Guide to OTT Technology for Network Operators
Lately the TV industry has been under a lot of pressure due to the emergence of new technologies and concepts. Traditional operators (Telcos, Broadcasters, Mobile Operators, etc.) although owning infrastructure, are facing technology disruption and strategic challenges on how to further monetize their large subscriber networks. In our daily operations we have noticed that operators are facing the following key challenges:
- Operators are facing disruption in their traditional business, due to lack of interactive features (Catch Up TV, Time Shift, On-Demand services) which creates subscriber churn and pressure on service pricing
- Due to inefficient legacy solutions, broadcasters are falling behind in acquisition of personal,user-behaviour data about content consumption
- Operators lack resources and knowledge to implement complex technologies such as OTT
These challenges can all be addressed with OTT (Over-The-Top) technology which enables new concepts of watching TV for both users and the operators.
Few could have predicted the incredible growth of digital TV and streaming in the last couple of years. This has accelerated even further during the COVID-19 pandemic. Stuck at home for an unknown amount of time, consumers globally turn to OTT (Over-The-Top) and other forms of CTV (Connected TV) content to stay entertained.
This brings a new scope of opportunities for the operators in search of restructuring their traditional business.
What is OTT
OTT (Over-The-Top) technology uses public internet to broadcast video content over the internet, bypassing traditional streaming technology such as satellite and cable. It presents an alternative method to traditional television broadcasting.
Unlike traditional video broadcasting where to access the service you require a television set with connection over cable or satellite, OTT technology uses public internet and different types of connected devices (STB, Smart TV, smartphone, tablets, laptops, etc.) in order to access desired content and services.
Most commonly it is associated with VOD (Video on Demand) Platforms but also refers to audio streaming, messaging services, or internet-based voice calling solutions (VoIP).
OTT services are typically monetized via paid subscriptions, but there are exceptions. For example, some OTT platforms might offer advertising based services or different types of in-app purchases.
Success of OTT
There are clear signs of growth in implementing OTT technology:
- The OTT market was worth $121.61 billion in 2019 and will grow to $1.039 trillion by 2027. (Allied Market Research)
- There was a 115% increase in OTT streaming to TVs between 2020 and 2021. (Conviva)
- Between April 2019 and April 2020, global OTT traffic increased by 198%. (Absolute Market Insights)
- Across the globe, 770 million people buy a SVOD service
- The total number of users for OTT services is set to increase to 3,761.4 billion (48% of the work population) by 2025 (Statista)
Of all the revenue made in the OTT market…
51.58% comes from advertising video-on-demand (AVOD)
40.16% from subscription video-on-demand (SVOD)
5.1% from pay-per-view, known as transactional video-on-demand (TVOD)
3.16% from Video Downloads (EST)
How does OTT technology work
While accessing video content via OTT is very straightforward for viewers, the integration of the solution components is fairly more complex than traditional broadcasting. From a high-level perspective, here is how OTT technology works:
- Content is uploaded by an operator to an OTT Platform
- The video is then transmitted via Content Delivery Network (CDN)
- End users select the desired content on the user applications (STB, Smart TVs, Smartphones, Tablets, PCs, etc.)
- Video player takes the video content from the CDN node over the internet and streams it to the end user.
Lets see what kind of technologies are involved in a fully integrated solution stack. Bellow diagram presents all the building blocks:
Source: UniqCast High level architecture
The Middleware stack is devised of several components (CSMS, TV Statistics & Client applications). It is known as the software brains of OTT platforms as it controls and interconnects all the components of the solution. The Content and Subscriber Management System (CSMS) is the central part of the solution commonly referred to as an administration portal. Apart from being the main interface for operator personnel to administer the TV service (Subscribers, Content, Packages, etc.) it also controls the majority of TV services and interacts with streaming & CDN and DRM serves to deliver Live, VOD and recorded content to the end users. It also integrates with external systems for billing, provisioning and with EPG and VOD content providers. Client applications authorize the CSMS and communicate with it, to provide required TV services to the end users on different devices.
A very important part of the Middleware stack is also the TV Statistics module, which gathers events across multiple devices about subscribers content consumption, enabling operators to monitor content usage and user behavior and adjust content acquisition accordingly.
Video headend components guarantee receiving video signal from satellite and terrestrial sources, encode it in a format for delivery in the IP network and transcode it for delivery to different client devices in managed or OTT networks. Transcoders also take care of creating required multicast profiles aligned to each other, segmenting these multicast video streams in the HLS chunks and uploading them on the streaming server, to be able to provide HLS streaming for OTT devices.
Fast Channel Change and Error Correction system is responsible for fast channel zapping and error correction in case of non optimal network conditions.
This part is most commonly referred to as Streaming where the servers are responsible for delivering Live and VOD content as well as for recording Linear TV channels as instructed by the Content and Subscriber Management system. Recorded content is stored on the storage servers that are part of the system, and are uploaded to the streaming server when required to be streamed to the clients. Same system is used for unicast streaming in the managed network using RTSP and UDP protocols (VOD server) and for streaming in the OTT network using HLS (OTT streaming).
DRM systems are used to encrypt Linear TV multicast streams in real time to protect video content from copying and unauthorized access. Multiple solutions exist that provide different aspects to the security. An operator normally consults its OTT Platform provider for advice on which DRM solution to choose for its case.
