The home networking debate has existed for quite sometime. However, as new technologies emerge, such as adaptive rate streaming, standards become mainstream and broadband penetration reaches new heights, this topic is relevant now more than ever. This report illustrates the available choices and implications of alternate multi-screen video architectures.

We sat down with Editor John Moulding for his perspective on why this report breaks new ground on the topic of whole home video.

Tell us why this report, Supporting the ‘any screen, anywhere’ video consumer, was so ambitious on the topic of whole home video?

JM: This is a huge topic that encompasses the future of the home video network, the evolution of multi-platform TV strategies and the long-term evolution of TV delivery itself – looking at whether service providers are going to move from a position where they are married to a physical network to one when they could operate in the ‘cloud’ and deliver services to any home by becoming over-the-top broadband providers.

We wanted to get some informed opinion that reflected the support there is for home network centric and cloud centric approaches to multi-screen delivery. That meant we had to talk to a lot of people – over 20 interviews plus other primary input. We felt it was worth it for Videonet because our editorial focus is on the post-convergence TV experience, and a lot of this is definitely being shaped by the convergence of television, IP and the Internet.

After researching the topic in-depth, do you believe that offering whole home video is one of the key competitive challenges facing operators today?

JM: There is no question that making content available on all important television display screens, including those that are out of the direct control of Pay TV operators (like CE screens bought in retail) is a key competitive challenge. If platform operators do not meet consumer demand for multi-screen viewing around the home they could easily find themselves in the same place as channel owners who were too slow to respond to digital TV and have since struggled to cope with audience fragmentation. They could end up exposed and vulnerable to new competition.

Platform operators have had a great couple of decades and not surprisingly, there are a lot of people who want to eat their lunch. There is a whole ecosystem of online content providers and aggregators who want to gain the attention of consumers on CE screens using broadband and over-the-top delivery. The arrival of connected TV devices like connected televisions, set-top boxes and Blu-ray players makes it so much easier for them to target Pay TV subscribers with alternative content on the television itself – on the main living room TV and in second and third rooms.

Not many Pay TV operators are established as service providers on the PC and mobile and they need to make sure they are not left behind in the race for consumer attention there. I think it’s fair to assume that any successful over-the-top (OTT) service provider who builds an audience online, mainly via the PC/laptop, is going to try to leverage any brand loyalty they have on the TV as soon as they can (as soon as TVs are connected).

If consumers are being offered compelling media experiences, including the all-important catch-up content, on multiple screens in the home, and that is not coming from the Pay TV operator, then the operator is losing time with its customer and potentially revenues. It is handing business straight to alternative providers, the best of whom could grow into strong and permanent competitors. So this is really about holding on to existing customers, making sure they are watching Pay TV services as much as possible, and maintaining revenues as well as looking for new distribution and revenue opportunities.

Why is content security such an important factor when developing a whole home video strategy?

JM: When we talk about whole home video there is an assumption that it is a Pay TV operator who is taking responsibility for creating this kind of multi-room viewing environment. So that means the content includes subscription channels and very possibly exclusive sports and other premium and pay per view programming.

If it’s worth paying for it’s worth stealing and whole-home will just create a nightmare for operators if it exposes them to unauthorized copying and redistribution. Operators will have to invest in these capabilities through media servers (like a DVR) and probably by taking responsibility for home networking issues, with the call centre requirements that suggests. So the last thing they want to do is buy a shiny new bucket with a hole in the bottom.

The big challenge for content security is that Pay TV operators can no longer guarantee they have end-to-end control of the video delivery. If they are handing content into a DLNA-based home network the conditional access (CA) could give way to DTCP-IP link protection. The original CA used by the Pay TV operator may have to hand over to a DRM system to reach target CE devices like PCs or smart phones in the home. So they need security solutions that are very flexible (and where the handover can be achieved securely inside a customer premise device – like the media gateway server).

If operators are delivering content from the ‘cloud’ instead, and using OTT infrastructure to reach multiple screens in the home, they still need to prepare content for different screens with different DRM requirements. In this case, the right DRM for the end target device can be applied from the outset. So the emphasis in the content protection world seems to be shifting from protecting content end-to-end with a single CA/DRM to managing the wider range of security requirements platform operators are going to face. To an extent, the security vendors are starting to act like an interface, managing the subscriber and device views and entitlements but working with any content protection system needed to get content where it needs to go.

What was the most unexpected thing you learned about whole home video while writing the report?

