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.

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! 

Without dwelling on the negative impression given by statistics, Mark underscored the promise of a more comprehensive transition to digital distribution where operators across the region can recapture a significant revenue base. The potential is even more dramatic when the new opportunity for Internet distribution makes content available to those subscribers who live away from their home country.

This hits a trend that we’ve been observing– Internet video is completely changing the way expats consume pay TV. Operators see an opportunity to broadcast local programming to expats all over the world. As you can imagine, this is both a huge revenue opportunity and potentially a devastating piracy challenge.

While some of these operators are rebroadcasting signals illegally, legitimate operators have the opportunity to enhance the subscriber experience with better quality and better selections of content. Asian operators have a special opportunity to service migrant populations and communities of temporary workers.

To reinforce another point in the article, Asia represents a lucrative market for content security providers. Cost is clearly an issue in this often low ARPU region; however technology and rising awareness of service theft are changing security dynamics. Operators upgrading to digital have a more compelling desire to protect their programming assets, and more advanced layered security approaches are making revenue protection way more cost effective.

Software-based content security is catching the attention of operators that are weary of the millions of cloned smart cards in the region. Software provides the flexibility to stay ahead of the hackers with renewable security and layered techniques like watermarking or fingerprinting. Even legacy smart card vendors are getting serious about software-based security.

We are certainly excited about the opportunities in Asia as hybrid networks, enabled by IP technologies, are on the agenda of most major operators.

Read Mark’s article where he breaks out some figures on piracy type and estimated costs per country.

Their most recent paper, published this  week, on the Common Scrambling Algorithm (CSA) mandate that many pay-TV deployments must accommodate illustrates very succinctly how technical decisions that once were wholly supportable now hobble the transition of traditional pay-TV players to the new competitive world. My only misgiving here is for any sense in which the specifics of this issue might reflect on the reputation as a whole of the DVB. The guidance of the DVB and its contributors has been instrumental  to organize and commercialize digital pay-TV around the globe, and continues to do so. 

The timely critique of a single technical standard should only be a cause to celebrate open debate – and legacy CA players who rush to the defense of this particularly sacred cow should see it as such. Rather, like scientists who see a grand theory smashed on the rocks of experimental evidence, we should recognize that the changing landscape does require a new assessment of the relevance of certain standards and grasp the challenge that this brings.

Compare that with IPTV operators. In the early days, theft of service was never a forefront requirement when building their networks – for two main reasons. They felt they had more control with fixed networks where the end device was a set-top box, so the threat of theft of service was potentially lower. In addition, content owners saw the emerging Internet Protocol Television (IPTV) as a potential threat and imposed much higher security requirements in order to gain rights to premium programming. Despite claims to the contrary from smart card vendors, software-based security was deemed acceptable in a two-way network and content protection was key to a full channel lineup to attract subscribers.

With the appeal of hybrid networks and novel OTT (over-the-top) services, all types of pay-TV operators find themselves in new revenue security territory. Cable and satellite providers are making strategic decisions to add more interactive services, many of which are delivered over IP-based networks. They are finding that software-only security solutions offer a more economical alternative, which are far easier to deploy, compared with smart cards that simply do not translate in the two-way environment, in particular in the case of mobile devices. 

IPTV providers are now looking into OTT services that deliver content outside their controlled, managed network. They need layered security solutions to take advantage of different delivery mechanisms outside of the living room. Plus IPTV operators with rights to exclusive content have become an attractive target for hackers, so theft of service prevention is a higher priority.

You can now put revenue security on the list of how these pay-TV services are converging. Operators require a flexible protection solution that can handle different networks, delivery formats, multiple end devices and the addition of new services – the ultimate goal is help monetize content, increase ARPU and reduce churn.

Come see me at Digital Hollywood Fall where we will tackle the latest DRM standards and actual technology implementations – today at 12:30!