We are now hitting a crunch time for Internet Video (OTT) to the TV. Looks like consumers love it (just look at Hulu and iPlayer), content owners love it (real customer contact at last) and the VC-backed start-ups are scrambling to monetise it (look at all the new retail STBs claiming to deliver it). BBC are busily trying to standardise it (joining OpenIPTVForum to bolster Project Canvas), Telcos are hoping they can monetise it (bandwidth/QoS charging) and television manufacturers are hopefully trying to differentiate through it (evidenced by CES 2009). Service Providers are wondering how to integrate it in to their IPTV services (whilst still paying for content from the owners who they now compete with), traditional STB manufactures are placing speculative bets on the video format and protection combinations (Adobe, Microsoft, Apple et al) and middleware providers are trying to incorporate in to their UIs. Chip manufactures are attempting to support it in silicon (STM, Broadcom and Intel), advertisers are wondering how to message effectively through it (pre-roll, post-roll, telescoping, sponsorship, banner ads) and governments are trying to regulate it (the Viviane Reding brigade). Cable and satellite operators are praying it goes away (whilst launching their own services just in case), clever software developers are innovating around the presentation and application layers (Yahoo widgets, Jinni, BLOBbox, Bee.tv, Boxee, Aprico) and niche video sites are wondering if they get cheap distribution at last (Cycle.tv, Joost, Babelgum). Journalists are writing reams of comment on it (most of it recycled), exhibitors are inviting people talk about it (most of it recycled) and the majority of the world is oblivious to all this and frankly don’t care.
But we as an industry do care and knowing which paths lead to success and failure is definitely front of mind. The PC-based OTT model is fairly simple to understand. The platforms are standard with lots of horsepower (PC or Mac), the technology choices are simple as they are only a click away (Browser, Codec and DRM), the audience is colossal, the business models understood and the delivery mechanism ubiquitous (the internet). But on the TV things become more challenging. The platform is CPU-poor (STB or TV), the interfaces are simple, the addressable device universe is small, the popular Codecs/DRM are not fully supported, the consumer expectation for quality and reliability is high and internet connectivity behind the TV is rare. Combine this with the popular OTT content owners trying to ‘control’ their content on non-PC devices and OTT opportunity has the real possibility of exploding before it starts.
So what is the answer?
Step 1 is to be realistic about consumer expectations:
1) We need to deliver a TV experience – ‘it better be at least as good quality and available the minute I want it’
2) The interface better be easy – ‘my coloured buttons on the remote better do the same thing across the whole service’
3) All the content needs to be in one place – ‘You mean I need to buy two boxes to see all the stuff I want!’
4) It should travel to and from other TVs and other devices – ‘I want to finish watching the movie upstairs on my iPhone’
5) There must be some editorialisation, contextualisation and personalisation – ‘ I’m not going to scroll down all those titles to find something that interests me and I want to be surprised with compelling suggestions’
6) The branding should be minimal – ‘I only care about programme brands and not these random parent company brands’
7) It must be easy to install – ‘What do you mean by running five cats?’
8) It must be cheap – ‘I don’t pay for it on my PC so why should I pay on my TV?’
Step 2 is to understand what the market needs to do to satisfy these expectations:
1) The content owners and telcos must work together to deliver the expected quality of service (and share the revenues appropriately).
2) Content owners cannot insist on their own look and feel but must become, or find, a trusted aggregator to consistently deliver a great user experience across its own, and others, content. Beware of regulation if this is not done fairly. The interface must be simple and portable – ideally across the existing universe of TV devices. That means offering a hierarchy of features that become increasingly available as the device horsepower increases. They must also stop continually changing their underlying technology choices - this is OK in the fluid architecture of the PC but not for simple devices.
3) Creating a critical mass of content which challenges that available on the open internet is very challenging for a single content owner. Yes Hulu is doing a good job and Kangaroo was bounced by the Competition Commission but the consumer want more than even they could offer. Let’s not forget that integrating OTT into existing DVB and IPTV content feeds is essential. I’m afraid that means true integration – within the broadcast feed, the EPG and the VoD catalogue.
4) The encoding and protection of the content must be standardised to allow portability across devices. Discovery of content stored around the home network is also attractive – DLNA is a good start. However, it then must be easy to locate and view – PC-like folders with incomprehensible files names will not do.
5) TV content providers must learn to be proper retailers by understanding consumption and preference and use that knowledge to offer compelling propositions that delight their customers. The broadcast ‘viewer’ model no longer cuts it in this time-poor, choice-rich world that we live in.
6) Be it Cat5, HPNA, Moca, HomePlug or Wifi, it must be easy to install and reliable. The economics of OTT will not support a truck role. And don’t ask the consumer to input a WEP key through the remote control.
7) The business model will not be solely subscription or pay-as-you-go so the industry must innovate around advertising, sponsorship, t-commerce, apps stores, up-sell/cross-sell etc
Step 3 is to pray for a miracle and hope we manage to create the right ecosystem that gets OTT thriving.
So there it is – as easy as 1, 2, 3. I’m not naïve enough to believe this is going to be easy but dropping the protectionism, the separatism, the proprietary, the indiscriminate and the mediocre would be a good start. So come on, let’s stop OTT going TNT before it’s too late. Remember the most important thing – consumers love it!