JM: The extent to which the OTT, cloud-based approach is already being seriously considered by operators as an alternative approach to the server/ client whole home video architecture. There is clearly strong support for both approaches. As Tom Lookabaugh, CTO at Entropic Communications says in the report, both models have their champions and even their champions are keeping an eye on the evolution of the other model.

I suppose the surprise is that, given how few platform operators have well established multi-platform services that exploit online distribution, online video technology is being considered not only to reach consumers outside the home but for in-home multi-screen distribution as well.

We continue our conversation with John in Part 2 of this interview where we talk about revenue streams from whole home video, definition of cloud-based TV and both technology advancements and challenges. Stay tuned.

Post #2:  Can Traditional TV Operators Embrace OTT Video as a Service?

There is an assumption by many market pundits today that the service operators in the world of Internet TV services and that of traditional pay-TV are totally disjointed. We think this is rather too simplistic.

Just like the world of e-commerce in the early generations of Internet, the shift of consumption did not totally upend the value of existing brands and consumer loyalties. A few new players emerged for sure, but by and large, the brick and mortar brands have become just as prominent on the Internet as they are on Main Street – the power of branding transcends the medium.

When you apply this logic to video, the service operators that make the leap to multi-screen delivery can indeed be the same names that dominate the pay-TV market in cable, satellite and IPTV today. They have the content, the subscriber relationships and the scale to make service delivery compelling whatever the physical distribution network, and in many cases they also provide Internet connectivity.

The challenge for existing operators is that this requires a fundamental shift in the way they think. Progressive digital TV operators may have to embrace novel technologies that have been designed to effectively scale and solve IP video issues and apply them over their delivery networks. By integrating OTT and adaptive rate streaming technology with pay-TV services, operators can enhance ARPU, subscriber loyalty and lure incremental advertising dollars.

This convergence of technologies also must encompass a proactive revenue protection and enhancement approach that enables digital TV operators to cast a much wider net with their service offerings. This shifts the central value proposition for the digital video enterprise beyond that of content protection alone, towards the broader perspective of revenue security.

Download our white paper, Pay-TV at an Inflection Point, and let us know if you agree.

• Flexibility in wiring infrastructure (CAT5/6, cable or telephone transmission)
• Fully digital quality distribution and display, including HD support
• Common components with in-room broadband access
• True interactive program guide and guest service utility displays
• Broad choice of middleware, video-on-demand (VOD) and in-room client technologies.  

When combined with earlier release windows that hotels enjoy, IPTV also allows network operators to take advantage of state-of-the-art digital TV security that enables licensing of on-demand content, including and most importantly HD.

Hotels must deal with more stringent content protection requirements to gain access and keep the rights to offer premium movie titles. In fact, the MPAA recently released its 57-page “Content Security Best Practices” document that provides 25 dimensions of content security across three areas. 

We have been developing hospitality security solutions and working with our broad partner ecosystem since 2004. In partnership with our hospitality resellers, including Guest-Tek, InfoValue and Tangerine Global, VCAS for IPTV is operational in many hospitality deployments around the world. 

We will have a team at HITEC, the world’s largest hospitality technology show, June 21-25 in Orlando to discuss how VCAS for IPTV can support a wide range of hospitality applications. Please contact us to schedule a meeting at the show so we can discuss how VCAS for IPTV can secure your:

• VOD Services
• Wholesale IP Broadcast Services
• DTH Broadcast Services 
• Additional Local Broadcast and VOD Encryption Services
• Expanded Capacity and Redundancy

Download a more detailed overview of our VCAS for IPTV has been optimized for a range of hospitality applications.

See you in Orlando!

We are very proud of our continued growth in IPTV. We feel we have been able to keep this top spot for several reasons. 1) We have built a very strong partner ecosystem that includes global and regional system integrators, which allows each vendor to focus on what they do best 2) We offer effective security solutions that address changing business needs and gives operators the freedom and flexibility to growth their businesses.

Since launching VCAS 3, what we’re calling the next generation of digital TV security solutions, we have received tremendous response on how we support operators’ “cash registers” that enable them to grow their subscriber base and add revenue streams. We are able to create value for our customers by understanding the complex business issues for multi-screen video delivery and delivering solutions way beyond content protection. 

You can see some examples of this from our library of white papers and other resources.

This recognition also reflects the dedication of our customer care team to respond to the unique needs of our customers. 

Thanks to everyone that has contributed to this noteworthy feat!

