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The State of OTT Services 2014
2013 saw OTT video services extend the overall market for pay TV, a definite shift to networked PVR, and a rapid move toward HbbTV.
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Speaking to U.K. broadcasters at the RTS Cambridge Convention in September, Liberty Global’s president and CEO Michael T. Fries conceded that Virgin’s TiVo networked PVR lagged behind the company’s own advanced TV product Horizon, which has attracted 365,000-plus subscribers in Germany, Switzerland, Ireland, and the Netherlands.

“We’ve asked TiVo to continue its path of innovation so that its product will look more and more like Horizon,” Fries said. “We’re trying to take the best of what the OTT experience is teaching us to incorporate that into a platform in the home that allows you to watch content across all devices.”

Fries added, “We’re in the connectivity business. We’re not going to own content.” He also said Liberty “need to build scale or we don’t survive.”

Underlining the point, Liberty Global offloaded its content division Chellomedia to AMC Networks for $1,035 billion (€750 million), to be sealed 1Q 2014, signed BT Sport in a 3-year $120 million deal for carriage over Virgin, and made Netflix available over Virgin TiVo boxes -- the argument being that it’s better to be in bed with the SVOD challenger rather than launch counter-suit Netflix-style products, as BSkyB has done with Now TV.

“Over-the-top providers are forcing change in our business, but it is their functionality or user experience that is more significant than their content,” Fries told RTS delegates. “We need to take great content and move it across multiple platform devices. We need to bring more personal content to the TV screen and the user interface currently doesn’t compare with what you’re getting from Netflix.”

He suggested there will be a “broadband arms race” over the next 3 decades, where cable will beat telcos and satellite rivals with superfast speeds over fibre optics.

Virgin Media made Netflix available over its TiVo boxes, marking the first time that a cable provider has offered Netflix directly to its customers. 

Virgin Media’s top broadband speed will increase to 152Mbps in February 2014, allowing an HD movie to be downloaded in under 4 minutes, the company says.

Announcing the firm’s “strongest cable distribution results to date” in October, TiVo boss Tom Rogers said of the Virgin-Netflix tie-up that “the market really took note of the potential growth opportunity that broadband TV presents through cable. ... Our view has been that the merger of linear television and streaming over-the-top TV is where the future of television is, and Netflix has clearly risen to the level of a must-have on the over-the-top side.”

HEVC and DASH Momentum

2013 was very different for these two separate but related technologies. High efficiency video coding (HEVC) was ratified in January 2013. The 50 percent bandwidth gains against H.264, and the promise for not only “content everywhere” but also “HD everywhere,” while reducing content delivery network (CDN) costs operators and broadcasters, make HEVC a very exciting prospect.

In December, Elemental Technologies chose London as a venue to demonstrate a world first: real-time processing of 4K 50fps (progressive 50) compressed in HEVC. The company says it has already proven p60 in its labs and that 120fps for on-demand content is also realistic.

2013 was more complicated for DASH. Various warnings and market realities (slow adoption on smartphones, a booming number of profiles, interoperability issues) were raised, so much so that according to Remi Beaudouin, director of product marketing for ATEME, “MPEG-DASH did not match expectations.”

The combination of the two standards became a reality during the 2013 French Open when Orange, through the consortium 4EVER, demonstrated the ubiquity of DASH+HEVC content across various networks -- terrestrial, OTT, IP -- and devices.

Investments in both technologies will continue in 2014, with ATEME and others predicting that broadcasters will launch their commercial services based on HEVC most likely around OTT/multi-screen applications first.

“In addition, the market push of Qualcomm and its Snapdragon 800 chipset supporting HEVC decoding, will constitute a major accelerator of DASH+HEVC deployments on both smartphones and set-top boxes,” says Beaudouin.

According to Arkena’s Du Pasquier, “There is a clear interest among all parties to roll out MPEG-DASH and HEVC to reduce fragmentation, simplify workflows and reduce bandwidth cost. There have been many announcements around this in 2013 but actually pretty few real deployments yet. We believe that the production of 4K content, the spread of 4K TV sets, and the adoption of the HbbTV 1.5 standard together with the implementation of common encryption should accelerate its deployment in 2014.”

Saffron Digital’s Peters believes HEVC to be too immature and not yet at scale for service delivery. “I believe that the technology to prepare the content and the capability of devices to be able to play it will start to get in place in 2014 and to a point where it may be useable in 2015,” he says.

He expects to be deploying services with MPEG-DASH in 2014 across multiple platforms. “The challenge from our point of view is that not all operating systems, like iOS, use MPEG-DASH, so you might be able to deliver DASH to web or Android but we’re not yet seeing DASH really simplify the delivery of content profiles across multiple platforms,” he says.

