The firm claims that service providers are starting to favour new products that use over the top (OTT) technologies to compete with Amazon and Netflix –
decreasing marketing on their cable, satellite, and IPTV products that offer managed quality of service.
Citing examples like AT&T’s recently launched DirecTV Now service, which offers live and on-demand TV, ABI Research’s managing director and vice president, Sam Rosen, said these services are meeting customer demand for “anytime, anywhere programming and mobile-centric viewing while targeting a larger national audience.”
“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.”
These challenges include quality of service assurance, network congestion management and content protection – on top of developing robust content management systems, video transcoding and storage pipelines.
“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,” said ABI Research analyst, Khin Sandi Lynn.
“Live OTT services, particularly sports packages, continue to gain the most traction, as they allow customers to watch the same live programs that they receive through pay TV services at a fraction of the cost.”