OTT & Multiscreen • Developing OTT for the Emerging Markets, II

Graphic - Digital Trends Video Opinions (header #2, web)

The observations in Part I of this article, “Developing OTT for the Emerging Markets“, outline specific challenges to entertainment providers in developing markets. But the weakness in capital in the emerging markets is somewhat offset by the strength in being able to peer into the future, by observing what the USA is doing today. This helps local players to assess what will come to their market several years from now and essentially creates a leap-frog effect for ambitious companies wanting to adopt the latest OTT solutions. Rather than wait 4+ years to adopt the latest OTT solutions, they can implement a service today, in parallel to their American counterparts.

Figure iii – Average Bandwidth Forecast by Region

Figure iii – Average Bandwidth Forecast by Region

Much of the adoption curve across the globe is driven by the behavior of local subscribers, as well as the adoption curve of new technologies in these regions. Here are a few areas where emerging markets differ from developed markets:

  • In the west, consumers are enticed by the introduction of 4K Ultra High Definition TV. But in developing markets, service providers just want to ensure that their standard definition content (SD @ 528 lines) is served to their consumers in the best quality possible. In some cases, an even lower resolution is offered, such as 288 lines or even 144 lines, requiring limited bandwidth transmissions and mobile devices (Figure iii).
  • 2nd screen and TV everywhere continues to be a hot topic in the west. In many emerging markets the second screen is, in fact, their primary screen. Mobile devices in emerging markets are used as a primary screen for voice, messaging, video, music, content, news, and even banking.
  • In some emerging markets the penetration of smartphone devices is relatively low. A device such as the iPhone is considered a luxury item. With some markets lacking a well-established middle class, the iPhone becomes the Prada of the mobile market, left to the top percentile of society. In the west, the iPhone is another high-end smartphone, but in developing markets the iPhone helps define one’s identity. This has allowed some of the lower cost Android manufacturers to gain market share.
  • HTML5[ix] and responsive design[x] may be at the top of the agenda in web design, but the emerging markets’ focus on serving video content to a much wider range of feature phones does not support advanced web features. There are thousands of feature phones that have limited video capabilities. Smartphone penetration is low, although gaining market share rapidly, but there is a concerted effort to support video to a wider range of legacy devices.
  • In the west, pay TV providers concern themselves with a growing number of cord cutters and cord shavers. In fact, some emerging markets have a large population of cord-nevers, where the market penetration of pay-TV is much lower (Figure iv). For example, the sub-Saharan region has less than 8% market penetration in pay-TV. Even though this market is expected to double by 2020, their market penetration still won’t come close to many developed countries[xi]. It is also possible that if a country misses the adoption curve of pay-TV, then they may prefer to use the Internet as their primary source of entertainment[xii]. This will further limit the penetration of pay-TV subscribers.
  • The west obsesses about BIG data. Many clients in the west have several years of experience in OTT services, so their focus changes from “We need to make sure the service works”, to “How do we increase our average revenue per user (ARPU)?” Reaching this goal results in focusing on collecting, correlating and analyzing more and more data. Emerging markets, on the other hand, don’t yet have a BIG data frenzy. It’s about basic reporting on what the service provider is selling, who is consuming their content, and which devices are displaying their video. Reporting is seen as providing the basic data needed to measure the success of an OTT service. It’s not yet treated as a complex analytics engine that will generate a higher ARPU[xiii]. Emerging markets are still building their first OTT service, or just investigating its commercial viability. OTT v2.0 features like complex analytics and recommendation engines will come in due course.
Figure iv – Pay-TV Average Revenue Per User (Bubble size represents the relative number of household with PayTV)

Figure iv – Pay-TV Average Revenue Per User
(Bubble size represents the relative number of household with PayTV), Sources: iDate, Ofcom, & Wikipedia

Often conversations around entertainment and the Internet lead to, “trading analog dollars with digital pennies”, an analogy popularized by Jeff Zucker, head of NBC Universal[xv]. In the context of this discussion, however, a far closer truth would be broadcast dollars vs. OTT pennies. But in developing markets there are no dollars to be earned since their Average Revenue per User (ARPU) is a fraction of that in the west (Figure iv)[xvi]. On the other hand, OTT pennies can be generated by high subscriber volume since many developing regions have a sizable consumer market. The selling strategy in these regions is less about increasing ARPU and more about generating a subscriber footprint reflecting orders of magnitude higher than can be achieved in the west.Possibly the most challenging issue for emerging markets is the accessibility of premium western content. 90% of American premium content is owned by nine majors in the USA: Disney, Fox, Time Warner, Comcast/NBC Universal, CBS, Viacom, Discovery, Scripps and AMC. These companies spend over 45 billion US$ on this content per year according to Todd Juengerfrom Bernstein Research[xiv]. Service providers in developing markets simply don’t have the capital to purchase these libraries. At best they can afford a tiny fraction of titles for commercial availability to local subscribers. Plan B is to consolidate content from local studios and producers. This focuses their library of titles on entertainment from regional content owners and delivering culturally diverse content that is much more affordable.

As digital video continues to grow at a phenomenal rate, I’m inclined to believe that western companies are more educated about the cultural, political, and economic dynamics of international expansion. For the entertainment community, it may be the case of realizing that earning 100 pennies is far more practical than trying to generate every single dollar.

• Synopsis

In the digital era of the 21st century, ’emerging markets’ have evolved into what we now call ‘developing markets’. If companies in the west are considered the adults of the business world, then developing markets are still at the adolescent stage. A developing market at least acknowledges that the emerging markets have entered their next growth phase. As digital video and entertainment proliferates around the world, the tide is not rising for everyone at the same pace. Developing markets still have to overcome obstacles in adopting streaming solutions due to cultural, technological, and financial challenges. This article has taken a look at some of the differences between developed and developing markets in the adoption of Over the Top solutions (OTT) and digital streaming. By examining some of these, we can help them mature into healthy and robust teenagers.

• About Gabriel Dusil

Ÿ• Home - Signature, Gabriel Dusil ('12, shadow, teal)Gabriel Dusil was recently the Chief Marketing & Corporate Strategy Officer at Visual Unity Global, and a member of the core management team that successfully secured 7.2m US$ in series “A” funding for the company in 2014. Before joining Visual Unity, Gabriel was the VP of Sales & Marketing at Cognitive Security, and Director of Alliances at SecureWorks, responsible for partners in Europe, Middle East, and Africa (EMEA). Previously, Gabriel worked at VeriSign & Motorola in a combination of senior marketing & sales roles. Gabriel obtained a degree in Engineering Physics from McMaster University in Canada and has advanced knowledge in Online Video Solutions, Cloud Computing, Security as a Service (SaaS), Identity & Access Management (IAM), and Managed Security Services (MSS).

