Bringing TV to Life: Over-the-Top TV

Online or “over-the-top” TV gives consumers what they want, when they want it. Indeed, the video distribution paradigm is no longer one where content is pushed to consumers; it’s one where consumers pull what they want, on demand, from wherever they are and on whatever device they may choose.

Consumers are embracing video delivered over an online connection, and the online video market continues to grow. The widespread penetration of fixed and mobile Web-enabled platforms is setting the stage for a rapid uptake of digital video services and current broadband trends are fueling their growth.

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Over-the-top services—the delivery to the TV set of video content over a broadband connection—represent a new strategic opportunity for key players in the communications, high-tech, and media & entertainment industries to gain an advantage in the ongoing battle for the hearts and wallets of consumers. Over-the-top TV brings capabilities associated with a PC to the viewing experience—choice, control and search being primary. It puts consumer choice and preferences at the center of the broadcast and communications industries’ business model.

The ability to provide direct-to-consumer relationships is being pursued by companies today because of increased cross-sector competition. Achieving excellence in engaging and interacting with consumers is now seen as a key to profitable growth by all players in the ecosystem.

Over-the-top refers to both linear and non linear video offered to the television set through an unmanaged broadband connection. Over-the-top capabilities enable companies across the communications, entertainment and retail ecosystems to go directly to consumers with their content, bypassing traditional network gatekeepers and access providers.

Over-the-top TV is the very embodiment of a disruptive technology, and much of the fierce jockeying for position one notices in the marketplace today is rooted in the need to carve out a profitable place in this new and very unfamiliar television environment. Over-the-top TV—bringing the PC to the TV, and the TV to the PC—will change how consumers access broadcast entertainment, and how content and communications companies provide it.

Elite university professors used to tell their students to look to the left and to the right because “one of you will not be here next year.” It’s an apt analogy to the state of broadcast and communications competition today. How the various players across this ecosystem respond to the disruption of over-the-top TV in the next couple of years will largely determine their ability to survive in the long term.

Based on Accenture experience delivering over-the-top TV solutions, and on research that includes our recent Global Content Study, the following keys to success should be kept in mind.

• Focus on premium video as the continued dominant application. Other content types such as user-generated content will certainly play a role in the future of over-the-top TV, but the most important offering will remain premium video.
  
  
• Plan to be a major player, or don’t play at all. There is no room for niche players in the video space. Companies need to be big enough to afford premium content or they will fade away as a viable competitor.
  
  
• Think of platforms as complementary, not “either-or” choices. Each platform (PC, mobile, etc.) has a role in supporting the central device, which for now will remain the TV set.
  
  
• Drive toward solutions that support an engaging user experience—seamlessly across broadcast (linear) and broadband (non-linear) experiences. This includes very high quality for content and high definition, an effective user interface and a recommendation engine that goes beyond the traditional capabilities and limits of an electronic program guide (EPG).
  
  
• Provide users with the ability to decide what to watch, when and where. Anytime delivery is, at this time, more relevant than anywhere delivery.
  
  
• Develop the analytics capabilities necessary to create deep consumer insights and then act on them. It’s important to move gradually toward direct-to-consumer business models, as well as to more valuable advertising approaches.
  
  
• Create the capabilities to manage customer interactions more effectively. A number of interoperable capabilities are especially important, including Content Supply and Delivery Chain management, payments, customer insight, advertising brokering, customer support and content search and discovery.
  
  

What can different types of companies throughout the broadcast and communications ecosystem do to best prepare themselves for the over-the-top future? Here are some factors and recommendations to consider:

• Cable operators and telcos should seek to “secure and expand.” That is, they should start by securing their home base—a leading role in the local market—by leveraging their existing strengths. Then they should look to extend their partnerships with content aggregators. Finally, these companies should look to be the dominant provider to the digital home.
  
  
• Broadcasters should seek to innovate and reposition themselves by taking a bold step forward in the value chain, moving closer to the end consumer. Leveraging their strong brand name as content producers and aggregators they should transform their traditional business model by embracing the broadband revolution without fear of cannibalizing their traditional revenue streams in areas such as advertising).
  
  
• Device manufacturers should learn from Apple’s success in creating an entire content ecosystem—controlling the value chain and integrating all elements into a stable and easy-to-use solution. By making a play encompassing the network, device, software and content, other device manufacturers have an opportunity to make similar kinds of plays.