ott delivery

8/2/2019 OTT Delivery

1/8

1 JUNE 2011

fodo.om

Cablevision and

Time Warner Cable

are streaming their

programming live to

Apples iPad. Com-

cast, meanwhile, is

building a rich online TV experience

or subscribers with its TV every-

where play, Xnity TV.

Hulu Plus gives viewers the

ability to catch up on shows they

missed the night beore on iPads,

computers, and even TV screens.

And Netfix, well, ater bringing

brick and mortar institutions like

Blockbuster and Hollywood Video

to their knees by delivering DVDs

through the mail, its on its wayto becoming the largest entertain-

ment subscription service in the

U.S., this time riding the Internet

to its aerie. And, while there are

plenty o naysayers predicting its

doom, as content prices rise and

the ranks o competitors grow,

Netfix just keeps handing out cash

to Hollywood or new content

deals like beads being tossed

to Mardi Gras revelers on

Bourbon Street.

Its hard to believe that, o

those products, only Netfixs

streaming service existed

more than 18 months ago.

Consider this:

Comcast rolled out Xnity to

tepid reviews in February 2010.

Hulu Plus was a beta

release in June 2010, and

launched or the general

pubic in November.

Time Warner Cable made

30-some channels available to

iPad subscribers in mid-March o thisyear. Cablevision made iPad-owning

subscribers giddy two weeks later

with its launch o Optimum Live

TV, it gave them access to all o the

MSOs channels and a couple o

thousand on-demand movie titles.

Microsot, Apple, Google and

its YouTube property, even e-tailer

Amazon and retailer Walm

looking to get in on the actIts just the tip o the ove

top delivery iceberg. More

providers are launching OT

vices every month, like Su

Communications, a relative

MSO with a subscriber ba

OTT Delivery:An Online

viDeO revOluTiOnThAT chAngeDTv Orever

Over-the-tOp delivery, its an evOlutiOn thatsleading tO a revOlutiOn in the industry

by Jim ONeill

edto /// FOnnVdo

ThaNk yOu TO Our spONsOr:

ComcastiPad App gi

access toEverywhere

onnue

2Over-The-Top Delivery,Its an Evolution Thats

Leading to a Revolution

in the Industry

5Analysts Say by 2016

OTT is $20 Billion Market

Primed to Get Bigger Fast

7Elemental Ceo Sees an

Exciting Ride Ahead or the

OverThe-Top Industry

8Ooyala Takes You

Everywhere

*SPONSORED CONTENT

12Pay TV Operators Maintain

a Sometimes Uneasy

Alliance With OTT

13Connected Tvs Have the

Power to Change the

Way We Watch Tv

15Online Video, the

o a Two-Way

Conversation

With Consume
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2/8

3 JUNE 2011

fodo.om

just 1.4 million. In June, it rolled

out Suddenlink2Go, which streams

tens o thousands ull-length

TV episodes, Hulu clips and some

1,300 movie channels.

HBO? Online. The Discovery

Channel? Yup. Almost all o Hol-

lywood is looking at how to get

its content online and how to

monetize it. Most have opted to

stick with service providers, or to

make their online content available

only to authenticated subscribers o

service providers.

But, said Sam Blackman, CEO o

encoding company Elemental Tech-

nologies, which counts ABC News,

CBS Interactive and the Big Ten

Network among its higher-prole

clients, that could change, too. He

believes its only a matter o time

beore content providers go straightto viewers.

It only takes one programmer

that can make more money selling

a la carte than through the sub-

scription model they have today,

and that calculation will just hit at

some point, he said. As soon

as it does it will be very hard or

anyone else not to oer a la cartebecause their value wont be the

same without it.

Industry analyst Sam Rosen, o

ABI Research, predicts great things

or the OTT industry; in act, he

believes that by 2016 some $13.3

billion in advertising revenue will

come out o it, much o it having

tagged along with content that hebelieves increasingly will migrate

rom traditional television.

There are industry trends that

you can see very clearly on the

ground right now that tell us o the

distant uture in, lets say 10 to 15

years, Rosen says. The rst is

that cable operators and telcos have

started to see a shit in revenue rom

TV delivery services to just broad-

band delivery services in the pipe.

