OTT video consumption is booming, especially direct-to-consumer (D2C) services. Over the last decade, we have seen an unstoppable rise of D2C services where content providers and rights owners are increasingly offering their content directly to the end consumers. According to a report by U.S. Subscription TV Forecast, spending on streaming services grew by 34% in 2020, reaching $39.5 billion. Digital TV Research forecasts that the total number of TV streaming subscribers will climb to 1.64 billion by 2026.
As OTT video consumption grows, a key challenge for content providers is how to deliver video streaming services at scale. Traditionally, content providers have relied on a third-party global CDN for infrastructure, with little control over the capacity and end-users’ quality. But the rise of live OTT streaming has many content providers eyeing a new delivery model that leverages infrastructure provided by the network operators, offering more control and superior streaming quality.
The challenge: Peaks in live OTT streaming
While the demand for VOD OTT services has typically been met with the global CDNs, live OTT streaming presents a more complex challenge. The industry is at an inflection point with the live OTT services creating peaks of traffic so high that they can saturate the networks. During a popular sports event, millions of viewers might be watching at the same time. Unless the network provider has forecasted extra capacity for the peak audience, quality of experience (QoE) issues can occur, including rebuffering and low quality.
To avoid negative consumer experiences where both the OTT and the network operator may be blamed, collaboration is necessary.
From a network operator point of view, the additional live OTT traffic often translates directly into higher network costs, with investments in the network typically having to be brought forward. Effectively distributing the ever-increasing streaming traffic is especially critical given that peaks of OTT traffic are expected to grow by 70% to 80% year-on-year, according to the latest global CDN figures.
Collaboration improves streaming quality, brings network investment under control and creates new revenue opportunities
There is a significant value in OTT content providers and network operators joining forces. Through collaboration, network operators can better control their network investment, but there is also the opportunity to create value by allowing access to their infrastructure. Money that is typically used by the OTT content provider to deliver content via global CDNs can be used to access the premium infrastructure deployed by network operators. Interestingly, the transaction doesn’t have to be monetary. A quid pro quo may exist, for example where the network operator offers subsidised OTT services, for free or at a discounted rate, to new customers signing up to their broadband proposition.
Growing their subscriber base through collaboration with network operators is especially beneficial for the OTT streaming providers, as the acquisition rate is a key metric for their valuation.
Technically, network operators are better placed than global CDNs to deliver content: Network operators know their networks better than anybody else, and they can leverage tools like multicast, edge presence or network APIs that are not available to the global CDNs. Furthermore, network operators have the advantage of being able to serve content close to the end users, which ultimately results in superior streaming quality.
The next step on the path to enabling better quality streaming experiences is to support 4K live streaming and, in the near future, 8K. Today, 4K streaming of live sports events remains challenging. Few content providers are streaming 4K live sports content at scale for two reasons. First, it is simply very costly to do with a global CDN, as the volume of data delivered is four to five times higher, and second the quality is nearly impossible to guarantee. By working with network operators, OTT content providers can unlock outstanding quality streaming experiences, without overwhelming the network. The collaboration opens opportunities for new business models that decouples the fees paid by the OTT content provider from the actual volume of data delivered, making high bitrate streaming possible both technically and economically.
The solution involves deploying a more open, dynamic, and elastic CDN where CDN instances can be implemented as orchestrated containers, in PoPs or at the edge for better granularity and deep caching, to mobilise infrastructure resources during peak events when they are most needed.
In addition, multicast ABR is a key component for future-proofing networks. The technology allows one physical copy of video content to be distributed to all users in an ABR format (DASH/HLS) via multicast rather than individual HTTP unicast connections. By offloading traffic from the CDN and backbone, multicast ABR reduces congestion and the impact of traffic peaks throughout the network, enabling efficient distribution of live content to millions of concurrent users. For instance, TIM, the Italian telco operator, delivered the 2022 French Tennis Open (Roland Garros) in 4K using multicast ABR technology.
An evolution is happening in video delivery. OTT streaming is rising, placing an unprecedented load on networks. Content owners are directly delivering streaming services to consumers, accelerating the phenomenon. Network capacity can’t keep up with the rise in OTT streaming, leading to congestion and reduced quality of experience.
By joining forces and using the latest advanced CDN and multicast ABR technologies, content providers and network operators can be empowered to deliver exceptional quality streaming experiences, lower costs, and even create new revenues. The relationship between content providers and network operators will evolve and grow over the next few years, opening up new business models and additional content monetisation opportunities for both parties.