The term connectivity+ neatly sums up these near-term opportunities for CSPs to add value via broadband-dependent services and apps that go beyond connectivity. In parallel, they can become more involved in the smart home, a whole category of add-ons ranging from smart door locks, doorbells and refrigerators to active security systems and health monitoring/remote health.

In all cases, CSPs are just one of the places consumers will be able to get these services (whether from them directly or via partners). There will be plenty of ‘OTT’ competition. And as with everything, understanding consumers, thanks to privacy-compliant personal data and the analysis of it, could decide who best anticipates needs and delivers the most compelling offers, fastest.

Daniel Hesselbarth, Principal, Business Consulting at EPAM, a leading global development, digital platform engineering and product design agency, believes that while CSPs have existing customer relationships that may, in theory, give them an advantage over competitors in the race to provide connectivity+ and smart home services, this relationship is fairly one-dimensional and data-light today – far from sufficient for the world we are entering.

“The CSP may know the customer from a commercial standpoint – as a revenue generating unit – but not their behaviours and experiences as a person, family or group of people in a home,” argues Hesselbarth. “Huge amounts of data are not being analysed by the CSP, such as fluctuations in terms of bandwidth per device or whether the customer is particularly security conscious.”

“The router knows everything,” he affirms. “You know the type of device, whether it’s mobile or fixed-line, the quality of service, usage behaviour, problems with lag and interference. The CSP would be able to determine all of that through the router. The CSP needs to collect and analyse the data properly to leverage its window of advantage and build up new services.”

Assuming GDPR compliance is properly executed and legally watertight and that the trust of the customer is maintained, the CSP is advised to ramp-up the collection of home usage data through the router and/or mobile devices via its own apps.

Hesselbarth believes it is the data- driven CSP that will enjoy the most success in the emerging connectivity+ and smart home markets. “Telecoms will have to adopt new business models based around data,” he says. “The data they will have access to is enormous as more devices become connected. Telecoms are in a very good position to leverage this data and offer customers personalised digital services.”

He stresses: “The single most pressing activity the CSP needs to do is build up their competency in data gathering. They need to collect GDPR-compliant data and apply intelligence in order to deliver personalised information and recommendations to the customer and to cycle back into services and product updates. This further requires a change in the organisation’s culture by building up in-house competency and hiring data scientists.”

CSPs can draw from experiences in television, where data science is already a top priority. And of course, many CSPs with the broadband focus to explore connectivity+ and smart home are also television providers. Television services provide examples of the organisational and data ‘re-engineering’ that is relevant to other activities. One can be found at Liberty Global, the pan-European cable operator/CSP.

Liberty Global now features a cloud-native microservices architecture built on AWS that provides one ‘back office’ for set-top box and OTT video services for cross-device customer journeys and a data lake that uses AI/ML (artificial intelligence/machine learning) to better inform decisions around product design, customer satisfaction and potential new revenue sources.

“One result is an environment ripe for self-disruption, continuous innovation and optimisation by instituting rapid design, build, test and deploy programmes,” explains Aliaksandr Baradyntsau, European Head of Media & Telco at EPAM. “This digital transformation journey helped Liberty Global enable agile processes, regular production releases and speed up time-to-market.

“The data lake leverages insights from individual viewing behaviours and greater audience trends to make each interaction more personal with anonymised data,” Baradyntsau continues. “With this foundation in place, customers have continuous access to new enhancements like tailored recommendations and individual watchlists.”

Broadband and beyond: the next steps for service providers

This is an edited excerpt from the new Videonet report, ‘Broadband and beyond’, which argues that even ultra-fast broadband will become commoditised, so communications service providers (CSPs) need to think about how they differentiate themselves and where they make money in future. They need to look towards connectivity+ services like premium managed Wi-Fi and family management, and place themselves at the centre of the smart home, whether offering customer care bots or security cameras.

The report explores the opportunities ahead and the operator transformation needed to capitalise on them, including a focus on cybersecurity, a data-driven culture, and agile device and service development. The report concludes that fixed-line providers are well-placed for this journey, from smart customer home all the way to the smart city, and reveals why.

You can download the (free) report here.

However, before anyone can establish a greater presence in consumer homes and lives, they must ensure they can keep people, their data and their privacy safe. And the ‘Broadband and Beyond’ report, commissioned by EPAM (a leading global development, digital platform engineering, digital and product design agency) suggests that communications service providers (CSPs) are well-placed to take on this foundational role, as well as many others.

As in medicine, the golden rule in the connected and smart home should be ‘first, do no harm.’ Gartner estimates that there will be 25 billion IoT devices in use by 2021, many lacking sufficient security features. Online hackers can exploit these devices and steal personal data by attacking home networks, and consumers may not have the skills or tools to protect themselves from such attacks.

There have already been warnings. Smart home security hit the national headlines in 2014 with the disturbing discovery that footage from security cameras in homes (and gyms, and offices) was being streamed live on rogue websites, including footage from baby monitors showing children sleeping in their cribs. One showed a small boy watching television in Woking, United Kingdom.

