 | Issue: | Latin America 2013 |
| Article no.: | 11 | |
| Topic: | Video delivery on hybrid networks | |
| Author: | Stuart Newton | |
| Title: | VP of Corporate Strategy | |
| Organisation: | IneoQuest Technologies | |
| PDF size: | 1600KB |
About author
Stuart Newton is IneoQuest’s Vice President of Corporate Strategy; he is responsible for analyzing, creating, recommending, and executing strategic and operational initiatives. Prior to joining IneoQuest, Stuart spent served in various roles at Wind River Systems and held several market and business development positions for high technology solution providers. Mr Newton has represented IneoQuest in industry bodies such as the Telemanagement (TM) Forum; he also regularly contributes papers and delivers keynote presentations at tradeshows around the world.
Stuart Newton is a chartered engineer and holds an Honours degree in Electrical and Electronic Engineering from Loughborough University. Mr Newton has contributed to several patents.
Article abstract
Video service providers’ core business asset is the content and how it’s presented – and mobile and Internet content distribution is enabling operators to reach out to new subscribers and offer advanced services that will allow them to better compete in a crowded market. However, to make the most of this burgeoning market, they need to do so with a savvy strategy that ties in existing services, while offers revenue generation innovations and ensures a high-quality viewing experience regardless of screen.
Full Article
Cable, satellite and IPTV operators are faced with a competitive dilemma as over-the-top (OTT) video services like Netflix and Hulu continue to capture consumer interest—and share of wallet. In an almost required competitive response, operators have been embracing TV Everywhere services, which offer mobile and internet access to subscription content through dedicated apps and portals.
But implementing a digital distribution strategy to push content to mobile and internet devices presents a new level of complexity into an operator’s architecture and service management approach. Pay-TV operators are rushing to implement IP-based adaptive networks, often with a third-party content delivery network (CDN) component, while at the same time needing to maintain the legacy linear TV network. For the foreseeable future, operators will continue to operate to deliver traditional television services via the set-top box (STB), no matter how large the digital component grows.
Operators need to manage video service quality and obtain analytics across both networks, in order to best optimize the user experience and ensure that the content is adequately monetized. A smart service assurance strategy can solve many of the key challenges in integrating the multiscreen experience across the two networks and all three screens: mobile, internet and TV.
A look at the market
It’s no secret that consumer thirst for mobile and online video continues to escalate, with more and more people watching video on handheld devices, game consoles, PCs and smart TVs. Also, the younger generation is growing up with a ‘new normal‘ expectation of access to their content anywhere, anytime on a range of connected devices.
And, companies like Netflix, Hulu, Apple and Amazon helped drive the OTT video market past US$8 billion in 2012- and it’s expected to reach US$20 billion by 2015. The U.S. and Western Europe are certainly hot spots, but emerging markets, especially Latin America, offer rich development opportunities.
Meanwhile, nearly 100 million users will pay for TV in Latin America in 2018, according to Dataxis, which said that 68 percent of the region’s TV households will have a pay-TV service then. Peru, Brazil and Mexico will represent the highest growth areas thanks to pent-up demand, but Argentina and Colombia will join Brazil and Mexico as having the largest pay-TV markets by 2018, representing 87.9 percent of the region’s business.
But in specific countries like Brazil and others, online video consumption has increased significantly in recent years. According to Streaming Media, the online video market in Brazil is one of the largest worldwide with a viewing audience of 43 million people monthly and penetration of 82.2 percent among Internet users. This is likely to increase as Brazil gears up to host the two most important sporting events, the World Cup and the Olympics, receiving over US$30 billion on investment from the Brazilian government for broadband and communications.
While not every country in Latin America has a large population capable of getting a 2-3Mbps video stream, many do, and they have huge populations with large Internet penetration rates, Streaming Media pointed out.
Meanwhile, ABI Research finds that nearly one-third of U.S. Telco TV households are expected to access multiscreen or TV Everywhere services by the end of 2013. Most of these homes are already using advanced interactive features like remotely programming a DVR.
“The shift to digital and OTT distribution is accelerating, particularly as content providers increasingly warm up to these channels,” said ABI Research senior analyst Michael Inouye. “While pay-TV services are still afforded many advantages, we are approaching the proverbial fork in the road when content owners will decide if they continue down the same path or forge ahead, shaking up the primary means of media distribution as we’ve known it.”
And so, the dynamics around revenue generation are in flux, and continue to change. In 2012, 58 percent of OTT video revenue came from subscription services. ABI now anticipates this share to fall to less than 32 percent by 2018, with new forms of digital content distribution taking over.
Rosen added that operators will need to think of the opportunity as a hybrid one. “This future, however, isn’t devoid of traditional media nor is it a matter of new channels necessarily winning, but rather a redistribution of wealth within the value chain,” said Sam Rosen, ABI practice director.
And that of course means that traditional pay-TV providers are in the best position to leverage proven channels—the STB—along with online and mobile access—if they can manage the service well enough to get the customer experience right.