• Tags

Ÿ4K, Broadcast, Connected TV, Digital Rights, Digital Video, DRM, Gabriel Dusil, H.265, HEVC, Internet Piracy, Internet Video, Linear Broadcast, Linear TV, Multi-screen, Multiscreen, New Media, Online Video, Online Video Platform, OTT, Over the Top Content, OVP, Recommendation Engine, Search & Discovery, Search and Discovery, second screen, Smart TV, Social TV, TV Everywhere, Ultra HD, Ultra High Definition, Visual Unity, emerging markets, developing markets, developed markets, Digital Trends Video Opinions

• References

[i] Internet Traffic, Wikipedia, http://en.wikipedia.org/wiki/Internet_traffic & Cisco’s Visual Networking Index Forecast (’13)

[ii] Cisco, Visual Networking Index (VNI), http://www.cisco.com/c/en/us/solutions/service-provider/visual-networking-index-vni/index.html

[iii] YouTube, Wikipedia, http://en.wikipedia.org/wiki/Youtube

[iv] Skype, Wikipedia, http://en.wikipedia.org/wiki/Skype

[v] 50 million concurrent users online!, by Jean Mercier, http://skypenumerology.blogspot.cz/2013/01/50-million-concurrent-users-online.html

[vi] Blu-Ray, Wikipedia, http://en.wikipedia.org/wiki/Blu-ray

[vii] Apple iPhone, Wikipedia, http://en.wikipedia.org/wiki/IPhone

[viii] Sandvine – Global Internet Phenomena Report (1H ‘13)

[ix] HTML5, Wikipedia, http://en.wikipedia.org/wiki/HTML5

[x] Responsive Web Design, Wikipedia, http://en.wikipedia.org/wiki/Responsive_web_design

[xi] “Sub-Saharan Africa pay-TV numbers to double by 2020”, by Jim O’Neill, Ooyala VideoMind, http://videomind.ooyala.com/blog/sub-saharan-africa-pay-tv-numbers-double-2020

[xii] A similar trend occurred in the payment industry over the years. Markets that introduced a check-based payment system in the 80’s migrated to credit cards in the 90’s and then to debit cards in the 00’s. In the USA, where checks were introduced, that method of payment is still used to this day. But markets in Europe that missed the boat with checks flourished with credit cards. Emerging markets, on the other hand, missed the boat with credit cards and went straight to debit cards. Furthermore, many of the smaller emerging markets still remain a cash-based purchasing society.

[xiii] Average revenue per user, Wikipedia, http://en.wikipedia.org/wiki/Average_revenue_per_user

[xiv] “Pay-TV Prices Are at the Breaking Point — And They’re Only Going to Get Worse”, by Todd Spangler, Variety.com, http://variety.com/2013/biz/news/pay-tv-prices-are-at-the-breaking-point-and-theyre-only-going-to-get-worse-1200886691/

[xv] Trading Analog Dollars For Digital Pennies, by Zemanta, http://avc.com/2008/11/trading-analog/

[xvi] Consolidated figures for Wikipedia, http://en.wikipedia.org/wiki/List_of_countries_by_number_of_households, Ofcom, and iDate, http://stakeholders.ofcom.org.uk/market-data-research/market-data/communications-market-reports/cmr13/international/icmr-3.23

OTT & Multiscreen • Developing OTT for the Emerging Markets, I

Graphic - Digital Trends Video Opinions (header #2, web)

 

Back in 1998, when I worked for Motorola, the company invited staff to join a corporate briefing on the status and future of the company. I was based in Prague at the time, and this was the first call of its type that I had the privilege of attending. There were literally thousands of people on this call, representing countries from around the world. After listening to our corporate executives talk about their vision of the future, one of the senior executives said something that caught my attention. He said (I’m paraphrasing as it’s been a while), “We plan to give special attention to emerging markets. We see a lot of opportunities in these regions and want to capitalize on their rapid growth potential. Specifically, we see states such as Idaho as an emerging market and we want to focus some of our efforts there…”

What? Idaho, an emerging market? Suddenly the reality of my role, working out of the humble Prague office located on the other side of the world, slapped me in the face. Even though I was responsible for marketing across over 25 countries in Central & Eastern Europe, it seemed that we weren’t even on HQ’s geographic radar.

I would like to provide some perspective on what are the true emerging markets in the entertainment industry – specifically in regards to video streaming. Fifteen years have passed since that call, and much of my time has been spent with one leg in western markets and the other in emerging markets. Holding dual citizenship as a Canadian and Slovak, I always felt I had solid footing in both cultures.

Figure i – Global Internet Traffic vs. Digital Video Milestones

Figure i – Global Internet Traffic vs. Digital Video Milestones, Sources: Cisco & Wikipedia

Digital video has arrived in a big way and is maturing rapidly across the globe[i]. Figure i shows the accelerated growth of internet traffic, of which approximately 70% will be video by 2016 according to Cisco’s VNI[ii] report. For nearly a decade consumers have enjoyed video streaming on their computers and more recently on their mobile devices. Even though this change occurred quickly, it has also been taken for granted. We expect high quality video streaming; that our Skype calls will work; we even assume that video will be served to our mobile devices. So, here is a quick reminder of what we didn’t have ten years ago:

  • We didn’t have YouTube, which launched in February 2005[iii].
  • Consumers were still calling long distance – Skype launched on the 29th of August 2003[iv] and reached its first 10 million concurrent users in 2007[v]
  • Blu-Ray discs had yet to be introduced, with the first titles being released on the 20th of June 2006[vi]
  • Even the iPhone began shipping as early as six years ago, on the 29th of June 2007[vii]

These products and services have become so essential to our lives it’s as if we’ve had them forever. But not everyone around the world has been enjoying entertainment at an even pace.

Information Communication Technology (ICT) maturity varies greatly outside of the developed market. The availability and quality of video streaming, communications, and mobility fluctuates depending on a given developing region. For example, the past decade has shown that the USA leads in the adoption of streaming video solutions, including its offspring Over the Top Content (OTT). Several of the first movers in OTT services who entered the market include Brightcove (est. 2004), Ooyala (est. 2007), and Kaltura (est. 2006). In addition, western subscribers consume more digital video than any other region around the work – in excess of 45GB of traffic per month. In fact, according to the latest report from Sandvine[viii], 32% of downstream traffic in the USA in 2013 can be attributed to Netflix alone. But in Europe, Canada and parts of Asia, these second-tier regions trail several years behind the USA in the adoption of OTT and video streaming services (Figure ii). European consumers, for example, consume a third of traffic compared to their American counterparts: 13GB per month. This is partially attributed to the limited supply of OTT services outside the United States.

Figure ii - OTT Evolution - Geographic Distribution

Figure ii – OTT Evolution – Geographic Distribution

The third tier in this assessment is that of emerging markets. These regions are at least four years behind the USA. This lag is significant on several fronts. First of all, from a competitive perspective, as the Internet is borderless, western companies are entering emerging markets before the local players have the knowledge, time or capital to build a service themselves. Secondly, early adopters from the west have first-move advantage to create an early footprint of global subscribers since they already have a platform and seed capital to expand to international markets. Western competitors wanting to establish a larger subscriber footprint in the east secure additional capital to buy expensive premium content. This footprint is easier to extend over the Internet where borders can be easily crossed. In contrast, broadcasters are typically restricted by geography due to regulation and the limitations of their physical infrastructure.

Stay Tuned for Part II

In the second part of this article we will look into several areas where OTT deployments in the emerging markets differ from developed markets.

• Synopsis

In the digital era of the 21st century, ’emerging markets’ have evolved into what we now call ‘developing markets’. If companies in the west are considered the adults of the business world, then developing markets are still at the adolescent stage. A developing market at least acknowledges that the emerging markets have entered their next growth phase. As digital video and entertainment proliferates around the world, the tide is not rising for everyone at the same pace. Developing markets still have to overcome obstacles in adopting streaming solutions due to cultural, technological, and financial challenges. This article has taken a look at some of the differences between developed and developing markets in the adoption of Over the Top solutions (OTT) and digital streaming. By examining some of these, we can help them mature into healthy and robust teenagers.

