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Disruptors are everywhere – do you see them?

Senior consultant Hugh Massam escaped from the energy sector after serving a 15-year sentence. Here he offers some thoughts post-IBC.

‘There is nought so powerful as a good idea whose time has come’. The question is, do you see the great ideas and disruptors that your competitors see?

When we’re busy developing products, jumping into new markets and maybe sitting in meetings about dense tech or legal issues, it can be all too easy to miss a competitor that’s about to eat your lunch. It was clear to me from three days at IBC that some spaces – such as middleware – are ponds filled with hungry competitors. The ones that spot a seismic shift first – or even make it happen – will be the survivors.

Netflix has been creating such a shift giving sleepless nights to many TV executives. Reliable live streaming over the Internet will probably be even more of a disruptor, and the content delivery suppliers at IBC are promising it for very soon, certainly less than five years, maybe as little as two.

At Wolfpack we are often asked to benchmark clients’ brands, and even this simple exercise can provide startling insights and opportunities pointing out gaps in the market or areas where completion is already fierce. From there we partner with them as marketeers and industry insiders, to help position products and promote them, avoiding the many sand-traps that can befall al product along the way. But what we also do is maintain an outside perspective and look for the real seismic shifts or threats.

Asleep at the wheel? …a story from the energy sector

Looking wider than IBC, the supply of electricity is a former state function and in terms of NPD, was asleep for decades. In some markets both are still true. Even applying basic marketing to it is fairly new and the marketing sophistication of some former state-owned behemoths in this space is still decades behind a sector like broadcast. And let’s face it, not many marketers are hogtied by the need to keep supplying product to a customers with an astronomical cost-to-serve (a wire to a farmhouse in the Outer Hebrides, for example) or to people who patently can’t pay (in practice most energy companies rarely cut people off).  Both happen with electricity.

But in the wider energy sector there is innovation, and it bleeds right into people’s home networks. Besides the obvious shift to local and renewable generation, there’s seismic action in storing power, and in supplying it to your laptop. For example, innovators like Moixa.

A conversation in the energy-supply space is likely to take a bunch of things for granted: Houses need to run off the mains; home electricity networks use standard 110 or 220 volt sockets; solar panels are great but they are best used through an inverter (solar panels generate DC, an inverter converts this to AC) and supplying AC in real-time to the building they are on or to the grid; once the sun goes down solar power is not relevant to evenings - the peak time of use – because batteries are too expensive. These are all fundamental assumptions about the market which players like Moixa are challenging.

Small solar phone chargers are old news. So why can’t a home’s solar panels - already generating DC - directly power small DC devices like phones, laptops and lights through a local network? Why can’t you charge a battery from your solar panels in the day, or from the grid at 1am, and store that power to peak-shave by taking demand off the grid in the evening? The grid provider will pay you handsomely to reduce peak-load on demand – ‘demand management’ is a $1.8B market in the UK alone.

The Economist last year spotted that emerging standards which will soon boost a USB cable’s power-carrying capabilities up to 100V (from the current 10) will change the game too.

Players like Moixa saw the obvious – an explosion in low-power DC devices in the home, and a rise in the number of solar panels producing DC on roofs. They are working hard on dull details like DC voltages and plugs, which have never been standardised.

And at the big end – many people still assume electricity plants are large, should be available 24/7/365,  and need to be built permanently near their fuel supply, but players like Karadeniz Energy and Agrekko are making massive inroads (and profits) supplying floating power plants and rented power generators. And the largest market for the latter may surprise you – the Middle East, not Africa.

So even in a slow-moving market like electricity generation, disruptors are there. The real question is – how often are you checking on the top three potential disruptors in your market?

 

Hugh Massam is a Senior Consultant with Wolfpack and also the Principal Consultant at E Equals Limited, an energy communications agency based in Cambridge, UK. @eequalsuk. 

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My pre @IBCShow 2013 hot topics

Here’s my take on what the key hot topics of IBC 2013 might be and the questions they raise for me.

Safe bets

Four topics are really way hotter than any others at the moment.

