Although OTT has been an IBC topic for a few years, we actually saw a plethora of end-to-end platforms that actually worked, often purely in the cloud. The range of supplier was impressive from Israeli start-ups like Vidmind to multinationals like Siemens or the pioneer Kit digital, now reprendre Piksel. There was also much more talk of real world deployments. Underlying technologies are of course needed to enable OTT and adaptive bit rate (ABR) was omnipresent with most - but not all - stakeholders betting on the convergent MPEG-DASH flavour. OTT ecosystems can still be daunting and as we predicted in last year's white paper written for VO, Broadpeak and Harmonic, multi-vendor pre-integration was a trending theme. This year's IBC was, as expected, all about the forthcoming Ultra HD/4K resolution, which will now be enabled by the new HDMI 2.0 announced at IFA and HEVC. HEVC was shown in a few real world setups as oppose to last year's lab demos, although there wasn’t yet any consumer-grade decoding solutions. Many demos painfully showed that frame-rate is an issue as Thierry Fautier pointed out to me here. The jerky 25 FPS demos clearly made the point that it's going to be at least 50 FPS or higher resolutions just won't take off. The 8K, Super Hi-Vision demo by NHK in the IBC's future zone blew my mind. With such an immersive experience, I doubt we’ll be wasting any more time with 3D in the living room. Although less prominent, but nevertheless significant, like the tip of an iceberg, the Smart Home continued its slow forward march with for example a demo of Cisco's Snowflake that dimmed the lights during a movie's night scenes. Several vendors like ADB or Nagra were talking about media hubs in the home. Big data was in a lot of discussions and I was pretty amazed by the power of solutions like Genius Digital's analysis of viewing statistics and how they can being immediate gain. Of course I too loved Wyplay's huge blue frog in hall 5, representing their new open source initiative, which needs to be analysed in the light of the US centric RDK project pushed by Comcast. As every year, I spent some time with a company slightly out of my usual focus, this year Livewire Digital showed me how professional newsgathering can meet BYOD. Some things I had expected (described here), but didn't see much of, included HTML5 that wasn't promoted as the mother of all UI technologies as I thought it would be. Also, despite Google’s recent successful Chromecast launch, dongles were not really visible at IBC (I’m told Qualcomm had one on their booth). Finally, it occurs to me tidying up my notes, that the true implication of the BYOD phenomenon hasn’t really been addressed head-on. Of course the show and conference were full of things to say about tablets and smartphones, but nobody seems to be looking at the deep business model transformation underway. When I learnt to do a TV launch business model, barely over a decade ago, the STB represented 70% of the project CAPEX if you hit a million subs. So in the future will a TV rollout cost 30% of what it used to, with the subscriber subsidising the operator for the other 70%? This is about my tenth IBC. In the jury for best booth, to which I was invited again this year (thanks Robin Lince), we realised that as IBC matures in the age of Internet and social media, the show is less about learning what the latest trend or product is or even what people think about them, we usually know all that before even coming. Face to face networking and building relations are the deeper motivation. In follow-up posts I’ll report on the 17 companies I spoke to this year at IBC: Brightcove, Envivio, Axinom, Visiware, Vidmind, Wyplay, Genius Digital, Astec, Axentra, Gravity, Akamai, Rovi, Cisco, Livewire Digital, Tara Systems, Verimatrix and SofAtHome.
Here’s my take on what the key hot topics of IBC 2013 might be and the questions they raise for me.
Four topics are really way hotter than any others at the moment.
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]
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?
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)
In the run-up to MCW 2013, we interviewed Lonnie Schilling, newly appointed CEO of Swedish software company Birdstep Technology, that provides smart mobile connectivity and security solutions.
CTOIC: What do you see as the key theme for MWC in 2013?
Lonnie: Well as in previous years, there are going to be many themes in 2013, but a reoccurring theme, and perhaps the greatest challenge for operators is keeping up with subscriber demand, staying ahead of the bandwidth curve driven by more video rich content and ensuring a compelling user experience for a wider demographic customer base.
CTOIC: How have operators been responding?
Lonnie: Not always in the best way! It seems that data caps have come back into play, but this is wholly counterproductive and fails to take account how customers want to use their mobile phones. Mobile subscribers are consuming more and more data and watching longer forms of video but these caps are self-defeating in such that customers believe that consuming data implies incurring punitive charges or data throttling which make the service non-compelling. So the real challenge for operators is to come to grips with complementary technologies like Carrier WiFi and Smart Data Offload solutions, and align this with their business needs to meet the requirements of their subscribers.
CTOIC: But hang on, I thought LTE/4G was supposed to solve this bandwidth crunch?