• About Gabriel Dusil

Ÿ• Home - Signature, Gabriel Dusil ('12, shadow, teal)Gabriel Dusil was recently the Chief Marketing & Corporate Strategy Officer at Visual Unity Global, and a member of the core management team that secured 7.2m US$ in series “A” funding for the company in 2014. Before joining Visual Unity, Gabriel was the VP of Sales & Marketing at Cognitive Security, and Director of Alliances at SecureWorks, responsible for partners in Europe, Middle East, and Africa (EMEA). Previously, Gabriel worked at VeriSign & Motorola in a combination of senior marketing & sales roles. Gabriel obtained a degree in Engineering Physics from McMaster University in Canada and has advanced knowledge in Online Video Solutions, Cloud Computing, Security as a Service (SaaS), Identity & Access Management (IAM), and Managed Security Services (MSS).

• Tags

Ÿ4K, Broadcast, Connected TV, Digital Rights, Digital Video, DRM, Gabriel Dusil, H.265, HEVC, Internet Piracy, Internet Video, Linear Broadcast, Linear TV, Multi-screen, Multiscreen, New Media, Online Video, Online Video Platform, OTT, Over the Top Content, OVP, Recommendation Engine, Search & Discovery, Search and Discovery, second screen, Smart TV, Social TV, TV Everywhere, Ultra HD, Ultra High Definition, Visual Unity, emerging markets, developing markets, developed markets, Digital Trends Video Opinions

• References

[i] Internet Traffic, Wikipedia, http://en.wikipedia.org/wiki/Internet_traffic & Cisco’s Visual Networking Index Forecast (’13)

[ii] Cisco, Visual Networking Index (VNI), http://www.cisco.com/c/en/us/solutions/service-provider/visual-networking-index-vni/index.html

[iii] YouTube, Wikipedia, http://en.wikipedia.org/wiki/Youtube

[iv] Skype, Wikipedia, http://en.wikipedia.org/wiki/Skype

[v] 50 million concurrent users online!, by Jean Mercier, http://skypenumerology.blogspot.cz/2013/01/50-million-concurrent-users-online.html

[vi] Blu-Ray, Wikipedia, http://en.wikipedia.org/wiki/Blu-ray

[vii] Apple iPhone, Wikipedia, http://en.wikipedia.org/wiki/IPhone

[viii] Sandvine – Global Internet Phenomena Report (1H ‘13)

[ix] HTML5, Wikipedia, http://en.wikipedia.org/wiki/HTML5

[x] Responsive Web Design, Wikipedia, http://en.wikipedia.org/wiki/Responsive_web_design

[xi] “Sub-Saharan Africa pay-TV numbers to double by 2020”, by Jim O’Neill, Ooyala VideoMind, http://videomind.ooyala.com/blog/sub-saharan-africa-pay-tv-numbers-double-2020

[xii] A similar trend occurred in the payment industry over the years. Markets that introduced a check-based payment system in the 80’s migrated to credit cards in the 90’s and then to debit cards in the 00’s. In the USA, where checks were introduced, that method of payment is still used to this day. But markets in Europe that missed the boat with checks flourished with credit cards. Emerging markets, on the other hand, missed the boat with credit cards and went straight to debit cards. Furthermore, many of the smaller emerging markets still remain a cash-based purchasing society.

[xiii] Average revenue per user, Wikipedia, http://en.wikipedia.org/wiki/Average_revenue_per_user

[xiv] “Pay-TV Prices Are at the Breaking Point — And They’re Only Going to Get Worse”, by Todd Spangler, Variety.com, http://variety.com/2013/biz/news/pay-tv-prices-are-at-the-breaking-point-and-theyre-only-going-to-get-worse-1200886691/

[xv] Trading Analog Dollars For Digital Pennies, by Zemanta, http://avc.com/2008/11/trading-analog/

[xvi] Consolidated figures for Wikipedia, http://en.wikipedia.org/wiki/List_of_countries_by_number_of_households, Ofcom, and iDate, http://stakeholders.ofcom.org.uk/market-data-research/market-data/communications-market-reports/cmr13/international/icmr-3.23

OTT & Multiscreen • Entertainment Challenges in Today’s Digital Society • 7 • What improvements can OTT offer to Online Entertainment Services?

13.Nov.20 - Entertainment Challenges in Today’s Digital Society (title)

• Video

• 9 minutes 44 seconds

7. What improvements can OTT offer to Online Entertainment Services?

With regards to improving OTT, there are four main features that will significantly improve the quality of online digital video services:

  • Content Accessibility
  • Content Upgradability
  • Content Portability
  • Subscriber Personalization

a. Entertainment Needs to be Accessible

Today’s digital society is migrating from an entertainment ownership paradigm to a licensing model. Past consumers typically bought hard copies of music and movies. Then they evolved to using the cloud for storage[i]. The main issue with ownership is that it is inherently inefficient from a global content management perspective. Millions of users own duplicate copies of their entertainment, which in turn amounts to millions of duplicate copies of the same song, movie, or TV program. For the environmentally sensitive, this needlessly adds to the amount of polymer, paper, and other harmful chemicals required to manufacture said copies, not to mention the wasted shelf space they take up in the home.

Extrapolating the idea that content in the future will mainly come in licensed form, it’s conceivable that once content resides in the cloud, those millions of duplicate copies will be rendered unnecessary. Imagine an OTT provider telling their subscribers:

“You no longer need to keep all of those files in the cloud.  We will delete your library and give you the best resolution and quality available for your purchased content. We will even allocate a license to members of your family. Furthermore, you can stream that content onto any device you own. We will format and deliver that content in the best quality possible, depending on the location, device, or network you happen to be using.”

That statement may not yet be feasible, but it offers a realistic vision of the future for OTT services. The licensing model will flip the entertainment industry’s current paradigm on its head. Rather than having millions of users accessing millions of duplicate versions of their entertainment, subscribers will simply license a single instance of that content, whenever and wherever they want. This is the essence of OTT.

13.Nov.20 - Entertainment Challenges in Today’s Digital Society (part vii, The ability to access content anytime, anywhere)

OTT services ultimately facilitate a single instance paradigmfor content. This approach has already begun. Consider Apple’s iTunes Match Service[iii] where users can upload their music library to the cloud. In fact, there is no need to upload music at all because the software recognizes that the subscriber has an instance of a song on their computer and grants them access to that song in the cloud. This same principle is possible for movies, TV shows, and any other type of entertainment content.

Practically speaking, one instance of a movie won’t happen in its purest form due to global delivery and caching requirements, archiving, competing services with the same title, etc. But theoretically it is possible have a single 4K or UHD[iv] master of a movie sitting in the cloud (Figure i). If a subscriber wants to access a movie, their content rights license is approved and granted for different devices or users. The movie would then be transcoded on the fly to suit the screen size, processor limitations, and networking capabilities. There are critical factors necessary to make this work, including: chipsets that can transcode 4K content on the fly, ubiquitous Internet access, bandwidth speeds that address quality of service, and seamless yet powerful DRM, to name just a few.

Figure i – Future of Content Delivery

Figure i – Future of Content Delivery

b. Entertainment Needs to be Upgradable

Once content resides in the cloud, such as in an OTT service, then the idea of an upgrade path is viable. Consumers today don’t upgrade their movies and music in the same manner as they upgrade software. Why not? If a user has a Blu-Ray version of a movie and buys a new 4K television, then why shouldn’t there be the possibility to upgrade to a better version? Consumers don’t want to buy content over and over again every time technology improves.

