ABI Research forecasts that live linear OTT video services will grow to approximately $7 billion dollars of worldwide revenue by 2021, from a little more than $1 billion in 2016.
With OTT competition significantly increasing in mature pay-TV markets, service providers are decreasing marketing on their cable, satellite, and IPTV products that offer managed quality of service in favor of new products that use OTT technologies to compete with Amazon and Netflix.
The most recent OTT service launch is DirecTV Now, an AT&T national product with live linear TV.
“These services meet the consumer demand for anytime, anywhere programming and mobile-centric viewing while targeting a larger national audience,” says Sam Rosen, managing director and VP at ABI Research.
“The services fit within carriers adopting mobile-first mindsets as mobile subscriber bases and revenues exceed fixed line revenues, largely due to per-consumer as opposed to per-household connections,” said Rosen. “This helps win the battle for exclusive content rights but poses strong technical challenges.”
Delivering these services comes with many technical challenges. Developing robust content management systems, video transcoding and storage pipelines, application ecosystems, and piecing together adequate video distribution networks are just the beginning.
Quality of service assurance, network congestion management, content protection including analytics-based protection, such as modules which limit password sharing, and business analytics are some of the technical challenges to offer mobile OTT services.
As mobile video consumption increases, mobile operators are exploring policy-based approaches to meet customer expectations and manage the effects of video services on mobile data caps.
The technical challenges are so significant that many operators made significant investments in technology platforms. AT&T/DirecTV purchased Quickplay Technologies to gain better control of its OTT launch.
“Despite the technical challenges, OTT services help pay-TV operators attract cord-cutters with a cheaper pay-TV alternative, as well as next-generation customers who never planned to subscribe to a traditional pay-TV service,” says Khin Sandi Lynn, industry analyst at ABI Research.