The rst piece o this is delivering

live TV to other devices inside the

ootprint o their network. The next

piece o it is delivering services any-where in the world to subscribers

who reside within its own network,

and then the third piece o it is

delivering services to subscribers

anywhere they are, he added.

And that, he said, will happen

over-the-top.l

Some apps ortablets give

users the abilityto control their

TV viewingexperience.

Tablets likethe Apple iPadmake content

discovery easier.

onnue o ge 2

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3/8

5 JUNE 2011

fodo.om

accessible, and consumers will

eventually discover it.

But, others in the industry see

OTT being driven by users who

know what they want, and are

helping to actually shape the direc-

tion o the market.

Rosen believes that drive by

consumers has produced two big

winners so ar: consumers and con-

tent owners.

The customer wins because

theres a more competitive envi-

ronment among providers, he

said. They benet because the

cost may come down, even as

entertainment costs go up. And,

the variety and the experience get

a lot better.

And, he said, the variety o pro-

gramming outstrips traditional cable

oerings by an order o magnitude.

I you have a customer whos

rom Turkey, ve years ago it was

hard to get more than two or three

hours o programming a week out

o Turkey, he said. Now, they can

watch Turkish TV 24/7. So I think

the customer is the rst one who

really sees a big benet.

The content owners creating that

programming are the other big win-

ners, he said.

For a long time the cost o

production was very, very high.

And the cost o reaching audience

was very high, he said. That

let a stranglehold on content and

you had to go down to a airly

low denominator to reach a wide

enough audience. Were starting to

see really unique and niche content

because you can reach an

ence wherever they are. A

think the content providers

second big winners.

There are, he said, boun

some losers in the segme

market evolves, but theyll

looking at scaling back gro

opposed to extinction.

Over the top is a big pie

a growing pie, he said. Y

see cable losing to satellite

telcos in the U.S. because

more choices available to c

ers, but MSOs will continu

grow as they turn more to

money o broadband, he

There will still be growth

vice providers, its just tha

will grow at 2-3 percent a y

others at 15-20 percent a y

the Internet, they will nd a wealth

o TV-optimized content and appli-

cations at their disposal.

What dollar value to place on the

industry, however, is a little tougher.

ABI analyst Sam Rosen said he

believes that advertising revenues

and subscriptions to services like

Netfix, iTunes and Hulu will likely

total $20 billion in North America

alone by 2016, with two-thirds, or

about $13.3 billion, o that attribut-

able to advertising revenue.

Netfix is the current leader in

OTT revenues, and its helped

consumers embrace long ormbroadband video on their TVs with

support in nearly every Smart TV

platorm. Apples iTunes and Hulueach represent about 15 percent o

the current over-the-top market.

Over time, more viewing o

YouTube and historically Internet-

based platorms will shit to the

living room, opening up signicant

advertising revenues, Rosen said.

We think over two-thirds o that

$20 billion gure will be advertis-

ing revenue. And we think in some

ways it will come out o the T V

advertising revenue world into the

OTT advertising revenue world asthe content shits.

The remaining third, he said is

rom pay-per view, rental, subscrip-

tions, or purchases online.

Twenty billion dollars, he said, is a

conservative estimate.

Asia is a big wildcard, he said.

Right now, Asia is a pretty small

piece o our orecast because o

the diculty o monetizing it. But

i you look at the number o con -

sumers, even though theres ewer

dollars per consumer, the potential

there is astounding.

So whats driving the growth?One buzz phrase in the industry

is that content is king. Many

OTT players believed in what can

best be described as the Field

o Dreams theory: I you build

it, they will come. Provide great

content, thats aordable and easily

Aasts Sa b 2016 OTTs $20 Bo Makt Pmdto gt B ast

by Jim ONEill

How big is the over-the-

top industry? On a worldwide

scale, research suggests that

it currently counts just over

780 million users, with about

106 million households in the

U.S. using some OTT video

services in 2010.

Those numbers are expect-

ed to skyrocket by 2016. ABI

Research said it anticipates

more than 1.3 billion online

video viewers worldwide, and

a recent report rom The Di-

usion Group orecasts some

250 million U.S. householdswill actively be watching con-

tent that comes in over-the-top

o pay-TV provider services.

