Just this month, I am proud to say we hit another major milestone that reflects as much on the entire digital video industry, as it does on Verimatrix. We celebrated reaching 500+ pay-TV operator customers and securing more than 20 million screens. (For additional milestones, read about our global number one ranking in Content Protection/DRM in MRG’s IPTV Market Leader report – for 5 1/2 consecutive  years!)

A large part of our tremendous growth has been due to the pay-TV planets colliding. Back in 2006, virtually all of our customers were delivering green field IPTV services over managed networks. Fast forward six years, our heritage in IP-based security techniques has placed Verimatrix in the center of this collision.

Cable and satellite providers are taking advantage of IP networks for two-way communication – over both managed and unmanaged (OTT) networks.  IPTV operators are also turning to Internet-based OTT video to enable a compelling multi-screen experience. And we are finding that increasingly even “pure play” OTT video providers need to meet the same content security requirements for premium video as the traditional operators do (see our latest white paper, Content Security Requirements for Multi-Screen Video Services.) Of course, there remain tens of thousands of analog operators that are still transitioning to digital (India’s Phase I digitization this year presents a wealth of opportunities.)

Our cable and satellite (DVB) customer base increased 100% in 2011, and we’ve had a 500% growth in secure OTT video services. Based on feedback from customers, particularly our DVB customers, they feel more confident that our VCAS solutions will help them extend into multi-network, multi-screen video services more efficiently.

Additional proof of our position in the market can be found in our 3-Dimensional Security approach, which we introduced more than three years ago: Flexible layers of protection techniques that address evolving business needs and revenue threats. In other words, any screen over any network to meet any threat. This clearly still rings true today.

Since celebrating this milestone was so much fun, everyone is focused on reaching the next one!

On his Copyright and Technology blog, he describes the objective of this paper as an effort “to gather actual security requirements from major content owners and describe them in a single document. The intent is to help pay-TV operators and other video service providers that are looking to launch multi-screen video services, so that they know what to expect and avoid any unpleasant surprises with regard to security requirements when licensing content to offer through their services.”

Bill summarizes one of the major findings while developing these content security guidelines. “Life for pay-TV operators used to be relatively simple: adopt a conditional access (CA) technology that was equally effective in thwarting signal theft as it was in thwarting content piracy. Economic and security goals were aligned between operators and copyright owners.  Now life is considerably more complicated, as operators have to support home networks and branch out into mobile services. Content security requirements are more complicated as well.”

Click here to read the entire post from Bill’s Copyright and Technology blog. Download the paper and let us know if you agree with the content security guidelines for multi-screen video services.

To help navigate this landscape and to better serve our customers and the market, we helped develop a paper that will serve as a content licensing and security guide for video service providers planning multi-network, multi-screen services. We teamed with Bill Rosenblatt, founder of GiantSteps Media Technology Strategies, who has been steeped in digital rights and content management technologies for many years and has served as technical expert in litigation and public policy initiatives related to digital copyright.

Basically, he has the studio relationships, technical and legal chops and objective perspective to summarize available information and draw conclusions that are valuable to service providers.

We believe this is the most comprehensive guide available today on how the approach to multi-screen and TV Everywhere types of services relate to traditional licensing and security rules. In general, we found that practical security requirements for over-the-top (OTT) services and portable devices are becoming more analogous to traditional video delivery as the industry matures, meaning the requirements are becoming more stringent.

It is HD content, delivered to any device, that has become primary benchmark in licensing terms and security requirements. The physical media delivery regime for HD was fundamentally grounded in the AACS protection model – now the application of similar principles and in the digital delivery domain is part of the background, although we are seeing trends that this is changing.

In fact, the content of this first version of the paper highlights areas – licensing attributes, new security techniques, release windows, usage rules and studio policies – that are most in flux and provides signposts on where requirements are headed. Of course, market dynamics will never stop shifting. Content owners will attempt to influence them through their licensing deals, and content protection requirements are among the most important licensing terms.  When appropriate, we will update our conclusions over time and use future versions of the paper as a vehicle for updates and elaborations as the industry evolves.

Whether you are a traditional managed-network operator, an OTT video startup, or an ecosystem partner developing devices and apps for premium video delivery, this paper is a must-read to gain a better understanding of content and revenue security in the changing world of multi-screen services.

If you are facing some of these choices in launching new breeds of services, please take a minute to download this paper and let us know what you think. We look forward to continuing this discussion!

