OTT Video Providers Look to 4K, 8K Video, Conflict with ISPs Will Grow

What is good for video entertainment app providers such as Netflix is not necessarily always so good for Internet service providers. Customers with suitable Internet access are an input to the business Netflix operates.

Supplying such bandwidth is both the revenue model and the cost driver for ISPs. ISPs arguably benefit from higher consumer demand for bandwidth, but also have to invest to supply that bandwidth, while charging prices consumers are willing to pay.

Bandwidth consumption, consumer resistance to higher prices, lawful pricing policies and capital investment are some of the issues ISPs therefore have to grapple with, when contemplating higher investment to support 4K and 8K video apps and services. 

Netflix, like all other popular apps, creates the reason for people to buy Internet access. But Netflix and other video services are the primary driver of bandwidth demand, which in turn drives network investment requirements. 

Entertainment video imposes bandwidth demand on the ISP network far out of proportion to all other apps, and ISPs do not always have the ability to charge their customers for what the bandwidth consumption represents, in terms of network load. 

So ISPs will eventually have to come to terms with higher-quality image standards that will affect bandwidth consumption as much as high definition TV differs from standard definition TV.

Over-the-top (OTT) services such as Netflix, VUDU, and M-GO, which exclusively distribute content over the Internet, see high image formats as a way to create distinctiveness in the video market.

That will apply to emerging 4K and eventually 8K video formats as well. Even legacy video distributors, such as cable operators, might do so as well. 

“We expect pay TV operators will seriously consider 4K movie services over IP connections directly to smart TVs, bypassing the set-top box," says ABI Research Senior Analyst Michael Inouye. "This will allow them to compete with OTT providers on feature set before rolling out 4K capable set-top boxes in 2015 to 2017."

In that case, of course, ISPs who also own OTT video services face public policy issues, as they cannot favor their own services without drawing regulatory scrutiny. At the same time, 4K and 8K video will drive capital investment requirements to support greater quantities of high-bandwidth video. 
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