Lonnie: Yes LTE does bring efficiencies over 3G and certainly more bandwidth, but the business case for the necessary coverage and density is prohibitively expensive. Here too Carrier WiFi is being used as a cost efficient solution for offloading. MNO's are now beginning to take advantage Smart Data Offload solutions to selectively offload non-premium data, perhaps a YouTube video, to WiFi while keeping premium data, such as a video subscription service like Netflix or Webex on the cellular core to leverage existing Subscriber Management services. In addition to smart selective offload, the MNO is interested in using subscriber analytics to better understand the Customer Experience from the perspective of the handset. The analytics give insight into what services are being consumed over WiFi and cellular, where the subscriber is when they consume the services and the quality of the service is, both objective and subjective. This resolves a key concern MNO's have had with WiFi; the operator now has complete visibility of the subscriber and service whether the user is on cellular or WiFi.
CTOIC: Presumably you agree LTE/4G does at least scale to the higher bandwidths required for emerging services, even if the costs are high?
Lonnie: I would argue that LTE has not kept up with the bandwidth curve. Just look at how smartphones are being used to consume more video. Did you know that it is expected that 2/3 of the world’s mobile data traffic will be video by 2016 or that globally, the average mobile connection will generate 1,216 megabytes of mobile data traffic per month in 2016, up 1,221% from 92 megabytes per month in 2011, a CAGR of 68%! This trend shows that the rate at which data consumption is growing, continues to outpace the rate at which mobile technology, including LTE, can deliver bandwidth. So here’s the telling data point, LTE gives us roughly 12x increase in bandwidth over 3G, but bandwidth growth over the period since LTE began development has gone up 30x. And, according the Cisco, the problem further exacerbates over the next few years. LTE is behind the curve when the market is demanding greater bandwidth.
CTOIC: So what is the answer?
Lonnie: I believe MNO’s must be more pragmatic about augmenting their mobile service offering with Carrier WiFi, in conjunction with Smart Data Offload solutions. By deploying an intelligent offload solution, the MNO can become much more innovative in how they package and tariff the service and effectively compel their customers to consume more instead of less. By associating network policy with the intelligent offload solution, the MNO decides which applications will be transported via cellular or WiFi determined by time-of-day, location, quality of connection or user policy profile. The point is that the MNO can be completely agnostic to the access medium for a greater aggregate RAN capacity, or develop innovative business models for maintaining premium traffic on the cellular and non-premium traffic over WiFi. Standards such as Hotspot 2.0 and ANDSF enable the automated network discovery, selection and security, as is done today in cellular networks. Then link this to the ability to have real-time active / passive analytics for the MNO to maintain a very clear perspective of the customer experience, even when using WiFi, and the MNO maintains the control of the experience associated with their brand and offering. It is not a huge leap in faith to foresee in the very near future that a customer can globally roam and handoff between cellular, WiFi and back to cellular based on a defined network policy.
CTOIC: How quickly do you anticipate this happening?
Lonnie: It’s already begun! But fact is that it will happen much faster than it did for the cellular industry, which took 30 years to get to where we are today with transparent international roaming where subscribers are unaware of all the transactions between operators taking place in the background. All that complexity is completely shielded from the user even though their own handsets are participating in the transactions. I believe the “Law of Accelerated Returns” tells us that it may be up to an Order-of-Magnitude less time than it took for cellular. Besides, the hotspot infrastructure is already there or under construction, and of course the industry understands well how to develop and negotiate roaming agreements.
CTOIC: Presumably cellular operators will not offload all their data. What data will they keep on their own infrastructures and how will that decision be made?
Lonnie: That will vary between service providers. But one thing they will all want is the ability to make intelligent decisions in real time over what data to move according to business rules and perhaps traffic conditions. Those decisions will be made by policy and executed in Smart Offload software that understands the subscriber, the data, the location and time-of-day and can offload according to specified rules.
CTOIC: What might those business rules be?
Lonnie: A service provider network might be getting a lot of You Tube traffic that is filling up the cellular network, and that could be offloaded to Wi-Fi. But say that operator has a contractual relationship with another OTT provider like Netflix that requires guaranteed QoS and the ability to monitor the activity. Then Netflix traffic would be kept on the cellular network and use the subscriber management capabilities there.
CTOIC: How will Wi-Fi be integrated with cellular?
Lonnie: That is still subject to debate. There are various options on the table, with some advocating running Wi-Fi in parallel with the cellular infrastructure and others who believe cellular and WiFi to be converged in the Packet Core. Regardless of the level of integration, I think it likely that operators will want to adopt a hierarchical structure where WiFi is implemented into the small-cell architecture and provides bandwidth and coverage in high-density venues and in-doors.
CTOIC: Thanks Lonnie, let’s see what MWC 2013 has to answer in this debate.