As part of its Awards coverage, Digital TV Europe asked Tom to reflect on his accomplishments in 2011, and provide his vision for 2012. Here is an excerpt of the interview.

1. What for you were the professional highlights of the last year?

We delivered a number of multi-network, multi-screen projects to our customers, and we completed the acquisition of an excellent technology company (Comvenient, a DVB conditional access specialist based in Munich). Plus, our company passed an important milestone as we added our 500th operator customer.

2. What was the year’s most significant wider industry development in your opinion?

The embrace of multi-screen delivery by pay-TV operators.  It’s hard to believe that the iPad was launched less than two years ago, when it seems that every pay-TV operator is now racing to support tablets along with mobile phones, Blu-ray players and connected TVs.

3. What are your goals for next year?

The complexity of multi-network, multi-screen systems poses a huge challenge for pay-TV operators. We have a great solution to abstract away much of the complexity and related cost. In 2012, our plan is to take a leading market position for these rollouts.

4. What do you think are the main challenges and opportunities facing the industry over the next year?

Challenges are global economic concerns and the complexity of multi-screen systems. Opportunities are the half-completed transition from analog to digital networks, and the fact that pay-TV will be ascendant as the legacy advertising model erodes.

5. What would have been your career of choice if you had not worked in the digital TV/media industry?

There are other industries?  I’m very intrigued by biotech and the medical advances that are being driven by an aging population and new genetic advances.

6. Which individual in the public eye do you most admire and why?

Well, I certainly appreciate the unique entrepreneurial spirit of Steve Jobs.  To start a business in the garage and make it the most valuable company in the world, to return from exile, create a powerful culture and brand – that’s quite a life story.

We laid out our product roadmap to show how we are meeting the needs of both our DVB and IPTV customers that are broadening their services to hybrid DVB-IP and multi-screen delivery. We haven’t received an RFP in the last 12 months that didn’t include some multi-network, multi-screen component. Even if customers are not ready to make that type of network transition now, they certainly want to understand their future options.

The Summit also provided a valuable forum to exchange views with experts and industry peers on the state of revenue security, potential threats and the piracy scene, and what’s next in the pay-TV marketplace.

We brought in two guest speakers to provide a broader view: Alan Constant and Steve Bjuvgard of Imediaco, a firm that provides technical and strategic consulting services across the entire range of media distribution technologies with particular expertise in video security. Alan offered an insightful perspective on the next 10 years of pay TV, by examining the previous 10 years. His convergence prediction is that DTH will be initially replaced by some form of hybrid network and then OTT on unmanaged networks.

Steve dug deep into piracy issues with some regional case study examples. He deftly broke down the status of piracy, along with the regulatory and legal enforcement environments in Asia and the Middle East. For example, in some Middle Eastern countries, it is estimated that up to 40% of urban households accessing pay-TV signals are unauthorized – meaning non-paying users.

Fresh from IBC, I also had some reflections to share. The most obvious was the lack of 3D “noise” on the show floor when compared to 2010. We saw only modest advancements in the positioning and development of 3D solutions and services. The 3D hype was soundly replaced by multi-screen services – although definitions differ, it is clearly the evolution of network convergence and it is no longer considered “new and mysterious” as it has been in years past. And it is worth pointing out that the falling prices of DVB set-tops are opening new markets, particularly in emerging regions.

Of course, operators are making decisions on the best ways to secure assets on these different delivery networks. As a validation of the software-based security approach, we saw even the legacy smartcard providers announce their software-based, multi-screen solutions. Of course, the other piece to the multi-network, multi-screen puzzle is content rights, which we find are dragging out these next-generation implementations.

We are working on some ground-breaking research regarding content rights across different networks and devices, so stay tuned.

All in all, the attendees at the EMEA Autumn Summit were a very interesting and dynamic group, representing both technical and business disciplines, with very ambitious and advanced business plans.  The speakers shared the difficulties of combatting piracy, not only through technical means but also through judicial, commercial, and creative mechanisms.

Of course, fun was had by all during our “extracurricular activities,” such as the visit to the Erdinger brewery with an extended tour of its facilities, where we learned everything worth knowing about beer making, and the Oktoberfest event itself, which was a totally OTT event (pun intended).

We look forward to hosting more events in 2012. We would love to get your input on what you’d like to hear from Verimatrix. Leave a comment and let us know.

