We tackle the drivers behind whole home video, current definitions of “cloud-based TV” and the technical challenges that operators still need to overcome to meet consumers’ expectations.

You can find the first interview here. 

Do you feel that developing new revenue streams is the main issue driving operators to offer whole home video services?  

JM: The key requirement is to protect the revenue streams they already have. We are about to enter a very disruptive period in television because convergence is finally happening and the wall between Internet entertainment and television entertainment is starting to crumble. Pay TV operators have to keep their younger audiences fully engaged or risk losing them, and that means giving them the content they want, when they want it and where they want it.

For their customer base as a whole, surely the best way to counter the threat of disintermediation from OTT providers is for Pay TV operators to play to their strengths and deliver their great, compelling broadcast and on-demand services (including premium sports and the best kids and nature channels) on every television. If your teenage child can’t watch that content in their bedroom then they are probably watching a terrestrial free-to-air service instead, going to the web with their PC or playing on a games console. I suppose they might do some homework if things get really bad! The key is to keep them ‘on platform.’

There is evidence that people will pay for whole home video services like multiroom DVR. It is not so clear that people will pay extra to watch their Pay TV services on their PC and it seems to be generally accepted that ‘TV Everywhere’ type services will wrap the online viewing into a bundle with the television subscription. But we spoke to one analyst in the report – Jayant Dasari at Parks Associates – who felt operators could eventually monetize this additional distribution. The example he gave was allowing a customer to watch online free with two devices but charging for access onto a third device.

What is the current definition of “cloud-based” TV services?

JM: It is too early for there to be a defacto standard definition for cloud-based TV. Some commentators refer to the cloud as any network storage and therefore talk about a managed operator cloud (like the headend used to deliver a managed telco IPTV service) and about an unmanaged cloud, which is the Internet. 

The most accepted definition of ‘cloud TV’ today, based on our research, equates it to Internet delivered television services (which could be on-demand or linear). So it means services that harness OTT video infrastructure and protocols.

People are also starting to differentiate the unmanaged Internet from the managed Internet because potentially TV service providers can become CDNs and start providing themselves with some QoS guarantees between the web video servers and the consumer. But that all falls into ‘cloud-based TV’.  

What have you found to be the most significant recent technological developments in whole home video? What are the tough technical challenges that operators still need to overcome to support a satisfactory experience?

JM: We can’t ignore the impact that DLNA seems to be having. Almost anyone you talk to involved in customer premise equipment has this name on their lips. Consumers want their Pay TV services in multiple rooms, the Pay TV industry is looking for ways to achieve this at prices that appeal to the mass-market and there is an increasing emphasis on media gateways feeding thin clients. DLNA can enable different devices to work together, whether they are coming from the Pay TV or the retail CE world.

The reliability of the physical home network itself is crucial. Multimedia over Coax Alliance (MoCA) seems to be making strong progress with multiroom services and they claim this is because of their superior reliability compared to wireless or home power cable solutions. Once you start offering whole home video solutions, the Pay TV operator has to take responsibility for that video network so Quality of Service (QoS) is crucial. Some people think media gateways, like a DVR, have an important role to play in managing resources and assuring the customer experience across the home network.

You can view the “Supporting the ‘any screen, anywhere’ video consumer,” report in its entirety on the Videonet site.

As the logic and variety of options are outlined on the Project Canvas web site, offering security mechanisms have clearly been identified as a key technology for Canvas devices. Even in this new video delivery age, a strong core security platform provides the essential support for revenue generating services and complements the fundamental free-to-air and catch-up services central to the Canvas vision. This partnership between commercial pay-TV services and traditional public broadcasting is a healthy example of how common platforms can benefit the industry and the consumer.

We have demonstrated our commercial developments of Marlin Broadband (Marlin BB) on a number of occasions, most prominently at IBC 2009 and IPTV World Forum events. In addition, we have incorporated Marlin support within our MultiRights DRM framework as an important complement to our globally deployed VCAS core technology.

As we move towards delivering fully commercial Marlin solutions, we look to Project Canvas as an important milestone in the selection and deployment of such standards track DRM options. There are a number of other projects around the world evaluating challenges similar to those faced in Canvas and we hope to participate in those initiatives on much the same basis.

Check back here frequently for news on how our value proposition meshes with these large-scale deployments.

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 #3:  Consumer Subsidized TV: The Role of More Open Standards

The era of the dedicated set-top box (STB) for each service to a TV is definitely coming to an end. What is emerging is a picture that involves a series of platforms that can support service specific applications or widgets selected and managed by the consumer. These platforms may themselves be based around standards such that service operators can create the applications that engage the consumer.

