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Catching Up with Live OTT TV in a Changing Landscape

  • OTT live streaming, especially premium sports, will be the fastest growing sector in pay TV over the next two years
  • Quality of experience with ease of use must be delivered cost-effectively and securely for success in live OTT
  • A flexible ecosystem allowing best of breed components to be deployed provides the best hope of meeting criteria for success in live OTT in an environment that is still rapidly changing
  • Viewer loyalty and monetization can be enhanced by eliminating barriers between live and VoD with time to view as short as possible

Streaming Ecosystem EBook USP-MediaExcel

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Early release windows; are we ready, or is it already too late?

This blog first appeared on Videonet.

Last week I spoke to Petr Peterka, CTO of Verimatrix, about the Hollywood studio’s latest attempt to avoid following in the music industry’s footsteps and the new Verimatrix’ watermarking product.

The general context we addressed appears bleak. The musical CD is no longer relevant for mass consumption and the DVD looks as if it is following in that direction. The MP3 format has become ubiquitous for music files. Will formats like MP4 or h.264 files doing the same for video? Just as P2P seems at last to be slowing, is streaming now taking up the slack?

Book publishers are also alarmed at what their future might hold for them. Tim Bradshaw, the FT’s digital media correspondent noted on May 17th that according to a recent survey, one in eight female tablet or e-reader owners over the age of 35 admits to downloading “unauthorised” copies of e-books. It’s not so much the 1 in 8 figure as the image of women over 35, which catches the imagination. Illicit content consumption is not just from acne-ridden boys. So if we’re all potential pirates, could digital watermarking be the deterrent that might finally work where previous threats have failed to stem the tide of piracy?

With session-based, forensic digital watermarking small changes are made to the video file. These cannot be viewed or heard by the viewer, but can be extracted out again from the file with the tools provided by the watermarking solution vendor. If someone redistributes his or her copy of a film, a unique “fingerprint” remains embedded in the video file. So after investigation, a finger can be pointed at the person who first redistributed their copy.

So that’s the stick, but the movie industry is trying to put together a carrot by creating new early release windows for movies. As users are prepared to pay for convenience, it seems only natural to expect them to pay a premium to get access to a movie more conveniently. Organising a movie party at home to show friends a film that might still be in movie theatres would be worth spending a bit more than on a normal $5 VoD (current US VoD rights start 90 days after theatre debut, the new “Home Premiere” would be available 30-60 days after debut instead).

The difficult question is exactly how much more is that worth? Studios have been talking of up to US$ 25 more for a rental period. TDG recently analysed the potential demand and was not convinced that this kind of proposition can fly. According to the TDG analysis, users would only be prepared to spend an extra $5, and only if the movie were available within a week of theatre release. Further, the TDG study notes that there is still some leeway in playing with both the price and time frame so there may be room for a new offering even if studios might have to lower their expectations a bit.

However, more people are betting on ad-funded models with free or cheaper content made available. Many small transactions are more in fashion than fewer big ones. As digital watermarking requires session-based processing, it will be too expensive for micro-transactions. Time will tell if offering something better for a higher price will be going against the current in the entertainment industry or not. Sometimes bone-headed stubbornness has paid, albeit rarely.

Verimatrix is involved in enabling this early release VoD window but Petr rightly used the term “experiment” when describing this initiative from the studios.

He told me that they had been waiting for three specific requirements to be fulfilled before embarking on this project:

  • Firstly secure encryption was required. This has been achieved and consolidated in the last decade
  • Disabling analogue output was the second requirement so as to make it harder to record. This was only achieved recently in the US when, last year, the Selectable Output Control issue was finally resolved last year.
  • Finally, studios required session based forensic watermarking which is what the new Verimatrix product is all about.

Verimatrix released a product called VideoMark 5 years ago, which was able to insert a digital watermark payload into the video outputs of a set-top box in real time. This addressed a range of re-broadcast and re-distribution threats, but required device-by-device software integration. The novelty of the newly released StreamMark product is that the watermarking can now happen in Head End or in the Content Distribution Network (CDN). Indeed the watermark can be inserted into a compressed and encrypted stream. By removing the requirement of decoding and decrypting, this new solution requires only a very small processing overhead. But as this solution is technically a stateful one, scalability will still imply some cost, even if it's a small one. StreamMark is designed to insert a unique watermark for each user and is therefore primarily useful for unicast not multicast, i.e. on-demand applications.

