Making money from multiscreen - Digital TV Europe

Multiscreen & OTT Series > Introduction

Digital TV Europe July 2014

The big picture tablet and smartphone revolution continues to preoccupy content companies, pay TV incumbents and over-the-top upstarts alike. Multiscreen and over-the-top distribution dominate discussion at TV technology trade shows and conferences and are likely to continue to do so for some time. Multiscreen TV is now mainstream. Pay TV subscribers in most markets now think of the ability to view content on a tablet or smartphone as a more or less inalienable right, and while services still have some way to go to match exactly what’s on offer on the main screen, rights deals are heading in that direction. Pure OTT meanwhile presents a very varied picture, with premium SVoD offerings – such as Netflix, Amazon Prime Instant Video and BSkyB’s Now TV – sitting alongside a vast range of other services, including various ad-supported and freemium offerings. This year’s DTVE Multiscreen & OTT series assesses the expansion of the OTT market and looks at the current challenges faced by providers of multiscreen services, taking in OTT strategies and challenges – including the viability of standalone and pay TV operatorled SVoD, TVoD and AVoD services. It also looks at recent developments in multiscreen strategies, including the use of tablets and smartphones as companion devices, and assesses recent and future evolution of the technology that underpins and supports the delivery of IP-based services from the cloud. ●

The

Published By: Informa Telecoms & Media Mortimer House 37-41 Mortimer Street London W1T 3JH Tel: +44 (0) 20 7017 5000 Fax: +44 (0) 20 7017 4953 Website: www.digitaltveurope.net

Editor Stuart Thomson Tel: +44 (0) 20 7017 5314 Email: [email protected] Twitter: @DTVEStuart

Deputy Editor Andy McDonald Tel: +44 (0) 20 7017 5293 Email: [email protected] Twitter: @DTVEAndy

Contributing Editor Stewart Clarke

Sales Manager Stacey Riley Tel: +44 (0) 20 7017 5320 Stuart Thomson, Editor [email protected]

Email: [email protected] Twitter: @stacey8830

Art Director Matthew Humberstone

Contents The Netflix effect

Publisher Tim Banham

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Good companions

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Passing clouds

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The multiscreen survey

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Sponsors

SUBSCRIPTION HOTLINE INFORMA GROUP Tel: +44 (0) 8707876823 © Informa UK Ltd 2013 All rights reserved Reproduction without permission is prohibited

Multiscreen & OTT 2014 > Case studies in OTT TV


The Netflix effect Netflix’s next stage of its European expansion is now close, but will its success rate continue and how far is the SVOD giant informing the OTT strategies of other players in the European market? Andy McDonald reports.

has long been a poster-child

Netflix for over-the-top video services. Its clean interface, effective in-house recommendation system, cross-device accessibility and refusal to tie users into long-term contracts have in many ways set a benchmark for what modern online video services should look like – and its growth rate speaks for itself. Since the service made its first steps into Europe at the beginning of 2012 by launching in the UK and Ireland, it has grown its foot-

print to also include the Nordic countries of Norway, Finland, Sweden and Denmark, with the Netherlands following in 2013. Though its existing presence in Latin America meant it did not have a standing start outside the US, as of the first quarter of this year, Netflix claimed 12.7 million international subscribers – on top of its 48.4 million US subscribers – and predicted there would be 50% year-on-year growth in Q2 due to the “rapid growth” in its international segment.

While its success story in Europe seems clear, Netflix is far from the only player in town. Recent research by the European Audiovisual Observatory revealed that there is now a staggering 3,088 on-demand services in the European Union, consisting of 1,104 catch-up TV services, 711 branded channels of broadcasters on open platforms and 409 VoD film services – the majority run by telcos or established media firms. The next chapter of the Netflix story was

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Netflix has taken the Nordic markets by storm since launching there in 2012.

announced in May when it detailed plans to launch in Germany, Austria, Switzerland, France, Belgium and Luxembourg in late 2014. By its own admission, the plan marked a “significant expansion” for the subscription service, but how difficult will it be for Netflix to make waves in these new markets, and how much push-back is it starting to see from a significant number of rivals across the pay TV and broadcast industry?

Scandinavian flavour Though Netflix does not break down user numbers by country, independent research indicates that its service is proving a phenomenon in the Nordics – in part because of the market conditions in these countries. According to research by Futuresource Consulting, digital video revenues are expected to exceed packaged video revenues in Sweden for the first time this year, making it the first country to pass this milestone. The firm noted a “significant shift” in Swedish consumer behaviour last year with a 24% decline in packaged video spend. This year, Futuresource expects digital video revenues to reach €153, compared to €146 million for packaged revenues, driven by growth of subscription video on demand services. “Netflix has been a key driver of this and quickly became market leader,” says Futuresource senior market analyst, Joanna Wright, who admits that though Netflix looked like it would be a good fit for the Nordics, “the scale of the success has definitely exceeded our expectations.” Despite facing rivalry in the Swedish OTT market from the likes of HBO Go and ViaSatowned Viaplay, Wright claims that Netflix has “definitely dominated” since its launch. “Viaplay and HBO have responded well and have also been marketing aggressively. Both have very strong content. I think together they have all helped raise consumer awareness [for SVOD].” However, Wright adds that without the Netflix launch, the SVOD boom “probably wouldn’t have escalated quite so much.” To understand the digital revolution taking place in Sweden, Wright says that a number of puzzle pieces fell into place at the right time. Broadband infrastructure being able to cope


with new digital services was one factor, while the success of Spotify – a Swedish company – helped to prove the subscription business model, albeit in the music space. Sweden’s digital transformation is also not unique in the Nordics, with Norway and Denmark in particular showing similar trends. Claus Bülow Christensen, innovation manager at GlobalConnect, a Danish provider of solutions for efficient and secure data networking, housing, and cloud services, says that for Netflix, the Nordic markets were like “low-hanging fruit”. “What Netflix saw for the whole Nordic region was both that we had really fine IT infrastructure, cheap broadband connections, and none of the existing operators in any of the Nordic countries had really built an OTTlike service that people were actually using. At the same time we also had quite a TV-, videoand movie-savvy population,” says Christensen. According to statistics from GlobalConnect Innovation, the analytics department of GlobalConnect, as of June 2014 Netflix penetration in Denmark was a huge 29% with 725,000 subscribers – establishing Netflix as the clear OTT winner in the market. In fact, according to Christensen, some 17% of these Netflix subscribers also access the US version using services like Unblock-Us – a VPN that blocks users’ online identity and lets them appear as though they are accessing sites from different countries in order to circumvent georestrictions. In essence, “Netflix’s biggest competitor in our market today is Netflix,” says Christensen. Slightly older statistics from February reveal that Netflix’s penetration rate in Norway and

broadcast industry, it just goes to show that accessibility and ease of use have a lot of clout – particularly when it comes to multiscreen OTT.

Waking up the market One of Netflix’s most significant rivals in the Nordics when it went live there in late 2012 was Modern Times Group (MTG)-owned Viaplay. Initially launched as Viasat On Demand way back in May 2007, the service was rebranded in 2011 to reflect an “enhancement” of the service. Now live in Sweden, Norway, Denmark and Russia, Viaplay allows subscribers to use a single ID and password to access Viasat pay TV content on any internetconnected device. This includes Hollywood movies, popular TV series like 24, Dexter and Sherlock, and even live sport such as Formula 1 and Premier League football – a key differentiator for the service. Newer movie titles like The Wolf of Wall Street and 300: Rise of an Empire can also be bought on a transactional basis. Christensen says that one of Viasat’s major responses to Netflix entering the Nordic market was to lower its price. In Sweden, Viaplay now costs SEK79 (€8.55) per month for its basic service, compared to SEK89 for Netflix, after the latter raised its prices slightly earlier this year. To also access Viaplay sports content the monthly cost is SEK279. According to MTG’s Viaplay boss Rikard Steiber, since Netflix’s entrance into the market there has been a “lot of momentum”, meaning that “consumers are starting to understand the benefits of using streaming

“We have seen very strong growth because ourselves, and some of the other players, have been doing a lot of marketing.” Rikard Steiber, MTGx/Viaplay

Sweden was a similarly impressive, and dominant, 20% and 17% – with 380,000 and 880,000 subscribers respectively. What seems astonishing is Netflix’s ability, in the Nordics, to trump rivals that have, at face value, better content. While the mantra “content is king” is often repeated in the

video.” Steiber says: “We have seen very strong growth because ourselves and some of the other players have been doing a lot of marketing and basically waking up the market to some extent. I think it has been very beneficial for all of us.” MTG has 62 TV channels across 38 mar-


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kets, as well as 28 production companies in 16 countries, and Viaplay now accounts for one part of a broader and more multi-faceted digital strategy. In March of this year, the firm merged its Viaplay business with MTGx, its ‘digital accelerator’ unit to establish a “digital entertainment powerhouse” under the leadership of former chief digital officer Steiber. The firm’s digital assets now include SVoD, TVoD and AVoD with ad-supported catch-up offered for a host of MTG channels across the Nordics at domains such as TV3play.dk, TV6play.no and TV8play.se. Beyond this Steiber notes that MTG is “ building a strong presence on YouTube,” as evidenced by its buyout last year of Swedish, youth-focused, YouTube multichannel network (MCN), Splay, and Steiber says that the firm is considering “more markets and more of these opportunities.” In June MTG also launched Viagame – a video site that allows viewers to watch people playing videogames. The service is similar to Twitch, a site that Google’s YouTube bought earlier this year for a reported US$1 billion (€740 million), and Steiber sees great potential in it both as a money earner and a traffic generator. In Viagame’s first weekend, the site drew an audience of 600,000 unique viewers with no marketing. “Viagame is a free service today, but one that you could easily imagine there being something premium that you would have pay-per-view or a pay-for-extraquality. Or there might be other transactional models around it that we’re looking to exploit as well,” says Steiber.