HbbTV Continues to Advance

2013 was rich with events for the pan-European Hybrid Broadcast Broadband TV initiative, which aims to harmonise broadcast and broadband delivery. Whereas 2012 was about proof of concept-oriented deployments with a few trials, more services were rolled out in 2013, mainly across Europe where 10 countries have officially endorsed the standard including Germany, France, Denmark, the Netherlands, Austria, and Poland.

Swiss cable operator UPC Cablecom introduced services based on HbbTV at the start of the year and, toward the end, Hungarian transmission services provider Antenna Hungária began testing HbbTV services as part of its MinDig TV offering. Czech Republic public television broadcaster Ceská televize launched the second phase of an HbbTV pilot project and Russian state-owned broadcaster RTRS also stated its intent to pilot HbbTV in three Russian cities. Germany’s Media Broadcast launched its multithek service via satellite in early December, offering a range of HbbTV applications including the on-demand portals from broadcasters ARD and ZDF.

Industry consortiums were also very active in paving the path to the future of HbbTV. HbbTV 2.0 specifications triggered a lot of positive discussions around the role of companion screens and how HbbTV should embrace the multiplication of devices, rather than fighting against the trend.

“Since the launch of a new standard for HbbTV supporting adaptive streaming based on MPEG-DASH, and DRM for content protection, more and more broadcasters are looking at HbbTV in a different light given that these two factors are key in enabling media organisations to scale and launch new premium offers and experiences,” says Alberto Gomez Yuste, technical director, EMEA, at Brightcove, Inc.

Jean-Marc Racine, managing partner at the consultancy Farncombe, says, “Whereas Connected TV had a head start five years ago, when if you wanted to get OTT content to the main screen, you had no other option now the gap between proprietary TV technologies and HbbTV has closed up. With HbbTV now coming to market it is basically on a par with proprietary connected TVs, including facilities for catch-up TV and ad-insertion for monetisation as well as secure streaming for pay VOD.”

The latter development is important, since pay TV operators have begun assessing HbbTV for the first time. The Common Encryption format (standardised as ISO ISO/IEC 23001) can be used for different DRM systems to share keys and is a major component of the HbbTV strategy that enables pay TV content.

“Most pay TV operators have used proprietary technology to date, although we see that evolving toward open source infrastructure software stacks like Comcast’s RDK [reference design kit] or toward more standards based solutions like HbbTV,” says Racine. “HbbTV combined with a DRM is a perfectly fine pay TV middleware and pay TV providers will get a low-cost device. Pay is not HbbTV’s primary market but certainly a derivative one.”

Turkish pay TV service provider Digitürk has adopted HbbTV, and so has Germany’s HD+ and French and the French satellite player FRANSAT.

“We’ve not seen broadcasters committing to the Smart TV Alliance so if they want to reach a large audience and want cross-platform activity manufacturer services then HbbTV is a clear solution,” says Racine.

ATEME’s Beaudouin says members of the HbbTV initiative are considering MPEG-DASH as a scalable video transport layer to combine the bandwidth efficiency of HEVC, desperately needed to monetise OTT services, with adaptive bitrate key benefits.

Broadcasters could draw on the experience of Spain’s Abertis Telecom S.A., which partnered with NAGRA to implement a multiscreen OTT service supporting MPEG-DASH with DRM managed on a cloud-based HbbTV platform.

The HbbTV consortium embarked on a global campaign to raise awareness and scored a coup when Australia’s public broadcasters decided to base next year’s launch of free digital television service Freeview (from Australia) on HbbTV. Malaysia, Thailand, and Vietnam are actively looking at the platform.

HbbTV services will continue to spread worldwide, including Latin America, in 2014. “This market penetration does not solve all of the challenges facing broadcasters,” says Beaudouin. “Hybrid services must find the right balance between connectivity and intrusion. Recent studies show that consumers have been over-provided with connected information. This excess eventually has a negative impact on the connected TV experience. The best connected is the enemy of the good connected.”

Edgeware also sees deployment growing as satellite and terrestrial broadcasters look to avoid development for multiple platforms. “There is a clear trend among large broadcasters to build their own CDNs rather than use public CDNs such as Akamai and Level 3,” says Edgeware’s VP of business development, Jon Haley. “The trigger for this change is a requirement to deliver much higher unicast traffic levels as more and more programming is made available on demand to more devices. HbbTV adoption should, therefore, grow in line with this.”

Gomez also notes a rise in the number of CDNs adopting MPEG-DASH as key for the evolution of the service with adaptative streaming capabilities. “The announcement that Autralia’s Seven Networks will be releasing HbbTV apps in 2014 will be a strong catalyst in the region and other markets,” he remarks. “In Europe, it’s time for a second wave of HbbTV experiences, but to achieve a more homogenous support of HbbTV on all devices, it’s vitally important to get more support from consumer electronics manufacturers.”

This article appears in the 2014 Streaming Media Europe Sourcebook as "The State of OTT Services."

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