Some are already getting on board. For instance, two Uruguayan pay-TV operators, Montecable and Nuevo Siglo, have incorporated Conax´s security solutions in their platforms to enable advanced multiscreen OTT and VOD services into their traditional pay-TV offerings.
Multi-Network management challenges
In the wake of this great industry change, video service providers are making IP network transitions to support legacy, linear TV services as well as new OTT-type offerings like TV Everywhere, all-in-one architecture. But that’s a lengthy transformation, and in the meantime most will maintain a multi-network architecture consisting of traditional broadcast infrastructure and a new adaptive streaming video-based delivery strategy.
Operators want to implement a seamless (and differentiating) experience for consumers that combines linear broadcast TV, video on demand (VOD), DVR service and online/mobile video. At the same time, operators are looking to add to the set-top box the kind of customization that subscribers have when it comes to mobile and online apps. The look and feel for the subscriber should be the same across platforms, and operators need a holistic view of the customer’s service quality and behavioral characteristics for all three screens. That’s the key to customer satisfaction, which also creates new monetization paths via targeted advertising and personalized service packages.
Often, however, the two sides aren’t integrated—and that presents key challenges.
For one, disparate management systems for the two types of networks make for a disjointed customer experience. Programming guides and content discovery, and even in some cases the programming itself, can vary across screens. That’s thanks to the sheer diversity of platforms and devices.
Microsoft, Amazon, Apple, each connected TV manufacturer and others all have their own app environments, requiring pay-TV operators to create and manage multiple versions of their TV Everywhere apps to capture the full range of the addressable market—an expensive endeavour. Differences in operating systems, screen resolutions, processing power and security requirements are also all in play, driving further fragmentation when it comes to managing service.
Also, consumers expect mobile and Internet access to content to have the same quality as it does on the living room screen—and it’s a big hit to an operator brand if it doesn’t. Managing for bandwidth congestion becomes critical to maintaining subscriber satisfaction as video traffic takes up much more of a subscriber’s connection than more traditional services.
This is exacerbated because video may be delivered to multiple numbers of connected devices both inside and outside the home. And, that delivery often occurs via different last mile connections. For instance, a Comcast subscriber may be using Verizon for wireless service, meaning that video viewing on-the-go involves an unmanaged link and a lack of visibility into the customer experience over that link. This of course can be true even when a CDN is in play.
The reality of digital distribution involves assuring service across a latticework of roaming agreements, third-party peering arrangements and home-grown as well as third-party CDNs.
Managing a hybrid video delivery system
Getting arms around the modern, hybrid world of video delivery is thus a complex endeavour that requires visibility across both sides of the architecture. A service assurance solution that looks at both should be a basic starting point. A single service assurance platform can allow for combined monitoring of Quality of Service (QoS) and Quality of Experience (QoE) across all three screens, for a 360-degree view of the subscriber’s viewing experience.
Some systems just offer video quality monitoring, but video analytics are also required for complete end-to-end visibility across hybrid networks and multiscreen services. By combining the power of analytics with quality assurance, it’s possible to determine the ‘reason’for why users behave the way they do with a much higher degree of confidence – something which cannot be done with analytics alone. Having a video management system that can pre-crunch and pre-filter video analytical data and interface to back-end big data systems for strategic decision-making will provide a distinct advantage to any operator to monetize video services across the three-screen revolution.
Analytics can be broken down into two buckets. Operational Analytics provide information as to how a service and the network delivering that service is performing, allowing video operators to ensure a high-quality viewing experience across the digital and the linear sides of the house. Operators can thus stave off churn—while attracting new customers. Those video analytics can enable dynamic tuning of the networks and services for better efficiencies as well.
Meanwhile, Behavioral Analytics allow operators to understand subscriber viewing habits, determine highly watched assets, assess average bandwidth requirements and track devices accessing their services, even on third-party, unmanaged links. This segment becomes a monetization engine, allowing operators to better fine-tune offers and revenue-generating add-ons for any specific market segment, and to roll out dynamic, targeted advertising, interactive purchases and other advanced tactics.
Pricewaterhouse Coopers (PwC) in its Global Entertainment and Media Outlook for 2013-2017 predicts reports that homes will spend increasing amounts on OTT and purchases and subscriptions made through the TV. That total will reach around US$713 million in 2016 and US$1.28 billion in 2017, surpassing box office spending during that year—an incredible opportunity for pay-TV operators to monetize digital distribution.
PwC also that growth in the OTT market will more than double in the next four years. Whereas OTT streaming content only accounted for three percent of the total entertainment market in both 2008 and 2009, it accounts for seven per cent this year and will rise to 16 percent by 2017. For video service providers, the core business asset is the content and how it’s presented—and mobile and internet content distribution is enabling operators to reach out to new subscribers and offer advanced services that will allow them to better compete in a crowded market. However, to make the most of this burgeoning market, they need to do so with a savvy strategy that ties in existing service while offering new paths to revenue generation and ensures a high-quality viewing experience regardless of screen.