So what was the topic of this year’s biggest digital TV conference? Well, actually, I was disappointed because it was multi-screen or any screen or something along those lines. But why is it disappointing you ask? Because we have been promoting this concept for years! And specifically securing premium pay TV content to all screens that subscribers find useful. In reality, I am really quite pleased that the industry finally caught up with our innovative security approach.

Let me offer you my observation about at least one of the less obvious challenges related to delivering rich combinations of TV services to all these connected TVs and portable platforms.  The challenge is reproducing many aspects of the live TV experience in a scalable fashion. Therefore, we are firm believers that, as this market matures, Internet TV services will naturally need a combined solution for both on-demand and live consumption.

None of the critical adaptive bitrate streaming protocols out there, specifically Smooth Streaming and HTTP Live Streaming (HLS), have been defined in a way that makes it easy to support tens of thousands of concurrent subscribers watching a major live event such as the soccer World Cup in real time.

When compared to the well-honed DVB broadcast technologies, some of the key issues of practical concern, like managing semi-synchronized key changes and addressing revenue leakage through re-broadcasting of various kinds, are not yet developed to scale in a streaming environment.

Addressing these kinds of issues takes Internet TV to the commercial level necessary to truly reproduce the pay-TV service paradigm–and associated revenue models – with which we are all familiar. This is where our experience from the IPTV and DVB worlds comes in really handy; where content is distributed to millions of subscribers while managing device entitlement, device security and frequent real-time rights changes.

If this makes you wonder if your current or planned multi-screen service scales beyond just a proof of concept or a friendly trial, give us a call. We are happy to show you how our VCAS for Internet solves this problem without installing a large number of servers in your head-end.

And don’t forget to stop by an old-fashioned cheese farm while visiting Gouda.

Steve Christian was recently featured on the increasingly popular Pay OTT TV Blog from Tvinici, which was highlighted at IBC 2011. 

Content security is one of the most complex issues associated with OTT TV.

We have asked Steve Christian, VP Marketing at Verimatrix, to give us the DRM / Conditional Access perspective of OTT TV (Verimatrix provides software-based security solutions for service providers).

Steve, What do you think are the main reasons behind pay TV operators expanding into the Over-the-Top Space?

A key driver is to be able to cover the bases of additional screens in the home, which from a defensive perspective would gather eyeballs of competitive or niche services. From a more positive standpoint this raises the competitive bar for other pay-TV operators in the same franchise area or region. Another reason is to be able to expand the geographic reach of the operator’s service brand beyond the existing subscriber pool, potentially to a worldwide audience.

What are the greatest challenges associated with content protection in the pay-OTT space?

The greatest challenge is awareness of content protection issues at a high level, and the details of how this must be supported at fine grain level.

To read the complete Q&A, please visit the Pay OTT Blog.

The targeted price point of a premium video-on-demand (VOD) movie – $30–is the center of the debate. The current discussion compares the success of one expensive VOD movie to cheap movie theater tickets. Cinema owners and movie directors have voiced their concerns about the shift in content consumption, with cinema owners noting that it is impossible to reliably predict consumer behavior. If it was that easy, every Hollywood title would be a blockbuster.

Early release windows, however, may provide a bit of safety net. I think that it will be an interesting offer for, initially, a small percentage of consumers. While the rate of adoption is questionable, it’s obvious to me that movie theaters won’t disappear any time soon and that electronic distribution will continue to grow.

The studios certainly have conducted their own research, and it is evident that they have high enough hopes to shake up the traditional models and to support premium VOD movies. From our recent press briefings and Chicago’s CableNET show, I also see that the media is interested and closely monitoring this topic.

But perhaps the most relevant indicator has arisen in our recent discussions with operators. They are evaluating this opportunity very seriously and investing time and resources in the digital watermarking requirement. This may be because even a small uptake by consumers will translate into a relevant chunk of revenue.

One technically interesting point for me is that operators often prefer server-side integration of watermarking. The tradeoff is whether the integration is done in the client device, or in the video server before delivery. For example, while our client-based VideoMark watermarking solution has the advantage of distributed processing without head-end integration, our new server-side StreamMark solution does not require modifications to client devices.

Fortunately we began researching and investing in watermarking years ago.  During the process, what we’ve discovered is that watermarking in the compressed domain means adding a server-side integration option; even if it means re-inventing the technology and taking a new look at digital watermarking.

