The Battle between IPTV and OTT

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The trend of Internet-based video entertainment has drawn plenty of attention over the last few years, from consumers and service providers alike. IPTV (Internet Protocol television), and OTT (over-the-top) are the two hot terms in the space. Both use the Internet to deliver content, but beyond that, they are very different.

This post looks at difference between IPTV and OTT, and how each is sparking fierce competition and opportunities for those in the video market. 

Delivery Infrastructure

Though both IPTV and OTT use the Internet as the content delivery medium, these services have different infrastructures enabling them.

IPTV focuses on network scalability, end-user applications, and infrastructure. It requires three key components for functionality: private, IP-based network TV, a content headend (a master facility for receiving, processing, and distributing IPTV signals), and a set-top box. With IPTV, content is provided through an Internet service provider’s own infrastructure. This infrastructure may look very much like customers’ existing digital cable TV set ups, but IPTV signals are transmitted using a different protocol (format) and different network. 

OTT, however, does not require multiple system operators to control and distribute content. Instead, OTT (also sometimes referred to as Internet TV) refers to scenarios when content is delivered to any connected device using an unmanaged, public Internet network. It uses no dedicated network or infrastructure provided by an operator.

Video Quality and Content

Though internet-based access to content is the same for OTT and IPTV, the quality of content and picture are different. 

Because OTT uses the public Internet for transport, it cannot provide any quality guarantee for media content. OTT refers to content that arrives from a third party like Netflix, Hulu, or myTV. The Internet services providers (ISP) that are actually delivering the content are merely delivering IP packets of data – not video content. They don’t distinguish a data packet carrying a piece of a video from a packet carrying a piece of an email.

It is this lack of responsibility for content quality that is the essential difference between OTT and IPTV. IPTV-provided content is transmitted through a network managed by a service provider, directly reaching the customer. This ensures that higher quality video is received. And unlike OTT, content provided through IPTV is controlled by standardized metrics assuring quality of content from the IPTV Interoperability Forum (IIF). 

Both IPTV and OTT have access to different levels of content. Consumers can access previously aired content (on-demand), movies, and TV. However, OTT does not provide live programming. OTT provides media through content aggregators and user-generated content that is unmanaged and cannot be guaranteed to be “high quality.” IPTV, however, provides both on-demand and live television programming in addition to the previously listed content.

Threats and Opportunities

OTT provides a cheaper service than IPTV since it depends on public IP networks. This is currently the primary advantage of OTT over IPTV. Again, though, public networks cannot be controlled for quality of service or reliability, which could negatively impact customer experience. Consumers expect good quality and fast service the first time; broken and slow networks could make the difference between a continuing customer and a lost one. 

Cable operators are leveraging IP-based services to capitalize on Internet video consumption trends by including IPTV services in their bundles. However, they have also been faced with an increased number of cancelled subscriptions due to OTT availability. Jordan Selburn, Senior Principal Analyst at IHS iSuppli, notes that, as a result, some cable operators hope to integrate OTT: 

“[O]perators wish to use OTT in order to add value to their services and keep subscribers from cancelling TV subscriptions in favor of purely broadband connections – preventing what the industry calls ‘cutting the cord.’” 

One effort along these lines is to allow OTT customers to have their Internet connection through the same providers as IPTV. This would still enable cable operators to provide Internet service for OTT, even if customers cancel their cable subscriptions.

IPTV’s growth opportunities are linked to the ability of video encoders to deliver high-quality streaming video at low bitrates over the Internet. Encoder providers are facing increased pressure to provide solutions that are effective in cost, bitrates, and compression capabilities. Analyst studies anticipate an increased demand for more advanced encoders such as H.264/AVC due to IPTV.

 

Both types of Internet-based service show consumer interest and promise of growth in the race to win subscribers. According to Point Topic, global IPTV has grown to 91.7 million subscribers, adding 4.49 million subscribers in the third quarter of 2013. Studies also show that more than 1.7 billion devices will be capable of accessing OTT content in 2014. 

But one key factor of success will be the quality of viewing experience. The winners will be those that can leverage video quality and consistent access to online content, whether through a controllable or uncontrollable network, for their customers. 

 

Do you currently use IPTV or OTT? What’s your preference? Share with your fellow readers below!

 

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