OTT to provide big opportunity for small channels

Joseph O'Halloran | 30-01-2013

In the face of views suggesting that the big brands will sweep up the over-the-top market, research firm an IHS Screen Digest is suggesting that OTT could be hot and more cost effective for smaller channels.
Moreover, in its Insight Report the analyst goes so far as to suggest that for many individual channels that have small- or medium-sized audiences, going exclusively OTT could become an option over the long term. It calculates that channels for which the cost of unicast OTT streaming would be 1.5 times or less than the cost of satellite broadcast could make such a transition.

Looking at the UK in particular, IHS believes that about two-thirds of the country’s major channels potentially could afford to switch to a unicast OTT-only delivery model five to ten years in the future. Yet it notes that only 58 of the 192 channels rated by the Broadcasters' BARB currently have such large audiences that moving to a pure-OTT approach would be cost ineffective for the foreseeable future and believes that the remainder are viable candidates to eschew traditional pay-TV platforms and move to OTT, but, it notes clearly, in standard definition. It adds that these 134 SD channels carry a weekly content delivery network (CDN) cost of €10,000 per week or less.
That said, the analyst offers a stark warning that any channel’s transition to OTT-only transmission is unlikely until a fundamental shift in television business models occurs. It warns that even if unicast could be cheaper for the vast majority of UK, such a thing would be meaningless if a shift to OTT streaming as a substitute for broadcast means losing audience share, brand power and reach. And today, it undoubtedly would, said IHS.
“For large consumption channels — i.e., channels with large audiences — the economics of OTT streaming remain highly unfavourable, with the cost in some cases hundreds of times greater than broadcast on satellite,” said Guy Bisson, research director for television at IHS.
“However, for channels with a low to medium viewing share, scaling for OTT may not be such an issue. It’s true that high definition (HD) makes OTT unaffordable for any channel regardless of its audience size, and that any discussion of moving away from traditional satellite, cable and terrestrial and to OTT is academic at the current time. Nonetheless, as television business models change and subscribers’ viewing habits evolve, there could be a gradual move among smaller SD channels to begin to investigate OTT unicast and multicast as a substitute for traditional broadcast during the next decade.”