Netflix is posterboy for ‘cloud’; Pay TV is getting started

Netflix gave the Pay TV industry a fright with its deep catalogue of SVOD content, available on virtually any device. It has turned out that the service is more of a complement than a substitute for traditional Pay TV but Netflix, and others like them, forced operators to accelerate or start multiscreen deployments and upgrade their user experiences.

The company made the most of the gift that 21st century networks and video display technology gave to new entrant content distributors: OTT. But their success is not just about CDNs, last miles and adaptive bit rate streaming, nor content rights and exclusive productions. It is built upon the IT cloud and in particular it has been built upon Amazon Web Services infrastructure.  

Adrian Drury, Lead Analyst, Media & Broadcast Technology & Services at the consulting firm Ovum, says that if you want an example of a company that is at the extreme end of cloud utilization, it is Netflix. “Theirs is pretty much the complete cloud-driven infrastructure and systems architecture for the delivery of premium services,” he declares. “The entire thing is built on AWS with the exception of a couple of datacenters where they handle all their customer data.

“It means they can very effectively scale up and scale down their services and it provides them with compute resources on-demand to test new applications that they are rolling out to end users. They have vast computational power to process the masses of data they are collecting about their customers and they have as much storage capacity as they want.”

He observes that the economics of Netflix are radically different to someone that is building their own datacenter and broadcast facility every time they go into a new market. There are no headends to build and pay for, and so fewer obstacles to international expansion. “They have to buy the content rights but from a technical point of view they just flick a switch and move onto a new AWS domain,” Drury explains.

He adds: “There is no such thing as a global Pay TV operator but if there was it would look like someone who is trying to copy the Netflix model.”

He picks out Comcast as an example of a traditional Pay TV operator that is starting to follow a similarly determined cloud path, although the cable operator is using its own private cloud environment, using OpenStack, as the architecture behind its X1 platform. X1 is the basis for a next-generation, more personalized user experience and new multiscreen and nPVR capabilities. Cisco has been helping Comcast build its private OpenStack cloud as part of an ongoing collaboration.

“With Comcast X1 there is the design and sophistication story and also the infrastructure and OpenStack story, which is about them having their own private ‘Platform as a Service’ environment where they can build new services,” Drury explains. “The key benefit is the speed and agility it gives them for new service launches.”

He adds: “Comcast is an absolute example of what we will see from other Pay TV operators.”

Another cable giant, Liberty Global, is starting to exploit the benefits of cloud infrastructure. The company is moving headend functions like encoding, transcoding and multiplexing to the cloud, creating a more virtualized delivery infrastructure for its European operating companies. It is also about to deploy a more cloud-centric second generation of its Horizon whole-home/multiscreen service.

Faycal Amrani, Managing Director and Chief Architect at Liberty Global, went public last summer with plans for an 18-24 month project to virtualize video processing. “By going to the cloud we can improve the cost efficiency by quite a big number, whether it is centralized or in a network of virtualized data centers,” he explained.

On the consumer-facing side of operations, the company is launching a ‘Horizon in the cloud’ offering that will be launched in one of its markets where the existing Horizon platform is not yet available. This new service will put the UI in the cloud.

The company says it will make substantial investments to take parts of the Horizon TV experience ‘into the cloud’, which means content distribution and storage services as well as the user interface. “These measures allow us to make new releases more simple and reduce the cost of our set-top boxes. Also, with more functions like recording moving into the cloud there is less dependence on local storage. This helps to further improve the lifespan of devices in customer homes,” a spokesman explains.

It is worth pointing out that Liberty Global is still completely committed to customer premises equipment. It views the Horizon gateway as a mini-IP headend that enables multiscreen device monitoring and QoE management generally, and can support a growing range of services, including smart home services like security. A spokesman noted that the company “will continue to improve and further update the firmware of the existing Horizon platform and set-top boxes.”

Bouygues Telecom, the French IPTV provider and quad-play operator, has been using cloud services to deliver a gaming experience to customers since 2002 and is currently investigating the power of the cloud for a range of television-related activities. The gaming applications are hosted and managed in the cloud, controlled via the end device, which can be a set-top box or other device, but delivered as video streams. “Cloud brings agility, scalability and easy service evolutions through central management and there is no need for end user software upgrades,” Hubert Cariou says of this innovation.

Cariou sees a bigger role for this kind of infrastructure in supporting live and on-demand multiscreen TV. “Due to the acceleration of video consumption on mobile devices, the main challenges are the cost and scalability of the streaming resources. A cloud approach can enable us to share resources and therefore benefit from cost savings and infrastructure scalability,” he reveals.

Bouygues Telecom is currently investigating the benefits of the cloud for data processing as part of a wider initiative to test cloud-powered services (working with Cisco). According to Hubert Cariou, Director at the service provider, “We can make use of big data processing in the cloud to better understand the end-user behavior and the family profile of our IPTV customers. This results in better service personalization, better service recommendation, better service satisfaction and potentially more accurate targeting for advertising.”

So far, the use of cloud-powered services generally has resulted in shorter development times for new products at the telco. It is also viewed as a way to lower costs for new services. “You can also scale in an extremely flexible way,” Cariou declares. “Cloud brings the advantage and flexibility of on-demand processing, sharing of resources, smart and centrally controlled algorithms and enables data security and privacy for different cloud customers.”

More reading: Videonet report, ‘Making the cloud work for TV’

The ‘cloud’ is not just about OTT but crucial IT concepts like virtualization and hosting and the use of vast and ‘elastic’ compute and storage resources. Using this kind of cloud can make Pay TV operators more agile, with benefits across nearly every part of their operation. Like OTT, this ‘cloud’ could be another game-changer and this report outlines why, addressing the impact on multiscreen TV, data analytics, video processing, the production environment, the STB and the UI. It investigates the impact of cloud infrastructure at pioneers like Netflix and Comcast and outlines the transformational ‘cloudification’ work that Deutsche Telekom has been undertaking and its implications for IPTV. The report also includes insights from Bouygues Telecom, Channel 4, BBC, IHS Technology, Ovum, Cisco, Amazon Web Services, Microsoft Cloud and Enterprise Group, Akamai and Elemental Technologies, among others.

Contents

Virtualization and hosting underpin the IT cloud
Multiscreen TV and network PVR
The data analytics opportunity
Video processing is a cloud ‘battleground’
Production, security and redundancy
Turning up the cloud dial
Deutsche Telekom and the SDN
Making service providers more agile
Initiatives to virtualize the user interface
Preparing for a mixed environment
Saving money with cloud infrastructure

Download report  (free)