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By
Tim Young
A few weeks ago, my fiancée and I went to go see the David Fincher/Aaron Sorkin Facebook epic The Social Network. On the movie poster and in the epilogue to the film itself, it is mentioned that Facebook now enjoys 500 million users. That’s quite a feat, to be sure.
However, it reminded me of something I had read the day before, which was that, as of the end of 2009, Skype had 60 million MORE users than that vaunted Facebook figure. 560 million users, worldwide, responsible for 36.1 Billion skype-to-skype minutes in the last quarter of 2009, alone (according to Skype’s Jonathan Rosenberg, quoted in GigaOm). Over a third of those Skype sessions included video.
So Mark Zuckerberg may have 500 million friends, but Skype’s got that, plus the population of Italy.
But it’s not just the sheer number of Skype users that helps paint a picture about the current state of the over-the-top voice and video landscape.
A quick look at Skype’s media center
completes the picture. “Skype for
Android now available” just as it is
announced that Android users have
eclipsed iPhone users in the US and
Japan. “Avaya and Skype Sign Strategic
Agreement,” emphasizing Skype’s
growing appeal for the business
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Mark Zuckerberg may have 500 million friends, but Skype’s got that, plus the population of Italy. |
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altogether in favor of over-the-top
video exclusively. A report from Yankee
Group released in April of this year
predicted that in the twelve months
following the report’s publication, 1
consumer in 8 would cut or reduce their
pay TV service and get their video from
some other source.
Why? Yankee Group analysts Vince Vittore and Dmitry Molchanov attribute the move to rising costs associated with pay TV services (and, to quote the old political chestnut, it’s the economy, stupid. We know that programming fees are spiking, but we also know that consumers are in a cost-cutting mode these days), as well as the proliferation of connected TVs and devices that function as set-top boxes.
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community. Partnerships with KDDI and
Verizon Wireless paving the way for
Skype’s growing mobile reach.
But Skype isn’t the end of the story.
On the video side, over-the-top plays from Hulu to YouTube to Netflix continue to allow consumers the option of taking an end-run around the conventional service provider value chain. With a decent broadband connection and a properly equipped set-top box (from the likes of Roku), gaming console (Wii/PS3/XboX 360), or web-enabled Blu-Ray player, combined with applications that enable web content from the likes of Netflix and Hulu Plus, makes for a solid video option at less than half the price of a decent digital cable/IPTV bundle. (Heck, ever since the switch to digital over-the-air TV, those who’ve opted to cut the cables even have a surprising number of news, weather, and sports coverage from their local network affiliates, often in stellar HD.)
So while OTT services have been
utilized as supplements to regular pay
TV services for some time (with short-
form video sites like YouTube carrying
the lion’s share of the web traffic),
signs point to more and more
subscribers getting rid of the pay TV
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However, I think it’s also worth mentioning that there has been a substantial shift in the way people look at (no pun intended) television. DVRs and video-on-demand shot an arrow through the heart of appointment-based television, teaching consumers that they can sidestep scheduling overlaps and endless commercial breaks by moving towards time-shifted viewing. Once consumers get used to the idea of watching what they want with limited forethought, the source of the programming becomes immaterial. The user experience is not terribly different for a consumer watching Netflix on-demand from a web-enabled Blu-Ray player than it is for a consumer watching on-demand video from a cableco.
The narrowing of the substantive gap between traditional CSPs and OTT providers can also be seen in the voice realm. A June 2010 report by Business Insight points out that conventional telecommunications companies are among the largest providers of IP voice services. While the process is fundamentally different from the CSPs perspective, in terms of the direction of revenue and who is stuck with the bill for network maintenance and expansion, the experience of the end user is not fundamentally different, in many cases.
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