Long reads

Cloud cover – IP and cloud-based alternatives to traditional broadcast models

CloudsTV consumption habits are changing fast, but how viable are IP-and cloud-based alternatives to traditional broadcast models? Anna Tobin reports. 

In the few short years it takes for a child to reach school age, the way we consume TV has changed almost beyond recognition. We are bounding further and further away from the ‘traditional’ TV viewing experience as each new generation of tablet, laptop, smartphone and connected TV hits the market.

Aside from live programming, kids who are as young as the century itself now spend little time focusing solely on a traditional TV set. They are the early adopters setting the trends. That’s not to say that they are not watching what broadcasters are creating, they are just not watching it when it’s scheduled. They are watching it on demand and often on a second screen or simultaneously on the main and a second screen.

To meet demand for this new anywhere, anytime personalised viewing experience and to survive in the market long-term, operators really have no choice but to at least partly migrate their offerings from standard distribution pipes to the more diverse and, therefore, complicated IP cloud-based delivery.

“In doing so, they can deploy their own ‘CDN in the cloud’, based on peering agreements with ISPs, rely on the cloud-based infrastructure of commercial CDNs, or use a combination of both,” says Simon Trudelle, senior product marketing director at digital media technology firm Nagra.

The key challenges with using OTT (over-the-top) TV delivery boil down to three issues: addressing usage peaks; controlling delivery costs; and ensuring a consistent quality of service, Trudelle argues. All three challenges are greatly amplified by the degree to which mainstream live content is delivered by OTT technology.

As operators accept their lot with regards to OTT, it is predicted that some, particularly smaller players, may start to withdraw from the infrastructure business altogether and outsource delivery to data centre providers and third-party content delivery networks.

Broadcasters used to have control of the ‘pipe’ all the way to its end point. This is no longer the case. “One of the biggest challenges of OTT video is creating content that can be distributed on different devices, browsers and networks, and that meets competing standards,” says Kurt Michel, director of product marketing for media at Akamai. “That is where the platform vendor comes in. They understand the complexities of IP delivery systems and how all the pieces fit together, leaving the broadcaster to focus on creating engaging content.”

Nevertheless, Michel believes that broadcast TV will remain the primary entertainment medium for some time to come. “Take the Superbowl, here in the US, for example. A year ago it recorded one of the largest ever online audiences hitting 2.1 million viewers, but the broadcast version went out to over 100 million viewers. Think about the capacity it would take to reach that amount of people online. We will get to the point where all TV is delivered over IP, but it’s going to take a long time.”

A question of cost

Research conducted by Nagra found that, in the context of internet neutrality and ubiquitous availability of reliable broadband, some broadcast channels could indeed find economically viable OTT delivery – below a certain number of viewers and hours of viewing per month.

Nagra provides tech for multiscreen delivery from the cloud.

Nagra provides tech for multiscreen delivery from the cloud.

“As CDN and general IP bandwidth costs keep decreasing, due to continuous technology enhancements in silicon, storage and overall transmission capacity, OTT delivery becomes increasingly attractive over time as one of the economically and operationally valid content delivery mechanisms,” explains Trudelle. “However, as high-speed broadband networks are not expected to reach every household in the foreseeable future, even in developed countries, content providers looking to reach the largest number of consumers are still better off using broadcast delivery networks. Indeed, we anticipate that most channels are expected to use a dual broadcast and unicast strategy to maintain their country-wide consumer reach and actually use OTT to increase the value delivered to consumers through more personalised interactive multiscreen on-demand services.”

It is likely that broadcast delivery will remain the most efficient and cost effective form of distribution certainly for mass audience, premium and live content, for the time being. And, for as long as the traditional broadcast market brings in the lion’s share of the market revenue, the majority of their revenue-based rights holders will stick by it. They will rely on OTT to complement and enhance traditional broadcast income, rather than replace it.

The second-screen market is growing all the time, as is the uptake of connected, OTT-compatible, TVs – although at a slower pace. Together they are fuelling the steady growth in OTT cloud-based delivery. Although it still needs some fine-tuning, OTT should become unmatched in its ability to manage flexible, multi-screen, anytime, anywhere distribution.

