In the fields of broadcasting and content delivery, Over-The-Top Content (OTT) describes broadband delivery of video and audio without a multiple system operator being involved in the control or distribution of the content itself. The provider may be aware of the contents of the IP packets but is not responsible for, nor able to control, the viewing abilities, copyrights, and/or other redistribution of the content. This is in contrast to purchase or rental of video or audio content from an Internet provider, such as pay television video on demand or an IPTV video service, like AT&T U-Verse. OTT in particular refers to content that arrives from a third party, such as NowTV, Netflix, WhereverTV, Hulu, or myTV, and is delivered to an end user device, leaving the ISP responsible only for transporting IP packets.
Consumers can access OTT content through internet-connected devices such as desktop and laptop computers, tablets, smartphones including iPhones and Android phones, set-top boxes, smart TVs and gaming consoles such as the Wii, PlayStation 3 and Xbox 360. Consumers can access apps in most app stores. PBS is testing the waters for streaming their content OTT to consumers via a Roku channel. TV providers have also launched packages where subscribers are able to choose from genre-based packages of channels and can watch live or catch-up TV through Xbox 360, home computer (Mac and PC), and newer models of Samsung Smart TVs.
Findings from market intelligence firm ABI Research show the OTT video market passed $8 billion in 2012 and is predicted to reach over $20 billion by 2015.
Two major consulting firms confirm that the Over-The-Top is expected to grow substantially. Arthur D. Little in a November, 2012 report said "OTT video is a mere $2 - $3 billion market in 2011 but is expected to account for approximately $15 billion by 2016, which would be roughly equivalent to today's in-store video rental market." The ADL report breaks the OTT market into different categories, according to their distinct strategies. For example, major content providers include Disney and Warner Bros. Internet players include Hulu, Netflix, and Amazon. Consumer electronics companies include Apple and Samsung. Pay-TV operators include Comcast and Sky. Accenture's research (survey 2012) said that a growing number of people in Europe and the United States already watch Internet video on their TV sets-and more regularly, and OTT-TV services have a steep growth potential.
The report said "Video over Internet is nothing short of an industry revolution. This offers service providers a huge opportunity-and challenge-to match quality and choice expectations, while still remaining profitable."
Content is Still King
Content is king, of course, and that's the basis of strong competition in the sector. The majors all advertise a large selection of streaming TV shows and movies.
In the last year and a half, the three major companies (Hulu, Amazon, Netflix) have each announced at least 9 content licensing deals--some exclusive, some not. But it's not simply a matter of who has the biggest library; it's about the kind and quality of content in the library. Competition, therefore, is being driven by consumers who want the best content, and the best content for a consumer is the one that offers programming in which he/she is uniquely interested. In other words, OTT vendors try to micro-target niche customers. There are hundreds of film libraries, content owners, production companies, and individuals that possess both new and older niche content that want to play in the OTT space.