A lot has changed in online video in the last decade. From 2011, when video content made up 53% of all uploads and downloads, to 2021, accounting for almost 82% of global internet traffic, the promise of watching videos anytime, anywhere is now more accurate than ever.
Yet, when we talk about internet TV, some concepts still give people a tough time differentiating, IPTV and OTT being two of the most common to mix up. So, whether it is to learn these acronyms’ meaning or discover how your media company can tap into their opportunities, it is time for you to understand all about them.
A quick hint to get you started? Both IPTV and OTT distribute video content over the internet using the IP protocol. They primarily differ in the type of service they offer, their infrastructure, and delivery method.
- What is IPTV?
- How does IPTV work?
- What is OTT?
- How does OTT work?
- IPTV vs. OTT – Pros and Cons
- IPTV or OTT? What’s suitable for your service?
What is IPTV?
IPTV stands for “Internet-based protocol television.” As its name suggests, it is a digital television system that sends live and on-demand video over the internet, but in a very controlled way.
This service delivers TV and video over a privately managed network. It could be a LAN, a WAN, or an internet service provider (ISP) network. Since it reserves bandwidth expressly for video delivery, IPTV guarantees a superior quality image and sound without interruptions, plus enhanced network security.
Some examples of IPTVs include Verizon Fios TV, DIRECTV STREAM, Movistar +, or Orange TV.
How does IPTV work?
Pretty much like simple web browsing. IPTV services store the TV programming and videos on servers to distribute a copy of those anytime a viewer presses play on a TV channel or on-demand content. The videos stored are sent over the internet using the multicast method. That is, data is transmitted to a group of destination recipients simultaneously instead of sending individual video copies to each user separately.
Multicast is a one-to-many or many-to-many distribution technique like broadcasting but delivering videos to specific users only. The nodes in the network (typically, switches and routers) replicate the content to reach multiple IP addresses (households, basically) via their internet service of choice, whether using broadband, fiber optics, or DSL. As a result, IPTV uses the network infrastructure and bandwidth very efficiently.
IPTV services frequently come in bundled packages from ISPs, including broadband and mobile lines. ISPs are responsible for delivering consumers the internet anyway, so it is a convenient model. However, this also locks viewers to a limited set of TV channels and VOD titles they can watch – basically, the ones offered by their ISP in a particular area or region.
Setting up an IPTV system requires some service installation and middleware and hardware components to ensure reception. The main ones? An internet connection (with the corresponding TV subscription), a router, and a device connected to the dedicated internet line (usually, a set-top-box) acting as a signal decoder to display content on the TV screen. The installation resembles the existing cable TV setup, so some might argue that IPTV would be like cutting the cord halfway.
What is OTT?
Look around at all the people not looking up from their phones while enjoying a video. That’s what OTT is about!
OTT refers to over-the-top, meaning video and TV programming are streamed to any device (smart TV, laptop, tablet, smartphone, or video console) over the public internet (using broadband or mobile data). It bypasses traditional broadcast, cable, and satellite gatekeepers, and it is the essence of the video “anytime, anywhere” motto. Anyone using an internet-connected device can access content – in their jammies on the couch, in a suit at a conference, or traveling by plane.
Some popular OTT names include YouTube, Netflix, Amazon Prime Video, Disney+, and HBO Max.
How does OTT work?
OTTs are purely streaming content providers. Since they use a free transmission system to deliver video and no such thing as a specific distribution circuit like IPTV, OTTs provide the content only upon request and in a unicast form. It is a one-to-one transmission method that serves one stream to a single connected device or recipient.
In this case, ISPs do not control anything about video delivery, video viewing, or content copyrights. They simply provide the infrastructure through which OTTs stream content directly to the end-user devices. And since the infrastructure and overall cost reduce significantly for OTTs, their prices tend to be more affordable than IPTV.
Still, with flexibility and ubiquity come added challenges. One of the inherent problems of OTT is being able to adjust to a wide range of networks and devices to serve content over the public internet. OTT performance depends on the internet connection speed, the available bandwidth, and the connectivity speed supported by the end-user display device. Therefore, image and audio quality might be affected whenever the OTT application adjusts to network performance to avoid long buffering issues. How exactly does this happen? Playing the video file that best accommodates the network conditions and screen size every time to prevent any data transfer drop.