Our assessment is that the new platform is one facet of a seismic shift in the cable industry that has been long dominated by few technology choices and closed ecosystems. IP-based technologies have now taken center stage as cable MSOs are recognizing the cost and business model advantages of delivering video through a new class of flexible, efficient and highly adaptable service platform.

Cable operators – and their subscribers – are ultimately going to benefit from a new freedom to choose the latest technologies as they take their business forward. IP distribution in the core network will lead inexorably to IP distribution to the consumer, who will be able to take advantage of new advanced customer premise equipment for subscription services to the big screen – and have the opportunity to access parallel Internet TV or OTT services using open adaptive rate streaming technologies.

Comcast Media Center’s CEO Gary Traver put it this way, “Fiber delivery has the bandwidth and resiliency to deliver the large number of video services and encoding formats that can help MSOs compete in today’s environment. The HITS fiber-based solution offers a reliable and potentially cost-effective content delivery method that an MSO can leverage in their long-term business strategy to add future services and revenue streams. ”

What a change from the view of IPTV just a few years ago! IP is not just for telcos that need to defend their subscriber base from the triple play ambitions of cable MSOs. This is surely a confirmation of IP as a central technology in all modern digital TV delivery systems.

Several years back, we predicted that all video delivery systems will be simply be referred to as digital TV, and that IP will underpin almost every aspect regardless of whether it is a telco TV service or a hybrid satellite/broadband combination. 

With Comcast Media Center’s announcement, this is truer than ever.

We are very proud to be a part of this deployment and be able to work with our partner, Harmonic. This is not only an important development for us, but for the industry.

Do you feel we are overstating the significance of this industry shift? Let us know.

The conversations were far removed from the hype that has been elsewhere, but rather focused on how service providers can capitalize on advanced OTT technologies to enable new streams of business. 

Steve Christian recently answered questions posed by CSI Editor Goran Nastic on monetizing video on demand (VoD) content that portrays Verimatrix’s perspective on the opportunity of OTT. For the resulting article, click here. 

Q. Monetisation issues of VoD have been around for a while now and given that all evidence suggests that consumers love the service and value it, why has this proved to be such a challenge?

A. The challenge is that some operators have created the consumer expectation of free content and now they are having a hard time putting the “genie back in the bottle” when it comes to charging a fee for that content. It really puts into question the first mover advantage efforts by OTT providers to offer free content, as it appears they have potentially cannibalized their own long-term revenue streams. The question is if they can successfully extract money from existing and/or new viewers.

History confirms that consumers are willing to pay for something that satisfies their threshold of quality, convenience and cost. At this year’s OTTcon, where we presented, the reoccurring theme was how operators can balance the quality-convenience-cost equation. 

• Quality – quality of the overall experience – not just picture quality – including responsiveness and reliability.
• Convenience – how easy is it to browse content, how to conduct channel up & down, how many clicks are required to start a video, how many channels are aggregated in a single location, etc.
• Costs – what is the right price point and fee model, how to price content consumed on different devices, etc. 

People have a high tolerance for intermittent quality if something is free. However if you start charging for the same content, the balance of these dimensions needs to be maintained at a higher level. People will expect an Internet service to function like a cable service – or perhaps better!

Q. Given the widespread availability of free VoD, is there now a risk that the window of opportunity for making money is quite small? 

A. I think it is important to debunk the assumption that content owners are not making money on the content shown on VoD sites. The revenue streams from more traditional viewing forms, like DVDs, are still in operation. 

I feel the availability of free content will actually shrink when operators start finding the right quality-convenience-cost ratio. 

Q. How big is the opportunity given the right strategies? (Parks Associates, for example, expects 38% of free VoD streams could potentially be monetised by 2012)

A. What’s the alternative? Total industry collapse?  I feel it is inevitable that this content will be more effectively monetized as time goes on. So, the opportunity is huge. 

Another common theory – that I believe is still very much only a theory – is that consumers are willing to cancel their pay-TV subscriptions and rely on fee online entertainment options. 

Goldman Sachs released an interesting report on online video (titled “Broadband 100″) that found while the consumption of online video is increasing steadily, it is not cutting into traditional pay-TV viewing. To put it in perspective, the report cites that consumer usage of online video is surging, with time spent currently growing over 60% yoy and at a 40% CAGR since 2007. This is set against a backdrop of more than 75% growth in online video traffic as measured in bits. Yet consumer usage of online video still represents only about five minutes per day for an average consumer.  The report goes on to say that professional long-form content is the fastest growing and most easily monetized. 