Monitoring, Integrations & Services
To easily operate and troubleshoot the system, several monitoring components are normally provided. From monitoring and accessing Connected Devices (CTV) to monitoring video streams in order to detect failures and quality errors.
System level integrations are required for provisioning the system through operators legacy systems such as CRM & Billing.
In the course of OTT inception a vast array of services are required. From consulting the operators on the technical and business aspects, to service design, project delivery and post delivery services such as technical support & maintenance.
It is safe to say that OTT technology is increasingly complex and requires a lot of industry specific knowledge and resources. Most of the operators are lacking these assets and are looking for E2E Solutions providers who would act as a “one stop shop” for delivering OTT Turnkey solutions.
Benefits of using OTT solutions for operators
Transitioning from Traditional TV to TV Anywhere
Traditional TV operators are recently being affected by the emergence of different OTT services (Netflix, Amazon Prime, Disney+, etc.) on the market. Currently Pay TV operators are facing fierce competition on the market which puts pressure on the price for the service. This is causing subscriber churn and decrease in the profit margin in the traditional business models. To further add users have limited budgets for subscription based services and can use only a few of them. Pay TV operators are fighting hard to sustain their business models with traditional offerings.
With the improvement in connectivity, new ways of accessing and consuming content, end users have become increasingly more demanding when it comes to how they consume content. Live TV has become a base service, which is crying out for interactivity features such as Catch Up TV, Time-Shift, On-Demand content and access to content across multiple devices. Operators that will enable enhanced user experience mixed with exciting content and interactive features will win the race for the cord cutters in the future.
Acquisition of user behaviour and content consumption data
The saying that data is the new oil is very much true especially in the TV industry. While traditional TV consumption metrics were based on large sample sizes, expensive and questionable accuracy OTT offers a completely new approach to the idea of TV advertising.
TV Advertisers are spending big budgets for TV advertising which is not efficient in several ways. TV ads do reach large amounts of viewers, however the feedback loop about who exactly sees TV ads is missing. Currently TV advertisers cannot deliver personalised target ads to specific audiences which means that the same ad is delivered to everyone watching TV.
OTT platforms enable TV operators to collect user behaviour and content consumption data across multiple devices. This enables TV operators to profile their subscribers and learn more not just about trends in content consumption but also about users themselves. This data is extremely valuable to advertisers which are looking for ways to further reach not only masses, but the “right audiences’’. By creating additional value with increased efficiency of advertising resulting in higher price per displayed ad per viewer, TV advertisers are willing to pay up to 10X more for Targeted/personalised advertising.
A few statistics on the topic:
OTT video advertising is set to have ad revenues of $119 billion by 2023, which is 51% of all OTT revenues. (Statista)
When OTT viewers own a second screen, 65% of them will look up product information on the other screen whilst watching content on their main screen. (Video Advertising Bureau)
Recharging your business model
Video streaming services are on the rise globally, with North America representing the most mature market at a 51% adoption rate. Europe and Asia-Pacific are seeing impressive growth as brands like Netflix expand internationally.
Why OTT platforms are so successful is also linked with the benefits of different monetization methods. While most solutions are subscription based, 20% of subscribers are making in-app purchases in 2020.
Furthermore, we are seeing growth of advertising driven “Freemium” business models, where users do not pay for the service, yet the business is driven by personalized and targeted advertising. Such an example is YouTube, where 1 billion hours of video are watched each day. To put things into perspective, YouTube collected 6 billion USD in revenue in the first quarter of 2021.
Casting a wide net when it comes to monetization methods could help OTT solutions grow in the years ahead.
Over-the-top media services have been with us for years, but they clearly have room to grow. Increased diversification and competition suggests the market is growing, and many opportunities are untapped. Beyond global adoption, there is a huge potential in non-entertainment markets. Take Away from a recent survey determined that 50% of OTT subscribers pay for educational content in the form of instructional streaming platforms. It is clear that whether you’re following your favorite platforms, or enjoying the latest Netflix/Amazon/Disney original series, OTT clearly represents the future of media.
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UniqCast suggests reading next: 'How to prepare a marketing strategy that will supercharge your IPTV/OTT service'
UniqCast is devoted in helping operators building turnkey IPTV/OTT solutions. With excellent insight in the industry, operator pains and offering of the existing IPTV vendors, the company facilitates a unique turnkey solution, taking care of every aspect of TV service that the operator needs, to successfully run the TV service.
UniqCast’s main goal is to help mobile, DVB and fixed operators and companies building residential areas, to build turnkey IPTV/OTT solutions in a cost efficient way, delivering an enjoyable TV experience to the end users. We provide a single point of contact and full, end to end responsibility, to guarantee on time project delivery and successful launch of TV service. With UniqCast, you get covered all aspects of the solution and possibility to absorb knowledge and experiences from our technical team.
Want to discuss your OTT requirements? Get in touch with me through firstname.lastname@example.org
Also, you can download our Tech Paper and learn more about our IPTV/OTT/DVB turnkey solution. It is an easy-to-understand text, prepared in a way to explain to you and guide you in the IPTV/OTT technology, allowing you to quickly understand new technology.