Awakening old giants In the Danish market, another firm taking a broader approach in their digital strategy is leading cable operator YouSee. The firm, which is owned by telco TDC, started offering SVoD to its customers back in Autumn 2011, and in December 2012 launched a consumer OTT proposition called YouBio. Though the service boasted a catalogue that was arguably much stronger that Netflix’s at launch with newer and better movie titles, it failed to catch on in the same way. “YouBio did have better content – that wasn’t where they lost on that battlefield. The battlefield was more in the smooth use of the interface and the broad availability of a service like Netflix and something that no one still can


Magine’s alternative take on OTT

While the term ‘OTT’ is usually associated with video-on-demand services like Netflix, one European player is taking a very different approach to over-the-top content distribution. Launching in its home market of Sweden last year and currently live in Germany and in beta in Spain, Magine is a cloud-based over-the-top TV service that offers live linear TV and catchup content across any device for a monthly fee. Founder and CEO Mattias Hjelmstedt explains that while Magine bears little resemblance to other VoD services, it is perfect “to bridge the gap” between linear and on-demand television – a good thing, he claims, when you consider “TV is still massively big compared to the videoon-demand space.” “We’re really there to change the distribution. When it comes to the big pay TV operators today, not the channels or the broadcasters, but the actual operators – cable operators, satellite or DTT – they’re still trying to make old technologies be achievable in the future and in today’s landscape,” says Hjelmstedt. “A lot of different multi-screen solutions that we see today are defensive and not replacement services,” he adds. However, he concedes that any service that helps to educate the market about new forms of content distribution is ultimately a good thing. Any service, that is, except perhaps Aereo. Though the controversial US TV service shared some similarities to Magine in terms of delivering linear content over the web to different devices, Hjelmstedt is keen to make a distinction. “From a customer’s perspective, we’re not trying to use technology to bridge a legal hole – we are able to actually innovate fully and at the

same time do it legally with the blessing of, and together with, the industry,” he says. The major difference between Magine and Aereo was that the latter sought to transmit content, at a fee, without licensing it or gaining permission from the broadcasters or rights holders. A US Supreme Court ruling at the end of June said that Aereo’s strategy violated copyright and should stop. In effect, the court decision defined Aereo as a cableprovider, meaning its retransmissions are the same as a public performance under America’s Copyright Act. The result was the broadcasters could seek an injunction. Disney/ABC Television Group, CBS Corp., 21st Century Fox and Univision Communications were among those welcoming the decision, and Hjelmstedt himself believes it was the right call. “We are really the opposite to what’s happened in the US with Aereo. We’ve been clearing up all the rights for years to be able to do it,” says Hjelmstedt, explaining that while legal loopholes and different cable rulings in Europe could be exploited, this is fundamentally not the way to do business. “If you disrupt distribution and the broadcasters, then all of a sudden, you’re going to become big, the broadcaster’s going to earn less money, they are going to produce less content, and you are going to get killed yourself. I don’t find that equation good,” says Hjelmstedt. Asked whether Magine could in turn be disrupted by broadcaster initiatives to distribute their own content in the way that Magine does, Hjelmstedt says that in the history of TV broadcasters and distribution are a hybrid. “You need to have strong players in both.”


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compete with on the market,” says Christensen. TDC executive Casper Hald concedes that Netflix set a benchmark for accessibility and that with YouBio the firm underestimated “how important access was.” At launch YouBio was available to access through a dedicated, low-price Netgem set top box, on two


business model,” says Hald, who claims that re-launching Blockbuster will prove to be a “winning formula.” However, not everyone agrees. While FutureSource’s Wright says that TVoD revenues are “not insignificant” she predicts it will only account for 20-25% of the digital business in the coming years.

“We we have licensed the Blockbuster brand, which is huge here in Denmark, to launch a full-scale premium VOD service.” Capar Hald, TDC

types of smart TV and for iOS and Android. “Basically, when Netflix launched they set the bar very high for how this should be available and how it should be working. Looking back, we learned a lot about meeting the consumers where the consumers are and that means that we need to have very broad accessibility,” says Hald. Though the YouBio service still exists, and operates in partnership with pay TV firm C More, it is no longer a priority for YouSee. The firm is instead focused on providing SVoD as a bundled proposition for TDC customers and its new aim is to offer an additional premium layer of content on top of this through the TVoD window. “We are not going to keep Netflix out of the market, because that’s not an option,” says Hald. “Basically what we are doing is we’re moving to current movies for rental and ownership, and we have licensed the Blockbuster brand, which is huge here in Denmark. We are now launching a full-scale premium VoD service, but it won’t be for a subscription.” TDC bought the Blockbuster brand in Denmark in January and plans to launch the iTunes-style rental and ownership store in the market this autumn, with Hald leading the project as head of Blockbuster. While YouBio previously offered TVoD alongside its subscription content, the launch of Blockbuster.dk will give premium content a clearly differentiated home, and will be a place where viewers can buy the latest episodes of series that have already become popular in the later SVoD window on services like Netflix. “We think that there’s a gap in the market for the current content, but with a different

Christensen, meanwhile, has been vocal in the local Danish media in claiming that TDC’s decision to buy Blockbuster is “really a stupid idea.” He says that “it’s a brand that, for many of the users, I’m sure it’s [associated] with some kind of sadness, seeing their shops closing down.” Hald disagrees. “We’ve done a lot of surveys on the brand and the brand value. The most important thing is everyone knows the brand, so in the target audience 99% can recognise and know what Blockbuster is.” Though Blockbuster proved not to be an innovative brand, Hald believes with its online relaunch, TDC can leverage the public’s familiarity with the name and offer a service that meets consumers where they are with a proposition they understand.

later, we do not consider them a serious threat, because their brand is irrelevant in Russia. Moreover, we have much stronger ties with local content owners.” Oleg Tumanov, founder and CEO of rival Russian service Ivi.ru agrees: “Russia, in my view, represents a challenging environment to Netflix due to high level of piracy, language, local content, local competition and legal system,” he says. In Poland, Maciej Maciejowski, member of the management board in charge of new business development at Polish broadcaster TVN, believes Netflix could also struggle if it tries to move into the Polish market. “The majority, and by majority I mean 99% of the online VoD offering, is advertising supported – that’s the reality that has been created here. Right now, to [be] entering with a paid offer, [you] must be very, very well prepared,” he says. While central and eastern Europe is littered with home-grown and locally run OTT services, Central European Media Enterprises (CME) operates localised versions of its Voyo SVoD service across numerous central and eastern European markets, including the Czech Republic, Croatia and Romania. Costi Mocanu, manager of Voyo Romania, says that though Voyo offers TVoD content, the SVoD layer is more popular and includes movie and TV content, including programmes from local CME network Pro TV. “In Romania, we have also produced three exclusive channels – Voyo Comedy, Voyo Cinema and Voyo Action – which are available only if you are a subscriber of Voyo,” says

“We don’t expect Netflix uptake [in France and Germany] to be as quick and as strong as it has been in Sweden.” Joanna Wright, FutureSource

The eastern frontier While Netflix has had an undeniable influence on the western European markets where it has launched to date, in eastern Europe, where it is yet to set its sights, it is not deemed as a threat. Artem Zassoursky, CEO of Russian VoD service Stream.ru says that while Netflix will likely move into Russia “sooner or

Mocanu. The idea behind these online channels, he explains, is to bridge the gap between linear and non-linear viewing. “We have seen that after 50 years of receiving linear television, people still prefer [it]. It’s a habit for the customers to wait and to get a schedule.” “We are practically a BBC iPlayer or HBO Go, mixed with Netflix, plus something more,” says Macanu, explaining Voyo’s mixture of TV catch-up, SVoD movies and curat-


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Multiscreen & OTT 2014 > OTT


Voyo’s content offering includes SVoD, TVoD and programmed online channels.

ed online channels. The service will also soon be available alongside a new AVoD service which is due to launch in Romania at the end of the month. Pro TV Plus will distribute mainly archive content from the CME TV network on an adsupported basis, preserving an exclusive Voyo catch-up window for the network’s most recent content. Discussing Netflix’s growing influence on the continent, Mocanu says: “Netflix as a presence in Europe has to be considered based on the customer’s ability to speak the English language. My impression is that Netflix first targeted countries with a population that understands the English language and speaks it very well. It’s [been] Scandinavia, obviously the UK and Ireland, and then they’ve launched in the Netherlands. I do believe that when they do their next step this fall in France and Germany, they will start having content problems.” Among these, he says, is the cost of not only translating, subtitling and dubbing Englishlanguage content, but also licensing locallyproduced titles. “I do not believe that House of Cards could be a decisive trigger in a country like Germany. But these are Netflix’s problems,” says Mocanu. “I do not believe they will come in the eastern markets earlier than eight to five years from now – I exclude Poland from this

statement. Poland is part of Central Europe and they will probably launch there earlier than three years from now.”

