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Time to kill the term 'OTT', and use 'Online Media' or 'Digital Media' instead?

OTT is a misnomer.

OTT stands for ‘Over-the-top’. What is it really ‘top of’? 

In the US, TV shows were traditionally transmitted through cable connections managed by cable operators like Comcast and Verizon. Here’s a link to an FCC report that explains the state of play of the TV distribution industry in the US, back in 2001. Consumers wishing to receive their preferred TV shows had to talk to such cable operators. In turn, such cable operators would talk to programming channels to receive get those shows which could then be retransmitted to viewers. Cable operators could facilitate all of this because they were licensed to do so by the government.

The bottomline being that the cable operators were vital in deciding what a TV user got to see as they negotiated with programming channels, and then resold the same to viewers.

Much before it became possible in India, in 1998, cable operators in the US were allowed by FCC to also provide internet broadband through their cable lines. Here’s a 1998 communique from the FCC talking of just that. That meant TV users could directly access content available on the internet without having to negotiate with the cable operators for watching their favourites, as they could directly get it through internet connections, thus they got their shows ‘over the top of cable lines’ and hence ‘over the top’. 

Around the same time such a churn was taking place in the US, Indian telecom operators were providing ‘VAS services/value added services’ - which one may say were the ancestors of today’s mobile ‘apps’. These 'VAS services' could be provided by holders of telecom licenses only if the scope of their licenses permitted them to do so. These VAS options were available as part of the mobile service itself as part of telecom licenses. Here’s a link to a recommendation paper from TRAI, India’s telecom regulator, that was tinkering with methods of improving VAS services - although eventually that became redundant in view of growing importance of internet.

When telecom operators started providing internet services too, mobile users could directly access ‘VAS’ options aka ‘apps’ through the internet media. These 'OTT' offerings did not require a separate license as they were provided by third parties other than the license holders, viz., cable operators and telecom operators. OTT offerings went over the top of such license requirements as they were made possible directly between the provider and the consumer.

Now mobile ‘apps’ as well as TV shows are accessible through the internet and clubbed together as ‘OTT’. 

My primary reservation with such a label is that it is dependent on the existence of legacy modes of content distribution. When we call it 'Over the Top' we require the prior existence of legacy modes such as cable lines and telecom services, on top of which digital content is supplied.

Such a label may have made sense back when there was lack of confidence in whether the transition could be pulled off successfully from cable lines and telecom services - which dominated content distribution so much so that people had started doubting whether content was really king.

As such 'OTT' forms were viewed more as an experimental initiative than as a disruptive force capable of coming into their own - they were never given a name that could set their own identity on their own terms. Thus, they were 'over the top' - and tomorrow, if they failed, we wouldn't bother ourselves anymore beyond the 'top'.

However, as per latest reports on Indian entertainment and media sector, it appears that such a transition has arrived in its own right as growth of digital entertainment dominates the overall growth in the Indian entertainment sector. Data consumption in India is currently at 10% of the global consumption, which is still considerably less compared to the share of India’s population to the global size, viz., 17.5% - indicative of the huge potential that lies ahead. Global entertainment growth halved in 2022 since the post-pandemic peak witnessed in 2021, while the comparable Indian growth was 16% for the same time period. A quarter of this growth was lead by streamed entertainment. While the global growth rate for the OTT segment is at a CAGR of 8.4%, India is way ahead with a CAGR of 14.32%.  In India, the market will continue to grow at an impressive rate of 14.3%, yielding a revenue of USD 3.5 billion in 2027. All the foregoing datapoints can be cross checked with PWC’s report on Indian entertainment industry.

Thus, 'Online/Digital Media' has truly arrived in its own right. It's going to have a better persistence than traditional distribution modes - more so because 'Online Media' is available to everyone in a non-discriminatory manner owing to net neutrality principles. Such non-discriminatory availability was not a persistent feature of content distributed through cable and telecom services, as cable operators and telecom operators enjoyed the privilege of 'gatekeeping'.

Atleast, in India, TRAI has tried to enforce regulations that would make content availability through satellite & cable operators in a non-discriminatory fashion - even then such regulations do not oust the possibility of voluntary abstinence by channel owners and cable operators from dealing with each other. No such 'blackout' possibility exists even as a probability for 'online media' except when the content is outrightly illegal or blocked. In this sense, 'Online Media' enjoys greater accessibility and availability than traditional media.

So, I believe that it’s time to put to rest the archaic and dependent label of ‘OTT’ and refer to them in their own right as ‘online/digital content’ or ‘digital media’ or ‘digital entertainment’.

OTT should be considered as 'Outdated' in view of 'Online Media' coming into its own.


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