Likewise, when a new family member wants to access the family OTT service, there should be a content rights provision to accommodate that desire. When an extended or recut version is available, or a new featurette[v] is available, subscribers should have the option to pay an incremental fee for that content as well.

Simply put, entertainment should be upgradeable. With content residing in the cloud, OTT services can allow for this level of granularity. A cloud-based licensing model, therefore, provides the platform for upgradability in a manageable and scalable service.

c. Entertainment Needs to be Portable

Content needs to be protected in order to maintain a level of control over portability. Ultraviolet DRM is a solution that seeks to address this need, but true portability is still in its infancy. DRM and the broader scope of content protection is a delicate balance between control and freedom.  The digital locker offered by Ultraviolet seeks to provide a level of freedom for consumers, but can nevertheless feel like a digital prison sometimes.

Portability in the entertainment industry has been extended with the advent of multiple screens (TV, PC, and mobiles), but there are still improvements to be made. Content purchased on one platform (iOS, Android or Windows) should be available on other platforms. Content bought on disc should port to any digital screen owned by the purchaser. Content bought in one geographic region should be accessible internationally. Even movies enjoyed in the cinema could have agreements with OTT providers to find creative ways to offer theater releases in sync with online subscribers.

d. Entertainment Needs a Stellar User Experience

Subscribers want to have fun before, during, and after a movie. The more they have fun, the longer they will stay and play. The longer they stay, the more money they will spend.

This virtual playground is called the User Interface and User Experience (UI/UX) in OTT. It centers on social media, recommendation engines, trivia, games, and statistics, as well as many other features. It’s all about a bi-directional dialog and relationship with subscribers. The consumer is no longer an anonymous viewer to entertainment. Instead, the OTT service provider can facilitate a personal and engaging dialogue with each and every subscriber.

Word-of-mouth and advertising serves to promote head-end content, but does little to promote long-tail titles. With the massive libraries of some OTT services numbering in tens of thousands of titles, it’s quite likely subscribers are not taking advantage of all the content available to them as these libraries are simply too large to navigate. According to Netflix, their recommendation engine accounts for at least 75% of what is being viewed[vi]. A related study found that 14 percent more subscribers enjoy videos following a recommendation versus browsing[vii]. Using different metrics surrounding recommendation engines[viii],therefore,subscribers can migrate to undiscovered titles that are already residing in the service they paid for.

The UI/UX provides the interface to discover new content and allows content distributors to monetize long-tail material that sits dormant in libraries for most of its useful lifespan.

Finally, the value of social media in entertainment should not be underestimated. According to Ooyala, “Personal testimonials are one of the most powerful influences on all types of consumer action… By learning what their trusted friends have enjoyed, and by comparing that to their perception of how much they have in common with the recommender, viewers get a very personalized and motivating impression of what to check out.”[ix]

Clearly, recommendation engines help consumers reach the heretofore uncharted depths of large entertainment libraries.

 


[i] “Turning Piratez into Consumers, II”, by Gabriel Dusil, https://gdusil.wordpress.com/2014/07/24/turning-piratez-into-consumers-ii/

[ii] “The ability to access content anytime, anywhere and on any screen is the essence of today‘s OTT multiscreen strategy.”

[iii] Apple’s iTunes Match Service http://www.apple.com/itunes/itunes-match/

[iv] 4K UHD, Wikipedia

http://en.wikipedia.org/wiki/4K_resolution

[v] Featurette, Wikipedia http://en.wikipedia.org/wiki/Featurette

[vi] “Science Behind the Netflix Algorithms That Decide What You’ll Watch Next”, by Tom Vanderbilt, 7th August 2013, Wired.com http://www.wired.com/2013/08/qq_netflix-algorithm/

[vii] “Branded Videos Shared More Than 500,000 Times Every 24 Hours”, by Greg Jarboe, 11th June 2013 http://searchenginewatch.com/article/2273968/Branded-Videos-Shared-More-Than-500000-Times-Every-24-Hours

[viii] For example: rating systems, social networking, “Likes”, shares, and chat statistics, viewing guides, promotion through syndication, past behavior, demographics ofusers with common interests

[ix] “Connecting Consumers with Content”, Ooyala http://go.ooyala.com/rs/OOYALA/images/ooyala-content-discovery-whitepaper.pdf

.

• Entertainment Challenges in Today’s Digital Society

•Ÿ  Check out additional thought leadership answers to the entertainment challenges in today’s digital society:

1. Is 2nd Screen a threat to broadcasters? What are the challenges for OTT moving forward?

https://gdusil.wordpress.com/2013/12/24/entertainment-challenges-in-todays-digital-society-i-of-vii/

2. How will 4K be adopted by consumers?

https://gdusil.wordpress.com/2014/01/13/entertainment-challenges-in-todays-digital-society-ii-of-vii/

3. Is there a future for 4K video in broadcast?

https://gdusil.wordpress.com/2014/02/10/entertainment-challenges-in-todays-digital-society-iii-of-vii/

4. How is OTT evolving, and what’s in store for subscribers?

https://gdusil.wordpress.com/2014/02/26/entertainment-challenges-in-todays-digital-society-iv-of-vii/

5. How is digital video affecting global communications?

https://gdusil.wordpress.com/2014/03/27/entertainment-challenges-in-todays-digital-society-v-of-vii/

• Synopsis

•  Understanding the entertainment market from ten thousand meters helps industry executives make strategic decisions. This leads to tactical initiatives that drive innovation, new services, and revenue growth. This Q&A series takes a top level view of today’s digital landscape and helps decision makers navigate through the latest technologies and trends in digital video. Gabriel Dusil, Chief Marketing & Corporate Strategy Officer from Visual Unity, discusses the ongoing developments in Over the Top (OTT) services, how these platforms are helping to shape today’s digital society, and addresses the evolving changes in consumer behavior. Topics include 2nd Screen, 4K Ultra High Definition video, H.265 HEVC, global challenges surrounding content distribution, and the future of OTT.

• About Gabriel Dusil

Home - Signature, Gabriel Dusil ('12, shadow, orange)

Gabriel Dusil is the Chief Marketing and Corporate Strategy Officer at Visual Unity, with a mandate to advance the company’s portfolio into next generation solutions and expand the company’s global presence. Before joining Visual Unity, Gabriel was the VP of Sales & Marketing at Cognitive Security, and Director of Alliances at SecureWorks, responsible for partners in Europe, the Middle East, and Africa (EMEA). Previously, Gabriel worked at VeriSign and Motorola in a combination of senior marketing and sales roles. Gabriel obtained a degree in Engineering Physics from McMaster University in Canada and has advanced knowledge in Online Video Solutions, Cloud Computing, Security as a Service (SaaS), Identity and Access Management (IAM), and Managed Security Services (MSS).

• Tags

• 2nd Screen, 4K, Broadcast, Connected TV, Digital Rights, Digital Video, DRM, Gabriel Dusil, H.264, H.265, HEVC, Internet Video, Linear Broadcast, Linear TV, Multi-screen, Multiscreen, New Media, Online Video, Online Video Platform, OTT, Over the Top Content, OVP, Recommendation Engine, Search Discovery, second screen, Smart TV, Social TV, TV Anywhere, TV Everywhere, UHD, Ultra HD, Ultra High Definition, Visual Unity

OTT & Multiscreen • Entertainment Challenges in Today’s Digital Society • 6 • Transcoding Challenges with H.265 HEVC & 4K UHD.