Q. What are, in your opinion, the top  ways that broadcasters and/or payTV operators can monetise VoD? 

A. For streaming – yes, the existing methods are advertising-based, subscription or transactional. 

For a download service, there is also the possibility of electronic sell-through – digital delivery of a file. Consumers may pay more for this option because it is potentially higher quality, they can own it forever, and view it in different ways and on different devices. Plus once it is downloaded, you do not need to be connected to the Internet each time you want to view it.

 Q. Assuming VoD is monetised, would you expect advertising, subscription or PPV models to dominate and why?

A. We expect the subscription or transaction model would be more successful than advertising, which we are already seeing with Hulu and Joost talking about a fee-based service. 

Ad-based content has been quite successful for Hulu, but remember that they reach less than 1% of the total broadcast audience, and insert less than one-quarter of the ad time compared to a regular broadcast (in fact, they’ve promised to only show 4-5 ads for an hour show). Even though they can charge a respectable amount for each ad, the total amount of revenue is much lower than traditional broadcast. The overall pot is substantially smaller. This points the way to fee-based revenue models.

 Q. Are there any significant differences between cable, satellite and IPTV platforms that might favour one over another in monetising VoD? 

A. We strongly feel that all operators are headed towards a hybrid network of some description and IP-based technologies are the common thread, which creates an interactive, two-way environment. 

IPTV providers should therefore have an advantage because their networks are intrinsically based on IP-based networks. The case can also be made for the cable operators that own both the broadband and TV pipes into a subscriber’s home, which provide more control over quality of experience. Satellite operators on the other hand need to have a broadband partner to offer the connectivity to take full advantage of a rich VoD service. 

Q. Can on-demand content available on the Web be brought to the living-room TV set in such a way as to complement payTV operators’ VoD offerings rather than bypass them?

A. The Holy Grail seems to be the capability to offer OTT content into the living room – to take center stage for family entertainment. The Verimatrix view is that traditional operators are well positioned to achieve this goal. They clearly already have the premier position on the living room TV and are now experimenting with how to take their TV services beyond the living room and capture viewer’s attention on other devices – PC, mobile, etc. 

Other approaches we’ve seen are to truly blend the TV and Web experiences together. Operators can choose to make this happen on the main TV (such as calling up an actor’s Twitter feed while watching his program) or bring in other devices to provide interactivity (it is become more normal for viewers to watch TV while working on their connected laptop). The market is so wide open at this point that there’s no 100% right answer.

What struck me, though, was a feeling that this characteristic phenomenon of a capitalist economy, which is usually associated with innovation, may actually stifle innovation to some extent. What I mean is that if one company has a good idea and tries to add a new feature, new service or a new business model to its system, it is very likely that they need to line up too many of the proverbial ducks in a row. A service provider ordering the end-to-end system may have enough power (or money) to make this happen. Most of the individual players may not have the time and resources to incorporate a speculative feature. 

Case in point, a service provider wants to repackage a set of episodes on a network DVR to a season and offer it again for purchase or rent; it may require cooperation of the storefront vendor, middleware, CA/DRM to re-encrypt the content, content management to keep track of a new asset, user interface, billing system, etc. Not to mention extending the distribution rights obtained from the studio. How can we optimize this process, make it more agile and responsive? 

The Paths to OTT

Another aspect of the conference that perked up my mind was the concept of over-the-top or OTT. What is it, really? When you ask the consumer, it may mean getting content from any source rather than a single TV service provider. It may also mean watching the content on a PC or even more importantly, getting it for free.

 A service provider may be thinking about reaching its subscribers on any device whether the user may be at home, traveling or even outside the provider’s managed network. Or even about reaching a new customer beyond the reach of his fixed network. And the studio may even be thinking about bypassing the service or network operator altogether. A very interesting and intellectually stimulating puzzle, indeed. 

But the bottom line is how is anybody going to make any money and who is going to benefit at the end. Is it like the buzz of the “long tail” content from several years ago? I did not hear it mentioned a single time at the conference. So what are the enablers of a successful OTT strategy? How does one monetize this new opportunity? I personally don’t want to go to too many web sites to get my content, set up numerous accounts, receive multiple bills, learn different user interfaces, set up my preference over and over … you get my point. 

Seems to me that a relatively easy way to deliver OTT is to extend an existing service to new devices and reach existing subscribers wherever they happen to be. This approach represents only incremental cost, reuse of existing content, adding value to the existing brand, extending the current relationship with the subscriber and ultimately increasing or at least maintaining revenue. 