Netflix’s next push The location and number of territories that Netflix is set to move to next has taken some industry watchers by surprise. Though the French and German language conversion arguably makes it sensible for the firm to go live in Germany, Austria and Switzerland, and France, Belgium and Luxembourg all at once,

material outside the UK” combined with the low cost of the service could help it to succeed. FutureSource’s Wright says: “We don’t expect uptake [in France and Germany] to be as quick and as strong as it has been in Sweden, because cultural impacts, legacy consumer behaviour and the existing competitive landscape will play a significant role in France and Germany.” German-based media expert and CEO and co-founder of consultancy TheBrainBehind Sebastian Becker agrees that while Netflix will “certainly gain a bit of the market” in Germany against existing rivals like Maxdome and Watchever, it will not see the same rate of growth as in the Nordics or even the UK. “If you look at Netflix’s international launches, the results were kind of mixed: difficulties in Latin America, mainly due to payment solutions; big success in Scandinavia because operators weren’t really prepared; success I would say in the UK and Ireland in terms of getting traction in the market rather quickly,” says Becker. “In Germany I think it will be a bit more difficult and there are a few reasons for that. First the German landscape is of course difficult, because a lot of the content that is long-tail is still freely available on German TV. And while culturally Netflix is a brand that’s known to let’s say the international part of the population, it’s certainly not a household name in Germany, so it’s a bit easier to launch these American brands in the UK or Scandinavia.” While we can only speculate as to whether Netflix’s famed algorithms have provided

“After 50 years of receiving linear television, people still prefer [it]. It’s a habit for the customers to wait and to get a schedule.” Costi Mocanu, Voyo Romania

there will still be challenges involved in launching in these countries. Media analyst and senior consultant at PayMedia Consulting Group John Holland says that the language issues will make this next wave of launches “more difficult than in an English-language environment.” However, he says the “greater tolerance for subtitled

some statistical justification for its ongoing rollout choices, the firm has made no secret of its ambition and intention to become a global media company. But how well it will fare when it starts to move further across Europe, outside of its English language-influenced comfort zone, is yet to be seen. ●


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Multiscreen & OTT 2014 > Companion devices & multiscreen monetisation


Good companions Understanding of the uses to which people put the different screens they own is still taking shape. From the development of companion apps dedicated to particular shows to the straightforward distribution of linear TV, broadcasters are still experimenting to find out what works – and what delivers revenue. Andy McDonald reports.

years ago, social TV and

A few companion apps were the buzzwords of the TV industry, with much time devoted to the topic at conferences and events. Broadcasters and content producers alike were investing in play-along experiences for shows and ways to extend linear content beyond the main screen. The logic appeared sound – capturing the rising tide of smartphone and tablet usage to engage with audiences and offer them additional content was a step away from tried and tested linear delivery into a brave new digital world. With the likes of Zeebox making a splash when it launched in 2011, thanks in

part to the pedigree of its founders – former BBC iPlayer boss Anthony Rose and former EMI board director Ernesto Schmitt – the companion screen space looked set to boom. Fast-forward to 2014: the hype seems to have died down, with many of the original proponents of the ‘second screen’ space pivoting or disappearing completely.

Second-screen apps Earlier this year, second-screen TV service Viggle acquired Dijit Media, the firm behind personalised TV programming guide

NextGuide, meanwhile, Yahoo! decided to close down its dedicated second-screen TV app IntoNow, with plans to instead integrate the technology into other products like the Yahoo Sports iOS7 app. In April, Zeebox took the bold move to rebrand itself as Beamly. Announcing the move, Schmitt and Rose described it as an evolution of the service, in line with shifts in the wider second screen TV market. In a blog post, Rose admitted that since its launch, Zeebox’s TV guide has been “embraced by a geeky male audience” and that its perception has been that of a “new-fangled social TV guide rather than the social network


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4oD (left) has experimented with content tailored to small screens. Beamly (right) represented a change of second-screen focus.

and TV participation experience that was our vision.” He added that while “Zeebox was all about TV, Beamly is all about the show,” with the app becoming a destination that provides value “even if you’re never in front of a TV.” In essence, with the rebrand, Zeebox shifted the focus away from live interactions and Zeebox’s personalised TV guide, towards TVfocused forums, chat-rooms and content. “The initial phase of social television and second screen was limited to apps providing a companion experience for audiences while watching TV. However, people’s emotional engagement with TV spans the whole day… Beamly for the first time brings together all of these touch points with TV in a single app,” said Schmitt.

In many ways, this shift away from live interaction, or play-along behaviour seems to be echoed by some of the major broadcasters. Back in 2012, the BBC launched a companion experience for the Antiques Roadshow – a long-running series in which members of the

public take their belongings to be valued by antiques experts. Announcing the move at the time, the BBC’s then head of IPTV and TV online content, Victoria Jaye said: “We want to creatively renew the audience experience around loved and established programmes, as

Making money from multiscreen By Stuart Thomson While the use of smartphones and tablets as companion devices can enhance the viewing experience on the main screen, and add value to broadcasters’ and service providers’ offerings, making money from multiscreen and OTT distribution of video itself has proved to be something of an elusive goal. There are two obvious routes. Operators can sell additional subscriptions or use OTT to target a different market than their mainstream pay offerings, or they can use additional screens as an opportunity to sell additional advertising. While advertising has remained the primary revenue stream for online video globally, pay models are clearly on the rise, notably with the success of subscription services including Netflix. “The SVoD and TVoD models are increasingly being looked at by broadcasters and other people wanting to launch services,” says Luke Gaydon, vice-president of operations EMEA at online video platform provider Brightcove, who expects to see more bundling of online video services with other products such as print and digital content subscriptions. Online video billing and content management provider Saffron Digital has focused pri-

marily on enabling broadcasters to make money from premium OTT services. Dan Peters, senior vice-president of product marketing, cites the example of Saffron’s work for UK broadcaster ITV’s Essentials service, targeted at expatriate consumers who are willing to pay to view ITV content. “It’s about how to supplement broadcast revenues with new and interesting retail models,” says Peters. “For ad-funded broadcasters there is an interest in premium services that remove the ads for a subscription fee, for example. There are different ways to pay for OTT content. We have seen subscription services with rental content or storefronts that offer a combination of rental and ownership content.” Saffron has provided electronic sell-through via its own proprietary digital locker system and plans to offer UltraViolet-based services soon. He says the company has focused on supporting “multiple retail models” and that EST is viewed as part of a wider spectrum of services. “UltraViolet means you aren’t tied to a specific device or provider, so we feel as it rolls out it will help to educate users and make them feel comfortable with EST,” he says. “We expect growth there – we are starting to see EST revenues picking up and consumer understanding of EST finally take hold.” For Mark Christie, chief technology officer at

online video platform provider Piksel, the EST model has yet to prove itself, and he says that Piksel has seen relatively little activity around UltraViolet, the standardised digital locker system. However, free-to-air broadcasters are adding VoD libraries and OTT simulcasts of live channels that can be supported by advertising. Saffron’s Peters believes that subscription services can provide a powerful weapon in an armoury used to hold onto viewers and prevent them from drifting off towards new OTT subscription-based services including Netflix and Blinkbox. “I think there is a willingness to pay to have ad-free access to content and we see growth there. Also for subscription services there is a willingness to pay additionally for transactional VoD or rental items if people get access to newer release content,” he says. “On the free side, library content will be available that is adfunded or for a slight premium, but to access new release content consumers will be willing to pay.” In order to take this forward, Peters says that “there is a growing expectation and need for enhanced merchandising – replicating what you can do in a physical store in terms of campaign management, voucher support and so on”. He says there is demand on the part of operators Continued on page 14 >


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Continued from page 13 > and broadcasters for content management systems to provide simplified delivery of merchandise campaigns across multiple devices. Advertising around multiscreen and OTT video more generally is not easy to create a business case for. Not only is audience measurement still in its infancy, but advertising agencies have yet to fully appreciate the merits of targeting ads, particularly as audiences are small. There are also technical challenges around where ads should be inserted into streams. A greater degree of targeting, and the inclusion of local advertising, is possible when ads are inserted at the edge of the network, but this means working with a CDN that can support this. Keith Wymbs, vice-president of marketing at video compression specialist Elemental, highlights the work that his company has done with Adobe to support pre-roll, mid-roll and post-roll advertising for broadcaster Turner, using Adobe Primetime to provide ad insertion and tracking. He says that one of the key challenges facing providers is delivering such functionality economically. CDNs, says Wymbs want to work with a limited number of technologies that reach the widest possible base of customers. Standards


are somewhat lacking in this space, although CableLabs’ Event Signaling and Messaging (ESAM) specification has been available for some time and has been adopted by the cable industry as a framework to act as a bridge between the SCTE-35 ad avail signalling standard and equivalent ad avail markers for iOS, Android and other platforms. For Gaydon of Brightcove, most of whose customers have settled on ad-funded business models, advertising for multiscreena nd OTT is on the rise and CPMs – the cost to advertisers of reaching 1,000 viewers – for online is now out-

stripping the equivalent rates for broadcast channels. Nevertheless, he admits there are problems. For one thing, advert blockers mean that about a quarter of advertising aimed at desktop users is lost. “The online ad market is growing but there is recognition that there is a lot of work to do to optimise online video advertising,” he says. To combat ad blocking in particular, he says that server-based ad insertion can solve the problem. “That gets you around ad blockers and gets you a better user experience because ads and content form a single stream.”

play along with the programme through the apps we’ve created, the retention is really high. Over 85% are staying with it week-in, weekout,” says Jaye. “We were always very cautious in this space because I think the evidence wasn’t there that this was a big audience need. But creatively, where we’re going is fairly consistent with what we’re finding out... We’ve been offering companion content for many years on the Red Button. For us, it was about seeing how that transposes to online or through apps, and we’ll take a case-by-case approach to that, which is what we continue to do.” Jaye admits that only “a few formats” really lend themselves to synchronous second screen activity, but says the BBC will get better at seamlessly helping audiences find out about programme information while they are watching shows on TV. “We’ll continue to explore ways technically to surface that content seamlessly if audiences want to draw it up while they’re watching the

programme. That would be our future direction of travel. But for the moment, we’re being quite selective about where we build a secondscreen experience related to a show, because we’re more interested in the future space where all programmes benefit from the information about them being more readily accessible.”

