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The State of the Streaming Market 2019
Our annual big-picture look at the numbers that tell where the online video market is today and where it's headed in the next year
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Comcast and Sky have already partnered to offer NBCUniversal's reality TV streaming service, hayu, on Now TV devices in the UK. Despite placing its bets on a traditional satellite pay TV platform, Comcast is likely to also be looking to expand its streaming footprint internationally using Now TV and its sister entities. 

With Disney+ and Apple's services both on the horizon to launch in 2019, the storm facing PSBs and pay TV providers will intensify. 

The number of publishers launching OTT services has grown too. From Condé Nast to Vice, there has been a growth in brands which once would have focused solely on text but are now launching separate video platforms with hours of new original content. 2019 could see an acceleration of this trend. 

"An increasing number of publishers will create platforms which attract consumers already using VOD products," says Tom Williams, CEO at Ostmodern. "This will mean that some publishers will take away much of their audiovisual content from social media platforms." 

Voice Takes Control 

All of this puts intense focus on discoverability, a focus that risks burying broadcasters all together. Ofcom will advise the UK government this year on how PSB prominence might be legislated to ringfence content. Today, PSBs get the top channel slots on a TV EPG (electronic programme guide). 

But even that may be redundant if, as many believe, voice search will soon be the dominant TV interface. Mark Harrison, managing director of the Digital Production Partnership (DPP), told the Changing the Picture conference in November that voice search will be the single most disruptive and important thing to happen to video in a decade. "There will be a ‘Voice EPG' and the question is, when we say ‘Play me some news, play me some comedy': What news? What comedy? Who will decide on this? The one who has the most money? And what will happen to niche content?" 

Virtual voice apps are being integrated into new TV displays and set-top boxes. Any pay TV operator choosing Android gets Google Assistant bundled in. It was estimated that smart speakers would be in more than 100 million homes worldwide by the end of 2018, while Amazon claims 20,000 different devices can be connected to Amazon Alexa alone. 

"TV is the most important space for us," Fabrice Rousseau, Amazon's GM for Alexa Skills EU, informed the IBC2018 conference. "Voice is going to change the user experience by making it a simpler and richer way to access content." 

But that's what worries broadcasters. In the same panel session, Channel 4's chief consumer and strategy officer Sarah Rose argued that content providers had to "actively defend" themselves over a service they had little control over. 

She urged broadcasters to work together to standardise voice interfaces (their metadata) "so that the consumer isn't going to be confused" and also urged Amazon to share data on Alexa interactions with consumers around content. 

Rousseau insisted that there were no plans to prioritise Amazon Prime over that of other content providers—yet. 

There are likely to be battles ahead around rights and which assistant can serve what content to which device. 

Sports Streaming Becomes Business as Usual 

Another indication of the growth in streaming is the impressive increase in peak concurrent plays. Peak concurrency in Q2 2018 was up by 45% YoY, spiking to 5.3 million concurrent plays during the winner-takeall 7th game of the NBA Western Conference Finals and then 7.9 million during the FIFA World Cup, as charted by Conviva (registration required). In the UK alone, a record 3.3 million requests were made to stream England's dramatic penalties win against Colombia via ITV Hub, according to The Guardian

These spikes demonstrate that sports are driving "appointment TV" in the streaming space even while they are broadcast to TV. More than 24 million people in the UK also watched England v Colombia, making this match one of the most-watched events in recent UK TV history, as reported by The Guardian

While live simulcast is becoming a valued part of the fan experience, these events can also create massive demands on the video delivery ecosystem, which faltered at times in 2018. 

Combating Latency 

The rollout of Formula 1 streaming service F1 TV got off to a stuttering start in May when live playback issues resulted in some viewers being unable to watch the race. 

Australian telco Optus had to hand its rights to the FIFA World Cup over to free-to-air broadcaster SBS in July after subscribers reported being unable to watch games. 

However, Nick Moreno, director of strategy at communications infrastructure company Arqiva, reminds us that these incidents are outliers. "Though clearly serious for the rights holders involved, these are noteworthy events only because they are now relatively rare," he told me in a December Broadcast interview. "Multiple millions of streams are delivered every day without hitch, but this doesn't make headlines." 

Latency has long been an OTT bugbear, but one that BBC R&D may have cracked. In a prototype for which it won an award at IBC, Chris Poole, lead research engineer for BBC R&D, explained that it could eliminate delay by either reducing the duration of each segment of video file sent over the network, or by creating the segments progressively as a series of chunks that can be passed through the chain immediately as they become available. 

Esports finally burst into mainstream consciousness last year. Official affiliation with the Winter Olympics in February is paving the way for the sport's full integration. The $25m prize pool at The International Dota 2 tournament is indicative of the entertainment's rapid rise. 

"2019, we will see more organisers experimenting with enhanced interactivity, such as allowing viewers to vote collectively on a player's next move in a game, through the use of polls that appear on the screen during the live feed," predicts Ostmodern's Williams. "Viewers in eSports will not just watch game broadcasts but will actively participate in them, potentially affecting the outcome of a contest." 

Rights to premium sports continue to be fiercely fought for. The most eagerly anticipated auction in the UK was for the English Premier League (EPL), the second-most lucrative sports franchise in the world behind the NFL. Incumbent domestic rights-holders BT Sport and Sky regained the bulk of live TV coverage, paying a combined £4.464 billion ($6.43 billion), which is less than the £5.14 billion ($7.1 billion) for the previous tranche. 

