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OTT and IoT evolution: Consumer choice fuels innovation

Television content delivery in the U.S. has been subject to some interesting developments lately, and it ultimately has huge implications for the internet of things. The FCC, major pay TV carriers and technology upstarts are involved in a multiparty face-off regarding the future of over-the-top (OTT) television content distribution, set-top boxes and the TV app ecosystem.

So just what does any of that have to do with IoT?

OTT is a particular subset of IoT. Its model — and the evolution of TV content delivery in general — presents the perfect archetype for IoT growth and successful managed-service innovation. OTT is a distribution model that has circumvented all the barriers put up by incumbent delivery systems. It has changed the way we consume media and substantiated the business case for a new service provided at an attractive price that resonates with the end user. The OTT story illustrates how to solve a number of challenges to generating widespread IoT adoption; namely, translating technological advancement into services proven to be both hugely profitable for providers and extremely desirable to consumers.

For context, let’s briefly review the history of televised media distribution. Back in the day, you had a TV and you had an antenna (or two). Networks and stations broadcast content for that TV. You could adjust your antenna and tune into a few different channels, but the programming was determined by the broadcaster. Suffering through commercial breaks was the price we all paid for limited content broadcast only at specific times. The networks ruled the roost. Next, the cable/satellite/pay TV industry came along with a box that typically sat on top of your TV set (set-top box), received a cable or signal and delivered a larger selection and variety of programming to your screen (sometimes ad-free) for a nominal subscriber fee. Content-hungry consumers inevitably embraced this new industry.

Broadcasters didn’t disappear, but they faced new and formidable competition, and cable subscribers could access ever larger swaths of programming. Thus, the set-top box (usually rented from Comcast/Time Warner/Charter/Cox/etc. as part of a subscription package) became the mechanism by which these new reigning providers could both distribute and control the content on your TV. There is a much greater selection of content available round the clock. But if you want access to your favorite shows on non-broadcast networks such as AMC or Bravo, you have to subscribe to a cable package that includes those channels (even if you don’t care about the other 200 channels wedged into that same package).

And now we find ourselves in the midst of a third TV evolution — over-the-top of the set-top box. OTT content is delivered via a broadband connection to the internet, and it’s opened up even more options for consumers. Some OTT content can be accessed through a rented set-top box or an owned gaming console via apps. But OTT content can also be enabled by adding another box on top of (or instead of) the cable-provided set-top box, which completely bypasses any of the controls determined by cable providers.

Though it may sound a little convoluted as described, this has actually become a common consumption model. Roku, Apple TV, Amazon Fire TV and Google’s Chromecast provide good examples of OTT bypass hardware for TVs, as do the growing selection of internet-enabled televisions, Blu-ray/DVD players and gaming consoles. And Netflix, Hulu, YouTube and Amazon Prime Instant Video are a few obvious examples of successful OTT content delivery services. Whether based on subscription, advertising or individual-episode transactions, these OTT powerhouses are familiar to pretty much everyone.

Now consider how OTT services have, in just a short time, transformed the way we consume TV media. Sure, we still have broadcast and cable schedules aligned to seasonal and episodic consumption (our weekly “must-see TV” nights). But we also have the phenomena of “binge-watching” an entire season or an entire series in a single sitting, or selecting only individual episodes, or streaming films for viewing on demand. This represents a massive shift in consumer behavior, and the success of paid services that enable our new user-customized consumption model hints at even more opportunity.

Content organization and discovery mechanisms are one area ripe for further development (a cross-service “TV Guide” for our ever-expanding list of OTT options would be nice). But broadening the parameters to encompass services extending beyond media content is where IoT can really spread its wings. Why not have your ADT home security system and smart home locks and alarms coordinated through an app on your OTT box, with an interface viewable on your TV screen? Why not use your TV remote to turn off all the lights in your house and launch The Walking Dead on your screen at the same time? To wit, Amazon’s recent announcement about incorporating its Alexa voice assistant functionality in its OTT Fire hardware shows that the notion of ordering a pizza through the TV while you’re watching it has crossed others’ minds as well.

Every step in this evolution of TV content delivery technology has brought greater choice to the user: First with regard to content selection, and now with regard to how we engage that content. The OTT box has become the location of real empowerment for consumers. Now you can use your Roku or Fire or Xbox and launch whatever media you want, much the same way you launch apps on a desktop. This is the part of the OTT model that really speaks to the IoT experience, because it breaks the shackles that tie us to our “old” way of doing things — every iteration enriches the experience for the user and expands the possibilities for services.

Which is not to say it’s all sunshine and roses around the subject. The whole reason OTT has been in the news recently is because hardware and content providers, regulators and other interested parties have competing interests in this arena, and all are jostling to best position themselves. Regardless of who comes out on top in those battles, the user is still going to win. The technological advancements consistently provide users more choice in programming and content, as well as the use cases. Each evolution empowers the consumer a little more, with increasingly targeted and personalized and connected TV services.

OTT evolution has incorporated the older models of TV content delivery and moved them forward, thus providing a richer experience. And average consumers have demonstrated a willingness to adopt and purchase services enabled by this evolution with an enthusiasm that is unmatched in any other IoT sector.

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