A second-screen app by Piksel: broadcasters are experimenting with various models.

well as enable brand new formats to flourish.” Having already at this time completed second screen pilots for Saturday night quiz show Secret Fortune and David Attenborough series Frozen Planet, the BBC said it would test companion experiences around a handful of programmes to explore “the key features and functions that genuinely make watching great TV an even better experience.” In particular it was keen to target “more traditional TV audiences,” in order to drive mainstream take-up. Since then the BBC has had success with a companion app for singing competition show The Voice, which airs in a Saturday primetime slot. Jaye, now head of TV content, BBC iPlayer, says the app’s usage increased by 42% since between season two of The Voice, when it was introduced, and season three. However, she says the BBC is taking a cautious approach to new developments in this vein. “It’s fair to say this is still quite a minority sport, but for those audiences that choose to

Programming One strategy the BBC is pursuing with different sized screens in mind is developing original content for the BBC iPlayer. According to official BBC statistics, iPlayer TV programme requests from tablets were higher than from computers for the first time in April 2014. For the month, the BBC said that 30% of TV content requested on iPlayer was from tablets, compared to 28% from computers and 18% from mobile devices. The


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rest of the traffic was made up of TV platform operators, smart TVs, games consoles and other connected devices. The BBC’s commitment to original content for iPlayer came earlier this year, at the same time as it announced and rolled out an updat-

seen fiction in our most-shared iPlayer content, because the most-shared content in iPlayer is usually current affairs [and] issuebased factual.” Overall, Jaye says the BBC is seeing “millions of views” for original iPlayer content,

“We want to creatively renew the audience experience around loved and established programmes, as well as enable brand new formats to flourish.” Victoria Jaye, BBC

ed version of its streaming service in a bid to offer a “consistent, but optimised,” experience across different screens. The new-look iPlayer was developed using responsive design so that it can be accessed on from different sized screens without the need for separate versions to be built. It also included a simpler and “easier to browse” homescreen, with the entire service designed to be easier to navigate. While the core of the iPlayer’s content remains the BBC’s broadcast channels and programmes, the new iPlayer also offers an opportunity for new content to be made available. Like synchronous second screen experiences before it, the iPlayer can now be used for “new forms of storytelling,” as well as to nurture new talent. From March the BBC made three new drama shorts available through the iPlayer. In May it added six original comedy shorts from famous comics including Micky Flanagan, Matt Berry, Frankie Boyle and Bob Mortimer, with plenty more content to follow later in the year – including a trilogy of iPlayer projects from acclaimed filmmaker Adam Curtis. “The drama is really about new talent – new writing and directing talent being showcased on iPlayer. The comedy shorts are about established comedians, invited onto iPlayer to create comedy that is original and different and very much authored by them, as opposed to conceived through a linear television slot,” says Jaye. “What’s been fascinating is that our audience has sought them out and really enjoyed them in volume. Both the drama shorts and the comedy shorts have made it to our most popular content in iPlayer. Interestingly, many of the shorts have been in the top 10 most-shared content in iPlayer. This is really interesting as it’s the first time we’ve

and while the short-form nature of this content seems well suited to mobile access, this was not necessarily by design, with the overall BBC strategy to make the iPlayer easily accessible from all four screens – TV, mobile, tablet and computer.


“What’s important is we’re story-led in terms of how long our content is. The fact is we make long-form content, live content, short-form content – all content available through iPlayer. It’s very much up to the audience how far they want to enjoy that on a mobile or a tablet,” she says.

Original content Referring to the BBC’s original iPlayer commissions, Jaye says: “We start out with ‘what does the writer want to achieve, what is the story we’re trying to tell?’ If that requires hours to tell meaningfully and powerfully, then we’re happy with that. If it comes in shorter form, that’s fantastic. We’re very much story-led, not device-led.” In the UK, rival broadcaster Channel 4 has also launched an original content push for its on-demand service 4oD. In its case, the con-

Case study: NTV+’s multiscreen experience By Stuart Thomson Russian satellite pay TV operator NTV+ has offered OTT TV since 2010, starting with a football-based offering before moving into multiscreen. In 2012, it launched new OTT services with on-demand content from the range of its channels. According to Lev Petukhov, head of web projects development, NTV+, Russia offers great prospects for OTT, with 70% internet penetration and 30% penetration of tablets and smartphones. Subscriptions sold on iOS devices boosted overall revenues in 2013, up 97% to US$2.4 million (€1.8 million). Petukhov says that NTV+’s iOS app has four times fewer downloads than Android but generates 10 times as much income, despite the fact that there are 10 times as many Android devices in the market. Petukhov says that people are accustomed to pay on certain platforms and not others – he says that the Xbox console brings more money than Sony’s PlayStation, for example, while he believes the smart TV has yet to establish itself as a platform through which people are willing to purchase premium content. Within two years of its 2011 launch, the broadcaster accounted for the lion’s share of live

sports events, delivering primarily to PCs. Petukhov says that iOS devices tripled their share from 10% to 30%. OTT is offered independently from the main pay TV service, but the broadcaster offers an 80% discount to its NTV+ subscribers. NTV+ expects to double its revenue again this year, with coverage of the Champions League and a new advertising-based VoD model. A new website will be launched for sports VoD in September, allowing people to watch news and highlights supported by ads. “We now have real expertise when it comes to sports content,” says Petukhov. Further development will include the addition of linear channels. “We have all the rights to do that,” says Petukhov. The introduction of new genres of content like more movies and new channels will be introduced. There will be a focus on driving distribution to tablets. NTV+ has to create a more sophisticated customer communications strategy with authorisation via social networks and personalisaton of user interfaces, says Petukhov. He says the broadcaster has achieved a good rate of conversion from free to pay content. However, he adds, it is still difficult to get money back from new media projects and expectations of a high rate of return are difficult to meet.


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The companion app for The Voice has proved successful for the BBC.

tent it is producing is deliberately short-form and deliberately aimed at mobile devices. “We launched our new shorts hub to meet growing demand for snackable, shareable, content – video that is ideal for watching on the move, on mobile devices, for when there isn’t time for a half hour or hour-long show. At the same time we wanted to create innovative new ways for brand owners to work with

Channel 4 to reach young audiences,” says head of 4oD Sarah Milton. Channel 4 is initially commissioning a diverse range of content, covering genres such as popular science and futurology, gaming, comedy and satire, lifestyle and food. Some will involve well-known Channel 4 talent, and some new talent from the internet world, says Milton. While it’s possible that one of the

shorts will subsequently lend itself to a fulllength linear adaptation, she stresses that this “is not the primary objective.” Mobiles, tablets and connected TVs are Channel 4’s fastest growing platforms and accounted for more than two thirds of viewing to 4oD in H1 2014. Milton says that currently most mobile viewing is for full-length programmes, reflecting the content available on the service. “Relatively speaking though, our short-form content does disproportionately well on mobiles and looking at video viewing more generally there has been a rapid increase in viewing to short form on mobile devices, particularly amongst younger viewers.” Whether smartphones and tablets should be viewed as alternative devices to which broadcasters deliver services alongside TV, as devices to which content must be tailored specifically, as companions to the main screen experience or a combination of all of the above will ultimately depend on individual broadcasters’ experience and resources. ●

Multiscreen & OTT 2014 > Technology


Passing clouds Cloud-based delivery of multiscreen services is enabling service providers to experiment more freely with less risk, but broadcast and OTT delivery are likely to remain largely separate for now. Stuart Thomson reports.

-based delivery of TV has

Cloud been very much in vogue in recent months, and the reasons are not hard to find. As free-to-air broadcasters and pay TV providers attempt to deliver more services – including live TV – to multiple devices over the web, they need to be able to match unexpected peaks in demand. They also want to be able to experiment with new services without making huge upfront investments. Pure OTT providers meanwhile are seeking to scale up their services to meet demand as it grows. Multiscreen delivery in particular is costly.

Fragmentation of the market for devices that can play back video, and of operating systems, with an absence of standardised ways of doing things and a lack of integration between OTT and broadcast delivery systems, have to some extent bedeviled operators as they try to optimise their delivery and drive down the costs and time taken to get services to market. So the technology choices made by OTT players, pay TV operators and broadcasters to deliver services to multiple devices plays a key role in determining whether such services will be economically viable.