1.    4K/UHD

Will the cinema standard merge with the broadcasting one? Will there be an intermediary 2K, like we had “HD Ready” before “full HD”? [I tried to answer some of these questions with Thierry Fautier's help here]

2.    HEVC

Are we in for the same long wait as when H264 was first supposed to come, or have things really accelerated? It used to take a decade to halve bandwidth requirements.  Last years UHD/4K demos required 35 to 40MBPS, how long will it take to compress down to the promised 10MBPS?

3.    OTT

Technology, ecosystems, devices

  • Is there a future for OTT STBs?
  • Will DASH finally be the ABR to standardize them all?
  • Has the interest in connected TVs peeked?

OTT Business & content disruption

  • What does Netflix or YouTube commissioning content mean to the industry?
  • Is the second screen becoming the TV? Is now the time for mass adoption of play-along apps?
  • Is cord cutting, a temporary phenomenon or the beginning of the end?
  • Oh and I suppose Social TV fits in here, but I'm not expecting it to trend much in 2013.

4.    Big Data, privacy, customer intelligence or the new clothes of recommendation

Content recommendation platform vendors have been screaming into the wind for half a decade already. All of a sudden the industry is listening to their message, but not from them. The Big Data crowd have stolen the limelight. Its ever so hard to form an opinion when something is so very hyped, but it is common knowledge that most operators still have a long way to go to start benefiting form the gold mine of customer data they’re sitting on. Content recommendation is probably just the tip of the iceberg.

Outsiders that might get traction in 2013

New subject: Dongles

Despite set makers fantasies, the connected TV still isn’t a reality in terms of usage. But with those millions of out-of-date screens out there, could HDMI dongles like Google’s latest offering finally make that change?

An ten-year old story; that may at last be true: The time is coming for IP, another 4 points:

1.     The rebirth of IPTV

I used to write about the death of IPTV, so, I got the timing wrong. Well actually I may have gotten the whole story wrong. As OTT services seem to be more than a fleeting fancy, Telcos are realising that all that expensive multicast IP technology could actually make a difference. Maybe they won’t have to sue money out of the global players like Apple or Netflix, but actually be able to cut deals with them in exchange for guaranteed last mile delivery.

2.     Targeted advertising

Companies have come and gone on this subject. My take was that although the targeting tech sort-of worked, there were never big enough segments to personalise to, making an ad just costs too much. That may at last be changing with the scale available to some operators.

3.     Guaranteeing service, offloading, DPI, Net neutrality

Technology is now here to enable an operator to offload video streams from 4G to Wi-Fi either because its free YouTube stuff and the Wi-Fi is free or on the contrary because its part of a pay TV subscription that the Telco is getting a cut from and the Wi-Fi has no guaranteed quality.

4.     4G & Fiber

New high-speed networks really are finally here and accessible to significant segments of the market. This is not an IBC subject per se, but it is the fuel behind this whole IP set of trends.

See you in Amsterdam, and here or elsewhere to see how wrong I was ;o)

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Maybe not all cord cutting is so bad for the industry after all?

I just read David Mercer's blog called "Europe’s TV Viewers Cut the Cord: Free TV Alive And Well" on Strategy Analytics blog.
I wrote a comment on their site, then suddenly the comment feature disappeared.

After reading the European Commission’s latest household communications survey, David draws a bleak picture. European's all over the continent are saying how they are leaving cable-TV for digital terrestrial which is still making big inroads throughout Europe. Read his interesting piece here.

What I wrote as a comment was that maybe cable operators will end up leaner and meaner once they shed all those subscribers that only watched FTA on their service.
ARPU should go up and customer call centers can deliver better service and/or reduce costs.
The survey doesn't say if cable are losing their triple play or high ARPU customers which would really hurt the business.

I know that in France at least, PayTV via DTT has all but flopped.
Joe Bloggs, or Madame Michu as she's called here, considers that DTT is for free TV, Cable and Satellite for pay TV and IPTV is somewhere in between.

YouView's potential success will be more of a real test for the likes of Britain's cableco Virgin or satellite platform Sky, because the DTT platform Freeview is already prevalent in the UK. A successful YouView with monetized OTT, would constitute really scary cord cutting for pay-TV execs.

I agree with David that the landscape is changing, but maybe not as fast as he implies.
I'm sure Strategy Analytics could match some operator subscriber numbers with this declarative survey to add some credibility.

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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.