The entire video delivery landscape is changing dramatically and that, in turn, will cause major shifts in what the New IP is expected to deliver to consumers, over both mobile and fixed bandwidth.
First, the video story: The world of pay-TV is changing before our very eyes, and not in a small way. Having discovered, first through YouTube Inc. and then through Netflix Inc. (Nasdaq: NFLX), Hulu LLC and other video delivery sites, that viewing streaming video content can be easily done, consumers are beginning to move quickly in that direction. About two in five US households now subscribe to an online video service, according to The Nielsen Co. , the best known media measurement company. Netflix has 40 million paid subscribers in the US.
What's more, a study conducted by research firm MTM for Ooyala Inc. and Vindicia projects that annual OTT market revenues will more than double from $4 billion in 2014 to well over $8 billion in 2018. So not only are consumers moving in that direction but they are paying for content in growing numbers as well. (See Study Sees OTT Revenues Soaring.)
The video is being consumed at home on big screens and small, and on-the-go, via mobile devices, as well. Pay-TV providers such as Comcast Corp. (Nasdaq: CMCSA, CMCSK) and AT&T Inc. (NYSE: T) are acknowledging this by allowing their subscribers to access their content remotely. Comcast's X1 service also lets them download recorded content to a device and view it wherever they choose.
And now all the big content players are getting into the game -- Home Box Office Inc. (HBO) , Sony Corp. (NYSE: SNE), CBS Corp. (NYSE: CBS), among others -- as well as big ISPs, offering their own OTT video packages. (See Comcast 'Stream' Joins OTT Flood, Verizon Dubs New OTT Service Go90 – Report, Sony Promises ŕ la Carte TV , HBO Now Goes With Apple for Now and Showtime Joins OTT Parade .)
It's as if video streaming is set to provide consumers with the ŕ la carte programming they've sought for some time now. In fact, the MTM survey says to expect "a proliferation of new, cloud-based online video services" and intense competition for the viewing eye, including the rise of niche services such as multi-language programming, children's programs and sports.
So what does this all mean for the New IP? Simply this: The IP networks being built today will soon be providing much of our video entertainment in the form of streaming video and may evolve to displace the more traditional video transport networks altogether.
That would, of course, require even more scalability, flexibility and distribution of resources than ever before. The way the core infrastructures are built today could well be inadequate for the video services of the not-so-distant future. More content will likely be stored closer at the edge of the network, placing new requirements on already exploding metro networks and new approaches to data centers/storage caches as well.
Most of the video services will likely be cloud-based, as MTM predicts, and that could fuel more on-demand service delivery as well, from an ever growing array of devices. (See Cable's Cloud-Based UI Makeover.)
None of this is happening tomorrow -- for now. A TDG Research study found that most folks who are pay-TV subscribers don't cut the cord when they also start using Netflix. But there is an upcoming generation of users that may never want to pay a comprehensive pay-TV service that comes with channels they don't watch or need. (See Is Netflix Really Cannibalizing Pay-TV? )
And those users will drive the evolution of the New IP even faster than it's moving today.
— Carol Wilson, Editor-at-Large, Light Reading