But, reports TDG, theres

signicantly more

potential or

uptake in the U.S.,

as 488 million

households will be

OTT TV ready,

with hardware

and broadband

connections in

place. And theyll have access

to plenty o programming.In 2009, net-based TV vid-

eo services were ew and ar

between, said Colin Dixon, a

senior partner at TDG. Today,

when a consumer connects

a smart TV, a Blu-ray player,

or any other video platorm to

O tm, mo wo stoa itt-basd patoms w st

to t oom, opp sfat adtss.sam rOseN, abi research aNalysT


4/8

7 JUNE 2011

fodo.om

spONsOrEd cOOoaa Taks yo ewby bismarck lEpE, cO-fOUNdEr aNd prEsidENt Of prOdUcts

The growth o online video is

simply remarkable. It took 38 years

or radio to reach 50 million users,

13 years or TV to do the same,

10 years or cable, 5 years or the

Internet, and less than 2 years or

Internet video to hit the 50 million

mark.

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FOnnVdo: What has the

growth o OTT meant to compa-

nies that do video processing, like

Elemental?

s bn: Its certainly

driven demand or gear ocused

on adaptive bit rate multi-screen

delivery. In the past, you didnt

have to worry too much about scal-ability or OTT delivery because it

probably was just going to a Flash

player, and you had to only support

a single-stream or Flash.

Now, you need to support adap-

tive bit rate delivery to a Flash

player, as well as a Silverlight play-

er, as well as all the iOS devices,

as well as Android and everything

else. So, you know you going to

need to support 20 to 30 outputs

per video asset you have.

Thats driven customers to look

or architectures that can support

multi-screen adaptive delivery, thatcan support many, many streams

or many, many les created rom a

single ingest source or ingest le.

Were really built around taking

advantage o parallel hardware

to get very high stream density,

or very high le density. The rst

couple o years we were selling

this gear, that was a cool eature,

but it wasnt necessarily a business

driver. Today i content owners

want to reach iPad and iPhone

and iPod and Android devices and

Roku boxes and Boxee boxes and

connected TVs rom Samsung and

Panasonic and everyone else outthere, they know theyre going to

have to support a myriad o di-

erent OTT devices. So, all o a

sudden the density they get rom

a product like Elemental Live is a

huge dierentiating eature.

Its been a transition rom nice

to have, to be able to support

many devices cost eectively,

to an absolute have to have, a

business driver or them. And that

transition has helped our business

signicantly.

FOnnVdo: How muchhas Elemental grown since launch-

ing in 2006?

bn: One way I like to

describe it is, in 2008 we had six

gures o revenue, in 2009-2010

weve had seven gures o revenue

and I think theres a very good

change well have eight gures o

revenue this year.

An order o magnitude every

other year i we can keep that

run rate up well be all right.

FOnnVdo: How big is the

encoding market?

bn: The most recent guresIve seen is that its a $1.1 billion

market this year, growing to about

$1.5 billion over the next our years.

The multi-screen market that we

ocus on is about $110 million to

$120 million today, growing to about

a hal-a-billion in the next three

years. Were really condent that

all the growth in video processing

is going to be in the multi-screen

adaptive space as opposed to the

kind o conventional encoding or

over-the air or satellite or cable. Its

all going to be adaptive, and thats

completely our ocus.

FOnnVdo: Who are

some clients youre working with

right now?

bn: Some o them are, and

emta ceO Ss a ext rdAad o t O-T-Top idst

by fiErcEONliNEvidEO

Elemental Technologies provides video processing solutions that enable multi-

screen content delivery or c ompanies like ABC, CBS Interactive, PBS and the Big

Ten Network, among others.

CEO s bn co-ounded the Portland, Ore.-based company in 2006.

Beore that, he designed integrated circuit products or Pixelworks, and held

engineering positions at Silicon Graphics and Intel Corporation.

Blackman believes over-the-top delivery is just starting to kick into gear, and

says the company has grown rom revenues in 2008 in the six fgures to a real

shop at eight fgures this year. Not bad or a fve-year-old company.