IPTV vs OTT – Pros and Cons
Herein we address the central question of this post: “what are the main differences between IPTV and OTT?” As it turns out, quite a few! Here’s a summary of the most important ones:
Content delivery and network
OTT video is mainly delivered using an open network without any infrastructure investment or necessary carriage negotiations. In contrast, the IPTV distributes content through a closed, proprietary, and optimized high bandwidth network via a specific ISP. A set of benefits and disadvantages comes with it: IPTV is reliable, maintains a high quality of service, and is far easier to monitor but more expensive and complex to deploy, manage, and update.
Like we already said, IPTV requires three main components to work: an internet connection, a router, and a set-top-box or an IP-based connected TV to display content. OTT, however, only needs an internet-compatible device connected to data or Wi-Fi.
Quality of the video
The quality of the video served by OTTs depends much on the available bandwidth and speed of the internet connection and device we’re using. In IPTV, we can expect a higher image and audio quality since it uses a private content delivery network to reach concrete IP addresses.
IPTV usually sells subscription packages at comparable rates to traditional cable or satellite TV. In contrast, OTT services can go as low as $4.99 per month or even be free for the user if we talk about an ad-based (e.g., AVOD) service. In this other blog, we help you to understand the various video monetization models available to OTTs.
Type of content
IPTV services typically provide an Electronic Program Guide (EPG), an on-screen guide of scheduled TV programming. Likewise, they may include three different content-type flavors: live linear television, some time-shifted television to replay a show (catch-up TV) or start it over, and VOD, including recorded channels and programs to watch on-demand.
OTT, on the contrary, traditionally provides a VOD catalog for viewers to pick and choose. However, some services now also add live TV channels to their offering (e.g., Disney+ and Amazon Prime Video). Nonetheless, the differences between one and another tend to blur as both services enhance their content offerings over time to attract a larger audience.
IPTV or OTT? What’s suitable for your service
Moving on to business, choosing between IPTV or OTT has traditionally depended on the content delivery infrastructure and operational resources companies have in place beforehand.
OTT is considered a more cost-effective and flexible solution that allows service personalization, introducing new compelling features for the user, and lower price. Yet, it comes with added challenges, such as the network’s reliability – which can degrade video quality – or the internet limitations and bottlenecks to scale efficiently – remember that OTT delivers videos point-to-point. Having said so, it is a business option open to many and varied use cases that requires a lower upfront investment than IPTV to set up the service. That is the main reason why OTT services have gobbled up a larger share of the TV market.
On the other side, IPTV provides a much higher quality of service and easier monitoring, management, and scalability, at the expense of higher operational costs to install, manage, and update all the infrastructure components. Despite its robustness, innovation cycles are usually slower, impacting the feature velocity and adaptation to the latest viewing trends. Legacy pay-TV operators and telcos are natural candidates to opt for a viable IPTV solution, as they already have the network infrastructure and customer relationships in place. However, the more advanced the network technologies become, the more we can expect hardware-based installations to become outdated. For instance, the 5G technology, roughly 100 times faster than the best available 4G, could change the game very soon.
Why choose when you can fuse?
To deliver future-facing TV experiences worthy of viewers’ time – you need the right platform to bring the best of both worlds together. That is what Cloud TV is all about.
Going beyond traditional IPTV and OTT, the Kaltura TV platform combines the agility and flexibility of OTT with pay TV’s robustness and scalability to power cloud TV transformations. The best of both worlds. Even better, it provides broadcast-grade 99.995% availability for live and VOD TV viewing across all devices so that connectivity and network reliability in the cloud are no longer an issue.
If 2020 taught us anything is that flexibility to change and elasticity to grow are vital to thriving in today’s TV landscape. Everything should be within TV operators’ reach, just a few clicks away. From easily setting up new TV channels, aggregating OTT services, and VOD content, to modifying the platform’s pricing plans and business models, launching new promotions, repackaging content bundles, or helping viewers find something to watch next. All those are still cobbled experiences today.
Look no more. If you are considering embarking on a similar journey soon and establishing your own full-fledged cloud TV offering, we can help.
Looking for a Cloud TV solution blending the best of IPTV and OTT? Discover the Kaltura TV Platform.