Pay TV vs. OTT – A False Dichotomy? STBs with Personalized Quality Experience Will Determine Connect-TV Market Leaders


According to a recent Digital TV report, more than 1 in 4 global TV sets will be Internet-connected by 2018. NPD reports that in the U.S. alone there will be 202 million Internet-capable TV devices by 2015, a 44 percent increase from the 140 million at the start of 2013.

No real surprises here. Industry pundits have postulated meteoric growth for connected TVs for several years now.

Regrettably, as the worlds of traditional Pay TV and OTT collide in today’s rapidly evolving TV landscape, it has become fashionable to pit one against the other — incumbent Pay TV providers vs. OTT upstarts in a ‘winner-takes-all’ fight for TV viewership.

Recent performance numbers from both Pay TV and OTT providers expose this battle as a false dichotomy, or at least an overly simplistic (and somewhat misleading) framing of the dynamic, highly complex debate surrounding the evolution of TV currently underway.

The 100 leading pay-television services around the world gained 18.98 million subscribers in 2013, an increase of 6.3 percent, informitv reports. ABI Research reports that the worldwide Pay-TV market reached 903.3 million subscribers in 2013, generating $249.8 billion in service revenue.

On the OTT front, global subscribers exceeded 66 million in 2013, according to MRG. The research firm forecasts OTT subscription levels to surpass 120 million by 2017. According to Digital TV, OTT revenue will rise from nearly $16 billion in 2013 to almost $35 billion a year in 2018.

This data suggests that, instead of a winner-takes-all battle between Pay TV and OTT, both services can accurately be described as leaders — with viewership and revenue on the rise for both.

What can be said with a fair measure of accuracy is that, as of today, traditional Pay TV holds an enormous market-share advantage over OTT, and on the flip side, the rapid emergence of OTT signals what is arguably the greatest period of disruption in the history of TV.

There is universal consensus that connected TV holds enormous monetary potential, is hugely in demand by consumers, and has fostered fierce (and healthy) competition among myriad players.

To be sure, ours’ is a fragmented, disjointed ecosystem. There will be market leaders and laggards and a fair amount of shuffling among established companies and newcomers as the future of connected TV plays out.

STBs with the Personalized QualityExperience Will Determine Connected-TV Leaders

A good way to keep your finger on the pulse of who’s pulling ahead and who’s falling behind in today’s connected TV world is to examine innovation delivered by the ever-evolving set-top-box (STB).

From an historical perspective, variations of the STB go back to rabbit ears, UHF converters, original cable boxes, VCRs, DVD players, DVRs, Blu-ray players, and video game consoles.

In today’s highly connected TV world (and for the sake of simplicity), by Set Top Box, I include any device that delivers independent connectivity to streaming video including Cable boxes and IPTV boxes (Internet Protocol Television) – particularly popular OTT services like Netflix, Amazon, Hulu, Vudu, and Crackle, along with a growing host of additional streaming services.

Driven by OTT’s growing popularity, the STB category is rapidly and radically being redefined by dongles or thumbdrives and other such devices that provide Internet access and streaming media capability.

No one wants to be left behind in the ever-expanding connected TV market. Smart TVs are grappling with the limitations inherent in their proprietary, ‘walled garden’ approach to app stores; Pay TV providers are leveraging their STB presence to drive innovation and enhance their services through inclusion of OTT offerings; and a sustained wave of established and new STB streaming-media players is cashing in on the demand for OTT specific content.

In particular, Pay TV providers are working mightily to put IP reception and advanced capabilities into their next-generation STBs, which only makes sense.

What would not make sense is for Pay TV providers to invest billions building the infrastructure that makes connected TV possible, including the costly ‘last-mile’ connectivity, and then not make every effort to capture the ‘last-touch’ — the consumer experience largely determined by STB-enabled functionality.

IHS forecasts a total of 45 percent of all STBs shipped in 2017 will be connectable, up from 26 percent in 2012. HIS also reports that the global market for connectable set-top boxes (STBs) will surge by 91 percent from 2012 through 2017.  Worldwide shipments of connectable STBs are forecast to rise to 125.6 million units in 2017, up from 65.8 million in 2012, HIS reports.

Without question, IPTV/OTT via STBs is the most impactful element transforming all aspects of the delivery and consumption of video on TV. The number of connected TVs will continue to grow, the amount of IPTV & OTT content will soar in the years ahead, and the STB will evolve to satisfy consumer demand for a simple and pleasurable viewing experience across all content.

This brings into clear view connected TV’s greatest challenge. Namely, the difficulty and frustration consumers face as they hunt and peck across a growing number of siloed OTT services, VOD offerings and exhaustive linear programming to find what they want to watch on their connected TV.

Enter Kannuu

Guided by the inviolable rule that with video content growing exponentially, connected TVs nearing ubiquity, and viewing options increasing on a near daily basis, ‘findability’ is the linchpin to consumer satisfaction and service provider success.

Kannuu’s driving mantra is ‘The Quality of the Experience”.  By combining innovative user experiences with state of the art personalization techniques, Kannuu’s findability engine intuits in real time what a consumer is searching for, presents ‘aha’ prompts and most importantly, dramatically reduces the frustration and time traditionally associated with finding that perfect movie.

Consumers crave instant ‘findability,’ and Kannuu delivers with an experience second to none, providing exceptional user experiences tailored in a personalized fashion to allow a unified discovery experience across all OTT/IPTV services, VOD offerings and traditional linear programs.

At the same time, Kannuu affords service providers – both Pay TV and OTT –boundless opportunity to differentiate their offering, attract and retain consumers, drive extra spend, increase ad revenue, and fully monetize their video assets.

The icing on the cake — being platform agnostic and committed to open standards, the Kannuu search and discovery platform integrates seamlessly with all Internet-enabled STBs (present & future).