13.Nov.20 - Entertainment Challenges in Today’s Digital Society (title)

• Video

• 2 minutes 46 seconds

6. Transcoding Challenges with H.265 HEVC & 4K UHD

• The video quality of entertainment is constantly improving, while viewing behavior is changing rapidly as well. H.265 (otherwise known as High Efficiency Video Coding, or HEVC) promises double the amount of video with the same bandwidth compared to H.264. Or viewed from a different perspective, video will be transmitted at half the bandwidth compared to H.264.

H.265 is becoming synonymous with 4K (4096×2160) and UHD (3840×2160). And true 4K from a broadcast perspective is becoming synonymous with HDMI 2.0. These three technologies need to converge to bring consumers to the next level in digital video.

The foundations of the H.265 standard were finalized over different stages throughout 2013, but it will still take time before consumers see this codec supported in consumer electronics. In addition, the industry still has to learn how to optimize the quality of compressed content so that it is bandwidth efficient, while still maintaining consistent high quality. Even though H.265 promises 50% efficiency, we’re not there yet as early tests reveal compression efficiencies to be between 15% and 35%. Bandwidth efficiency also translates to lower storage requirements which will be a welcome improvement for cloud service providers.

Figure i - H.264 vs. H.265 - Encoding Time

Figure i – H.264 vs. H.265 – Encoding Time

At the moment, encoding in H.265 is expected to take ten times longer than H.264 at the same frame size, so this will initially be a burden to encoding and transcoding services at the ingest stage. But this metric doesn’t tell the whole story.  H.265 encoding should also be understood from the context of 4K encoding and higher color bit depth.  Figure i attempts to show the encoding burden against time, represented along the horizontal axis[1].

When 4K becomes mainstream, and with 4K frames at four times the size of HD frames, it is estimated that encoding will take 40x longer than today’s HD @ H.264. That’s assuming we’ll be happy with 8-bit encoding (typically found in Blu-Ray and DVD movies). Time will tell whether the industry will accept 8-bit at 4K. It’s also possible that 10-bit will be synonymous with 4K, or maybe even 12-bit as the technology matures.

Time will tell…

 


[1] These are just estimates, and have not yet been lab tested.

• Entertainment Challenges in Today’s Digital Society

•Ÿ  Check out additional thought leadership answers to the entertainment challenges in today’s digital society:

1. Is 2nd Screen a threat to broadcasters? What are the challenges for OTT moving forward?

https://gdusil.wordpress.com/2013/12/24/entertainment-challenges-in-todays-digital-society-i-of-vii/

2. How will 4K be adopted by consumers?

https://gdusil.wordpress.com/2014/01/13/entertainment-challenges-in-todays-digital-society-ii-of-vii/

3. Is there a future for 4K video in broadcast?

https://gdusil.wordpress.com/2014/02/10/entertainment-challenges-in-todays-digital-society-iii-of-vii/

4. How is OTT evolving, and what’s in store for subscribers?

https://gdusil.wordpress.com/2014/02/26/entertainment-challenges-in-todays-digital-society-iv-of-vii/

5. How is digital video affecting global communications?

https://gdusil.wordpress.com/2014/03/27/entertainment-challenges-in-todays-digital-society-v-of-vii/

• Synopsis

•  Understanding the entertainment market from ten thousand meters helps industry executives make strategic decisions. This leads to tactical initiatives that drive innovation, new services, and revenue growth. This Q&A series takes a top level view of today’s digital landscape and helps decision makers navigate through the latest technologies and trends in digital video. Gabriel Dusil, Chief Marketing & Corporate Strategy Officer from Visual Unity, discusses the ongoing developments in Over the Top (OTT) services, how these platforms are helping to shape today’s digital society, and addresses the evolving changes in consumer behavior. Topics include 2nd Screen, 4K Ultra High Definition video, H.265 HEVC, global challenges surrounding content distribution, and the future of OTT.

• About Gabriel Dusil

Home - Signature, Gabriel Dusil ('12, shadow, orange)

• Gabriel Dusil is the Chief Marketing and Corporate Strategy Officer at Visual Unity, with a mandate to advance the company’s portfolio into next generation solutions and expand the company’s global presence. Before joining Visual Unity, Gabriel was the VP of Sales & Marketing at Cognitive Security, and Director of Alliances at SecureWorks, responsible for partners in Europe, the Middle East, and Africa (EMEA). Previously, Gabriel worked at VeriSign and Motorola in a combination of senior marketing and sales roles. Gabriel obtained a degree in Engineering Physics from McMaster University in Canada and has advanced knowledge in Online Video Solutions, Cloud Computing, Security as a Service (SaaS), Identity and Access Management (IAM), and Managed Security Services (MSS).

• Tags

• 2nd Screen, 4K, Broadcast, Connected TV, Digital Rights, Digital Video, DRM, Gabriel Dusil, H.264, H.265, HEVC, Internet Video, Linear Broadcast, Linear TV, Multi-screen, Multiscreen, New Media, Online Video, Online Video Platform, OTT, Over the Top Content, OVP, Recommendation Engine, Search & Discovery, Search and Discovery, second screen, Smart TV, Social TV, TV Everywhere, UHD, Ultra HD, Ultra High Definition, Visual Unity

OTT & Multiscreen • Featured Speaker at the OTT Video Executive Summit

Gabriel Dusil from Visual Unity Global  is Announced as a Featured Speaker at the OTT Video Executive Summit

www.OTTVideoSummit.com

April 14th, 2014. Prague, London, Dubai— Visual Unity Global, a leading OTT platform and multiscreen solution provider,announces Gabriel Dusil, Chief Marketing and Corporate Strategy Officer as a featured speaker at the Over-the-Top Video Executive Summit (www.OTTVideoSummit.com), to be held at Boston’s Lenox Hotel on April 16. Mr. Dusil will speak on topics of “All things content— licensing, transformation, DRM, tracking”, and “Integrating OTT with Social”.

The OTT Video Executive Summit brings together thought leaders to discuss topics crucial to the development of streaming video and evolving Pay TV business models. The conference topics range from content, enabling technologies, to discussions on the evolving viewing behavior of consumers. In addition to experts and executives, the conference includes a panel of everyday people from various demographics. The event is also gamefied, with the leading point-getter being awarded the “OTT Genius” trophy.

“Our audience will benefit greatly from Gabriel Dusil’s experience and perspective on this dynamic industry,” said Brian Mahony, CEO of event producer Trender Research™ Inc. (www.trenderresearch.com). “The industry is going through a period of rapid change, and innovation from companies such as Visual Unity puts it in the driver’s seat.”

In addition to the topics where Mr. Dusil will be speaking, the additional sessions include:

  • “Netflix and net neutrality, who wins?”
  • “Economics of hybrid Pay TV/OTT video services”
  • “Content discovery and navigation— way beyond channel surfing”
  • “What’s a TV channel these days? What’s a brand?”
  • “TV Everywhere: Is it really? What will it take?”
  • “Changing consumer behavior— cord-cutting, multi-screen, interactivity, demographics”
  • “Platform device wars— TVs, consoles, STBs, tablets, mobile”
  • “HD OTA: the dirty little secret”

A focus group of from various demographics will also provide insights on their viewing habits. These include profiles such as “Chatty Tween,” “Working Mom”, “New Vision for Univision”, and “Nana.”