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5/89 JUNE 2011

fodo.om

always held true in pay TV. I think

in the pay TV world its roughly

hal subscription, hal advertising

driven I think thatll be the case

as you go to an OTT world. So,

things wont change that much.

The nice thing about OTT delivery

is that the service provider has way

more control over what the end

subscriber is seeing.

It gives them the ability to have

much more fexibility in their busi-

ness models.

FOnnVdo: Whats driven

the change in the past, say, 12

months? Whats brought OTT to

the oreront?

bn: The technology has

come a long way ad networks

are integrated to the video

processing systems, like

Elemental so that ecosys-

tem is starting to evolve. Theact that the technology now

is there or that to happen in a

way thats not horribly annoy-

ing to the consumer, thats

one part o it.

I think theres also a rame-

work being created now that

wasnt there beore. Hulu

shows 30-second commer-

cials a given number o times

during a program and people

watch them and keep consum-

ing content on Hulu.

The conventional advertis-

ing model that people werentsure would be accepted or

over-the-top delivery has

clearly been accepted when

the content is good enough

on a site like Hulu or ABC.

com or NBC.com. Theres

less ear, now, that people are

going to stop watching a stream

because theres an advertisement

in the middle o it.

And the quality o the delivery

has gone up so much with adap-

tive bit rate streaming and high

denition. Consumers are getting

as good an experience with over-

the-top delivery now as theyre

getting with their cable set-top box;

they might lose a little bit o resolu-

tion compared to an HD stream,

but compared to any SD channel

on television, youre going to get a

better video experience now. And

consumers will pay as much, or

sit through as many ads or that,

regardless o the inrastructure o

how that video is delivered.

FOnnVdo: How does

cloud encoding, like Amazon and

Encoding.com aect your busi-

ness? What kind o impact does ithave on Elemental?

bn: Its something were

watching very closely. Our

experience, thus ar, is that our

customers, who are Tier 1 program-

mers and service providers, their

content is so incredibly valuable that

theyre not willing to move it o

premise into a public cloud inra-

structure. We are looking at ways

to help them get more comortable

about security in the cloud, but

there have been a couple o high-

prole examples where a movie has

leaked a couple o months beorerelease, or a TV show has leaked

and, when that happens the compa-

ny loses millions o dollars because

the piracy impact on rst-run shows

and movies is so big.

Theres some work in our space

to get Tier 1 olks comortable with

the security level in public

inrastructure, and we hav

ideas around how were g

do that because we think t

is a great way or our custo

publish their content and it

us to a nice recurring reve

el as opposed to a pure un

model that we have today.

going to take some time, it

something we see our cus

being willing to even cons

the moment.

FOnnVdo: As O

grows, who are the winne

losers?

bn: Its going to be

win or consumers in term

and quality o content.

I think programmers are

to do very well. Theyre go

have a lot more pricing pow

the service providers. I yoa nice angle to get directly

customer, thats a very pow

lever to use in negotiations

Comcast, Time Warner, ot

panies like that.

Service providers will ha

ocus on cost-eective de

more than they have in the

but they could also be win

they do a very good job o

to be more than just video

ers and work to become o

network architects and ne

inrastructure olks.

Now, its interesting thatare all these CDNs coexist

these service providers. In

long term, is that really an

relationship that makes se

we really need CDNs and

onnue o ge 7

app that they released or the iPad

thats really cool with a spinning

globe on it that you can spin the

globe, nd a story o interest and

click on itBoom!pull up the

video. And that app went to No. 1

in the App Store within a couple o

days o its release and since that

one, weve had three other custom-

ers at least that have their own app

on the iPad that has driven huge

trac or them.

Thats been a real game changer

or us and we certainly work very

closely with Apple to make sure

that, i anyone is using our encoder,

it will get through the App Store no

problem at all.

The next big driver will be around

ad insertions or these apps that

have video. Were working very

closely with some o the video ad

platorms to make sure that they

can interact with our video process-

ing technology to deliver ads to

these platorms.

