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OTT Video

  • November 2014
  • -
  • IDATE

All major operators are involved in TV/video delivery. For linear services, multicast technology is very widely deployed by most ISPs for IPTV solutions using unique source systems. Some also use substitute delivery for telco-managed services (non-IPTV eligible households), mainly via satellite.
Non-linear service strategies depend on the ISP, from total control of distribution with rights acquisition, billing and packaging to pure pipe solution with costs savings and total externalisation (viz Telecom Italia).

Nevertheless, the majority of players provide linear TV and non-linear services through managed services, mainly for two reasons:
• Video (notably high-quality) leverages subscriptions, especially for fibre in the USA
• By using multicast for linear TV in their core network, they can save the bandwidth they need to carry
through unicast (given the more bandwidth-hungry architecture)

Telcos are directly competing with large OTTs in some of the VoD markets. They offer relatively similar services around VoD, despite the smaller catalogues of the telcos. This is indeed the main market on which they are competing so far, with telcos being real leaders and fighting mainly against Apple. SVoD can nonetheless be seen as a competitive offering compared to VoD, despite the different catalogues. Therefore, although telcos are very limited on SVoD (indirectly as distributors/resellers), telcos and large OTTs are clearly direct competitors for all forms of on-demand paid video, with OTT players like Netflix, Apple and, to a lesser extent, Amazon leading the market. Telcos with some form of own ad-funded free video services are relatively rare regarding user-generated content. On the other hand, most telcos do offer managed distribution of catch-up TV solutions from major TV channels compared to large OTTs which do not really offer such services.

Table Of Contents

OTT Video
1. Executive Summary ........................................................................................................ 6
2. Methodology and definitions ............................................................................................. 7
3. Main concepts of OTT video........................................................................................... 8
3.1. Delivery modes................................................................................................................................................. 8
3.1.1. Managed ............................................................................................................................................................ 8
3.1.2. OTT.................................................................................................................................................................... 8
3.2. Video formats ................................................................................................................................................... 8
3.2.1. Advertising-based revenue platforms ................................................................................................................. 8
3.2.2. VoD .................................................................................................................................................................... 9
3.2.3. SVoD.................................................................................................................................................................. 9
3.3. Internet delivery modes ................................................................................................................................... 9
3.3.1. CDN and telco CDN ........................................................................................................................................... 9
3.3.2. Peering............................................................................................................................................................. 10
3.3.3. eMBMS ............................................................................................................................................................ 10
3.4. STB and related devices................................................................................................................................ 11
3.5. General drivers of online video, and the barriers........................................................................................ 12
3.5.1. Drivers.............................................................................................................................................................. 12
3.5.2. Barriers............................................................................................................................................................. 12
4. OTT video markets........................................................................................................ 13
4.1. Advertising-based revenue platforms.......................................................................................................... 13
4.1.1. Market size....................................................................................................................................................... 13
4.1.2. Market structure and ecosystem ...................................................................................................................... 13
4.1.3. Key trends ........................................................................................................................................................ 13
4.2. VoD.................................................................................................................................................................. 14
4.2.1. Market size....................................................................................................................................................... 14
4.2.2. Market structure and ecosystem ...................................................................................................................... 14
4.2.3. Key trends ........................................................................................................................................................ 14
4.3. SVoD................................................................................................................................................................ 14
4.3.1. Market size....................................................................................................................................................... 14
4.3.2. Market structure and ecosystem ...................................................................................................................... 15
4.3.3. Key trends ........................................................................................................................................................ 15
4.4. CDN and Telco CDN....................................................................................................................................... 15
4.4.1. Market size....................................................................................................................................................... 15
4.4.2. Market structure and ecosystem ...................................................................................................................... 16
4.4.3. Key trends ........................................................................................................................................................ 16
5. Telcos and their OTT strategies................................................................................... 17
5.1. OTT players .................................................................................................................................................... 17
5.1.1. Amazon ............................................................................................................................................................ 21
5.1.2. Apple - iTunes .................................................................................................................................................. 23
5.1.3. Netflix ............................................................................................................................................................... 24
5.1.4. Facebook ......................................................................................................................................................... 27
5.1.5. Google - YouTube............................................................................................................................................ 29
5.2. Telcos.............................................................................................................................................................. 32
5.2.1. Comcast........................................................................................................................................................... 38
5.2.2. Orange ............................................................................................................................................................. 41
5.2.3. Numericable/SFR............................................................................................................................................. 42
5.2.4. Telecom Italia................................................................................................................................................... 43
5.2.5. Telefónica......................................................................................................................................................... 45
5.2.6. Verizon ............................................................................................................................................................. 47

Tables and Figures

Table 1: Top 10 online video sites properties, in the USA ..................................................................................... 17
Table 2: Top 10 peak period applications, North America, Fixed access, 1H2014................................................ 18
Table 3: Top 10 peak period applications, North America, Mobile access, 1H2014 .............................................. 18
Table 4: Top 10 Peak period applications, Europe, Fixed access, 1H2014........................................................... 19
Table 5: Top 10 Peak period applications, Europe, Mobile access, 1H2014 ......................................................... 19
Table 6: Top 10 Peak period applications, North America, Mobile access ............................................................ 28
Table 7: Content offering through managed services ............................................................................................ 33
Table 8: Content strategy ...................................................................................................................................... 34
Table 9: Different approaches to the telco CDN .................................................................................................... 37
Table 10: Telco CDN strategies............................................................................................................................... 37
***
Figure 1: Spectrum dynamic allocation ................................................................................................................... 11
Figure 2: CDN and telco CDN market, 2013-2018.................................................................................................. 15
Figure 3: Number of videos viewed in a month in the USA..................................................................................... 17
Figure 4: Top 10 online video sites in the UK, by unique viewers, February 2014.................................................. 22
Figure 5: iTunes Revenue Mix per account and active users accounts .................................................................. 23
Figure 6: Sales of Apple TV.................................................................................................................................... 24
Figure 7: Netflix yearly revenue history and forecasts, 2007-2014 ......................................................................... 25
Figure 8: Evolution in Netflix RandD expenditure ....................................................................................................... 27
Figure 9: Facebook engagement by post/media type ............................................................................................. 28
Figure 10: Facebook's yearly capital expenditure ..................................................................................................... 29
Figure 11: YouTube content protection process ....................................................................................................... 30
Figure 12: Google quarterly capex spending since 1Q2011-1Q2014 ....................................................................... 32
Figure 13: Comparison of increases in traffic costs and access revenue ................................................................. 33
Figure 14: Telco vs OTT markets for video............................................................................................................... 35
Figure 15: Comcast road map .................................................................................................................................. 40
Figure 16: Consolidated Capital Expenditures of Comcast....................................................................................... 40
Figure 17: SFR distribution chain.............................................................................................................................. 43
Figure 18: TI Group CDN.......................................................................................................................................... 44
Figure 19: Telefónica's inter-regional architecture .................................................................................................... 46
Figure 20: Telefónica's global video platform............................................................................................................ 46
Figure 21: End-to-end CDN product ......................................................................................................................... 47

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