Don’t take me wrong; there will be successful OTT services outside of the traditional service providers. As an example, my family enjoys the Netflix on-line service. But even this one started as an extension of another business strategy rather than a pure OTT, even though it may end up eliminating the mailing of physical DVDs altogether. (By the way, I did end up signing up for a higher tier broadband service indirectly paying for the Netflix service to my DSL provider.) 

This is why Verimatrix has extended content protection services to PCs and smart phones, added support for adaptive rate streaming and provides a multi-rights head-end, shielding the service operator from the complexity of multiple device types, each possibly requiring a different CA or DRM system. These are all necessary enablers of a successful OTT strategy. 

Home Networking Standards and Psychology

Home networking and sharing content among devices in the home in particular is another topic that excites me. It started as sharing content between a DVR and one or more set-top boxes or PCs, sometimes called whole-home DVR or multi-room DVR. This scenario was partially driven by the fact that content is already present in the home on the DVR and the destination devices are compatible as far content format and resolution are concerned. 

Such architecture has been standardized to some extent by UPnP and DLNA and even OCAP-HN. But as one starts adding devices requiring different file formats, video codecs and resolutions, this architecture may no longer be sufficient. The lack of remote access to home content is another serious limitation. As bandwidth is becoming ubiquitous, it will become easier to stream transcoded content in the appropriate format, optimized for the destination device directly from the head-end. 

DLNA may still be used to discover the content in the home but the rights and the device-optimized content may be reacquired for the best user experience. Thus DTCP-IP may not be the only way to protect content in the home. By taking advantage of the more flexible way of signaling content protection and other content attributes using UPnP content discovery services, allows the destination device to copy the content locally, request its own rights and access keys or request a more suitable instance of the content altogether from the service provider. 

Psychology of ownership plays a role here as well, but I believe that over time consumers will become comfortable with the idea of owning rights to content rather than owning the content itself in the DVD form or the digital form. The ultimate challenge is to make this complexity completely transparent to the end user – “search, select and play” nothing more.   

I look forward to continuing these conversations at NAB. See you in Vegas.

Gotta go – last call for boarding!

What our work with ABS-CBN most profoundly represents is the nature of the transitions underway in the pay-TV world globally. Not everyone may know of the global diaspora and intense viewer loyalty that makes Filipino TV content a hot product.

Set against the background of a transition to digital TV standards even in developing markets, ABS-CBN has taken on the challenge of global multi-network content availability that optimizes revenue sources through a single security head-end.  And they have chosen VCAS cardless solutions to address this challenge – emphasizing that the choice is driven by a shared vision of how operators must address revenue security not only for IP delivery, but also in the traditional satellite and cable broadcast world as well.

Congratulations to everyone that made this landmark deployment a success!

Please come see us this week at the Philippines Cable Television Show (PCTA), where we will have VCAS for DVB and VCAS for IPTV security solutions on display.

But even as we trip over the potholes, perhaps it’s important to focus on the positives, which is truly important for a company like ours that stands to gain so much from the dramatic moves towards an IP infrastructure for our information and entertainment content. Luckily the show was filled with senior-level execs who were conducting due diligence in order to make some major decisions as they build their pay-TV platforms.

Let’s see at next year’s show whether those potholes get filled in.

Euro50

Our warmest congratulations goes to Per-Ola Wester of TeliaSonera for his place on the Euro50 list by Digital TV Europe. Per-Ola has been an instrumental leader of the hugely successful IPTV system deployment at TeliaSonera. He has also been shortlisted for the “Technology Leader” of the year award.

TeliaSonera is a notable customer for Verimatrix not only due to the highly effective technology integration that it represents, but also its expertly managed commercial growth. It is a service that now ranks amongst the  top tier of the industry and shows no sign of slowing down. In fact, concepts that Per-Ola and his team are exploring are likely to lead the way in demonstrating how the pay-TV world can expand its frontiers and deliver a truly compelling consumer experience.

Congratulations are also due to our close partners in this endeavour including Motorola, Tandberg and Edgeware.

The awards will be presented in London at the Euro50 Awards Dinner on November 17th during  the Digital TV World Summit. Stay tuned . . .

UPDATE: Per-Ola was in fact selected as the Technology Leader at the Euro50 Awards ceremony. We strongly feel that concepts Per-Ola and his team are exploring at TeliaSonera are likely to lead the way in demonstrating how the pay-TV world can expand its frontiers and deliver a truly compelling consumer experience. 

Congratulations!