FOnnVdo: An analyst I

spoke with said online video ad rev-

enues will top $13 million by 2016,

as more content goes rom TV to

over-the-top delivery and advertising

ollows it. Does that surprise you?

bn: Our thesis is that the

managed service model o pay TV

in the past is all going to be con-

verted to delivery over IP. And, as

that transition happens, the same

models or paying or that content

are going to hold true that have

this is just a partial list, ABC, CBS

Interactive, National Geographic,

PBS, Big Ten Network, NPG, and

thats like one-tenth o the inter-

esting, big-name customers that

are using Elemental or VOD le

creation or live streaming.

FOnnVdo: How have

Elementals d ay-to-day interactions

with these companies changed?

bn: I think one o the big

drivers o the last year has been

the iPad and we have a lot o

customers now that have recog-

nized the importance o building

an app to put on that iPad that

gives customers direct access to

that content. ABC News has an

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6/811 JUNE 2011

fodo.om

Pa Tv Opatos Mataa Somtms uas

Aa Wt OTTby Jim ONEill

While more pay TV opera-

tors have begun oering

some favor o online video

service to their subscribers,

its generally initiated as a

deensive strategy intended to

keep a service providers con-

nection to a subscriber.

We denitely see over

the top as the enemy o the

operator. Over the top, by

denition, means the consum-

er doesnt have a relationship

with the operator, aside rom

the broadband theyre provid-

ing, they have a relationship

with whoever is providing that

video service, said Steve

McKay, CEO o Entone, a

company that specializes in Hybrid

TV and connected home solutions.

That means operators now have

to compete on speed and price as

opposed to having an equal rela-

tionship with the consumer, which

is where all the strategic opportuni-

ties are.

A branded relationship with the

consumer, he contends, opens up

opportunities or driving up ARPU

by oering other service bundles, as

opposed to being seen as a neces-

sary evil, as in, Whom can I pay

the least amount o money to or the

highest amount o speed so that I

can get my over-the-top services?

Thats a terrible scenario or the

operators and one, we believe, they

providers? Or, should the service

providers look more aggressively

at taking on some o that content

delivery unctionality themselves?

Thats going to be a very interest-

ing discussion over the next ew

years.

FOnnVdo: What other

losers are there out there?

bn: I think some o the

olks who are currently being called

dramatic winners now will, over

time, come up against signicant

cost pressures.

Netfix is a company I really

admire, I think theyve done a great

job, but I dont see how they can

continue to deliver a great selection

at $8.99 a month when they have

to start paying the same content

ees that cable TV providers have

had to pay.I think companies that are trying

to build new subscription models

could really struggle over time, say

the next ve to 10 years.

The VOD model could be great

or someone like Apple, but the

subscription model, I just see that

being really tough.

FOnnVdo: We talked

about consumers being the win-

ners. One o the big selling points

about OTT is that it gives everyone

more choice. Do you think theyll

ever have real choice, as in a la

carte?

bn: I think so. I think so. It

only takes one programmer that

can make more money selling a la

carte than through the subscrip-

tion model they have today, and

that calculation will just hit at some

Racks o servers make upthe heart o video delivery.

onnue o ge 10

point. As soon as it does it will

be very hard or anyone else not

to oer a la carte because their

value wont be the same without it.

FOnnVdo: So, pull out

your crystal ball whats OTT look

like down the road?

bn: Its going to be very

interesting in the next couple o

years to see service providers

making all o their programming

available as OTT. You see the start

o it with Cablevision and Time

Warner Cable. I think that trickle is

going to turn into a food over the

next couple o years.

The big question I have, and every-

one in our industry has, is once you

can watch your Comcast subscrip-

tion perectly on your iPad or other

device in your household, are you

still going to pay 200 bucks a month

or a subscription? I think the answeris yes, because video is so important

to the consumer in general.

I thats the case, then I think a

lot o advantages that some o the

new, disruptive companies have

starts to be diminished.

Thats the big question or us: Are

you going to be able to maintain

that revenue stream in the MSO

state by making the content avail-

able wherever consumers want

it? I you are, that really keeps the

industry dynamics healthy. I not,

then youre going to see huge price

compression in the space, which

will make all our lives a lot harder.