Cloud potential

“Cloud-powered service delivery enables a new generation of experiences,” says Yoav Schreiber, marketing manager of service provider video at Cisco Systems. “This includes new, exciting and more engaging forms of multi-screen services, which are synchronised, contextual and personal, enabling greater subscriber control such as pausing content on one device and resuming on another, viewing control of camera angles, and social interactions and recommendations.”

Offering the consumer a better search facility and tailored recommendations will help advertisers too. Increasing ad revenue streams is vital to the survival of most OTT operations long-term. In addition, the cloud has the potential to cover far more than media delivery. We will see it expand into home security, home energy management, home healthcare and much more – all potentially lucrative revenue streams.

Companion apps are also already starting to integrate additional features – such as programme synchronisation using audio recognition – and offer richer interaction features to viewers, such as gaming and polling, interactive advertising and e-commerce.

Another growing market is personal storage in the cloud, points out Schreiber. “The Cisco Global Cloud Index projects that cloud-based personal storage will increase 42 times by 2016. We think that there is a ripe opportunity for TV service providers to play here as well, combining premium and personal content storage and access to their subscribers.”

This new golden vision for the ‘cloud’ comes at a cost, however. “Using the cloud to deliver TV obviously requires bandwidth and enterprise-grade reliability that is much more demanding than traditional web video,” explains Marty Roberts, senior vice president of sales and marketing for Comcast’s white-label video management and publishing subsidiary thePlatform. “Cloud systems need to invest in reliability and redundancy so that TV quality is never compromised.”

“The cloud-based value chain is an increasingly fragmented and crowded place.” Nikki Gore, Quickplay

Reputable established broadcasters in particular are concerned about seeing their control over Quality of Service (QoS) being eroded by taking their offerings OTT. They are also worried about being able to stick to their content rights contracts. “As content is ‘freed’ in order to be delivered in more places, content owners will place more onerous requirements on distributors to ensure they are following the rules,” says Chris Johnston, vice president of digital media solutions at Brightcove. “Just because it may become technically possible to view a show on an iPad from a mountaintop in Kenya, does not mean that someone has the specific right to do so.”

Security seems to be less of a problem. “PlayReady and Widevine DRM emerging as the dominant standards in IPTV and multi-screen video delivery has done a lot to alleviate security concerns,” explains Nikki Gore, vice-president of marketing at Quickplay Media.

Price adds: “Content security in two-way networks is far more capable than in previous generation delivery models. Rights management, however, is now far more complex, with mobile devices in the picture. Location Based Services (LBS) will now be a key part of that.”

Those concerned about moving to the cloud worry about a possible trade-off between scale and control, says Schreiber. “Larger service providers have the scale and capabilities to build and manage their own cloud infrastructures. For smaller service providers, gaining scale by outsourcing to cloud-based CDNs and data centres needs to be calibrated against the amount of differentiation and control over video quality, experiences and brand that can be maintained.”

With these fixes still to be made in the cloud, combined with the current economic situation, companies are understandably reluctant to dump their multi-billion-dollar investments in an established infrastructure that actually delivers television incredibly well.

The hybrid approach

During this transition period “service providers are likely to increasingly rely on a hybrid technology approach in order to deliver TV services, by leveraging both their existing infrastructure and new IP systems,” predicts Roberts.

“The sunken investments in capital expenses prohibit ‘rip and replace’ strategies.  We are seeing dual mode IPTV set-top-boxes, however, that can tune to both existing plant (QAM) and IP-based video systems,” he says. “Using a system like MPX, from thePlatform, traditional TV services can be extended to computers, tablets, games consoles, smartphones, and more. This cloud-based system is deployed alongside traditional TV systems, and over time more true TV functionality can be migrated to IP via CDN distribution.  It’s a transition path we’re actively working on with major operators in Europe and North America.”

However, those with the luxury of being able to afford to invest in a full-scale cloud rollout should quickly reap the benefits, says Schreiber. “Software-centric architectures can unify separate networks, making it easier to manage existing and IP-based TV services; elastic infrastructures can enable new services to be implemented more flexibly – for instance as an evolution of existing capabilities; and flexible frameworks can ensure well-defined service instantiations and orchestration among various video functions.”