Meanwhile, hacked CCTV cameras and printers were among the devices used by the Mirai malware to launch a DDoS (distributed denial of service) attack on the Dyn DNS service in 2016 – pointing to how weak home security can quickly become a global network issue.

CSPs that deploy cybersecurity technology can provide protection to all smart devices in homes on their networks without any action required by consumers. And partnering with cybersecurity vendors – as Telenet did with Israeli vendor SAM, as one example of work in this field – enriches the business value proposition for network operators by delivering network visibility, management capabilities and creating new revenue streams with additional services.

The research firm Parks Associates has found that 71% of U.S. smart home households are concerned about cybersecurity (and that concerns can intensify with device adoption). Speaking ahead of a Parks Associates connected home event last year, Derrick Dicoi, VP, Strategy and Product Management at Comcast Cable, noted the need to keep the entire home – both digital and physical – secure.

“With heightened consumer awareness around privacy, convergence between digital and physical security, in a way that does not overburden consumers, will be key,” the exec commented.

CSPs can make security one of their competitive differentiators. Together with established ecosystem partners, they have experience in:

• Protecting high value data streams (e.g. premium video content )
• Managing security across multiple devices cost-effectively (e.g. multi-DRM)
• Minimising the software/processing footprint for security
• Implementing cloud-based (and multi-territory) security implementations
• Dynamic security (adjusting security levels to match threat exposure)
• Partnering at a deep level with silicon and device developers and manufacturers
• Firewalling apps from firmware and hardware (e.g. on STBs)
• Auditing security design and implementation
• Monitoring evolving threats at a global level
• Proactively updating security clients (hardware and software)
• Managing privacy-sensitive data
• Full GDPR (and equivalent) compliance.

CSPs understand the concept of ‘security as a managed service’. They rely on ongoing relationships with consumers meaning that they have never been able to ‘sell and forget’. For many of their smart home rivals, like retailers, this will be brand new territory.

It is worth noting that some major security solution vendors that CSPs have worked with for many years on their Pay TV operations are themselves expanding into the smart home and IoT space. Irdeto, for example, has a Trusted Home solution that protects the connected home beyond the router, partly harnessing fingerprinting technology.

The Kudelski Group, which has a standalone cybersecurity unit, recently announced that it has joined Deutsche Telekom’s nuSIM initiative, which moves SIM functionality from the physical SIM card directly to the chipset. nuSIM is aimed at the IoT market where devices like trackers and sensors have new size, power and bandwidth constraints. Kudelski has over two decades of experience in embedded security.

For Deutsche Telekom, a key aim for nuSIM is enabling IoT devices and applications to be delivered cost-effectively at scale. That will be a challenge for everyone. It helps communication service providers that they are part of an ecosystem that already contains the know-how and talent that will be needed.

Broadband and beyond: the next steps for service providers

This is an edited excerpt from the new Videonet report, ‘Broadband and beyond’, which explores the opportunities for service providers in connectivity+, the smart home and smart city. It investigates the skills and technologies needed to succeed in these markets, existing service provider strengths and the transformations they need in order to do better (including the move to a data-driven culture, plus agile device and service development).

You can download the (free) report here.

 What Covid-19 could mean for television and media:

• Short-term rise in broadcast TV and SVOD viewing. Nielsen predicts 60% higher ratings
• Negative longer-term impact, assuming an economic downturn, with impact on advertiser confidence and discretionary media spend
• New streaming services (like HBO Max , Peacock and Quibi) could benefit from an unexpectedly high demand at launch
• There is a danger that media that can be cut back most easily will be the first to hurt in a recession (so there is still some danger for streamers)
• Cinema releases could be postponed, premiered on streaming services or made available in the Pay TV rental window earlier
• Esports could attract new fans from among ordinary sports viewers, with the value of esports rights climbing
• A boost to game streaming sites like Amazon Twitch and YouTube Gaming, and more paying subscribers for this category
• Growth in user-generated channels and content creators, driven by young audiences who are stuck at home due to school closures.

What media and technology companies are doing right now:

• Netflix and YouTube have agreed to reduce video bit rates in Europe.
• Sky has paused sports fees due to the loss of live content
• Sky Deutschland is making some content available free for a month
• Canal+ is putting some of its pay content in the clear
• BBC will schedule more shows related to education, fitness, religion and cooking, including a virtual church service experience
• Some brands are reallocating spend from linear TV to OTT, where money was originally destined for sports
• Hollywood production has ground to a halt, with California in lockdown
• JP Morgan has cut its European media sector ‘earnings by share’ forecast by 15% in 2020, and 8% in 2021
• Esports firms are taking their live tournaments online, where they began, in one of the easiest moves of all
• Some traditional sports federations are turning to virtual simulations, including NASCAR.

The full story….

The Covid-19 epidemic is likely to result in a dramatic surge in viewing as audiences crave news from TV and some light relief. U.S. ratings agency Nielsen predicts that ‘staying in home’ could lead to a massive 60% increase in the amount of content watched.