Saffron Digital has worked on projects for commercial broadcasters like ITV Essentials.

Flexibility Service providers and broadcasters are therefore increasingly turning to cloud technology to deliver their offerings with a greater degree of flexibility. Essentially, this means delivering as much as possible from software-based delivery systems hosted in data centres that can be turned up and down according to demand and


18



do not require upfront investment. Instead, the ideal is to be able to tap into infrastructure on demand and to be able to try out – and, if they fail to attract viewers, drop – new services without taking on a huge amount of risk. “Generally broadcasters are starting to think more strategically about broadcast and OTT,” says Dan Peters, senior vice-president, product management at Saffron Digital. In the past, he says, broadcasters and operators were typically focused on getting services up and running as quickly as possible, leading them to deploy whatever technologies were at hand. They are now attempting to think more strategically and optimise their investments. However, looking too far ahead can in its own way lead video providers to fall into some very big holes along the road. Peters cites the example-to-avoid of the BBC’s ill-fated Digital Media Intiative, a vast and all-encompassing project to update the broadcaster’s workflows and systems for the digital age that was famously abandoned subsequently, with most of the £125 million investment being written off. “The obvious lesson is that at certain sizes projects become unwieldy. If there isn’t a quick turnaround of a few months the projects will get overtaken by events,” says Peters. In general, broadcasters and service providers want their infrastructures to evolve to accommodate the delivery of more OTT and multiscreen services but they don’t want to have to tear out their existing systems and begin again. “What we’ve seen is that when you’re talking to large media organisations, very often they have existing mature technology stacks that they wish to leverage to underpin new services. Ripping and replacing everything wholesale is not really viable and what we have done is create a number of point solutions that can be incorporated into an existing workflow,” says Luke Gaydon, vice-president of operations for EMEA at online video specialist Brightcove, citing the example of his company’s Zencoder multiscreen encoder, which supports standards such as MPEG Transport Stream, HbbTV and MPEG-DASH. Brightcove has supplied a range of products that are designed to plug into broadcasters’ and other service providers’ existing systems. In addition to its overarching Video Cloud infrastructure, the company has launched a new media player – The Form – that can be provided separately. “It doesn’t need to connect to Video Cloud. If you have a media asset man-

agement system or content management system, but are looking to add a fast player, you could leverage it,” says Gaydon. The Form is designed, he says, to be a single player that can relatively easily work across multiple types of device. He contrasts this with the practice – driven by necessity – of developing different players for specific platforms. “There is a huge overhead in maintaining these different players,” he says. The need to develop different players for different devices and operating systems has been driven in some cases by the need to replace content and adverts at a local level. “To remove

lowed up with support for live encoding. Wymbs says service providers typically deliver coverage of live events rather than retransmitting 24-hour linear channels wholesale. Concerts and big sports events often mean big spikes in demand for web video – a clear case where cloud-based processing can come into its own by allowing providers to meet additional demand without the need to invest in their own dedicated equipment. Wymbs says that Elemental’s system for live workflow can enable operators to provide multiple streams (for example with different camera positions at sports events), delivering mez-

“These days I don’t sense that buyers are able to determine whether an investment will look smart in three months.” Keith Wymbs, Elemental

that [requirement], you should look at providing ad and content replacement on the server side,” says Gaydon. Brightcove has developed a product called Once to enable server-side advert and content insertion, enabling service providers to use the native player on each device rather than developing their own.

Video processing The cost of video processing – encoding and transcoding to prepare content for multiple devices and delivery routes – can increase dramatically as services grow, particularly given the different formats that operators need to support to deliver to an ever-growing range of iOS, Android, Windows-based and other devices. This has led to a growing reliance on software-based processing in the OTT world – something that can be contrasted with the dedicated hardware encoding platforms generally preferred by traditional broadcasters. Video processing specialist Elemental introduced its cloud platform one year ago. According to Keith Wymbs, vice-president of marketing, recent developments across the industry have included a growing emphasis on the need to introduce live streams to accompany on-demand and catch-up content. Elemental introduced file-based processing in the first phase of its cloud rollout and has fol-

zanine format-based feeds to the cloud for processing for delivery to HLS and Smooth Streaming-based platforms. “A live encoder is more complex in that you need to maintain timing in encoding. The same is true in live workflow. You can’t get ahead or behind or you break the live nature of the streams. Since those are being maintained in the cloud it is a bigger challenge to qualify that workflow and test it out to get the bit-rate right for contribution,” says Wymbs. There is essentially a trade-off between reliability and quality, with bit-rates kept relatively low for the former but pushed higher to deliver high-quality, high-resolution streams. Andy Salo, vice-president of product management at RGB Networks, agrees that there has been a sharp increase in interest in cloudbased service delivery in recent months. RGB Networks provides CloudXtream, a service delivery platform that has been used to deliver cloud-based DVR and ad insertion. “There is no lack of standards but at the same time there is no standard way of doing things,” says Salo. Operators have to deal not only with a range of formats, but with formats that are constantly evolving and require adaptation. They face high per-user costs to acquire and format content that make a mockery of any business case. Salo highlights two open source technologies that have been widely adopted in order to


19



Elemental is a leader in software-based video compression.

bring some order to proceedings – OpenStack and Docker. The former enables operators to deploy ‘virtual servers’ in data centres in a semi-standardised way using open source technology. OpenStack, backed by a number of large companies, is designed to give operators a single way of managing their applications across different data centres. Docker, says Salo, essentially does the same at the app level, providing a ‘virtual container’ for apps that can sit either on a virtual machine or an actual hardware server. Essentially, by providing a ‘container’ for apps that is smaller and more flexible than a virtual machine, Docker liberates app-based service providers from some of the constraints and costs they previously faced. Google has committed to deploy Docker 1.0 in its Google Cloud platform. According to Salo, Docker is positioned to become “the new virtual machine” and services will likely be based on OpenStack plus Docker to maximise flexibility. “This will be yet another reason for people to see the light and deploy cloud-based apps,” he says.

More innovative Salo proselytises the merits of OTT as the future of video. Initially, he says, RGB’s customers want unified management of OTT and broadcast, “but essentially everything is going to be OTT ultimately”. He compares the trajectory of video services with that of voice, where the idea of having a separate dedicated voice platform is now hopelessly outmoded.

OTT and multiscreen video is increasingly as good as – or, in the view of some of technology providers, better than – traditional broadcast systems. While standard features of broadcast services such as closed captions have been available in equivalent OTT services for some time, adding such features as captions, teletext and multiple language support in multiscreen deployments can be challenging. “The traditional providers have spent many years complying with DVB and MPEG standards but on the multiscreen side we are seeing more fragmented systems because each protocol is a bit different,” says Wymbs. For Mark Christie, chief technology officer at

mix of content, they will really only be able to differentiate based on the user experience they provide, meaning that it makes sense to configure a service to show each device at its best. “The distinction is down to the experience if content is the same between services.” Envivio, another pioneer of software-based encoding, has captured significant business from the drive amongst service providers to deliver video over-the-top to multiscreen devices. Recent developments for the company include the launch of services for Sky Go and Envivio teaming up with cloud-based billing and middleware provider 1 Mainstream to deliver video services for operators. The company, which has previously delivered services to operators using the VMware infrastructure, also announced its integration with OpenStack at the NAB Show. The Software-Defined Network (SDN), also supported by Envivio, is another attempt to introduce some sort of standardised way of doing things – in this case focusing on quality assurance and bandwidth, relating capacity requirements to the requirements of each specific app. Boris Felts, the company’s vice-president of product marketing says that operators are “looking to virtualise and move into software” via the ‘software-defined network’ as well as pushing for standardisation of the data centre infrastructure and a common infrastructure for public and private cloud-based delivery.

“Anything that requires investing in hardware is complex. Once you move into a virtual network some of the pain points go away.” Boris Felts, Envivio

online video specialist Piksel, “consistency in terms of brand” across devices is less important in most cases than delivering the best service that a particular device can support. “OTT is not trying to look more like the broadcast way of doing things. People got used to the grid-type EPG and the remote [but] now you have touch screen devices and so on that allow you to be more innovative around the experience,” he says. If multiple OTT providers are essentially providing the same

“Anything that requires investing in hardware is complex. Once you move into a virtual network some of the pain points go away. The main reason a Comcast or AT&T is looking at this is to gain flexibility and become more agile in launching applications,” says Felts. While initiatives including OpenStack, the SDN and Docker are clearly well-intentioned, Felts admits that “all these new initiatives are not fully mature” and that people typically still use commercial, proprietary technologies that