We need our customers to be mak-

ing good money so they can buy

our gear. The programmers have to

be paid well or their content. I, all

o a sudden, service providers are

not going to be able to monetize

as eectively as they have over

the past ew decades, then thats

going to cause enormous disrup-

tion in the entire space.

FOnnVdo: So, you have

$10 million to invest in any com-

pany, except Elemental. Who do

you invest in?

bn: Id say Amazon is thecompany I really admire right now.

Amazon and Rackspace.

How Amazon has been able to

innovate on a lot o ronts never

ceases to amaze me. Theyve just

done such a good job with that. Id

take that $10 million and put hal in

Amazon and hal in Rackspace. l

have to protect against, h

Its going to be a pitched

Research rm The Diu

Group contends six drivers

uel OTT adoption:Net-ready devices will

ingly replace traditiona

consumer electronics;

Wider access to digita

as operators relax thei

distribution restrictions

National governments

policy aecting the dis

o Internet content;

Consumers like on-dem

media delivery, and wi

toward products and s

that support access;

More personal media i

tized now, and consum

access to it on their TV

OTT services are avail

multiple screens, allow

consumer to enjoy me

more screens.

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7/8

13 JUNE 2011

fodo.om

For operators with a limited

deployment, or no IPTV service,

Entones answer is a broadband

TV edition that eliminates the

need to buildout a network inra-

structure to support IPTV and

instead bundles Fusion with a

broadband Internet service.

And while devices are givingoperators headaches, theres a

looming cloud on the horizon in the

orm o content providers looking

to get their content directly to the

consumer, skipping the middleman.

I you were deep in the coner-

ence rooms o those companies,

theres no doubt in my mind that

theyre all struggling with wanting

to be able to do that because they

can monetize more o the value

thats in the content library, said

McKay. On the other hand they

are in many ways beholden to the

customers that butters their breadtoday, mainly the big operators.

Most operators see themselves

as between a rock and a hard place

when it comes to their network and

OTT trac.

Embrace it, they believe, and

theyll be ghting major network

headaches. But, or any operator

these days, that burden is going to

be put on their network whether

they acilitate it or not.

I I go down to the Apple Store

and buy an Apple TV, and I plug it

into my network, well, whether that

brand relationship is between me

and Apple or me and my operator,

the burden on the network is going

to be there, said McKay. So i

theyre going to have to invest the

capital to upgrade their networks

or all these broadband video appli-

cations, then they might as well be

the service operator monetizing the

provision o the service.

In many ways, broadband has

become the primary relationship

between the consumer and the

service provider.

Cable operators and telcos have

started to see a shit in revenue

rom TV delivery services to justbroadband delivery services in the

pipe, said Sam Rosen, an ABI

Research analyst. And you can see

this anywhere you look in the world.

You can see this at Sky, at Liberty

Globalincluding some o theirEastern European servicesand

in Comcast in the U.S. That shit in

revenue, rom TV delivery to becom-

ing the means whereby other people

become responsible or the content,

its signicant. And its happening.

McKay agrees, saying hes seen

an increasing change in the market

overte past 12 months.

Theres a much more height-

ened awareness to both the

opportunity and threat o cloud-

based services, he said. A year

ago there was a whole lot o

education required by us about

what was coming. Now its a much

more strategic engagement; theyre

deciding whether to deend against

it or embrace it. Theres still a lot o

conusion about whether a Roku

device is a riend or a oe in our

eyes its denitely the enemy o the

operator. The discussions a

nuanced, and thats a good

For the consumer, McKa

its a antastic time becaus

have the opportunity to ge

they want.

But, he adds, the choice

still too binary. At one en

spectrum, you have premiTV that can cost consume

that $2,000 a year.

We estimate maybe 20

percent o the market eel

getting what theyre paying

McKay said. Those peopthe means and the appetit

or those services.

On the other end, you ha

audience that either has ne

been connected or doesn

has enough value to oer.

Its that big, what we c

middle class, thats not be

properly served, he said.

thats the consumers who

more choice, more than th

get rom a Roku device, bu

wither not willing to pay o

are very unhappy paying o

Any time you have a mism

between the consumer ap

and what the market oer

an opportunity. Thats the

nity operators have to grab

To me, the operator wh

gure that balance out has

opportunity. l

From the earliest days o

broadcasting, how viewers con-

sumed content has always been

airly straightorward: They sat

around a television and watched

it unwind in ront o them.