“The OTT Video Executive Summit is an excellent venue to peer into the future trends of video streaming,” said Gabriel Dusil.  “The OTT market has grown at an unprecedented pace, from its birth less than ten years ago.  The thought leadership represented at this event will help industry leaders to make informed and strategic decisions in how they shape their online revenue opportunities.”

The OTT Video Executive Summit is a one day event and is open to executives across the industry. For more information or media inquiries, contact Brian Mahony, bmahony@trenderresearch.com, +1 508-479-7254.

About Visual Unity Global

Visual Unity Global is a global provider of video and digital media solutions, enabling our clients to deliver premium quality video content over the internet. Our clients can measure, analyze and optimize their libraries over time and achieve optimal business success. Our platform capabilities inspire our clients to deploy their assets across multiple devices, screens, and media formats. Visual Unity helps clients manage, deliver and monetize their digital content.

Visual Unity is a Multiscreen Solution Provider, bridging the gap between linear broadcast, IT and IPTV to help clients reach and engage audiences on any screen. Since 1991, the team has been designing and delivering turnkey broadcast and complex multiscreen solutions worldwide – from HD outside Broadcast (OB) vehicles and major playout facilities to live internet streaming and Video on Demand services. Visual Unity’s award-winning vuMedia™ platform helps broadcasters and content owners control how their brand and assets are managed and monetized in the multiscreen environment. vuMedia™ is a highly scalable and a modular architecture, delivering a cutting-edge live viewing experience on the web or any mobile or connected device – all of which can be deployed into existing workflows and business processes.

Visual Unity is based in Prague, London, Munich, Nairobi and Los Angeles. For further information, please visit www.visualunity.com, info@visualunity.com

OTT & Multiscreen • Entertainment Challenges in Today’s Digital Society • 5 • How is digital video affecting global communications?

13.Nov.20 - Entertainment Challenges in Today’s Digital Society (title)

• Video

• 6 minutes 15 seconds

5. How is digital video affecting global communications?

In today’s digital video landscape there is a battle between the entertainment, computing and communications industries. The entertainment industry includes content owners and those that license content for distribution. In computing we find companies that provide hosting, storage, and application-based services. Within the communications sphere are telcos, network service providers (NSPs), and Internet service providers (ISPs) that distribute data around the world. P2P networking is a good communications example of a transport protocol riding on top of the Internet.

Figure i – Industry Wars between Entertainment, Communications & Computing

Figure i – Industry Wars between Entertainment, Communications & Computing

For several years, ISP’s have observed an increase in bandwidth of a magnitude higher than they were accustomed to before video streaming became popular. It may be argued that the turning point was around 2005 with the introduction of high definition video at a time when Internet bandwidth was fast enough to stream good quality video. The popularity of Apple’s iPhone, together with the launch of YouTube, accelerated the use of video to the mass market.

This has forced ISPs to upgrade their back-end and last-mile infrastructures in order to meet these higher bandwidth demands and maintain quality of service (QoS). The issue is when we look at service usage in OTT providers like Netflix, Hulu, YouTube and others. With Netflix subscribers exceeding 40 million and Hulu now over 5 million, typical bandwidth usage for these subscribers far exceeds that of a typical user. The average Netflix user watches five TV shows and three movies per week[i]. This can easily generate up to 80GB of traffic per month if we’re talking about high-definition content. Power users can easily exceed 160GB per month when P2P downloads are taken into account (see Figure ii). Compare this to figures released by Sandvine[ii], wherein Europeans average around 13GB per month on their fixed line service. Their USA counterparts are over three times higher, averaging 45GB. So in countries where OTT is relatively mature, bandwidth usage can easily skyrocket.

Figure ii – Internet Usage Comparison – Europe vs. USA

Figure ii – Internet Usage Comparison – Europe vs. USA

The bottom line is that ISPs are not earning the same incremental revenue from OTT because these are existing subscribers that are already paying for their ISP service. But now they are also using the connection to download video from their OTT provider. From an infrastructure perspective, when Netflix doubles their users, they can effectively use those funds to double the capacity of their OTT service. On the flip side, the ISP sees an accelerated increase in bandwidth usage, reaching and exceeding 10 times more than normal with no foreseeable increase in revenue. But they still must upgrade their networking infrastructure in order to meet capacity. Some see this as ISPs getting the short end of the stick (Figure iii).

Figure iii – ISP vs. OTT Revenue Compared to Infrastructure Cost

Figure iii – ISP vs. OTT Revenue Compared to Infrastructure Cost

Certainly bandwidth usage cannot be blamed on OTT providers themselves. Video is also streamed from websites, video is downloaded through P2P networks, and corporate infrastructures are increasingly using video for communications. Regardless, in markets where video streaming services are prevalent, bandwidth usage per subscriber can burden network infrastructures.

ISPs may feel they are losing power over their subscribers. As a counter-offensive, we’re seeing examples where ISPs are vying to bring control back to their camp. One way is through bandwidth caps on fixed line services (similar to bandwidth caps on mobile services). ISPs are looking to regain control of the subscriber through what could be viewed as a form of Internet governance: charging extra fees based on the type of traffic traversing their network, or traffic shaping, whereby certain traffic such as P2P or OTT video is set to low priority or blocked all together, with traffic being prioritized in a way that is preferred by the ISP. This serves to stifle the use of high bandwidth applications such as OTT and may result in higher fees for heavy Internet users. Essentially this is a way for ISPs to level the playing field.

Increased bandwidth usage due to digital video brings new challenges to an infrastructure provider. But this isn’t necessarily a bad thing for all those involved as threats can also be turned into opportunities. Some Internet providers (eg. cable companies and satellite companies) are working towards regaining control of their market space by investing in OTT – essentially adding OTT as an extension to their communications portfolio.  Triple play[iii] (Internet, telephone, and television) and quadruple play[iv] providers (who include mobile services) are already heading in the right direction. ISPs that are already responsible for transmitting video envision hosting and managing entertainment assets as a strategic expansion of their communications portfolio. This speaks to the convergence of communications, computing and entertainment industries through a conduit that converges onto OTT.

It’s not just ISPs that have seemingly lost control and are being relegated to utility providers. Mobile providers have also been bumped from the pedestal of supremacy. The three applications they owned – voice, contacts, and text messaging (SMS[v]) – have now been over-shadowed by the millions of applications accessible through the Internet. Mobile providers no longer control the handset, applications, or content.  And for that reason they are under threat of becoming a utility, an infrastructure of interconnections, where their borders are wireless base stations, not end-users. To regain relevance in their market telcos need to reach consumers once again. From an entertainment perspective, telcos have an opportunity to extend their participation in the content value chain – creating, uploading, managing, delivering and consuming content by investing in OTT services. This investment solidifies their value in the virtual supply chain of digital video.