No information is required on the end device so this kind of architecture is well adapted to multiscreen deployments that at the moment are on everyone’s mind.

The basic challenges of any watermarking technology are that the watermark must be:

  • invisible
  • easy to extract
  • difficult for pirates to see and remove.

As these challenges can be somewhat contradictory, a finely tuned combination of different algorithms is necessary, and achieving this is probably one way we will see competing solutions differentiate.

Verimatrix' solution requires three separate steps:

  • Firstly, the video assets must be pre-processed, usually when the operator ingests new content. This stage identifies and stores the location of potential marks. For each of these locations, the information that would be inserted is also prepared and stored for future use.
  • The second stage is to embed the watermarks at distribution a point where a unique session is set up. This can be in a central server or regional VOD server or in an edge CDN server. The original file has extra info added to it that embeds a unique transaction ID.
  • The final stage will only happen when pirated content is discovered. For now extracting the watermark is only done in Verimatrix’ labs.

Copyright Verimatrix

The technology was reviewed by the major studios during the soft-launch period and a third party audit was carried out by Jian Zhao, a distinguished researcher in watermarking theory and practice.

The Verimatrix pricing structure is based on unique payloads i.e the number of transactions and is volume dependent. On June 7th, StreamMark, which has been in soft launch for a year, was be released commercially.

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Contrasted feelings, unpacking my Apple TV II

Just to set the scene, I’ve only been an Apple User for just over 2 years, so I still feel pretty novice: my love/hate relation with Apple products still oscillates widely from just loving the way it all works out-of-the-box to really hating how boxed-in it makes me feel. Apple TV II consolidated that that duality of feeling.

The biggest thrill with Apple products is usually unpacking it, and just switching it one WITHOUT reading any manual EVER.

This time, the packaging was merely OK: I felt a bit disappointed, as Apple had raised my expectations from previous products starting with an iPod in 2004 that really blew my mind. Even the little box my iPhone 4 came was so cute that my son asked my to keep it to decorate his room. Apple TV’s box has already been thrown out.

The switching-on ceremony however did stand up to expectations.

Only 10 seconds after having plugged in the power, Ethernet and HDMI cables, I was browsing through movies on my 46” LCD. Admitedly not everyone may have a spare Ethernet cable right next the TV, so I wonder how much more it would of cost Apple to through Wifi in [oops correction: there of course if Wifi, thanks Graham].

But back to those first few seconds. As usual the shear simplicity of the user interface is astounding. I just don’t get it: Why oh why are thre so many more buttons on other remote controls.

The only traditional TV player to have tried something like this (i.e. a 6 button remote) is NDS with Snowflake and they’ve been demoing for years – the situation must be dire to the extent they felt the need to recently release a press statement about some small operator in a very small market planning to launch with it.

Something counterintuitive is happening here, and I still don’t understand. I feel no doubt at all in my guts that this navigational paradigm is superior, yet the market is saying something else. Either one of us is wrong, or I’m missing something. Please comment if you have any ideas on this.

Back to Apple TV itself again, beyond being intuitive it is also kind of fun. Streaming isn’t yet rate-adaptive so when you ask to watch a trailer it takes a while to buffer, but that's only a few seconds for me, as I live in the city with a decent DSL connection, but I would guess means the AppleTV isn’t really much fun if you don’t have at least 3 or 4 spare megabits.

From a content perspective, I haven’t done a proper analysis of what studios are represented in which proportion (I do that when I’m paid by clients hint hint), but the overall impression is that for the French market at least, is that iTunes really has got a critical mass of exciting blockbuster stuff. There were scores of movies I’d like to see. What I know is once I’ve seen those, how fast does it refresh … time will tell.

Moving to the Internet section I was dazzled by the ease of linking to my Flickr account (nebul2, my photos are public). But frustrated that the mobile.me connection didn’t work – very un-apple to have such a overt bug with no clear error message.

Linking computers was as easy as pie, but epitomised the duality of Apple. The light side of the force was that very ease: just share stuff on you computers WITH iTunes software … and it appears seamlessly on you TV. But the dark side of the force is just there: iTunes or be damned.