Those who can afford it may seek to create their own cloud-based networks or take over existing ones in order to maintain the control they already enjoy over delivery and reap all the extra benefits the cloud can potentially offer. David Price, head of TV business development at Ericsson asks: “What competitive advantage do service providers have if they don’t own the network? If they did that, they just become content licence aggregators and resellers to consumers – with no advantage over a pure OTT.”

Price predicts that content will continue to be delivered through a combination of methods. “In simplified terms, we can separate those who own the content rights; those who have the relationship with the end consumers for delivery information services – voice, video and data; and those parties that have both. We will see a mix of owned and controlled delivery infrastructures combined with infrastructural elements from outsourced third parties.”

“That mix will change depending on the current balance of power between, amongst others, the value of the content versus the strength of consumer relationship. Unicast, non-linear content will inevitably use some form of CDN but, in the case of that third category of entities that have both content and delivery, it will probably be a CDN that is owned and/or at least partly controlled by the provider,” adds Price. [icitspot id=”46591″ template=”box-story”]

Apple TV has yet to match the hype surrounding it, but it still could, which would really give it the potential to control the video market as it does the audio market. With no other obvious competitors, in the meantime OTT providers such as Netflix and Hulu are busy forging relationships with consumers that allow them to bypass existing service providers. Turning these associations into long-term commitments is key if these OTT players are to beat traditional content providers and Apple at their own game.

“A good example of a company using the cloud to enhance the viewing experience for consumers, with their end devices, is Samsung,” says Carlos Conde, solutions architect at Amazon Web Services (AWS).

“Samsung uses multiple AWS services to run its Smart Hub application, which supports Samsung’s devices such as TVs, Blu-Ray players, tablets, and phones. The Smart Hub application authenticates devices, delivers applications and content, pushes notifications, and takes other actions that support the specific device. If Samsung were to use a traditional on-premises data centre, they would have spent US$34 million dollars in hardware and maintenance expenses during the first two years. With the AWS cloud, Samsung met their reliability and performance objectives at a fraction of the cost.”

As ever, even once the initial investments have been ploughed into the infrastructure, commerce is also still likely to be playing catch-up. A fail-safe business model for leveraging the opportunities that OTT TV delivery throws up has yet to be developed. However, Michel thinks Akamai could be on to a winner with its ad inspiration services. “The ability to insert video ads into the online screen to target individual viewers by tracking their viewing behaviour is one of the biggest opportunities we see,” he says. “As this opens up you will see ad spend move to online video in a more interesting way. It will also work in a hyper-connected video environment where products are placed in broadcast content and then displayed on your second screen, giving the viewer the ability to react instantaneously to it without interrupting the viewing experience.”

Major players

As is often the case with an emerging technology, many big, established OTT names – such as Netflix, Amazon, iTunes, YouTube – and major broadcasters are visibly battling it out with a few intrepid startups for controlling stakes in cloud networks. And, away from the media spotlight, a number of companies are vying for a grip on the cloud space too.

“The cloud-based value chain is an increasingly fragmented and crowded place,” warns Gore. “From the perspective of delivering a multiscreen service, there are numerous vendors who do elements of delivery, but fewer who take a more ‘end-to-end’ solution approach. If you break this down by function, the following elements are essential for implementing a cloud-based multi-screen service: content integrations; encoding; media transformation; CDN; CMS; advertising platforms; and storage.”

Roberts sees the players positioning themselves to dominate the cloud based TV infrastructure as “central video logistics systems, such as thePlatform’s MPX; CDNs, whether incumbent providers such as Akamai or in-network CDN systems from companies such as Alcatel Lucent; and device manufacturers, such as set top box and Smart TV manufacturers, who provide the premises equipment that can tap the IP streams.”

With network-based DVR technology already available, it is rights issues for multi-device access that is arguably slowing progress. Content providers must decide whether to offer broad multiscreen rights, hold back in order to strike separate deals with device and service providers, and also how to window content online. Cloud storage costs are an additional industry concern.

However, with young viewers increasingly expecting instant online access to programming, it is down to the content makers and distributers to work together to make the cloud pay.

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