Cable increased the amount

o channels available, the DVR

eventually allowed viewers to

time shit their viewing, but little

else changed.

Now however, the revolution

has taken hold.

There are a plethora o devices

available to make it easier or

viewers to watch over-the-top

content, rom the under $100

Roku, to connected TVs rom all

the major CE manuacturers that

cost thousands o dollars, butmake it easier than ever to con-

nect to online content.

As TVs become directly con-

nected to Internet it begins to

shit the power in the value chain.

What we see happening

isand this will take some

time, because it will take some

time or the installed, base o

connected TVs to grow, and

the replacement cycle start

cotd Tvsha t Pow

to cat Wa WWat Tv

by Jim ONEill

Consumers arent the only ones

buying OTT devices, there are a

number o operators around the

country, especially smaller ones,

who have embraced devices like

the Roku and Boxee box as one

way to bring their customers theOTT options theyre demanding.

In their eyes, its a way to keep

their wire connected to a sub-

scriber who might otherwise look

elsewhere. And, they say, theyre

still selling value-added services

that include truck rolls to connect

the devices, broadband upgrades

and more.

McKay, maintains that puts

them in a precarious position.

What happens is they realize

that what theyve done is helped

to move those customers away

rom them, he said. Now,when a customer turns on their

TV, their relationship is with Roku

or Netfix and not the service

provider. We have that discus-

sion all the time how they c an

enable that category o services

while at the same time protect-

ing a customer relationship.

Entone is one o a number o

manuacturers that oer opera-

tors solutions by helping them to

expand their services.

Its Fusion TV, or example,

comes in a variety o favors. For

operators with an IPTV deploy-

ment, which complements IPTV

service with rich media services

like Vudu, Pandora, Flickr and

more than 100 other Web apps.

It helps them to enrich their

existing service and stave o

over the top, he said.

onnue o ge 12

onnue on ge 15

Opatos ow a to ompt o spad p as opposd to a a qatosp wt t osm, w w a t stat oppotts asTeVe mckay, ceO OF eNTONe

Connected TVs, like this Sony model, makeaccessing over-the-top content easier than ever.


8/8

15 JUNE 2011

fodo.om

to you, Schreiber said. 5min

is based on that. We said lets

embrace the ragmentation and go

to where people are tradi-

tionally going online.

In other words,

bring the content

that resonates

with a doctorto the Websites

shes most likely to

visit, or bring ood-

related content to

ood-related sites.

5mins approach is

to curate the Web or

high-quality video that

originally was shot or the web.

We nd it has much more clicki-

ness to it, he said. I still need

content rom MSNBC and I still

need the Colbert Report because I

want to oer a well-rounded pack-

age o content or my users.Content providers, he said, need

to embrace the interactivity that the

Web oers, like Twitter, YouTube,

Facebook and other distribution and

blogging platorms that allow or

genuine two-way conversations.

He points to Vice Magazine,

a Web-based publication that

supports its editorial mission

with Internet-purposed video.

They use the content as the

start o a conversation, he said.

And then a lot o engagement or

it ater that. Much as the Hu-

ington Post, another recent AOL

acquisition, is doing, he said.

We brought in the right content

to enable a similar interaction tohappen, he said.

I you take a great piece o

content that was driven editorially,

created or a platorm that creates

interactivity, and all o a sudden

advertisers see that theyre get-

ting great engagement because

the content actually was created

with an eye toward engagement

on this platorm.

That allows advertising to inte-

grate products dierently than with

traditional content, rom product

placement being negotiated beore

a segment shoot to a subtle call outbeore, during or ater a piece runs.

When you start having a con-

versation with an advertiser beore

the show has even been shot, it

changes what you can do with it,

he said.

5min and AOL have begun doing

a lot o original content, bringing in

sponsors and underwriters to inte-

grate their products with c

its conceived.

