Michael Lantz, CEO, Accedo, argues that telcos need to adopt OTT technology to remain flexible and cost effective.
The media world has been evolving at a dramatic pace over recent years. IPTV, which emerged not so many years ago as a revolutionary new way for telcos to use their IP networks to deliver TV is being left behind by a plethora of new ways to get video content to mass audiences across the globe. But it isn’t over for the telcos, they just need to learn to adapt to the new market situation.
The IPTV Challenge
A full-fledged IPTV solution makes use of closed networks, which allows for high quality streaming to targeted consumers. This will never be as flexible as an internet-centric OTT solution since software updates need to be deployed to head-ends within the network. Add to that the fact that IPTV operators have traditionally wanted complete control of their services, and it is easy to see how they struggle to keep up the speed of service innovation. In addition, OTT also means better opportunities for internationalization, where IPTV would be more difficult to grow internationally.
I personally also think that the legacy IPTV systems have a huge cost problem. Price and margin pressure on the classic pay TV business will require a fundamental shift towards shared infrastructure and cost-efficient system maintenance to allow for more investments in content, rather than technology. If IPTV operators do not evolve, they will struggle to compete in a world where consumers can find competing video services a click of a button away.
If flexibility and speed to market remain key competitive factors, IPTV operators should embrace fundamental elements of OTT solutions. While I’m not arguing with the benefits of a STB-based big screen experience delivered primarily to existing broadband subscribers, it is vital to embrace cloud infrastructure strategies and modern approaches to software and service maintenance be able to cost-efficiently scale the business and roll out new features and functions.
Part of the challenge is of course about IPTV operators traditionally being larger organisations with the need to become faster and more agile to stay competitive. I firmly believe that the route to more flexibility and agility would mean that they will need to relinquish some of the control over the infrastructure and service offering to content partners or technology vendors.
While we’re still seeing a clear cost advantage of keeping the video traffic in your own network, the declining distribution costs for OTT video will quickly make OTT delivery very competitive. Due to the increase fragmentation of consumer services, it will be vital for IPTV operators to also offer their services OTT to provide consumer value.
The Future of IPTV
Accedo firmly believes that Telcos will continue to play a major role in TV service aggregation, device management and consumer packaging. However, we believe that the network itself will remain less important as a competitive tool. IPTV offerings should evolve to target all consumers on the market via all devices, effectively becoming true OTT services.
The improved loyalty from consumers will quickly justify the business case especially combined with the cost-efficient OTT service delivery architecture. OTT has matured to provide an attractive competitive platform for any IPTV operator. If this trend continues, I can see a future where closed network IPTV solutions will disappear completely replaced by OTT offerings. Both consumers and operators will benefit from such a trend.