In certain kinds of systems, for instance the DirecTV view of the home media server, standards are only necessary to be able to share the content, they are not necessary to manage the device itself.  That device, therefore, can be a completely proprietary system that is wholly owned and subsided by the network or system operator. It is most likely produced exclusively for that network operator, just like traditional STBs have been. 

IP-based standards in such platforms also allows operators to cost-effectively deploy a security system and business rules that can satisfy all demands of content owners while creating the transparent usage model that consumers demand.

We believe that IP and the sophisticated protocols built on IP are the common building blocks to make digital convergence happen inside the home.

One such standards activity is the Open IPTV Forum – a cooperative of technology companies that is seeking to create an end to end platform for the delivery of IP video services. Another recent initiative is Project Canvas propelled by the BBC in the UK.  A standard becomes important like this when it can enable multi-vendor participation. 

As members of both the Open IPTV Forum and Digital TV (DTG), among several other standards consortiums, we are seeing the central role that IP-based technologies are taking. However, we feel that a key component to these specifications is the ability to generate revenue. Creating the right experience that consumers are willing to pay for will most certainly generate continued innovation.

We are watching Project Canvas and others like HbbTV closely, like the rest of the industry.

Stop by our booth at CommunicAsia to discuss the current standards in Asia Pacific.

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.

But in reality, these two worlds are really not exclusive as they might seem.

Some content may start as paid content, and later on may be distributed in the clear with commercials and eventually distributed freely. Other business models allow users to chose between paid but ad-free version or ad-supported version of the same content. Content providers or service operators are not likely to transcode each content for different distribution models if they can avoid it.

As a comment on Google’s apparent position here, I don’t see why an open source codec or open standard should be fundamentally incompatible with revenue generating services. This has been disproved by several standards organizations including MPEG, DVB or OMA, but that is a discussion for another day. The bottom line is that if valuable content will eventually be encoded and distributed using VP8, we’ll be able to protect it if the business model requires it (it is open source after all, isn’t it?) Read on NewTeeVee why open sourcing VP8 matters.

The other issue in debate is whether open source VP8 will stay free. It is unlikely that after a quarter of a century of digital video compression research, Google (or On2) would be able to come up with a codec that is of comparable quality as those developed by MPEG/ITU without infringing on anybody’s patents. If I remember correctly, Microsoft tried something similar with VC-1 and it did not work according to the original plan.

I don’t believe that any serious service provider will jump on the VP8 bandwagon without being able to accommodate all licensing fees into their business model upfront.  Maybe this will speed up MPEG’s effort to create a royalty-free version of MPEG codec, which will avoid splitting the pay-TV and free-TV worlds.

I guess we will wait and see . . .

• 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!

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 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.

Now, we’ve all complained about tradeshows – they are costly, require a large amount of company resources to make them successful and can be murder if you don’t have the right footwear.

But at the end of the day, it provides us with a great opportunity to meet with customers, partners and prospects and have meaningful conversations about their conditional access and content security plans. In speaking with service providers – cable, satellite, IPTV – we have picked up on a major theme. They are all contemplating landmark updates to their network to improve their competitive profile, capture additional revenue or simply better serve current subscribers.

More specifically, we are seeing four main trigger points for operators to transition their network and upgrade their content security platform.

• Analog-to-digital transition
• Digital cable-to-IPTV migration
• Cable switch-out to all IP
• Hybrid digital terrestrial/IPTV
• The adoption of IP for video delivery of satellite

Fortunately for us, these transition scenarios take advantage of proven IP-based standards and technologies. It also reinforces our position that eventually all pay-TV networks will be categorized as simply digital TV. Two-way interactivity of IP will underpin almost every aspect regardless if it is a telco TV network or a hybrid satellite/broadband combination. 

Based on strategy sessions with customers, we have identified a unique set of complex issues operators need to consider when upgrading their content security. Namely, they need to make decisions around their long-term “revenue security” strategy.

 Our team has developed a white paper that explores these issues and provides common migration approaches that can be downloaded from our site, “New Content Security Strategies Transform Pay-TV Service Migration: What Operators Should Consider when Upgrading their Networks.”

We have received positive feedback on the paper so far. Please let us know what you think.

And we’ll see you at our next tradeshows: Philippines Cable Television Show (Mar 16-19), IPTV World Forum in London (Mar 23-25) and Convergence India (Mar 23-25), with comfy shoes!