Chief Executive Officer, Birdstep Technology
Schilling brings 20 years of experience of equity investment, strategic business development, architecture sales and marketing within the international communications market. He was most recently Director, Mobile Service Provider Sales & Business Development at Cisco and he has also held leading management positions in other global companies such as Motorola, ITT, Worldview Technology Partners, Bolt Beranek and Newman (BBN). Schilling holds a B.S. in Computer Science from the University of Maryland. He completed graduate and postgraduate studies at the Swiss Federal Institutes of Technology, the International Institute for Management Development, INSEAD and the Marshall School of Business at USC.
I wrote this blog entry in planning my visit of the BBWF 2012 show floor.
OTT is creating a deep shift in the TV value chain. Most cord cutters or thinners actually leave their traditional pay TV service to go somewhere else, or trade down to a cheaper subscription. Someone out there is profiting. Even if a 100$ monthly spend becomes 10$, that’s still 10$ of fresh ARPU for the new guy.
But Hulu, Netflix, Roku, Amazon, Google, Apple, Microsoft beware: pay TV operators and even dusty old Telcos have realized that they too can be the new kid on the block when it comes to OTT TV.
But why would I be interested in an old pay TV operator, let alone a Telco, when all the sexy OTT upstarts are vying for my business?
One answer is data, or rather what has recently become known as Big Data. It’s adding fuel to traditional CRM and data mining, but also brings radically new service possibilities.
Like data mining Big Data is basically about aggregating data from user’s interactions with a given service and then number-crunching it in huge data centres to provide marketing teams with customer intelligence. One main goal has always been to improve and better target products to different markets and customer segments.
Data mining started as far back as the 1970s and by the 1990s it was an industry in its own right. But it has mainly been one dimensional, querying against a single relational database, or just maybe two or three interlocking databases. The most typical example is of a Supermarket chain analyzing data on the contents of shopping baskets to "mine" combinations of products that are purchased together (there's been a lot of mileage out of the good old beer and diapers case from the 1970s, where a marketeer - who wasn't yet called that - after analyzing shopping basket contents, realized that more beer could be sold if it was positioned in an aisle "on the way" to the diapers at least during weekends).
What’s new though is the explosion in different types of data, i.e. from all the screens in the house, and there’s also a huge increase in the amount of external data that can be collected from a range of sources including social media and messages. At the same time scalable cloud-computing architectures have come along to enable the data crunching to be powerful enough to get closer to real time answers, even when petabytes of data are involved.
So now instead of just realizing why subscribers behaved in a specific way in the past, Big Data will enable operators to optimize a service so it best suits what they will do in the future. For example providing near real-time content or service recommendations based on what the family is doing at the moment …
This is where Big Data will not only serve the interest of incumbent operators by giving them ammunition to fight off some of the OTT upstarts, but also bring new services to the end user. A few decades ago advertising was fun. But today TV advertising has become that period of time you either use technology to make disappear (i.e. with a PVR) or disappear yourself during the break. The truly personalized advertising that Big Data can enable could make it relevant and therefore interesting and oh so much more valuable.
You may be wondering what has this got to do with BBWF. Big Data has voracious appetite. This is where a broadband service provider can come in. 3G is often too slow, and is still capped in most markets, while 4G is still only in its infancy, so most content consumed in the home over IP will come through a broadband provider.
This means that a Home gateway is about the only place almost all user interactions go through. The gateway is also the hub of the home network where in-home usages like a child streaming a film dozens upon dozens of times can be captured to help personalize a service (who doesn’t have a few worn out Pixar DVDs that always amaze by still being playable despite all the scratches).
Where almost all operators have fared badly with their ambitious content plans, often closing down channels they created, OTT is giving them a second chance, thanks to the central role of the home gateway. Companies that are exclusively in the Cloud will never get such a complete picture of home usage. Operators with coherent gateway strategies on the other hand will be best placed to harness Big Data by combining the cloud and the home network most effectively.
So at this year’s BBWF I’ll be looking out for companies that will enable my vision of the future. I’ll post something after the event, but I know I’ll look out at least for:
- ADB that has extensive tools for monitoring home network usage,
- Axiros that have championed and extend TR-069 to get it to carry more information than in the original spec,
- Broadpeak who has made me curious with their new nano-CDN technology,
- Cisco who’s new acquisition NDS have been championing Big Data for a while,
- SoftAtHome with a compelling hybrid CloudAtHome approach,
- Witbe and any other QoE companies that are monitoring retail devices.
See you there?
According to Oliver Johnson, CEO of Point Topic, Consumer Value Added Services (VAS) Revenues are to Triple to $420 Billion in 2020. Wow! Tripling in 10 years is a compound annual growth rate of about 14%.
Johnson used the following graphic during a presentation at CommunicAsia 2012 earlier this week:
Source Point Topic (CommunicAsia 2012)
Who wouldn’t want to operate within such an industry?
