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OTT Tipping Point Part 1

Tipping Point
My recent appearance at the Set-Top Box Gateway Summit in London picked up a bit of coverage (mainly from CSI who hosted the event). I've been meaning to post an article on the topic of the "OTT Tipping Point", which I have been researching, but the quotes, which I really did say, that were picked up by CSI summarise the topic well. Watch this space for the full analysis. 

CSI Gateway Summit: Industry Reaching "OTT Tipping Point"

By Goran Nastic

NAGRA has said that CDN costs have fallen sufficiently enough to enable an economic migration of broadcast content into an over-the-top environment, arguing that even satellite would be cheaper to go all-OTT within a decade.

Speaking at CSI’s Gateway summit, Matthew Huntington, VP of product marketing at NAGRA, outlined how the company performed recent analysis based on something it calls the “OTT tipping point”, which is the point at which OTT mechanisms of delivery become cheaper than traditional methods of transport.

“The interesting thing is where we are today in terms of CDN costs – the key costs of delivering that video – is for a million subscriber network with maybe 250 channels, it’s actually cheaper to deliver that today all from an OTT infrastructure than it is via satellite. Even Sky theoretically in ten years time with no inertia or momentum would be cheaper to go OTT than via satellite,” said Huntington.

Huntington did concede, however, that things change when the most popular DTT channels are considered: “If you look at usage of the main terrestrial channels and when that gets cheaper, that is still decades away doing the Big 5 channels OTT in a country like the UK.”

In terms of transcoding, he argued that the cloud is theoretically a cheaper place to perform multiple transcodes but that this approach is currently held back by rights issues.

“The Horizon project (which NAGRA is part of), part of its challenges is that it can really support one transcodefor one device in the home whereas on average there are three IP connected devices in the home so you’d have to choose which one you use. The question is, is it right to put a lot of transcoding capability into a device in the home or should we go back into the cloud model where we stick the transcodingin the headend, is that a better cost equation? The thing that’s driving us towards the gateway is rights,” he said.

Huntington also argued that interactivity is moving into the tablet, which will likely become the key TV device in the household. “Screen democratisation has happened but there is also second screen inversion where the handheld (ie companion) devices become the key device the customer relationship sits with, where they’re getting their video from and where they go to discover content. The main TV set is just the dumb display in the corner of the room they move stuff onto when they want it.”

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