Things got even more contrasted when I tried the all-new AirPlay. Again from within iTunes on my Mac or indeed my iPhone, it was fantastic. But even on the Mac you can’t use any other software (maybe I missed something, but why are photos easy to send from the iPhone to Apple TV but not from iPhoto on the Mac?!?). I’ve always felt I understood the “walled garden” expression, but actually I hadn’t. Incumbent Telcos or restrictive mobile operators feel like Wikileaks compared to using AirPlay. It’s a step too far for me in Apple-only land.

I bought a brand new MacBook Air, at around the same time Apple introduced the Apstore to the Mac. << Don’t just download stuff from the Internet, [imagine the snake from the Jungle book saying this next part] trusssst in me, I’m Apple, I’ll let only get the besssst sssoftware that I have persssssonaly checked (and taken a cut from).>>

I again feel torn apart by the beauty of my new toy and the way its closing down into a scary world of big-brother Apple.

But here it must be that I’m just too old-fashioned. For my kids, the open Internet is reverting back to what it broke out of when the Compuserve’s of the world represented a walled-garden Internet.

Maybe Apple is just showing us a way back to the future, but I hope not, I love Apple but it’s getting harder to swallow, and yes you’ve guessed where this is going: I don’t want to end up like Adam.

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Cord cutting may be a real phenomenon, but French VoD shows why maybe it’ll be slow

I have had the fortune to be living in France since before the Internet. I experienced the French triple-play phenomenon both as a customer and as a privileged industry insider.

One of the main promises IPTV made from thou outset was to bring a huge catalogue of on demand content, i.e. the VoD mantra we all believed in that would delinearise TV viewing in an eye-blink.

Orange was the only operator to go it alone and build a unified VoD environment from scratch, negotiating content directly – back in 2003 Hollywood studios were very condescending to operators and negotiators of the first hour often need to put their pride in their pockets.

Uncannily, Canal Plus forced Orange’s hand by acquiring their then VoD supplier (which is now called CanalPlay). With hindsight, although this was a good idea at the time, Canal Plus basically speared their main competitor into existence.

But early VoD take-up was excruciatingly disappointing and only France Telecom’s deep pockets managed to sustain the effort. Issues came from the technology and design (i.e. QoE and difficulty to navigate), and of course from the catalogue.

Now we’re almost eight years down the road. Orange still isn’t very transparent with the figures and the technology and navigation problems are still not all fixed. VoD obviously isn’t the paradigm shifting success once hoped for. However, at least it’s no longer a failure. Enough of Orange’s millions of IPTV subscribers consume VoD to keep the ball rolling and I believe actually turn a profit. The initial goal of reducing churn has been met.

But the other main players here in France, are even more opaque than Orange with real VoD ARPU. I can only surmise that, with the exception of adult content, this is because the figures are even less encouraging.

I have a simple explanation for this: The other major players like Free or Numericable have multiple VoD stores. They did not build their own deep catalogue and VoD brand, but instead gave their subscribers access to branded VoD stores like CanalPlay, M6 VoD etc. So if you are a customer of one of theses operators and want to watch a movie, you first need to decide where to go. To make things worse, prices aren’t identical; so you might even need to shop around. Believe me that’s not fun with a TV remote control.

The French content industry has awoken to this issue and discussions are underway so that some films at least, will be made available exclusively via one VoD provider who would then promote them more effectively. That might alleviate the pain, bit won't fix the core problem.

So where’s the link with cord cutting?

The parallel here is that if walled garden Pay-TV may be expensive and sometimes give a feeling of being penned in, cutting loose leaves you on your own to fend for yourself. Which service do you turn to for which type of content? A bit like which VoD store do you turn to when you’re a Free customer in France?

You might laugh at this thinking I've missed the point;  arguing that say a Boxee box or an AppleTV will enable this new provider to deliver an all-in-one experience. You might be right, but by the time they reached that comfort zone of a truly lean back experience, you’ll be paying a bill very similar to a PayTV one.

Pay-TV operators have time, if they act now - no need to run, just be realistic - to open up to enough OTT content, while still delivering that all important lean-back experience. They may see numbers erode a bit, so maybe for example Sky's natural point of equilibrium is bellow the 10 million subscriber  mark despite their beliefs.

I don’t know if Pay-TV will die in the end or if as News Corp’s Operating Chief would have it 'Cord-Cutting' is 'Flavour of the month. I do know that if Pay-TV operators play their cards right, many of us will still be paying our Pay-TV bills for a while yet.