“On TV And Video” is a column exploring opportunities and challenges in advanced TV and video.
Today’s column is written by Allen Klosowski, senior vice president of the advanced solutions group at SpotX.
My parents have seen a lot of technology come and go during their lifetimes. When they were young, television was in its infancy, limited to black-and-white images on a small, dimly lit screen. Today, they have not one, but two high-definition televisions side by side in their living room: One is a traditional cable television set and the other is a Roku TV.
My parents don’t care that one TV receives programming through a cable box while the other streams video through the Roku app and other smart-TV apps. They like to be in the same room together, and this setup avoids the need for compromise; my dad watches sports silently with closed captioning and my mom keeps up on her favorite shows at the same time.
If you switched on the same show on both TVs, you wouldn’t be able to discern which was which because the image quality and viewing experience are identical.
While this story is unique to my family, it’s representative of the larger reality that the lines between television and over-the-top (OTT) video are becoming blurred. Consumers don’t dwell on how some televisions have internet capabilities and others do not. The only relevant factor is whether they can access their desired content at a satisfactory level of quality. Once that need is met, OTT, traditional TV and everything in between become insignificant distinctions in the minds of most consumers. All in all, it’s just “TV.”
Was OTT video streaming spurred by the first smart TVs in the late ’90s and early 2000s? Or maybe Netflix’s rollout of streaming video in 2007? Whatever beginning point you choose, one pattern holds true: Early users of OTT sought a different experience than traditional television. Audiences wanted greater control over the specific content they consumed, and they wanted to watch it on their own time.
A decade later, however, the definition of OTT video has significantly evolved and broadened to include features and capabilities that weren’t in the picture early on. Consumers who leverage over-the-top video have undergone a parallel transformation, and the user base today looks very different than it did years ago. These factors are evidence of ongoing progress that should continue to shape the way video is packaged, supplied and monetized for years to come.
In the early days, over-the-top video and video-on-demand (VOD) were often one and the same, so it was acceptable to use terms like OTT and VOD synonymously. On the other hand, OTT and linear TV described entirely different experiences. OTT represented a limited selection of video streamed to televisions or computers over the internet, unbound by dayparts or bundles.
Television viewing was subject to network scheduling, but a wide variety of content was available, including live events such as sports and newscasts. Moreover, the experience available in OTT fell short of the premium standard that had been set by traditional television – navigation was clunky, user interfaces were not well-suited to the available devices and buffering was a constant annoyance.
Due to these discrepancies, early OTT was mostly seen as a supplement to regularly scheduled programming. While it was clearly a disruptive innovation that quickly established staying power, it wasn’t regarded as an acceptable alternative to TV.
Over the last several years, however, OTT has advanced to the point that it rivals traditional television. Live, broadcast-quality video can be streamed over the internet and viewed in an uncluttered, lean-back environment where viewers are in complete control of what they watch and when.
Many media owners have also upskilled in video streaming, bringing a greater variety of content into the space. Leading broadcasters have developed TV Everywhere applications to make their original content available in OTT environments, and pioneers like DirectTV Now, fuboTV, Hulu and SlingTV have even brought live and linear programming into the mix. Viewers can now enjoy a comparable experience regardless of whether they’re accessing content over-the-top or through traditional channels.
The natural upgrade cycle for video viewing technology has also driven “passive adoption” of OTT. Many consumers buying smart TVs are not necessarily doing so on purpose, but brand-new televisions are often equipped with internet capabilities by default. In these cases, OTT adoption isn’t a conscious choice, but rather a natural evolution and simply a sign of the times.
Cord cutters, cord shavers and cord nevers have all made their content consumption decisions for very different reasons than the early adopters of OTT, and the audience has broadened as a result. Now, the delivery method of choice is less about what the technology represents – innovation, modernity, being ahead of the curve – and more about the experience it can deliver. From a consumer perspective, over-the-top is not a new category but rather the next evolution of how TV can be enjoyed.
What’s more, major pay-TV providers have taken notice of this shift in consumer thinking, and some have begun signaling that they may adopt over-the-top delivery in the not-so-distant future. For instance, AT&T is reportedly planning to replace its satellite broadcasting with streaming via OTT, and European broadcaster Sky has dropped hints that it will add IPTV to its traditional satellite TV offering. If they move forward, developments like these could help establish OTT as the foundation of next-generation TV offerings around the globe.
So the question is this: If consumers no longer see a relevant difference between traditional TV and OTT – if even pay-TV providers are signaling adoption of over-the-top delivery – should advertisers continue to pour resources into maintaining two separate approaches?
Or have we reached the point where over-the-top video and traditional television as we’ve known them are simply regarded as components of an all-encompassing total video strategy?