The Advantages of the OTT for the Linear TV

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This is an odd man out post based on an essay that I recently wrote on a business request. 

What is OTT?

The Over-the-Top (OTT) technology refers to digital content, applications, or services that are delivered directly to consumers over the internet, bypassing traditional distribution channels like cable or satellite TV. These services cover a wide spectrum, including video streaming, messaging apps and voice over IP (VoIP) calling.

OTT video streaming revolutionized the linear TV experience both for the broadcasting of live events and of movies. This was due not only to the introduction of pay-per-view business models in addition to the traditional subscription and ad-supported ones, but also because of the appearance of global service providers on a media market previously dominated by local players.

From a technical point of view OTT systems are designed to minimize the impact of network latency and the processing power of the display device by providing a “best effort” approach to serving up the content. That is, OTT technology adjusts to the network performance of the entire chain in real-time so that the video and audio are delivered without pauses caused by buffering.

The Five Pillars of the OTT Technology

The proliferation of OTT video streaming services was made possible mainly by the advancement in the below technologies.

Technology

Role in OTT

Major players

Adaptive Bit Rate streaming (ABR)

Reduces the impact of network latency by encoding different renditions of the same content.

Bitmovin, Castr

Digital Rights Management (DRM)

Encrypts the video to protect content producers and owners.

Google Widewine, Apple FlairPlay

Content Delivery Network (CDN)

The global network of content distribution. Serves video from the location closest to the user.

Amazon Cloudfront, Akamai, Cloudflare, Fastly

Payment gateway

Enables pay-per-view or subscription model.

Stripe, Apple Pay, Google Pay, PayPal, Payme

Ad placement and targeting

Enables an ad supported, free access model.

Google AdX, AdButler

Smart TV system

Provides an easy to use end-user interface.

AppleTV, GoogleTV, Roku, Amazon Fire TV, etc.

The Architecture and the Value Chain

The below diagram illustrates the high-level architecture and workflow of an OTT service configured for pay-per view business model to stream live or recorded content. The actual architecture of the white-label OTT platform providers – like Castr, Dacast, Telebreeze, Telestream – can be very different and varied depending on the business model and other system requirements. The core mandatory components are the video content packaging, the CDN and the end-user interface or application.

the flow of OTT television service
  1. Packaging of the live or recorded video content.
  2. The packager service requests key from the DRM tool.
  3. The package encodes and encrypts the video with the key.
  4. The encrypted file is transmitted to the CDN for global access.
  5. The player device requests playback. The encrypted video stream is returned.
  6. The end-user submits requests for DRM license. A key is returned to the viewer after authorization or payment.
The above flow enables a couple of value chain alternatives. There are examples for all kinds of successful OTT value chains, but if a company aims to dominate the global market landscape it must cover almost the entire chain with proprietary or acquired solutions. For example, the tech giant Apple runs its own service for the DRM, the payment, the hardware and also for the application components, thus challenging the old wisdom of “content is king”.

The Advantages of OTT Features in Linear TV

Feature

End-user’s advantage

Telecom provider’s advantage

Available over public internet

Not tied to cable TV set-top-box subscription. The content can be viewed on a variety of screen sizes and in a variety of scenarios.

Reduced infrastructure and support cost of fixed network by eliminating the cable TV infrastructure and on-site installation.

Available also on mobile internet

Portable and mobile access to the paid service.

Increased utilization of mobile investments, incl. 5G networks.

Cross-border, international service

Unlimited access to cross cultural content.

Increase of potential customer base, building relationship to competitors’ customers. 

Application based user interface

Increased interactivity allowing social interactions and ease of use. Personalized experience.

New surfaces for building brand and loyalty and generating e-commerce revenue. Ad targeting.

Live-stream events stored as on-demand videos.

Replay without local storage.

Potential for prolonged ad views.

Closing Remarks

The innovations in cloud based content delivery, the 5G infrastructure, higher resolutions, and interactive experiences will reshape the industry’s landscape. However, the regulatory challenges will also increase particularly in content censorship and taxation.

Sources