Three-screen grows up

An expression sometimes used in reference to one’s children—“The days are long, but years are short”—applies to today’s fast-moving video business, as well. It may require stepping outside of the daily grind to realize how quickly some technologies, such as multi-screen, are growing up.

A panel moderated by Parks Associates Director of Research Brett Sappington was an occasion for attendees at CES 2012 to see a measuring stick applied to this category. An expert in the TV Everywhere phenomenon, Sappington pointed to a recent growth spurt, saying that the number of operators offering multi-screen has seen a “dramatic increase from July 2009.”

Over these past two-and-a-half years, consumers have turned to second and third screens for several reasons. Sappington said that the biggest three were that consumers 1) found it easier to find content via over-the-top (OTT) providers; 2) were able to play Internet video on their display devices; and 3) found Internet video cheaper and in some cases not available elsewhere.

As for availability, Parks found that 81 percent of consumers in the U.S. were able to get a TV Everywhere through Pay TV provider. In Western and Eastern Europe that number was 40 percent and 12 percent, respectively.

One important development is that as operators have made these systems increasingly available, more and more have begun to compete with each. “Some are now offering it outside of their (territories),” Sappington said.

In Italy, three service providers have now become virtual MSOs: Telecom Italia, FastWeb and Mediaset. Sappington said that United Arab Emirates (UAE)-based Etisalat has “cut a deal with LG to be able to offer linear and video on demand to anyone in the Middle East and North Africa.”

The largest cable operator in the Republic of Korea, CJ HelloVision, has also become a competitor to others outside of their footprint. In what could be a harbinger of the future, the operator launched TV Everywhere, but discovered after 18 months that it could not afford to maintain it as a free service. As a result, the operator built a portal and now offers the service for pay throughout the country.

Sappington also pointed to DishNetwork’s purchase of the Blockbuster video rental business and ongoing rumors of Verizon’s interest in acquiring Netflix as indicators that multi-screen is no longer simply a matter of incumbents competing against new media aggregators.

One company that took an early lead was Orange. The France-based operator launched 12 channels of mobile TV back in 2005, and five years later, along with Deutsche Telekom, it formed the joint venture Everything Everywhere, now the largest mobile operator in the U.K. “The Orange Group proposes multiple innovations on all platforms,” said Jean-Pierre Bienaimé, SVP Strategy and Communications for the Wholesale France unit of Orange.

That innovation is adjusting somewhat, however. While some operators, notably Comcast through its acquisition of NBC Universal, have moved upstream, Beinaimé said that over the past year Orange has been disengaging from its five content partners. “Now we are focusing on content aggregation rather than on content production,” he said.

Bienaimé said facilities-based operators must cope in various ways with the increasing demand for mobile and video services and the need to prepare for an all IP network. He pointed to Orange’s use of Wi-Fi and femto cells, adoption of content distribution network (CDN) technologies and integration of HomePlug and Wi-Fi as ways it has improved QoS, increased efficiency and grown capacity.

How the shifting, multi-screen landscape looks depends in part upon where you sit. As the CEO of anti-piracy company BayTSP, Stuart Rosove said that he was focused upon tracking unauthorized screens and shutting them down. Now as Irdeto VP Marketing (Irdeto acquired BayTSP in October 2011), he is also interested in strategies to capture a greater use of video.

Rosove said that while statistics indicate that cord cutting is “nibbling at the subscriber base,” change could accelerate. “The bigger threat,” he said, “is generational cliff jumpers.”