own specific content library.

2013 in OTT Devices: Roku, Chromecast, Xbox One and PS4

Tablets are ruling the roost as sales skyrocket and top PC sales in Q4 2013. TVs that can reach the Internet will top 202 million units by 2015 says the NPD Group (OTT and smart TVs). Media player install base could reach 31 million by 2015 as well and may very well be the reason connected Blu-Ray player sales will fall.

Google may have chopped the head off a lot of OTT device maker bottom lines when it introduced its $35 Chromecast device. After a couple tries it seems they might have found the perfect device – wireless, low-cost and easy-to-install needing just a USB port (can also use standard electrical outlet) and an HDMI port. It doesn’t have a remote, instead it uses your smartphone or tablet. It can easily be moved from display to display, but at such a low cost, who wouldn’t just buy a couple? Well, demand is so high they have been hard to come by. It also signed major distribution partners who have apps installed including Netflix, HBOGo, Hulu Plus, YouTube (of course), and Pandora – showing they’re not limiting themselves to video. Now, if you manage to get one (it’s been the #1 Electronics item on Amazon for weeks) you will join an ever-increasing army of hardware agnostics. Plus, we hear there’s an open source SDK in the works for 2014.


Roku, for its part, managed to add a Time Warner Cable TV app, YouTube on Roku 3, WatchESPN (live access to ESPN, ESPN2, ESPNU, ESPN3, ESPN Deportes and ESPNEWS), and WATCH Disney Channel, WATCH Disney Junior and WATCH Disney XD. However, some of those require authentication (proof that you get those channels through a pay-TV subscription). Roku currently supports over 1,000 channels and back in August was the most used OTT set-top device (according to Parks Associates, vs. Apple TV, Sony, TiVO, Netgear, SlingBox and Boxee, with an other category). Weird, I don’t know a single person with a Roku. They do have an install base somewhere in the 5 million range as reported back in April.

The end of 2013 also saw the next iteration of game consoles arrive to market and sell millions in the first couple weeks, 2 million each in fact. These new consoles are revamped and redesigned to be central points for the entire family’s entertainment needs and less about just video games. Microsoft has already stated that they are planning on creating Xbox One specific video content, unique content aimed at making their platform a dominant force in the living room for both video games and video entertainment. Consoles have lists of video apps for things like Netflix, Hulu, and Amazon as well as other online video stores like Vudu, and Crackle. YouTube has an app as well and Microsoft is hoping people will utilize those Kinect units to video chat via Skype on the platform. Meanwhile, in the Sony camp the Playstation 4 has a focus on creating content and streaming it out to the masses via Twitch which offers gameplay broadcasting. It too has apps for Hulu, Netflix, Redbox Instant, Amazon, etc.

2014 in OTT

2014 will see a shift toward making OTT more like OTV, old TV with more live content reaching the consumers. Several cable and satellite companies are now offering live TV streaming to mobile devices both in the home and in some cases, outside of it. Others are working on cloud-based DVR systems that could emerge from testing by year’s end.

OTT Channels become Full-fledged Content Creators

2013 was the year of original content for major players. Netflix, Amazon and Hulu all invested in original series, but that is just the beginning. 2014 will see them all become production studios in their own rights. Instead of throwing money at content people may have already seen or that has already aired on TV, they are going to start looking more and more at first run, exclusive, original content as a way to build audiences and maintain numbers. That’s not to say that they will abandon the business models that got them to where they are already, it means they will move money towards their own content and away from that of others.

amazon studios

Amazon already has an Amazon studios division with five shows focuses on the lighter side of content, comedy and kids. Netflix took a more dramatic approach with the more serious House of Cards which has a second season coming soon. But it too sees the value in comedy with Arrested Development Season 4 and Lillyhammer to name a few. Hulu, which is still owned by TV broadcast companies is going to need to change a few things to grow and that will include pulling together more original, exclusive content as well.

4K Streaming

Even though 4K, or UHDTV, is still in its infancy, Netflix is already doing 4K streaming tests and CEO Reed Hastings has stated that users will need a stable 15Mbps stream (so probably around 25-30Mbps connection) to stream the newest format. Amazon and Netflix both recently announced that they are shooting their new shows in 4K and that means those with a 4K display, which is very, very few currently, will have some brand new content to watch. Those who haven’t purchased a TV in the past five or so years are probably about ready to do just that. NPD expects about 13 million to ship next year, though how many of those are purchased remains to be seen. Prices are still extremely high and until they plummet into th realm of the average consumer, 4K will remain in the shadows. The game consoles currently don’t support 4K but Microsoft has stated that it could be done on the Xbox One with a software upgrade and they would be fools not to shoot their new content in 4K to make it more future proof.

The Virtual MSO

Finally, I think someone will step up and become a virtual MSO, IP-based delivery of live TV channels in a traditional cable format including channel surfing and subscription packages. Sony is apparently talking about making one with Viacom, Intel is trying to pull in Samsung and Amazon, AT&T might be putting one together, Apple is trying to figure it out. Roku thinks it is going to happen, the Boxee CEO does too, and so do I. At least there will be some solid movement.

2013 saw a series of retransmission fee disputes between broadcasters and cable/satellite, so what better way to stick it to them than to break out of the mold and start offering their channels in a different way, through a different kind of provider? Will any of it come to fruition in 2014? Will we all be streaming the major broadcast channels live by year end? One can certainly hope so because that is the only way that OTT can overtake traditional pay TV and force a change in how channels are offered. Hopefully, the virtual MSOs won’t fall into the same deal that cable fell into with channel bundling bloat and allow a more a la carte option where you can get more channels you want and less channels overall.

OTT minus STB

The living room has become a tower of boxes to get all the content consumers need – cable boxes, Roku, Boxee, Chromecast, connected TVs, game consoles, tablets, mobile phones… But that’s all going to change as consolidation continues and content providers get their apps everywhere. That’s what the game console makers were hoping for, a single box to do everything – music, video, communication and gaming in one. That stack of remotes will go away as well. Microsoft is betting on motion and voice navigation, but that probably won’t be the norm. However, with the new round of consoles one thing is plain to see – video is on everyone’s mind.

ott 2014 set top boxes

A connected TV and a game console could be all you need in the future, or a regular TV and a Chromecast as it continues to eat market share. I’m not saying everyone will have a game console, but in general, living rooms will only require a single box soon. If Sony gets their virtual MSO together, you can bet it will be through the Playstation 4. If Google does, it will be Chromecast, and so on and so forth. But the success of one could see a string of others and ideally, they’ll all become hardware agnostic over time so that you only need an app and a subscription to get IP-streaming Live TV along with your VOD. Those remote controls? They’ll be gone as well and tablets and smartphones will be used instead, just like on the Chromecast and with Xbox Smart Glass. Hopefully, we will see more interesting expansions on this as well because who needs five set-top boxes and remotes lying around?

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