The targeted modification of video pixels is too slow when we consider the complex coding of compression schemes like H.264. Therefore, we have focused specifically on enabling watermarking in the compressed domain by making modifications that can be expressed efficiently in the compressed bitstream and applied while the content is delivered.

Efficiency is key because the delivery infrastructure is all about delivering the maximum number of parallel streams. If we have to introduce overhead to it, it is crucial that it is small and fast. As underlying watermarking algorithms and requirements have matured, the ease of integration now is critical to broad adoption of digital watermarking.

The development will remain interesting because it’s an experiment on the technical front as well as for consumer behavior and I am sure there will be more progress to be reported in the future.

For more information on StreamMark, you can watch the video on ScreenPlays or download our white paper, “Integrated Watermarking Creates More Durable Pay-TV Businesses.”

I’d argue the biggest impediment to perfecting these apps is content. The biggest impediment to gaining the rights to content is content security. And who already has access to high-quality content and conditional access (CA) / digital rights management (DRM) systems in place? Digital TV operators. We believe the cable, satellite and IPTV operators that already have the rights to broadcast premium content are in the cat bird seat to offer the best live mobile TV experience.

The demand is clear. According to Sandvine, real-time entertainment, including video streaming, now accounts for about 43% of North American Internet traffic, up from 10% in 2008! And for the first time in history, the number of households paying for TV subscriptions is falling, in part due to the rise of Internet TV and over-the-top (OTT) services.

The technology is finally catching up to this demand when you consider what adaptive rate streaming can now enable.

Now, in this new OTT world, the issue of content rights is complicated. Take companies like Ivi and FilmOn.com for example. They have developed technology that captures over-the-air broadcast signals and streams them to mobile devices – without consent from the networks.

Clearly these broadcasters are not thrilled with the so-called loophole that they found in the U.S. Copyright Act. Both of these companies are already in an embattled legal fight with content owners to see if they have the right to do this. According to some attorneys, the law is on the side of the networks.

We recently launched our ViewRight LIVE app in iTunes, which enables secure distribution of premium pay-TV services via WiFi and mobile wireless networks – of live TV. The app provides subscriber/device registration and device-level authentication. ViewRight LIVE also allows operators to customize and brand their mobile TV channel to match the look and feel of their traditional channels.

So with the content rights, technology infrastructure and now the security available to enable a superior live mobile TV experience, digital TV operators have a tremendous opportunity. I’d say it is better to beat fledging online TV operators in the marketplace rather than the courtroom.

What are your thoughts?

Based on some R&D and plenty of customer feedback, we feel Verimatrix is inherently well-positioned to drive the gathering and tracking of customer viewing information to help our operator customers achieve their larger business goals. Our revenue security solutions are already present at the device level to transparently – and securely – capture the critical real-time subscriber information needed to help drive an enhanced user experience.

Imagine what operators can do with a fine grain picture of who is watching what content, on what devices it is being watched, and when and where these devices are used. With such a picture, they can better determine the “why.” But it’s equally clear that all this data must be protected with an adequate security envelope.

At IBC this year, we sat down with Ben Schwarz to discuss this concept of “real-time subscriber intelligence.”  He has written about it in Broadband TV News and called it a humbling “why on earth I hadn’t I thought of that?” moment.  He has articulately described how Verimatrix technology would fit with an existing pay-TV ecosystem – alongside test & monitoring solutions as well as engine recommendation systems. Check it out and see if you agree.

We realize that the concept of gathering subscriber usage data is not new. However, with the advent of TV Everywhere services and instant gratification born through social media outlets, operators need to think about subscriber behavior and usage data more intelligently.

A cost-conscious and practical approach to make real-time subscriber data a reality is to leverage existing infrastructure assets from known and trusted partners that are already enabling next-generation TV services.

According to Colin Dixon of TDG, “Ensuring the security and privacy of sensitive consumer data is paramount in this equation. As a result, the infrastructure required to for gathering and delivering data on what customers watch and when must embody this reality. Verimatrix has been widely entrusted with maintaining the security of pay content and the integrity of rights information – and is therefore in a good position to extend this type of service to operational data.”

Download our white paper on the topic: “Arming Digital TV Operators with Real-Time Subscriber Behavior and Usage Data” to learn how operators can benefit.

This concept will continue to develop, so stay tuned.