In a recent announcement, CenturyLink indi- cated that it was scrapping its IPTV offering in favor of OTT. The logic? It is simply cheaper to deliver over the internet than over fixed
line. But CenturyLink isn’t alone in this movement. Comcast, with the XFINITY platform, has
been advocating OTT over IPTV for a while,
and several other cable providers (Verizon,
Charter, etc.) have all been putting increasingly more eggs into the OTT basket. In fact, one
could argue that there is a grassroots movement in the industry toward streaming, driven
by consumer demand for watching what they
want, when they want, and from whatever device they want.
There is a nice synergy between what the
providers want—lower cost of delivery—and
what the consumer wants—anytime, anywhere
access. This leaves us with a critical question:
“What does all this over-the-top delivery mean
for the future of traditional broadcast?” Before
I answer, let’s look more closely at the cost of
delivering over fixed line or satellite. When it
comes to delivering content to the television,
providers have a physical value chain—the headend, the set-top box, the line in the ground (or
the eye in the sky). All of that demands considerable dollars and resources to operate, maintain, and upgrade. It’s also why providers offer
multiple services (internet service, VoIP, etc.) to
maximize revenue on equipment owned and installed. But when it comes to delivering content
over the internet? Not so much the case. That
physical value chain dwindles significantly (
especially as a lot of broadcast-level equipment,
like encoding, moves to the cloud). Sure, there
are new costs associated with OTT (like using
content delivery networks), but they are much
smaller than owning the end-to-end pipe. What
that means is that providers can achieve greater margin on content delivery—lower capital
expenses, growing viewership, and increasing
ad impression rates all equate to a much better upside than delivering over fixed lines like
with IPTV or broadcast.
So, let’s return to that question about tradi-
tional broadcast. I think there’s an obvious an-
swer to it. Broadcast television, as we know it
today, will go away. No, this isn’t going to hap-
pen tomorrow or even next year. This is a long-
term evolution of the television viewing experi-
ence. Yes, the ball has started to roll downhill
(as providers are opting for OTT over IPTV), but
it’s going to take a lot more for a true transition
to happen. For example, we’ll need more con-
sistent quality for OTT. That will require some-
thing other than the delivery systems we have
today. 5G is going to help. HTTP2 is going to
help. The networks we have today aren’t built
for streaming video, but the networks of to-
morrow will surely be created with this kind of
content in mind. Still, we have the issue of ad-
vertising. Until content distributors and access
providers can achieve revenue parity between
OTT and broadcast ads, television as we know
it will still rule. The distribution model follows
the money, and right now the money is on the
Yet, this brings up another interesting ques-
tion: “What does streaming mean for the reg-
ulations governing the distribution of video
content?” Up until now, it’s been a “signal” dis-
tribution from a source to a fixed endpoint.
When it’s “broadcast” over the internet there’s
no longer a signal, and the endpoint isn’t fixed.
Will a provider still need a headend to deliver
video broadcast to a specific geography, or will
the FCC modify regulations to account for user
mobility (and the mobility of the signal)?
There’s no doubt that CenturyLink’s announcement sends a clear signal to the industry—OTT is the future of video delivery. But it’s
an uncertain future. Even as the industry and
consumers embrace streaming video, there’s
no shortage of issues that need to be addressed
before the incumbent systems of today give way
to the promise of tomorrow.
IPTV Is Dead.
Is Broadcast Next?
Jason Thibeault is the executive director of the Streaming Video
Alliance. Follow him on Twitter @_jasonthibeault.
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