20

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Specified practice: cloud TV and standards While cloud-based video processing and delivery is on the way up, the economics of multiscreen video remain challenging due to a lack of standardisation, notably in respect of DRM and streaming formats. With regards to the latter, operators have long complained that they have to support an ever-growing number of profiles within an ever-growing number of formats that – notably in the case of Android – have to be tailored to an ever-growing number of devices with numerous minor variations between them. Mark Christie, chief technology officer at Piksel, says that the DRM and adaptive bit-rate format landscape is still very fragmented, as is the market for devices that support the Android platform. For service providers, despite the benefits delivered by technologies such as ‘responsive design’ – where applications reconfigure themselves according to the device on which they are consumed – this involves a cost. “Pay TV operators essentially delivered to a set-top box that they could keep up to date,” he says. “If you are trying to deliver across so many [OTT] devices and tablets and so on it increases the cost of building and maintaining [the service].” This has led to the springing up of application development providers who can take some of the pain of product development away from service providers and broadcasters. However there are some signs that times are changing. While service providers still have to deliver video in multiple adaptive bit-rate formats and profiles, HLS is now more or less dominant and the rival Adobe and Microsoft Smooth Streaming formats are converging around MPEG-DASH, which has been adopted by a

number of service platforms including the UK’s YouView. “DASH is getting there and we have seen some commercial traction for the first time this year,” says Boris Felts, Envivio’s vicepresident of product marketing. Luke Gaydon, vice-president of operations EMEA at Brightcove, says that DRM is still problematic, with service providers needing to support multiple DRMs to reach even a handful of popular platforms. However, he agrees that the development of common encryption formats and the growth in popularity of MPEG-DASH and HbbTV could point the way to the sunlit

perform the same functions, such as VMware, a commercial off-the-shelf product that provides much the same functions as OpenStack.

much more agile way than they used to do,” says Felts. “They are seeing the benefits of using software and off-the-shelf servers and virtualisation.” Change is being driven by the new, agile OTT players. More traditional pay TV operators realise they can no longer plan changes to their services over a five-year period – they have to be in a position to respond quickly to the needs of a fast-changing market. Felts also says that multiscreen services are becoming more like full-service offerings, combining a full range of live channels with on-demand and catch-up content. He says peo-

Software processing Nevertheless, he says, operators are using those technologies that are practical to use in order to gain flexibility. Flexibility – meaning an ability to turn services on and off and to scale them up and down to meet spikes and dips in demand – is the goal that really unifies operators. “People are launching services in a

Gaydon: service providers need to support multiple DRMs to reach even a handful of platforms.

uplands of a less complex future for app development for certain platforms – such as smart TVs in the case of HbbTV. There are also technologies in use that can simplify the development of web-based services that work on different devices, such as HTML5 – but dedicated apps for mobile platforms are likely to remain something that require a lot of work. However, in the meantime complexity acts as a barrier to entry to smaller players and prevents larger operators from targeting all the devices in the market. This is good for business for companies like Brightcove that offer a way for broadcasters to contract out the complexity, but there is obviously a cost involved.

ple are also increasingly demanding broadcastquality bit-rates – or better – from OTT particularly as web-delivered video moves towards the big screen. HEVC, enabling a 30-50% saving in bandwidth, can be used to deliver 1080p60 video over the web. The rise of OTT and multiscreen video has given a major fillip to software-based video processing and delivery systems and their providers. While traditional broadcast delivery chains have relied in the past on dedicated hardware platforms, on the OTT side the flexibility and cost-effectiveness of software has swept all before it. Elemental’s Wymbs says that content preparation for OTT and multiscreen distribution is increasingly based on software, even if contribution remains an area where hardware-based technologies are likely to maintain their market share for some time to come. The shift to software was evident at the NAB Show earlier this year when Harmonic announced a major shift to a software-focused approach with its unveiling of VOS, designed to enable virtualised video processing from a single software platform, encompassing functions that have hitherto been managed discretely such as ingest, playout, graphics, branding, compression, packaging and delivery. Ericsson also announced at the show that it had integrated its EVE management layer with Elemental’s encoding platform. “There are large entities looking at software for 24/7 operations as part of their virtualisation strategy because they can’t have that [hardware] asset sitting stranded,” says Wymbs. He says that in the OTT and multiscreen domain operators have to be able to experiment with new services and applications – and ultimately to see them fail – without having to invest huge sums of money upfront in infrastructure. The pace of change in software processing power also means that any video service provider would be advised to maintain maximum flexibility.

HEVC and convergence “These days I don’t sense that buyers are able to determine whether an investment will look smart in three months,” says Wymbs, adding that cloud-enabled delivery allows operators to change their platforms in a shorter timeframe. “Even if you don’t take every single software release you can do easily change the platform


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Broadcasters have turned to companies including Brightcove to deliver OTT services.

every six months.” For broadcasters and service providers used to a slower pace of development, the world of OTT can be challenging – particularly if they wish to integrate their broadcast and new media operations. While OTT and multiscreen delivery is dominated by software technology, for pay TV and other traditional broadcasters, OTT-based delivery is still for the most part treated separately from the main business of broadcast. But with multiscreen services now received by growing numbers of homes, some broadcasters and service providers may ultimately look to migrate their ‘traditional’ broadcast systems to a more OTT-like technology platform. The complexity of integrating very different infrastructures means that this will likely progress in piecemeal fashion. Piksel’s Christie says that “it makes sense to ingest content once and have workflows in place for the broadcast headend and the OTT side as well”. OTT, he says, is having an impact on the way media companies are organised, by demonstrating the importance of metadata and feature-rich content management systems. These systems, he says can also benefit the broadcast side of the business. According to Felts, a growing number of operators are trying to converge their broadcast and broadband platforms. He cites the example of a customer of Envivio’s in Portugal. The fact that off-the-shelf hardware is becoming increasingly dense means that the main objection to delivering video from a data centre – that the latter takes up more space and is less efficient in terms of power consumption –

rather than a broadcast centre is fading away. In any case, the opportunity to pool resources in a data centre means that the space and power demands of any single virtual headend are largely irrelevant. For operators seeking to deploy HEVC-compressed video services, there is in any case little choice as no HEVC compression chipset currently exists. Elemental’s Wymbs also says that some operators are already making the shift. While Elemental has not been traditionally known as an MPEG-2 compression supplier, the company is providing this for Comcast’s Xfinity platform in the US, he points out. He also says that live video is increasingly being seen as a key part of multiscreen. While migration away from traditional hardware systems for broadcast may be some time off, Wymbs believes that the introduction of HEVC as the compression system for the next generation of headend and consumer premises gear may push things towards a tipping point in favour of software-based processing. Up to now, much work on new HEVC/H.265 compression has been focused on how to deliver 4K services efficiently, with its use for OTT video happening more slowly – the reverse of what many people believed would be the case when HEVC first emerged. Currently, most devices decode HEVC video in software. “When a new device with native support for HEVC comes out that will be a big milestone for the industry,” says Wymbs, adding that Elemental currently makes about 10% of its revenues from HEVC – though with the bulk of this related to 4K rather than OTT. Envivio’s Felts believes that HEVC is on the

way up and will be adopted for a wider range of applications, pointing out that the latest generation of smart TVs support the format, while tablets can already decode HEVC in software and devices with hardware-based decoders also on the way. “Operators will try to differentiate based on video quality,” he says. “Higher resolution services will be a true differentiator.” For Piksel’s Christie, much depends on how organisations are structured and how willing and able teams are to work together towards a common end. “There are lots of organisations that still treat OTT as part of ‘new media’ with different reporting structures [to broadcast], so it is also about how the organisation comes together. It depends on how forward thinking organisations are,” he says. Brightcove’s Gaydon sees room for optimism on that score, with broadcasters looking to integrate the broadcast and digital teams. Playout providers such as Red Bee Media and others are also typically now delivering specific digital capabilities. “There has been a collapsing of the distinctions between these activities,” says Gaydon. Cloud-based delivery has the potential to transform the economics of OTT and multiscreen delivery but operators’ Christmases are unlikely to come at once. Service providers are not taking things as far as entirely virtualising their video delivery infrastructure by contracting the process out wholesale to a third-party data centre. Similarly, the convergence of broadcast and OTT is certainly not something that will happen immediately, but there has been a considerable amount of discussion around whether all or some of broadcast channel line-ups could more efficiently be delivered via OTT, with claims and counter-claims being made about the likelihood of bandwidth costs falling to an extent that investing in expensive broadcast infrastructure no longer makes sense. What is clear is that a growing number of services are being delivered over hybrid platforms, with additional channels available on internet-connected broadcast platforms via the red button or a hybrid EPG. Sooner or later, growing use of the cloud will help transform not only OTT but all TV. In the meantime, pay TV operators and broadcasters will continue to find their way to deliver services over a hybrid infrastructure as efficiently as possible. ●


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Multiscreen & OTT 2014 > The survey: industry views on multiscreen and OTT


In the final part of this week’s series of features about multiscreen and OTT TV, we survey a range of industry participants about some of the key issues and challenges relating to cross-device, online video distribution.

The multiscreen survey

Is OTT now best seen as a complementary service to traditional pay TV or is it a competitor? Why? David Sandford, vice president and general manager, international, TiVo While OTT has been considered both a competitor and an ally to linear television, we are now seeing operators increasingly embracing OTT – signalling a move towards its acceptance as a complementary service. This is exemplified by the pairing of Netflix, Hulu, and other OTT services integrated with an operator’s own linear and on-demand offerings, and it has proven to be the service consumers want. An integrated offering provides the customer with an optimal TV experience. With OTT complementing the operator’s own offering, viewers can easily switch from a live sporting event to on-demand binge-watching Orange is the New Black without having to move from their seat or pick up a

new device. Additionally, by integrating search across all content sources, viewers can search for a popular series and access all episodes, not just ones from this season. Consumers receive a broader content catalogue wrapped into one seamless viewing experience.

