There have been endless discussions about the threat to satellite pay-TV by nonlinear TV services. Is satellite’s future being drastically threatened by the rise of OTT? Nobody can deny that OTT is competitive but surely it must depend on the attitude of the satellite broadcast industry as to whether they make this work or not. It is going to be down to pay-TV providers to take the right path and to turn what could be a significant challenge into a significant opportunity.
The Asian market is interesting in terms of the dynamics between the OTT and satellite market. The Asian market is very fragmented in terms of the crucial requirement for OTT – a reliable broadband connection. Asia varies wildly in terms of infrastructure and in many region, broadband is still not available. In an emerging market like Asia where terrestrial is patchy, satellite TV distribution is still very much the staple. Satellite is by far the fastest way to give access to communities, covering relatively large geographical areas. In many developing parts of the world it is the major means of TV broadcasting and content distribution. According to ABI Research, forecasts, OTT has played out very well. From a revenue perspective, the market has grown to be about 10 to 15 percent higher than the analyst firm’s forecasts from 2012 timeframe. North America and Asia- Pacific have been a bit more robust
The United States was an early adopter of OTT platforms, but outside this region, it has been more muted. “To be honest, the rise of OTT has been initially pretty slow outside the U.S. The expectations from the consumers were there, but there were very few offers in Asia-Pacific two years ago,” shared Alexandre
Muller, MD, APAC TV5Monde. “Things have changed in the past 12 months with s massive number of OTT offers. Adoption is good, but not as rapid as it could have been due to numerous constraints, including payments systems.”
OTT is here to stay and that is a fact. Now satellite service providers have to make that critical decision about their future. This is an industry that has to think long-term and must embrace these changes in order to ensure that their businesses can adapt. Satellite broadcasters need to use OTT to adapt to the on-demand consumer world.
OTT will continue its march into new markets but Alpert, former U.S. broadcaster HBO, believes that, in parallel, many of the smaller, local regional services will rise (eventually merge). Many believe the larger OTT operators will try to enter into more traditional major pay-TV niches and buy, or attempt to buy, major distribution rights.
Seriously, the future of satellite 10 years down the road is unknown, but for the foreseeable future, the traditional pay-TV business appears to be safe. People still want linear TV. OTT very much has its place, but it has not replaced linear viewing, and many believe that it can never replace traditional TV viewing habits. Linear TV is something that people come back to. Once they have binged on their OTT services, they return to traditional TV set in the living room. However, that should not give DTH operators cause to rest on their laurels because OTT is not going away and is only going to increasingly compete. Unless operators look at their business models and adapt, they will be hurt in the long term. By creating alliances and partnerships with OTT providers and players to their strengths, satellite pay-TV providers can carve out a very positive future for themselves.
Change in consumer behaviour and decreased regulation has led to increased integration of satellite platforms with other methods of distribution, either via their own OTT distribution or via circulation agreements with cable or IPTV operators. At the same time satellites economical allocation works very well in emerging and low Average Revenue Per User (ARPU) market, as well as with highest video quality levels. Interestingly, this means that satellite continues to be one of the best choices for the low and high end of the market, while ceding the midrange to other providers. Satellite providers may need to focus on delivering premium services. Provision of original content that keeps viewers hooked is going to be absolutely essential, as will early release movies in Ultra-HD and HDR via broadcast with set-top box storage. Satellite providers and operators have much to consider. This is a critical point in their evolution and they will embrace the challenge to secure their long-term future.
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