The rollout of the nbn™ network is enabling Australians to consume online video content – but the move from traditional broadcast to broadband delivery brings its own challenges.
The arrival of Over-the-Top (OTT) video into the Australian market over the last year from local operators like Stan and Presto as well as global players such as Netflix has seen average end-users receiving services over the nbn™ network substantially increase their monthly data consumption.
This time last year the average end-user receiving services over the nbn™ network was downloading just 70GB per month. The average end-user is now downloading more than 110GB per month as they enjoy the convenience and great choice offered by OTT video providers.
However, a new report from global telecoms and media research company Ovum Australia - titled OTT Video – Creating a New Market - points out that the move to ‘broadband TV’ means consumers and industry are coming to grips with an entirely new way of doing things.
Ovum forecasts that the number of Australians paying for services like Netflix, Presto and Stan will quadruple over the next four years to hit 4.7 million in 2019 – comfortably outnumbering subscribers to traditional pay TV services delivered via cable and satellite TV which will number only three million.
However, Ovum notes that this sea change in the video market will create an entirely new delivery model for video services – a very different one from that experienced by cable and satellite pay TV subscribers.
“OTT video is delivered by multiple service providers across a value chain that is only loosely coordinated. No single provider is ultimately responsible for service quality and stability,” the report says.
“This arrangement has the undoubted advantage that it is low cost, and this makes OTT video services cheap to buy.
“But there is a price to pay for this. Service guarantees are limited, and service quality cannot reach the same levels as pay TV and IPTV unless OTT providers convert themselves into IPTV providers by major investment in new infrastructure.”
As a result, Ovum says that it is important for Aussie consumers to properly understand the new landscape.
This is so that they can be better informed about the strengths and weaknesses of all the different pay TV options that are now on the table and what their expectations should be around these new services.
In addition, the report also comments that it may need the different players in the OTT video industry to look at ways in which they can work together to help deliver an improved quality of service to consumers.
“OTT video can deliver great customer benefits, but it also creates tensions between different players in the value chain,” the report says.
“These tensions can be further mitigated, to the benefit of customers, if telcos and OTT video players can cooperate to fund additional network investment to manage the delivery of digital video content – as has already happened in some developed markets.
“This creates a better experience for OTT video customers, and also creates a wholesale revenue opportunity for telecommunications service providers.”