Post #1:  The Latest OTT Opportunity: Connected TV

Of all the new Internet TV delivery options, the connected TV is especially interesting to service operators: It’s already front and center in the living room, there is perhaps no expensive STB required, it features an already integrated remote control and has the potential for high-quality presentation without distortion or noise from connecting cables.

On the other hand, today’s connected TVs are fundamentally constrained by proprietary interfaces, wholly proprietary aggregation portals and simplistic navigational schemes. Limited or no storage means streaming-only presentation of content. 

Our current feeling is that the Internet-connected TVs are primarily an aspect of a features game in a highly competitive consumer electronics market and is one of the options least likely to be exploited for premium video delivery services. The more likely scenario will be facilitated via connected devices such as Blu-ray players game consoles and last but not least via STBs, although these may take on a new identities such as whole home DVRs, media gateways, etc. 

It is possible that connectivity may be used to blend the TV and Web experiences together. Operators can choose to make this happen on a TV using overlay or screen sharing applications, such as calling up an actor’s Twitter feed while watching his performance.

But given that living room viewing is a shared experience, it may be more realistic to see TV supplemented by other more personal phone or pad devices with better user input capabilities to provide such interactivity. I can attest with my own family’s habits, that it has become more normal for viewers to watch TV while working on their connected laptop!

I presented last week at the TV 3.0 – Future of TV conference (co-located with @DisplayWeek) . I was surprised to hear that nearly 20% of TVs shipped in 2010 will be network‐enabled, which is projected to reach about 60% in 2013!

And we are experiencing some interest from CE manufacturers to embed software-based security technology directly into these next-generation TVs.

Nonetheless, I came back with the opinion that STBs are not going away anytime soon. The issue (and cost) of customer support needs to rest with the operator who ultimately owns the quality of experience.

What are your thoughts?

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.

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! 

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!

At the same time, we have seen many recent changes from watermarking technology companies – Dolby has quietly closed Cinea, its watermarking business unit, Philips spun out its watermarking division, now called Civolution, which acquired Thomson’s watermarking technology (Thomson had previously acquired Mediasec and Nextamp).

Based on my past experience as COO of Mediasec and what we’ve discussed with customers at Verimatrix, I firmly believe that watermarking has the most business potential as an integrated layer of an overall content security solution. More specifically, I believe watermarking is a key component in monetizing premium content for pay-TV operators that are increasingly competing with “free” and the notion from many consumers that certain content should be free.

When viewed as a revenue security tool, watermarking can enable operators to develop new business models by offering higher value, better quality content for competitive over the top (OTT) and early release pay-per-view content.

I will be speaking at IBC2009 on this topic for the panel, “Content security: Ensuring content is not mis-used.” I will be presenting watermarking techniques that encourage responsible consumer behavior, rather than restricting the consumer’s media use. And if you are looking for more information on the topic, please download our whitepaper, “Integrated Watermarking Creates More Durable Pay-TV Businesses.”

See you in Amsterdam!

-Steve Oetegenn