[i] “Average Netflix User Watches 5 TV Shows, 3 Movies Per Week via the Service”, Business Wire, 6th Sep 2012, http://www.businesswire.com/news/home/20120906006400/en/Average-Netflix-User-Watches-5-TV-Shows#.UtAD9_RDtUA

[ii] Sandvine – Global Internet Phenomena Report (12.2H)

[iii] Triple Play, Wikipedia, http://en.wikipedia.org/wiki/Triple_play_(telecommunications)

[iv] Quadruple Play, Wikipedia, http://en.wikipedia.org/wiki/Quadruple_play

[v] Short Message Service, Wikipedia, http://en.wikipedia.org/wiki/Short_Message_Service

• Entertainment Challenges in Today’s Digital Society

•Ÿ  Check out additional thought leadership answers to the entertainment challenges in today’s digital society:

1. Is 2nd Screen a threat to broadcasters? What are the challenges for OTT moving forward?

https://gdusil.wordpress.com/2013/12/24/entertainment-challenges-in-todays-digital-society-i-of-vii/

2. How will 4K be adopted by consumers?

https://gdusil.wordpress.com/2014/01/13/entertainment-challenges-in-todays-digital-society-ii-of-vii/

3. Is there a future for 4K video in broadcast?

https://gdusil.wordpress.com/2014/02/10/entertainment-challenges-in-todays-digital-society-iii-of-vii/

• Synopsis

•  Understanding the entertainment market from ten thousand meters helps industry executives make strategic decisions. This leads to tactical initiatives that drive innovation, new services, and revenue growth. This Q&A series takes a top level view of today’s digital landscape and helps decision makers navigate through the latest technologies and trends in digital video. Gabriel Dusil, Chief Marketing & Corporate Strategy Officer from Visual Unity, discusses the ongoing developments in Over the Top (OTT) services, how these platforms are helping to shape today’s digital society, and addresses the evolving changes in consumer behavior. Topics include 2nd Screen, 4K Ultra High Definition video, H.265 HEVC, global challenges surrounding content distribution, and the future of OTT.

• About Gabriel Dusil

Home - Signature, Gabriel Dusil ('12, shadow, orange)

Gabriel Dusil is the Chief Marketing and Corporate Strategy Officer at Visual Unity, with a mandate to advance the company’s portfolio into next generation solutions and expand the company’s global presence. Before joining Visual Unity, Gabriel was the VP of Sales & Marketing at Cognitive Security, and Director of Alliances at SecureWorks, responsible for partners in Europe, the Middle East, and Africa (EMEA). Previously, Gabriel worked at VeriSign and Motorola in a combination of senior marketing and sales roles. Gabriel obtained a degree in Engineering Physics from McMaster University in Canada and has advanced knowledge in Online Video Solutions, Cloud Computing, Security as a Service (SaaS), Identity and Access Management (IAM), and Managed Security Services (MSS).

• Tags

• 2nd Screen, 4K, Broadcast, Connected TV, Digital Rights, Digital Video, DRM, Gabriel Dusil, H.264, H.265, HEVC, Internet Video, Linear Broadcast, Linear TV, Multi-screen, Multiscreen, New Media, Online Video, Online Video Platform, OTT, Over the Top Content, OVP, Recommendation Engine, Search & Discovery, Search and Discovery, second screen, Smart TV, Social TV, TV Everywhere, UHD, Ultra HD, Ultra High Definition, Visual Unity

OTT & Multiscreen • Turning Internet Threats into Entertainment Opportunities

Portfolio - Visual Unity, Turning Internet Threats into Entertainment Opportunities (title)

• Synopsis

• The entertainment landscape has changed more in the last decade, than in the 60+ years of broadcast. Much of this disruption can be attributed to the growth of the internet. From this infrastructure, several battles are raging under the feet of consumers; Broadcast has a new adversary called OTT (Over the Top Video); ISPs are struggling to keep up with bandwidth demands of video; mobile infrastructures have also witnessed significant changes in consumer behavior as applications overshadow handset features. This presentation explores the various battles taking place between the communication, computing and entertainment industries. The global landscape in subscriber behavior continues to change rapidly, and OTT has the potential to be at the center of it all.

• View the recorded video presentation from Visual Unity’s Web Seminar Series

• 36 minutes 49 seconds

• Download the Original Presentation here

Portfolio – Visual Unity, Turning Internet Threats into Entertainment Opportunities (v3.2).pptx

• View the PDF version here

 

OTT & Multiscreen • Entertainment Challenges in Today’s Digital Society • 4 • How is OTT evolving, and what’s in store for subscribers?

13.Nov.20 - Entertainment Challenges in Today’s Digital Society (title)

• Video

• 9 minutes 36 seconds

4. How is OTT evolving, and what’s in store for subscribers?

Figure i - OTT Adoption - Vertical & Horizontal tiers

Figure i – OTT Adoption – Vertical & Horizontal tiers

The adoption of OTT is evolving internationally along three main tiers:

  • Tier 1– These are global and national broadcasters that are adopting their own OTT service. In the context of the technology adoption life cycle[i], they are the innovators of online streaming services.  Their entertainment library is delivered as either subscription-based Video on Demand (SVoD), transaction-based VoD (TVoD), or advertising-based services (AVoD). The most popular OTT method according to recent studies is SVoD[ii], although TVoD is also gaining in popularity. This points to the desire of subscribers wanting more granular control of their entertainment.
  • Tier 2– These are regional broadcasters, distributors, and content aggregators that see OTT as an opportunity to expand their traditional portfolios by distributing content over the Internet. This tier also includes telcos and network service providers (NSP) looking to expand their services into entertainment by hosting and managing OTT content. These companies collectively represent the early adopters.
  • Tier 3– This is a relatively new market opportunity in the context of OTT. Here sits the early majority, which includes online retailers, higher education, and houses of worship, to name but a few. These companies have large treasure troves of videos for product promotion, training, advertising, and video blogs for public consumption. But some videos need to remain confidential, for partner usage only, or to a select number of subscribers. Typical file-based storage solutions are not appropriate for the real-time and bandwidth-intensive nature of video. And the added complexity of ingest, transcoding, metadata, and multiscreen viewing results in enterprises looking for a more suitable private OTTplatform. Within this tier there are libraries that lie dormant, waiting for an appropriate OTT service that allows control over their subscriber base, implementation of strong protection, and a service that retains their content rights.
Figure ii - OTT Evolution - Geographic Distribution

Figure ii – OTT Evolution – Geographic Distribution

These tiers are serviced somewhat differently across the globe. In emerging markets such as Central and Eastern Europe, the Middle East, or Africa, the main opportunities continue to reside in the higher tiers. For developed markets such as Western Europe and the USA, there is untapped potential in the lower tiers. At the moment, the USA leads the market in OTT development. Europe, Canada, and selected countries in Asia are around 18-24 months behind the USA in deployments. The remaining third-tier and emerging markets are 36-48 months behind the USA.

OTT is also evolving based on how users are consuming content. Or rather: how they wantto consume content. The days of bundled pay-TV services may be numbered. Why pay for 500 channels when the average user watches channels whose number can be counted on one hand? Consumers only want to buy what they consume – no more, no less. This change in consumer behavior will be a threat to niche channels, but it may also be an opportunity for the long tail to differentiate its content and attract subscribers directly.

Buying a pay TV service is like going to a book store and having to buy the entire section of the store for just one book. Subscription-based services are closer to obtaining a library card and just borrowing the books you want. Borrowing in the OTT context is the same as licensing: once all the content resides in the cloud, then subscribers get a virtual license to access that content. And all that content is readily accessible, whether the subscriber knows it’s there or not.

This brings us to the evolution and need for recommendation engines and their need to accurately present content that is relevant to each and every user. The modern recommendation engine combines viewing and purchasing habits, demographics, friend recommendations, collaborative engines, and other metrics to provide suggestions that fuel viewing into the long tail.

