7 August, 2017
Will IPTV and linear TV providers survive the OTT services age?
Over the past few years, Over-The-Top (OTT) video services have made a significant impact on the global video market. It’s no surprise, with broadband and fibre Internet becoming increasingly widespread and affordable around the world. According to a report by Boston Consulting Group (BCG), OTT and the Internet video market have added US$25 billion to the global video industry.
That might be great news for OTT providers and consumers, but the outlook isn’t quite so positive for the competition: as OTT adoption increases, so does its destabilising influence on linear TV broadcasters and IPTV providers.
So what does the future hold for traditional broadcasters in the context of OTT video? In this blog, we’ll take a look at whether or not linear TV and IPTV providers will survive the age of OTT video.
OTT has already started to eclipse linear TV
While OTT video doesn’t currently have the same foothold in the market as traditional video services (it only accounted for 5% of the US$500 billion global video market at the time of the BCG’s report), it’s growing at around 20% annually, compared to linear TV’s 2% growth per year. OTT video giant Netflix, is already the single largest pay-TV provider in the USA, and at the rate it’s currently expanding around the world, other countries are sure to follow. The success of Netflix’s OTT services has also had a knock-on effect: OTT service providers of all shapes and sizes are becoming more common in the global video market. This increased demand and competition will undoubtedly drive innovation and competition in the OTT space, which will place even more pressure on linear TV providers to remain relevant and competitive.
Linear TV and IPTV providers have time to adapt before it’s too late
Even though the number of OTT service providers is growing rapidly around the world, it doesn’t mean that IPTV and linear TV providers are not able to change. The majority of users today consume both linear TV and OTT video content. Park Associates Video Reseach of 2015 indicated that while 17% of households in the USA subscribe to HBO’s OTT service, 91% of them are also pay-TV subscribers. However, the same study reports that half of these subscribers would consider cancelling their TV subscription in favour of OTT services.
Existing IPTV and linear TV providers are in an ideal position to enhance their existing service offering by providing OTT video services alongside their current offerings: they have access to an established viewer base, large content libraries, and a credible reputation in the industry. Those who want to stay competitive in the medium- to long-term should already be considering their options for OTT video delivery.
How can existing providers start enhancing their services with OTT?
So, to answer the question in the title of this post: will IPTV and linear TV survive the age of OTT? Probably not. However, major players in these industries are already adapting their service offerings to accommodate a changing technological landscape and evolving consumers. It’s likely that media providers will seek out IT partners with the infrastructure to deliver an OTT offering at the scale they require – HBO and AT&T’s partnership will undoubtedly set a precedent in this respect – and shift their core business towards OTT services as their users demand more.
Whether you’re an existing OTT provider looking to outsource part or all of your infrastructure, or a new entrant looking for cost-effective way to break into the OTT market, TERALINK Solutions can help. Contact us directly if you have any questions, and download our free guide to the State of IPTV and OTT in 2020 to learn more about the future of OTT.