That got me thinking, who indeed?
Much of what makes up these VAS aren’t yet in the scope of global juggernauts Apple & Google. On the contrary, all seem to be very Network operator centric.
So why then are my friends at major European Telcos so gloomy?
Point Topic have looked at current VAS and projected them to 2020. That’s a good approach to get an idea of market size, but doesn’t show who’ll be selling the services by 2020 i.e. in an IP lifetime.
Let’s run through Point Topic’s 8 VAS:
1. IPTV – this may still be Telco’s exclusive hunting ground but as I just wrote in a white paper, IPTV is being complemented with OTT. By 2020 there will be no distinction between IPT & OTT. If Google and Apple take too long to get their TV acts together the Netflix’ of the world will have carved out a big piece of this pie for themselves. Otherwise for Telcos to stand a chance of staying on top of this market, they’ll need the support of regulators and crazy laws like ACTA to exterminate what’s left of Net Neutrality.
2. VoIP – again what could be construed as Telco hunting ground, is already dominated globally by the likes of Skype so isn’t voice is destined to become free? I asked Point Topic to explain why they see so much VoIP revenue in 2020. Oliver told me “VoIP currently has the largest share of fixed line consumer VAS & will still grow slowly (see chart).” So what about free VoIP? “While operators are offering free VoIP, it’s often only free to other VoIP connections and sometimes only to users on the same ISP. There are still going to be plenty of calls to mobile and standard fixed phones and along with those ISPs that do charge for VoIP as part of a bundle this still adds up to a pretty good revenue stream”.
3. Gaming – Gaming is classified as just another VAS, but this industry obeys its own complex rules. Most gaming industry pundits believe that the big editors like EA or Valve will lose out to more innovative smaller outfits. Operators have been trying to capture some of the value here for over a decade. I don’t see why they should be any more successful in the future than in the past.
4. Music downloads – I’m surprised that this market is still seen as existing by Point Topic. At the last party with dancing, that I went to, people asked for a Deezer connection to play their songs, rather than hooking up their iPhone. To justify downloading, the size of files must be large relative to available bandwidth. If there are say, stereoscopic 4k videos in 2020, then maybe video downloading will still exist, but I don’t see how downloading will remain relevant for sound files in 2020. So if this revenue is generated from streaming, then network operators might just scrounge the scraps, with the lion’s share of this market remaining with service providers like iTunes or Spotify.
So I asked Point Topic why they kept this segment until 2020. Oliver answered: “streaming will become more popular, but it can still be patchy. Unless you want to use your mobile bandwidth while out of reach of free WI-FI, or eat your much larger fixed allowance then just for efficiency’s sake, users will want to download once and share that file amongst their devices. Memory/disk space if just cheaper and more reliable than having to be in the cloud the whole time. In addition we still retain the desire to 'own' something, even if it's bits on your disk drive, having something to hand is more convenient and more desirable. Just look at the Megaupload case to see what can happen to your data if you trust it to someone else.”
That’s where I beg to differ, because I think connectivity will be so much better and even more ubiquitous in 2020.
5. Security – I have no doubt that there will be a gold rush on this market. Of course anyone selling spades will make a fortune, but beyond the obvious B2B market, the jury is still out as to whether the public at large will spend significant budget on remote sensors, cameras, and the like. If the segment were to include home automation, it might stand a better chance. But it’s still a level playing field so anyone could come out on top.
6. Home networks – this is a new frontier, which I’m excited about. People are in pain and we don’t even know how to start fixing their problems. Part of the solution will include more robust and simple networking technologies, some monitoring and helpdesk services, content discovery and DLNA approaches to in-house content sharing. But if home networking can’t be made easy very soon, it may never make it as a mass market, because the Cloud is already here...
7. File transfer / cloud – I would have guessed this would be the big one in a 2020 market. Watching Dropbox make an impact in both business and consumer segments in parallel shows that there is a clear demand here. In an 8-year window I could easily imagine the descendants of Dropbox taking a slice out of whatever I’m willing to pay for access to content. Amazon seams to believe in the link between hosting services and the content therein. The experts at Point Topic have plotted a line based on today’s typical file transfer service. Again I have no issue with the method to get to a market size, but this is an area where services in 8 years will be so very different, that it probably doesn’t mean much anymore.
8. Teleworking – Teleworking was always going to be so very important so very soon. The technology has actually been available for many years. The success or otherwise of teleworking will now be driven by what is socially and / or professionally acceptable in terms of behaviour and work ethics more than by any new service or technology. So I see no reason for the tiny size or the stakeholders of the Teleworking market to change over what is - for social change - a short period of time.
You can see Point Topic’s press release here.
Long version of the June 2012 Viaccess-Orca (now VO), Harmonic and Broadpeak White Paper on the technical challenges and business imperatives of OTT.