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OTT content delivery to play important role for pay-TV operators

A new report from IMS Research forecasts that 72 percent of VOD requests via pay-TV platforms will be free transactions, and OTT content delivered via set-top boxes will account for a fair share of those transactions.

According to the IMS Research report, "On-demand Services Business Models: Video, Games & Over-the-Top – 2011 edition," OTT content delivered via set-top boxes will generate $48 million for pay-TV operators this year. The report also examines the changing dynamics in the on-demand market in 30 countries.

"OTT services are becoming one of the biggest threats to traditional pay-TV operators, and with devices such as smart phones and tablets proliferating (in) the marketplace, consumers are quickly becoming accustomed to on-demand multimedia consumption," said report author Anna Hunt. "Offering a variety of on-demand services is now essential for digital TV operators that want to retain market leadership status."

Common strategies of pay-TV operators include offering free on-demand content to subscribers of certain digital bundles and offering catch-up TV services via set-top boxes or online, and over the next couple of years, integrating OTT services into the set-top box for seamless multimedia delivery to subscribers. IMS Research forecasts that in 2016, OTT services delivered via pay-TV set-top boxes will generate $436 million in worldwide operator revenues.

In 2010, an estimated 37 million IP-enabled hybrid set-top boxes shipped worldwide, with 42 percent being satellite boxes, Hunt said. This equipment is allowing satellite TV operators to stay competitive with cable TV and IP networks, which are better suited for two-way interactive services such as VOD, she added.