January 28, 2010

Connected TV and OTT Set to Rise

A growing appetite for over-the-top (OTT) content and the potential revenue streams it could bring to equipment manufacturers are strengthening the connected TV space.

Within two years, Internet video revenues are expected to top $29 billion worldwide, pulling with it a 58 percent share of the Internet television equipment market. That means connected TV and OTT content are poised for a growth spurt, according to a new report from IMS Research, Market Opportunities for Internet Video to the TV.

This despite the current buzz around 3D content and its advancing technology.

“At the Consumer Electronics Show, consumer electronic companies appeared to be pushing the 3D concept,” Rebecca Kurlak, IMS consumer electronics analyst and author of the report, said. “However, a larger part of the picture … is still the growing opportunity to provide consumers with access to more content, in this case, OTT content.”

Fast and secure

The content, she noted, is generally connected by 100-base TX Ethernet, which is included in every “Internet-enabled” box, with the exception of the Nintendo Wii. Typically Internet video taps out at about 5 Mbps, but usually closer to 1 Mbps.

“There have been reports of interfaces only really supporting 10 Mbps MPEG streams in the Blu-Ray standard for maximum bitrates, but this is a factor in DLNA (Digital Living Network Alliance)/home media sharing instead of Internet video,” Kurlak noted.

Down the road, sending uncompressed video to the TV set will transition to sending video to it via DLNA/UPnP A/V with Digital Transmission Content Protection over Internet Protocol (DTCP-IP) or some other DRM, she said.

“But this is primarily a question of security, and a Blu-Ray or PS3 with Internet video support will still preferably send its video to the TV over HDMI,” she added.

More predictions

Some of Kurlak’s other predictions: 12.5 percent of TV sets shipped globally in 2010 will have some form of connectivity; and by 2011, that number will grow to 30 percent, albeit a year later than expected.

Content partnerships are expected to rise in 2010 as well, even before 3D viewing hits its stride. This is likely good news for advertisers and the OTT/Internet video business models, which, as Kurlak points out, are “still being defined and re-defined by content owners.”

A recent advertising effectiveness study by Arbitron provided promising evidence.
 
One key finding was that a traditional 30-second television commercial, when integrated within an interactive, social networking environment, often outperforms broadcast television equivalents in brand metrics such as recall, consideration and purchase intent.

In the meantime, 2011 looks to be the tipping point for OTT content, connected TV and the technologies and equipment components that will drive them.

–Craig Kuhl