The Carrot and Stick Approach to OTT Content

The Carrot and Stick Approach to OTT Content

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Stephane Bourque, www.incognito.com

Binge-watchers rest assured: OTT content providers show no sign of slowing down. New reports from Digital TV Research show global online TV and video revenues over fixed broadband networks will reach $42.34 billion by 2020. This forecast is warmly received by major OTT companies like Netflix, a content provider estimated to be aiming for over 104 million international subscribers by 2020. With such high forecasts continuing into the next decade, service providers must ensure that their systems can keep up with the escalated bandwidth consumption required for OTT content. Typical consumers use about 29GB of bandwidth data on average per month, while OTT consumers are using more than 213GB — a significant increase.

Given how the cable industry is in such a dynamic period due to the influx of OTT programming, my company, Incognito Software Systems, conducted a survey titled “OTT Challenges and Opportunities” to find out how service providers view the popularity of over-the-top services, what the top contributor to bandwidth is, and what strategies they are deploying to tackle the increase in bandwidth usage. According to the findings, more than 95 percent of respondents recognize the strain that high-bandwidth applications — including OTT services — put on networks, and have started upgrading their networks or plan to in the next 12 months. Many operators have already deployed strategies to cope with the popularity of OTT content, although there are some interesting regional differences. You can find a detailed summary of the survey findings here (and on the infographic below), but the question remains: Is it better to punish high-bandwidth users with caps and fair usage policies or to provide incentives such as service add-ons like boosted speeds or unlimited streaming?

2013.07.29-OTT-Challenges-Opportunities-Infographic XXOverall, more providers are currently adopting the “stick” approach, which means that when subscribers reach their bandwidth threshold, either a limit on their downloading speeds (bandwidth cap) is implemented or a fee (fair usage policy) is incurred. But this is changing. More and more providers are recognizing the value of offering a “carrot” to subscribers (or incentives for certain packages) — so expect to see more service add-ons and even proprietary OTT services in the near future.

Clearly, there’s no single answer to the OTT content challenge, but a measured approach that puts your customers first will help you come out on top. One thing’s for sure — now is the time to rethink traditional business models and consider how to add value for subscribers. For millennials, OTT content is their first choice for media, and a Technavio report projects a 25 percent compound annual growth rate for streaming media players for the period 2013 through 2018. The need for effective congestion management and automated policy enforcement will continue to become more necessary as these increases happen. Providers need a way to automatically enforce fair-access policies during heavy consumption periods, so that everyone on their network is receiving a fair share of bandwidth resources. An automated policy management system can be used to mitigate this task.  

To ensure that subscribers remain in control of their plan, a system should automatically identify and notify so called “top-talkers” who are exceeding, or close to exceeding, their bandwidth quota. Providers can efficiently monetize high-traffic users by offering short-term upgrades or service plan changes, or alternatively offer a speed-reduction agreement for the remainder of a subscriber’s billing cycle. To keep quality of experience (QoE) high for business subscribers, it’s important that a policy enforcement system can determine if the subscriber plan is for residential or commercial use.

Ultimately, better bandwidth monitoring and management tools will help you identify usage trends, while the ability to develop and quickly roll out new customized service offerings is necessary to remain relevant to your customers. Armed with the right information and tools, you can ensure customer satisfaction and loyalty in the long run.

For more information on the aforementioned OTT survey, download the report here. Thank you, TiA. 

2 COMMENTS

  1. Those stats are astronomical and probably true about bandwidth. The more we use, the more we need. Will we ever run out?

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