On the surface, it would seem that unbundling cable packages and letting consumers pay only for the channels they want to watch would lower their subscriber costs. Not so fast – the pricing structure of cable packages is based on the large base of subscribers. Purchasing select channels on a standalone basis would drive the per subscriber fee exorbitantly high. According to Nielsen, the typical US consumer is only interested in 17 cable channels– and the cost to purchase only these channels would exceed the fees charged for packages.

The growing popularity of Over-The-Top (OTT) video services may offer a way for consumers to buy only the channels they watch, but will it be the Holy Grail solution? It depends on how many channels you want to watch. If to satisfy your video appetite you would need several set top boxes and multiple service subscriptions, the monthly fees could add up quickly. After a few months, consumers may wish there was an aggregation solution that delivered a single set top box all OTT services could run on – thus re-inventing what we have today with cable service.

Another problem to consider is the poor monetization models that exist today for SmartTV, OTT and game console content. A recent Unisphere Research survey of media professionals who want to monetize video content shows about 80 percent are realizing less than 10 percent monetization, and only five percent are seeing 90 percent, or better, monetization.

Given their inherent advantage of a huge installed base, cable providers have an opportunity to deliver solutions to both problems. Certainly one piece of their service packages is sticky - the Internet connection. No matter what cord cutting or shaving is done, consumers still need their Internet service. So, working from the basic Internet access, what services can be offered to make consumers happy and improve the monetization model?

Let’s start from the advertiser’s perspective. Currently, most of the ad buys are national or regional. OTT offers potential for more granularity in ad buys – down to households or even individuals. Dynamic ad insertion tools would allow narrow targeting for efficient use of ad dollars. Could cable providers integrate the OTT hardware into their set top boxes? If they did, then billing and program search could become a value add. Instead of learning multiple program search tools, consumers would have a single search tool that aggregated results across all the OTT services. Initiatives like these could begin to satisfy the consumer desire for pay by channel or program, and the imperative to monetize content.

Economic issue aside, consumer expectations for broadcast quality video delivery to any device mean that broadcasters must have a video delivery workflow process to ensure that high quality demands are met. There are multiple ways broadcasters can do this. They can build the infrastructure themselves to deliver video, but this is an expensive proposition and requires expertise in many areas. Consider the challenges in delivering high quality video: Scaling for delivery anywhere, supporting all the various viewing devices and video formats, security and availability of content, and gathering audience engagement analytics for advertisers. Or, they can use various cloud services such as storage and transcoding to piece together a solution. This would move the costs from CapEx to OpEx, but would still result in a solution requiring manual workflow. Content Delivery Networks (CDNs), on the other hand, have developed specific video delivery service packages that address many challenges in one workflow solution, supporting many formats for ingesting video while offering cloud storage, transcoding and delivery.

There is no doubt that the OTT environment is dynamic, with new announcements coming almost weekly. There is a current gap between consumer’s desire in how they pay for content and the economic reality of how channels are bundled. Monetization today seems a far off dream. It is safe to assume in several years we won’t recognize the video delivery landscape compared to what we have today.