More attention was on whether a digital player would be enticed by the EPL's smaller package of livestreamed games. Amazon eventually made the move by purchasing a 3-year, 20-match-per-season set of games for Prime (following its scoop of exclusive UK rights to the ATP tennis tour and US Open tennis tournament). 

While this looks like more of a tester for the future, the biggest mover in sports streaming was Perform Group, the UK-based self-proclaimed Netflix of sport, which rebranded in 2018 as Perform Content, and DAZN, with the latter being its consumer-facing division. 

DAZN Goes for Broke 

Already with a presence in Germany, Austria, Switzerland, and Japan, it launched in Italy and the US last year. In Italy, it paid nearly €600m for three seasons, or 114 matches a year, of football league Serie A. 

Ampere Analysis is sceptical. "DAZN has an addressable market of 7m Italian households. It needs to sign at least 25% of these homes in order to break even on the rights costs," it notes, adding that DAZN's monthly price of €9.99 means DAZN's break-even point, "while high, is not unachievable".

It maintains, "DAZN's local success will be a key test of whether subscription OTT players are really ready to disturb incumbent pay TV providers in the big-ticket sports rights arena." 

It landed in the U.S. in September with an eyewatering $1 billion for exclusive U.S. rights to broadcast Matchroom Boxing's 16 US and 16 UK staged fight nights per year which, at current exchange rates, means around $118m per year—a bigger budget for promotion than HBO and Showtime put together. 

Matchroom's boss Eddie Hearn told The Independent, "I could have done this with less money—probably half the money—but to make it as powerful as we can, this figure enables us to do it. This will end up eradicating, in my opinion, the pay-per-view model here in America. It's so expensive, it's ridiculous—$99 for a pay-per-view". 

"Paying over the odds for a niche sport in an already saturated US market, in terms of content distributors, is an enormous gamble; especially at a time when viewing figures for boxing and sports overall is declining," is the view of MIDiA Research

MIDiA points out that Disney-owned ESPN+ offers a much more diverse sports portfolio, which could impact DAZN's value proposition on entering the market. But DAZN is nothing if not ambitious and aggressive, plotting to make inroads with major sports leagues, including the NFL and MLB when rights become available in 2021–2022. 

At the other end of the scale, for second- and third-tier sports, remote production for signal contribution purposes over the internet is gaining ground. SRT, the open-source protocol developed by Haivision, goes some way toward ironing out the glitches in sending video over the public internet, a point recognised with the award of a technical Emmy. 

Codec Wars 

Arguably the efforts to promote an alternative video streaming codec to HEVC were generated as much by frustration over HEVC patent holders' refusal to budge on either cost or transparency of licence payments than any bounding improvements in rival technologies. Nonetheless, most observers concede that the foot dragging by HEVC stakeholders has irreversibly opened up the market for new contenders. 

Chief among these is AV1, backed by the Alliance for Open Media (AoM). Others include Divideon's xvc, which attempts to find a middle ground between AV1 and HEVC, and PERSEUS from V-Nova, which works by enhancing existing HEVC encoders and so wouldn't necessitate a rip and replace. V-Nova is promoting this at MPEG with a view to getting it standardised. Samsung, which is not a member of AoM, is pursuing its own HEVC successor through MPEG. 

The sanest observers on this topic point out that HEVC is still a very efficient codec and that it will take any rival at least 2 years to either reach critical mass of market development and/or standardisation to make any real impact. By that time, MPEG intends to come riding to the rescue with Versatile Video Coding (VVC), designed to generate a 40% efficiency over HEVC for applications in omni-directional immersive media. 

The desire to improve VVC's commercial prospects by reassuring potential users that the mistakes of HEVC will not be repeated led to the formation of the Media Coding Industry Forum (MC-IF), which includes HEVC Advance. 

5G Drives Mobile Gaming and Extended Reality 

Cisco's latest Visual Networking Index predicts that by 2022, 60% of the global population will be internet users, more than 28 billion devices and connections will be online, and video will make up 82% of all IP traffic. This volume is being driven by 5G, which will go commercial in 2019. 

Qualcomm's 5G-ready Snapdragon 855 chip is already being incorporated into flagship Android smartphones like the Samsung S10. The system-on-a-chip is primed for 2Gbps speed using a 4G modem, but higher in 5G mode and using the 802.11ay-based protocol, it will take Wi-Fi speeds up to unprecedented 10Gbps. 

Intel and Ovum predict that user demand for video data alone will grow from a monthly average of 11.7GB per 5G subscriber in 2019 to 84.4GB in 2028, at which point it will represent 90% of all 5G traffic. 

The source of this data won't necessarily be autonomous cars or IoT sensors but VR and AR (merging into eXtended Reality [XR] or mixed reality [MR]). Virtual and augmented reality traffic will skyrocket, Cisco believes, so that by 2022, it will consume 4.02 exabytes (EB) a month, up from 0.33EB/month in 2017. 

Intel/Ovum states that 1 minute of AR will consume 33 times more data than 1 minute of 480p video. Yet by 2028, AR games will dominate more than 90% of 5G AR revenues, or around $36 billion globally. 

Intel speculates, "Initially, users will see mobile cloud gaming become a reality, as cloud-based servers do the heavy graphics and AI lifting for less powerful mobile devices." 

Intel and Ovum also list a variety of ways that video viewers will be able to enjoy immersive experiences, including "responsive haptic clothing," that will drive new 5G use cases. 

[This article originally appeared in the 2019 Streaming Media European Industry Sourcebook.]

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