Figure iii – OTT Evolution - Content Discovery

Figure iii – OTT Evolution – Content Discovery

Adolescent Collector

My dad drove me home from school one day when I was eight years old. I remember enjoying the song that was playing on the radio but had no idea who sang it or what it was called. I distinctly remember thinking, “Wouldn’t it be great if I could have a copy of every song that I ever liked?”

This was the developing mind of a collector, and my imagination didn’t stop there. I dreamt on and thought, “Wouldn’t it be great if I not only had the songs that I knew I liked, but someone would give me all of the songs that I liked, but didn’t even know existed?”

As I sat there in the passenger seat, barely able to see out the window (booster seats didn’t exist then, and I probably wasn’t wearing my seat belt), I imagined how big my collection would be. How many songs did I know and already liked? How big would my collection be if it included songs I wasn’t even aware of yet? What type of machine would be able to do all that?

Our Dodge station wagon wasn’t a great ride by any stretch of the imagination, and certainly the audio system was paltry. Forget surround sound. Forget the Internet, too. Eight-track tapes were on their way out and vinyl was the audiophile’s chosen medium. But it didn’t seem to matter at the time. I didn’t own any cassettes or records until I began to collect albums in my teens. Then I recorded my own compilations onto cassette tapes. In the 90’s, I migrated my entire collection to CD’s, and eventually even ditched all of them once I stored the entire collection onto my computer. I had the forethought to rip my collection in 320kbps MP3, which was complete overkill at the time due to 128kbps being the norm. But I realized that as technology progressed, the demand for higher quality would persist, and if were to rip 500 audio discs, I would do it only once in my life.

The computer, Internet, and some incredibly smart people were eventually born into this world to bring us technology where we can quickly search for new or related musical interests. We can sample artists that are in visual cluster maps similar to artists we already like[iii]. We can do the same for song titles as well. Spotify, Rhapsody and Apple’s Genius allow us to discover artists that we never even knew existed.

Many years have passed since my childhood dream of collecting all that content, and I find myself in a world where this collector’s dream has now become a reality.

4. How has social interaction evolved from broadcast to OTT?

Entertainment is About Communication

It’s worth mentioning at this stage that I strongly delineate between the average consumer and the avid collector. For example, most people are happy to visit the local library. But collectors want to bethe library. There will always be collectors that find personal satisfaction in owning vast libraries of music and movies. But it’s the average consumer that drives the industry, not the collector. The average subscriber is where the bulk of OTT revenue will come from, and online services need to cater to the behaviors of the mainstream consumer.

These days I use Facebook to view what my friends ‘like’ and scan Twitter to see what they’re chatting about. I follow others with similar interests and monitor their comments. I also read recommendations from like-minded individuals to guide me to new material. Even the viewing statistics of people that I don’t know help me determine whether a view count is high enough for me to check  out. I will also check out suggestions from my content provider hoping to find something new and exciting to watch.

Technology is evolving to a level of detail where subscribers are presented with personalized lists of suggestions that dig deep into media libraries and present suggestions that are both accurate and compelling. We’re getting to a level of sophistication in search and discovery where these engines will know our interests better than our best friend– maybe even better than we know ourselves. That seems scary, but let’s not get side-tracked. It can also be an opportunity.

If a recommendation engine can provide suggestions that are extremely accurate, then subscribers will pay more attention to the service. This will help drive subscriber loyalty and higher revenue opportunities.

Subscribers can enjoy suggestions from recommendation engines and social interaction thanks to the bi-directional nature of the Internet. Broadcast, for the most part, is unidirectional. Their audience is anonymous and any feedback is “out of band”. But OTT is inherently bi-directional. And that opens new doors in subscriber engagement and personalization. The entertainment industry is only now beginning to tap into the full potential of real-time bidirectional communications. Reality shows utilize text voting and Twitter. Television offers second screen apps for live broadcasts[iv]. Despite this, advertising and social networking have yet to find their full potential in the context of online entertainment. At least we are on the right track with the industry’s bi-directional communication experiment, and that is leading to higher engagement and personalization.

Figure iv – OTT Evolution - More than Just Video

Figure iv – OTT Evolution – More than Just Video

Up to this point we have focused on OTT as an entertainment platform. But OTT is becoming more than just live, video on demand, or premium content. OTT is on its way to becoming a platform that serves entertainment, computing, and communication. The culmination of all three of these industries merges on OTT where a) video, music and gaming fall under entertainment, b) productivity applications and storage reside in computing, and c) conferencing and social networking are part of communications.


[i] Technology adoption lifecycle, Wikipedia, http://en.wikipedia.org/wiki/Technology_adoption_lifecycle

[ii] Streaming Media – OTT Video, Coming to a Paid Channel Near You (13.Q3)

[iii] Music-map, http://www.music-map.com/

[iv] “8 great apps for second-screen TV”, Times Herald, http://www.timesherald.com/technology/20140204/8-great-apps-for-second-screen-tv

• Entertainment Challenges in Today’s Digital Society

•Ÿ  Check out additional thought leadership answers to the entertainment challenges in today’s digital society:

1. Is 2nd Screen a threat to broadcasters? What are the challenges for OTT moving forward?

https://gdusil.wordpress.com/2013/12/24/entertainment-challenges-in-todays-digital-society-i-of-vii/

2. How will 4K be adopted by consumers?

https://gdusil.wordpress.com/2014/01/13/entertainment-challenges-in-todays-digital-society-ii-of-vii/

3. Is there a future for 4K video in broadcast?

https://gdusil.wordpress.com/2014/02/10/entertainment-challenges-in-todays-digital-society-iii-of-vii/

• Synopsis

•  Understanding the entertainment market from ten thousand meters helps industry executives make strategic decisions. This leads to tactical initiatives that drive innovation, new services, and revenue growth. This Q&A series takes a top level view of today’s digital landscape and helps decision makers navigate through the latest technologies and trends in digital video. Gabriel Dusil, Chief Marketing & Corporate Strategy Officer from Visual Unity, discusses the ongoing developments in Over the Top (OTT) services, how these platforms are helping to shape today’s digital society, and addresses the evolving changes in consumer behavior. Topics include 2nd Screen, 4K Ultra High Definition video, H.265 HEVC, global challenges surrounding content distribution, and the future of OTT.

• About Gabriel Dusil

Home - Signature, Gabriel Dusil ('12, shadow, orange)

Gabriel Dusil is the Chief Marketing and Corporate Strategy Officer at Visual Unity, with a mandate to advance the company’s portfolio into next generation solutions and expand the company’s global presence. Before joining Visual Unity, Gabriel was the VP of Sales & Marketing at Cognitive Security, and Director of Alliances at SecureWorks, responsible for partners in Europe, the Middle East, and Africa (EMEA). Previously, Gabriel worked at VeriSign and Motorola in a combination of senior marketing and sales roles. Gabriel obtained a degree in Engineering Physics from McMaster University in Canada and has advanced knowledge in Online Video Solutions, Cloud Computing, Security as a Service (SaaS), Identity and Access Management (IAM), and Managed Security Services (MSS).

• Tags

• 2nd Screen, 4K, Broadcast, Connected TV, Digital Rights, Digital Video, DRM, Gabriel Dusil, H.264, H.265, HEVC, Internet Video, Linear Broadcast, Linear TV, Multi-screen, Multiscreen, New Media, Online Video, Online Video Platform, OTT, Over the Top Content, OVP, Recommendation Engine, Search & Discovery, Search and Discovery, second screen, Smart TV, Social TV, TV Everywhere, UHD, Ultra HD, Ultra High Definition, Visual Unity