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How OTT is Forcing Legacy Media to Evolve

The highly efficient approach that Google applies to storing and serving digital video content is apparently influencing the legacy video distribution value-chain to evolve.

Proving once again, that necessity is the mother of invention -- particularly when meaningful new competition forces an industry to change.

According to In-Stat, traditional Video-on-Demand (VoD) services, and their typical siloed video services currently use a great deal of proprietary -- or industry-specific (i.e. very expensive) -- equipment. They see traditional and pay-TV service providers migrating to more efficient Content Delivery Networks (CDNs) and data center models based on server virtualization.

In-Stat believes that this migration enables content portability and will have a direct impact on equipment vendors, service providers and content owners. Meaning, this will be disruptive to the legacy status-quo.

"Increasing usage of over-the-top (OTT) Internet video is driving traditional TV service providers to launch TV Everywhere initiatives," says Gerry Kaufhold, In-Stat analyst. "The data center approach promises more flexibility to manage content for delivery to multiple device types, enabling service providers to offer any content, on any platform, in any location."

In-Stat believes next-generation on-demand approaches increase content owner influence, and greatly expand the delivery options. Among other impacts, content owners and service providers will need to re-negotiate licensing agreements that will reflect more flexibility and responsiveness to consumer demands.

The CDN trend will also drive a shift in the type of equipment and features that manufacturers provide to service providers to handle video delivery.

In-Stat's market study found the following:

- Over the next five years, the worldwide value of Content Delivery Network (CDN) services will pass $2 billion annually by 2011 and continue growing thereafter.

- Barriers, such as digital rights management, competing encoding formats and standards, and restricted bandwidth remain a challenge to meet new demands for flexibility in content use.

- Adaptive Bit Rate Video approaches will permit IP-networks to deliver a quality User Experience at lower bit rates.

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