Report: Broadband TV households to top 360 million by 2014
More than 360 million households worldwide will have the right equipment in place by 2014 to view over-the-top videos, with half of that number actively receiving OTT services, according to recent research by The Diffusion Group.
Colin Dixon, a managing partner at The Diffusion Group, said most OTT efforts to date have failed because they depended on proprietary, single-function hardware that was purchased by consumers.
"In order to grow a profitable base of service users, OTT operators must either give the hardware away for little to nothing - something upstarts cannot afford to do - or leverage other Internet-enabled platforms as a conduit to the living room," he wrote in a summary of the report. "The latter approach is preferable, yet its success hinges on the rate at which these Internet-enabled platforms diffuse - a factor over which OTT providers have little control."
Dixon noted that a number of companies, including Netflix and the BBC, have been embedding their service software in a variety of retail video platforms and are enjoying early success.
The BBC's iPlayer has proved to be a popular option abroad for "catch up" TV in countries that didn't face the same network DVR constraints we've had in the United States up until Cablevision's hard-fought court victory last year.
Over the next five years, normal replacement cycles and a shift toward embedded platforms will lead to at least one Internet-enabled living room video platform per home, according to TDG.
One area of concern for pure OTT providers is revenue. Hulu has been widely successful with drawing viewers to its site, but it has waffled on whether it should implement subscription fees for its services instead of the current advertising-based model.
Now that Hulu is partly owned by Comcast through the NBC Universal joint venture with General Electric, it will be interesting to see whether any cable operators take Hulu up on its offer to enable OTT services through its platform, which AT&T has largely done on its Web portal, and how Hulu's service will evolve alongside the walled garden approach used by Comcast and Time Warner Cable in their Internet video services.
Suffice to say, we weren't having these types of discussions at the start of last year.