Campbell Foster, director of product marketing, Adobe Primetime The average consumer doesn't know the difference between traditional pay TV and OTT, and in the longrun, the distinction doesn't matter. Viewers want access to great programming wherever they are. Companies who can meet consumer

demand with engaging experiences will succeed.

Remi Beaudouin, director of product marketing, Ateme At the early stages, OTT was solely considered a threat by pay TV operators. New players bypassing traditional ones were creating a danger to the businesses of the latter by offering new ways to consume. Pay TV operators tried to fight with their regular offer and quickly realised they had more opportunities than threats. ‘’If you can’t beat them, join them,” so says the proverb. Hence, they use OTT delivery as a way not only to offer content ubiquity on multiple screens, but also create interactivity with the end-user through apps or social networks.


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Mathias Hautefort, deputy director-general, Netgem OTT is both a competitor and a complement to pay TV. It is a competitor because OTT services bring consumers a significantly more attractive proposition than traditional pay TV services in terms of price (contractless SVOD, premium and pay-per-view), à la carte content selection, multiscreen and out-of-the-home availability. But OTT is also a complement to traditional pay TV because it can enable services that are not available (or practical) in traditional environments (multi-screen and out-of-the-home access) and because operators can provide access to pure OTT services while still controlling the portal, EPG and overall user experience on customers’ primary TV set. In addition, pay TV operators can take advantage of the commoditisation of the infrastructure used for and by OTT services such as bandwidth, storage and cloud encoding to migrate a good number of existing services. By embracing a cloud-based infrastructure, traditional pay TV operators can not only enhance their offering and keep up with new standards, formats and services but can also save significant capex

required to scale, upgrade and maintain a traditional managed and hosted infrastructure. We like to talk about the concept of ‘freemium TV’. OTT promises to propose a new pay experience for those who used to prefer free content. It’s not a direct competitor to traditional premium pay TV. For only €10 per month we can provide a different experience with essential content, such as live TV, catch up and VOD. That’s what we propose for one of our clients in France, Virgin Mobile, with the Studiobox by Videofutur.

Albin du Pasquier, OTT product manager, Arkena OTT technologies open the door to new distribution means, disturbing traditional TV viewing habits. Customers now have access to a wide choice of content on multiple devices with the ability to control what they want to watch and create their own viewing experience. For traditional TV broadcasters, this can be seen as an opportunity to extend their offering from simple linear streams to on-demand services, although it can also be seen as a defensive constraint to avoid losing audience share. For pay TV operators, the TV everywhere concept allows them to reach a wider audience on multiple screens and offers asso-

ciated new business models. Of course some emerging actors will also use the OTT opportunity to reach customers directly and enter this new market but the interesting thing is that OTT will enable smaller players to develop a niche content offer with limited investment and still reach their audience.

Steve Shannon, general manager, content and services, Roku The majority of Roku users are also pay TV subscribers. OTT is starting to enhance the pay TV value proposition with TV Everywhere apps from major programmers. We think Roku is a great complement to a Pay TV service and support that users subscribe to pay TV services and use TV Everywhere apps because those are among our most engaged users.

Peter Hahn, director product marketing EMEA and APAC, SeaChange OTT is for SeaChange and our service provider customers certainly complementary. OTT is an exciting way to reach new and existing subscribers on new devices. The pay TV operators will use OTT to strengthen their market position and build on top of it new revenue streams from new services or new customer groups.

Do you consider (a) bandwidth and network neutrality challenges (b) competition from pay TV incumbents or (c) online piracy to be the biggest single challenge facing 'pure' OTT video providers? Why? Steve Shannon, Roku I believe it will most likely be competition from pay TV incumbents. Their biggest challenge is acquiring rights to the best content that will help them acquire and keep viewers. They compete for rights with pay TV and other OTT competitors.

getting consumers to pay attention and stay interested in their content. That of course requires making people aware that your product is worth their time and money – and that may require standing out from pay TV incumbents with more marketing presence.

Albin du Pasquier, Arkena Jim Denney, vice president, general manager, product marketing, TiVo This question requires the option ‘(d) other’ or ‘some of the above.’ There is no single challenge, as this is a complex ecosystem with a collage of players. The challenges facing OTT providers consist of a combination of garnering consumer attention, competition from incumbents and acquiring content on licensing terms that allow you to be competitive. If OTT service providers primarily augment the TV experience, then they face the challenge of

In this very competitive environment, there will be many challenges to overcome for OTT players to succeed. Primary criteria have always been and will always be the attractiveness of content. But this is not the only condition and we believe at Arkena that the user experience, and especially the quality of service, are also key for customer loyalty. Customers are now expecting a broadcast quality-like experience on OTT, especially if they’re paying for the service. Our long experience in the content industry has led us to con-

centrate on helping our customers to deliver the best video experience to any device. For example, we have designed and deployed our content delivery network with this focus in mind, relying on a strong local presence and peering agreements with ISPs to avoid congestion. So we strongly believe quality and bandwidth to be the key differentiator for these services in the coming years.

Peter Hahn, SeaChange The biggest challenge for pure OTT is the bandwidth and network neutrality. If a) is the limiting factor b) and c) don’t matter anymore. On top of that we will see the start of 4K also on OTT services which requires even more bandwidth. It is very crucial for OTT service


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tent (linear, catch-up and on-demand, OTT give access to more and more content today), which it can then offer to its customers either on subscription, as a freemium service, payper-view or a combination of all models. This is due to legacy business models, existing exclusive deals, entry cost for certain content owners, legislation, or the fact that certain content owners simply prefer to monetise their content on pay TV or on their own platforms. That said, the bandwidth challenge, which includes net neutrality, shouldn’t be underestimated, at least not for a few more years. Cloud-based content distribution makes it easier for OTT providers to serve all their customers and only pay for content being delivered. The challenge for cloud content distribution providers is providing a reliable, scalable and affordable platform that OTT providers can take advantage of. But OTT providers cannot control the bandwidth to the home, from the edge of their cloud to

the ISP’s network and from the ISP to the home, as well as the bandwidth in the home. And there’s clearly a risk that the OTT service experience may not be as good as it should be for some customers. On the piracy topic, it’s very important that an OTT video provider uses the highest, most industry-accepted content protection available, or it may not get access to some content.

providers that the “tube” is uncapped and all services are equal.

Campbell Foster, Adobe Primetime The single biggest challenge facing 'pure' OTT video providers is the economics of the industry. Content is becoming less expensive to deliver, but remains extraordinarily expensive to produce. The consolidation in the payTV industry is a direct result of distributors seeking more leverage in carriage negotiations. Smaller OTT providers just don't have the scale to be able to negotiate lower rates with the content providers, and will operate with lower — or zero — margins, unless they can make money in other ways.

Mathias Hautefort, Netgem Actually, the biggest single challenge facing pure OTT video providers is access to content. An OTT service can only be successful if it can gain access to a sufficient amount of con-

Remi Beaudouin, Ateme Bandwidth efficiency and neutrality are the biggest challenges for pure OTT players. Content is king, but reach is queen. What’s the purpose of having key content rights, an enormous catalogue or a large channel line-up if nobody can receive it, or can, but with such poor quality of service that nobody really enjoys it.

What route - (a) subscription VoD (b) transactional VoD and/or electronic sell-through or (c) advertising - offers the most promising way to make money from online video services and why? Mathias Hautefort, Netgem It all depends on how the content owners monetise their content and to what extent they are willing to adapt to new models (outside of pay TV). Some will embrace innovative models, like Netflix managed to do when it started the DVD subscription and OTT streaming, even if many studios later decide that they could make more money in a different way and abandon some models. Others will prefer existing legacy models and not take much risk. So what’s important for an OTT VOD service provider is to be flexible and to have the means to adapt to new opportunities. In fact, with the right architecture in terms of content management, preparation, protection, monetisation and distribution, an OTT VOD service should be able to create opportunity for new models or quickly integrate new models to satisfy consumers. On its own (except iTunes), a pure pay-per-view or a pure online sales-based OTT VOD service is not likely to be successful, even when it can take advantage of UltraViolet. Similarly, an ad-based service will have a lot of difficulty creating sufficient critical viewing to afford interesting content. So we believe that an OTT VOD service must create a right mix

of SVOD for a basic subscription and TVOD for premium content, letting the user decide where and when to spend some of the money.

Jim Denney, TiVo This question requires the option ‘(d) other’ or ‘all of the above.’ What we’re seeing today is that the most monetisation promise comes from providing consumers the simplest access to all the routes to online video. Ultimately, different content lends itself to different monetisation models. Each route has its own promise, and each can have its drawbacks. If you can gather enough of an audience, then advertising holds the most promise. However, transactional can be the simplest model, and subscriptions can be the best way to generate a steady revenue stream. Pay TV services that offer a combination of all three have historically proven the most successful – the current paid TV model is an example of such. This is a way to encapsulate the subscription model (both the cable subscription and subscription to OTT providers such as Netflix), an easy-to-use inter-

face for access to the operator’s own VOD library and of course the advertising they can insert on linear and VOD content. We see a combination of up to two or three of these as likely to be the most promising.