AOLs deal with Heidi Klu

one example o how the co

pany is monetizing video cr

Everything rom a specic d

to original articles and video

Klums voice, are being cre

That ends up being a vinteresting proposition, h

You can bring in an adve

the start o the process a

have a real voice.

Schreiber said he believe

content has increasingly b

taking money away rom o

ormats and its all going to

the wheels o this industry

elevating content quality, d

methods, all o it.

I love the idea o OTT,

A lot o original content b

produced now is ve or six

utes long because that wocontent being delivered to

when OTT really starts tak

that actually will bring eve

ull circle again.

All these new platorms

potential or a true two-way

sation. Its potential or com

OTT video is just the beg

that conversation. l

to happenbut increasingly, its

just going to become a standard

eature or the TV display to con-

nect to the Internet, said Altman

Vilandrie & Co. Director Jonathan

Hurd. When that happens, it gives

the TV device more perspective

on what the consumer is doing or

watching than a set top box has.

A traditional set top box, or

example, can collect data on what

channel a consumer has one, and

or how long. But, it cant actually

tell i that channel was actually

being watched, or i a set was

turned o, but the STB let on.

The cable operator doesnt

know i somebody is actually

watching the show that the set top

box is tuned to, said Hurd. And,

i somebody is watching a Netfix

show using another box, the set

top box wouldnt know about it.

A connected TV can change al o

that, collecting a wider variety o

inormation on viewing habits than

ever beore.

Not only does it know i a device

is on, it can track whats being

watched through audio watermark-

Service providers arelooking or ways to reach an

audience that increasingly

is alling under the spell o

over-the-top video. Younger

consumers especially are as

used to nding content on

the Internet as they are nd-

ing shows delivered by more

traditional means.

Its been a tough road or

many, who have tried to

migrate their businesses to a

digital platorm by taking their

pay-TV strategy and putting it

on the Web. While building asignicant audience, its been

hard or them to achieve the

same level o success that

theyve been used to.

Think o it, almost, as a

chicken and egg dilemma.

It as i theyre saying, I

the Web is going to be suc-

cessul, Ill create original

onnue o ge 13

content or it, but until then,Im going to repurpose exist-

ing content that I shot or another

platorm, said Evan Schreiber,

VP o content and acquisition at

5min Media, an AOL company.

We are starting to get away rom

that in the space as we mature, but

you still see a lot o cable shows,

broadcast shows, local stations just

repurposing content.

And that, he says, is a mistake.

A lot o the numbers dont come

back as being very impressive, so

they dont pour more resources into

it and they chalk it up as an incre-mental part o their business, but

not part o their growth strategy.

Theyre missing the opportunity

to have a very strong one-to-one

relationship with their audience.

The current model, he says will

work... to a point.

With respect to certain content,

you can get away with it, he said.

O vdo, t Stato a Two-Wa cosatoWt cosms

by Jim ONEill

ing or other techniques, can track

online video usage, providing a more

complete picture o viewer habits.

A connected TV, hooked up to the

Internet, as opposed to a set top

box, which might be connected to a

relatively thin, proprietary upstream

pipe, can provide inormation to the

TV manuacturer, the OS owner,

and even a content owner.

That, o course, raises the

potential or serving tightly tar-

geted advertising.

It almost certainly will be able to

supply more data points than a tradi-

tional Nielsen sample, or example,

Hurd said. So, I can be shown two

or three dierent ads. I I dont have

a pet, or example, maybe I would

never see dog ood ads.

Just as cable created th

tunity or a lot more chann

could be broadcast in the a

spectrum, we now have th

new inrastructures thats

ing the opportunity or a lo

channels, and its bi-direct

interactive so it also adds i

demand, what I want to se

I want to see it. l

But were seeing a lot o com-

panies just chopping up a 30- to

60-minute show and trying to get

away with that.

Theres value to that, getting it

when you want it, where you want

it, he said. But theres more i you

develop a tablet app, a mobile app,

something specically or an OTTprovider. But as the Web evolves,

there are companies looking at a

brand new approach to content.

Scale and nding audience, is

one o the hurdles Web content

providers ace, because the Web is

a ragmented place.

You cant just pop your brand

on it and expect people to come

ott delivery

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