Campbell Foster, Adobe Primetime I don't think anyone's figured out the magic formula. Certainly advertising is where you're seeing the most innovation, with grand experiments in dynamic ad insertion outside the traditional C3 and C7 windows starting to bear fruit. In addition to boosting ad revenue, there's an opportunity to help broadcasters lower their costs with lessexpensive ad delivery methodologies through automation and use of programmatic sales. It's a very nascent space, whereas subscription and transactional VoD are more evolved (and less interesting).

Peter Hahn, SeaChange We will see the biggest growth over the next couple of years with products which offer subscriptions or advertising-supported services. We already have very successful pure OTT services in the market, which use either sub-


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generalising, everything else should most likely be offered on an advertising-supported basis.

viewing habits, for instance, will prefer subscription models whereas casual movie viewers will prefer the transactional model. Ad insertion seems to apply better to short content with high social sharing potential and can represent an interesting option, complementary to subscription or transaction offers to attract new audiences to paying for services. What is important for a technology provider like Arkena is the ability to offer all these different options for the video service provider to be able to create its own favoured model.

scription VOD or advertising-supported VOD. But I would not limit it just to VOD. I think that we will also see a revival of linear TV over OTT and related VOD services such as catchup and restart.

Steve Shannon, Roku It all depends on the content. Content offerings that deliver breadth of top tier new release content and those that cater to deep affinities (e.g. foreign language packages) should be subscription, or if the licensor doesn’t allow subscription, then TVOD. At the risk of over-

Albin du Pasquier, Arkena It’s hard to predict which type of offer will succeed best: we can see that major players generally experiment with different models – premium content offerings available through subscription or per-transaction and free content with ad insertion. Depending on the audience targeted, customers with a strong appetite for TV shows with binge

In your opinion, what are the main ways that the move to multiscreen, IPdelivered video will change the way people watch and interact with TV, if at all? Albin du Pasquier, Arkena Recent surveys have demonstrated that video consumption on mobile is increasingly significantly. Customers are getting used to accessing content on all devices, forcing distributors to adapt to this trend. For instance, many services now offer the ability to pause video on one device and to resume on another. Another trend we’ve observed is the ability to offer real-time complementary content and interaction with live shows on companion screens. This represents an interesting opportunity for broadcasters to differentiate and propose an immersive viewing experience to their customers allowing, for instance, social media interaction, voting, accessing additional information, etc. For this purpose, Arkena has developed a smart framework solution based on audio fingerprinting to help content distributors to precisely synchronise interactions on companion screens.

David Sandford, TiVo Multiscreen and IP-delivered video have already changed the way we consume and interact with TV. The most dominant impact has been the shift to content consumption on mobile and tablet devices, which has created a more personalised viewing experience tailored to individuals. The trend we’re seeing today is very similar to what we saw when TiVo first introduced PVR technology. The PVR was revolutionary in that it created the opportunity for the consumer to watch what they wanted when

they wanted. Now, with multiscreen streaming and sideloading, we’re again helping to revolutionise TV consumption such that consumers can choose what they want to watch, when they want it and where they want it.

Campbell Foster, Adobe Primetime Moving to IP-delivered television opens the opportunity to personalise interactions with viewers. Content recommendations are obvious, low-hanging fruit, but we're starting to see the use of personalisation to create much more engaging viewing experiences by incorporating social feeds, web content, and other areas of interest for the viewer within the TV environment. Again, this is a nascent space, and it's very exciting.

Peter Hahn, SeaChange In addition to the consumption of more diversified content, subscribers will use new devices as companions for more effective content selection, driven by search and recommendation services, to consume “context aware” services and to control other devices such as inhome gateways.

Steve Shannon, Roku There are many answers, but the most salient has to do with changes in what people watch. Content viewing will be more fragmented, meaning a broader array of content will be watched more often and with more convenience. Binge viewing is a major trend that could transform TV from

rigid and highly scheduled structures to formats that give the creatives more flexibility to evolve television as an art form without the need for prescribed lengths, weekly ratings achievements, commercial break points, cliff hangers, recaps, etc. Many predict that viewership will shift from TV to mobile, but we believe that as more and more TVs become connected, TV will remain the dominant venue for people to watch their favorite shows.

Remi Beaudouin, Ateme The move to multiscreen definitely triggers interactivity and connectivity. It used to be considered as a second screen only, but it is actually more than that. It is a companion screen creating a different type of experience. Content ubiquity is of course eased with multiple screens. You are not forced to be at home to enjoy your shows, but people use their tablets, smartphones or PCs to connect, comment, rate, flag, like, follow, what they are watching. TV programmers are embracing this trend and encouraging end-users to go on their app to have a different view and add some comment on the show being aired.

Mathias Hautefort, Netgem The most important change from traditional TV watching is time-shifting, which was not introduced by IP delivery but rather by the PVR. Suddenly, people could watch not only what was on but what they wanted, and no longer had to organise their evenings and weekends around the EPG. IP-delivered services took this concept a step further by allowing people to watch content away from their TV


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Multiscreen & OTT 2014 > Survey


set, including outside their home. The initial consequence was screen fragmentation and significant decrease in live audience numbers. However paradoxically, when content can be viewed anywhere, live events have seen audiences increase because they are more accessible than to just those in front of their TV. This

is particularly true for sport events and other ‘crowd gathering’ events like Eurovision or Strictly Come Dancing. Both these trends will continue to grow and regular programme viewing will be more and more fragmented, while live events will gather larger audiences via streaming services. People don’t and most

likely won’t interact with TV and TV programmes as they were expected to but in some form, they will interact by: joining live events (traditional form of social interaction); or binge-watching (new form of interaction, both with the show characters and with their friends who already watched the entire season).

What category of device do you think will have the most future significance for OTT video as a living room choice (a) games consoles (b) smart TVs (c) connected TV devices (d) operator provided set-top boxes. Why? Steve Shannon, Roku It will be connected devices because they will offer the best experience with the broadest content selection at the lowest prices, and they are easily upgradeable. Connected TVs will be second.

David Sandford, TiVo The operator-provided settop box will likely have the most significant future impact on OTT video consumption in the living room because it is the platform that brings linear, VOD and OTT content worlds together in a way that is easy for the consumer to navigate. With an operatorprovided set-top box, there still is ample room for operators to innovate by framing all content choices and delivering a personalised service. The STB, as we’ve seen with TiVo’s deployments in the UK with Virgin Media, Ono in Spain and Com Hem in Sweden, can deliver the ultimate TV experience and provides the most efficient way to search and consume content that is yet to be matched by gaming consoles, smart TVs or connected TV devices.

Remi Beaudouin, Ateme There is no single answer to this question. For sure, connectivity is key. The future is about OTT and the capability to use the IP world to reach more watchers or provide more services. Based on this assessment, each player will use its best vehicle to transmit content and interact with it. The next generation of pay TV provider set-top box will be hybrid: one connection to the managed network (IPTV, cable, satellite), one to the unmanaged network for OTT delivery, TV manufacturers add connectivity to receive content while TV program-

mers use connected device to rate the same content. So a completely new ecosystem is setting up in place around OTT delivery.

Mathias Hautefort, Netgem There’s definitely an opportunity for operatorprovided set top boxes to regain prominence among devices used to access content, but they have to become smarter and smaller at the same time. While the OTT content/application space has always been fragmented due to the fact that each manufacturer was providing a proprietary application framework, which is also true for smart TVs and games consoles, the gradual adoption of OTT video standards has allowed content and application providers to become available on a larger number of platforms. It’s now easier for pure OTT players to reach more viewers and for set-top box manufacturers to integrate existing and upcoming OTT services and content. In particular, the adoption of HTML5, and more specifically the advanced video formats and content protection that HbbTV offers, such as support for existing OTT video formats like Smooth Streaming, Dash, and HLS, has created a perfect hotspot for set-top box manufacturers, application/content providers and content owners. In addition, set-top boxes will have more flexibility to integrate a unified interface which provides access not only to existing TV services, OTT services and the client-side of cloud-based TV services, such as start-over, catch-up and nPVRs, which in most cases will still be accessed via an EPG or from the context of TV channels.

Peter Hahn, SeaChange It’s the number of hours watched on a device, and not so much the number of shipped devices, that is relevant for OTT service providers. The most content will be con-

sumed on connected TVs and TV service providers’ set-tops. The software in both types of devices is built to be flexible and focuses on content consumption. It is paramount for service providers that subscribers consume content on their networks, so the focus will be on making content consumption as easy as possible. Similar things apply to connected TV devices. Customers will buy a connected TV device only for content consumption.

Albin du Pasquier, Arkena Again, who will win the remote-control war is hard to predict. It depends on the local habits and ecosystem. For instance, in France, TV services with a set-top box supplied are generally included in the monthly internet subscription fee, whereas we hear about the cord-cutting phenomenon elsewhere. Unlike smart TVs and other connected devices where login with a remote control is not very convenient, operators and gaming consoles generally have the advantage of offering native authentication and billing facilities. Furthermore, operators and gaming consoles benefit from a large established presence whereas connected TV remains pretty fragmented with variable capabilities, making it difficult to address so far. However, standardisation initiatives like HbbTV in Europe or DASH, together with second-screen services, will surely help broadcasters to reinforce their OTT presence on smart TVs.

Campbell Foster, Adobe Primetime None of the above. The mobile phone will have the most future significance for OTT video by serving as the gateway to a viewer's needs and wants. Connecting data from mobile interactions with IP-delivered TV experiences will enable deep personalisation in ways that will benefit consumers. ●


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