Nielsen modelled this figure on how consumers’ media habits changed during the major snowstorm of January 2016 and Hurricane Harvey in August 2017. When a two-foot snowfall hit the New York area, TV usage that Saturday rose 45% from the previous Saturday and was 49% higher than the next Saturday after the blizzard. During Harvey, total TV use rose 56% from the preceding period and was 40% higher than the period following the storm.

“Short-term, viewing of broadcast TV and usage of SVOD services may rise if people stay at home, but it would be simplistic to say that this is ‘good’ for the TV industry,” says Richard Broughton, Research Director at Ampere Analysis. “Any underlying economic weakness triggered by the effects of coronavirus on business and trade, alongside consumer spending patterns on goods and services, will have a negative impact on both advertiser confidence and consumer discretionary media spend.”

He also points to historic economic downturns to show that the portions of media spend which suffered the most were those which consumers could cut back most easily.

“In the last recession, this was cinema, DVD/BD [Blu-ray disc], and industry ad-spend. Pay TV was hit later, and less badly. So, we might see a short-term gain in subscription OTT before any serious social or economic damage has occurred, but the mid-term performance of the sector is likely to be more tightly linked to the overall impact of coronavirus on the economy – and thus health/jobs/personal finances.”

Netflix and YouTube alleviate traffic

Anticipating Internet-buckling demand for OTT video with more people at home – and simply to keep everyone’s communication channels open – the EU asked Google and Netflix to dial back their bit rates. Both complied, with Netflix reducing its traffic on European networks by 25% for at least the next month. Subscribers with the premium 4K UHD service may be the only ones to experience a dip in service quality as a result. All YouTube videos will now play in SD by default for viewers in the EU.

According to The Guardian, initial fears about broadband capacity rested on the rise in remote working, which led to speculation that residential broadband networks would not be able to cope. But in practice, daytime peaks have risen, while still remaining well below a typical evening peak.

Pay TV opens up

A number of the continent’s Pay TV broadcasters are widening access to their services or pausing subscriptions.

Comcast-owned Sky, for example, is giving customers a breather on its sports subscriptions, given that there’s effectively zero live (traditional) sport to watch. The F1 calendar, a staple of Sky Sports’ schedule, has been halted until at least Azerbaijan GP on June 5. Sky Deutschland is unlocking its Sky Cinema and Sky Entertainment packages, including Sky Box sets for all customers for one month.

With France in lockdown, Canal+ is putting some of its content in the clear (available to non-subscribers with a compatible set-top box). Channels usually reserved for particular packages, like cinema, are also being made available to every Canal+ subscriber.

Globally, the stage is set for new streamer launches including HBO Max and Peacock, all of which can expect to witness short term surges in subscription. And into the fray comes short-form streamer Quibi, which will offer a 90-day free promotional offer to entice users. The platform may well have done this anyway in order to build profile, but the crisis-induced demand for content could see it take-off faster than even backer Jeffrey Katzenberg had dreamed.

Unlike HBO, Disney and NBCU, Quibi’s offer includes episodic drama and comedy but it also features daily news bulletins, including coverage from CTV News owned by Canadian telco Bell.

Broadcasters streamline

Broadcasters including the UK’s BBC and TV, and NDR and RTL in Germany, are cancelling live audience shows or airing them ‘behind closed doors’, with the BBC’s political flagship current affairs programme, Question Time, one casualty. The BBC is also focussing more of its programmes on the outbreak and offering more content about education, fitness, religion and recipes for those stuck at home – fulfilling its longstanding role as ‘Auntie’ to the nation in a time of need.

“We are already seeing new ideas coming through which might provide innovative new ways of producing TV in these uniquely challenging times,” said BBC Director General, Tony Hall.

This includes: a ‘virtual church service’ on Sunday mornings across local radio in England; a new iPlayer experience for children; the return to iPlayer of shows including Spooks and The Missing, which were presumably earmarked for the pay service BritBox.

Meanwhile, the UK government has categorised broadcast news journalists for radio and TV as ‘key workers’, which means their children can continue to attend ‘school’ when those institutions shut to other children.

Newsnight and The Andrew Marr Show will remain on air but operated by fewer technical staff.

Advertising tumbles

Usually, a captive TV audience means consumers are more attentive to brand messages – which may still be the case now. But longer term, ad revenues are expected to tumble.

ITV became one of the first to raise the alarm when it forecast a slump in future advertising revenues of at least 10% for April, with travel companies deferring their advertising campaigns. (Read the full story here at our sister publication, Mediatel News).

ITV also has rights to the UEFA Euro 2020 football championships (which has been postponed a year), which would further weigh on revenues. The share prices of major advertising agency groups WPP, Interpublic, Omnicom and Publicis Groupe have all hit multi-year lows.

Some brands are reallocating spend from linear to OTT, particularly in cases where sponsors had planned to advertise in live sports events. According to video ad serving platform SpotX, online ad inventory has increased 16%, although travel and hospitality brands have heavily reduced or completely halted their spend.

Falling ad revenues will, of course, mean that broadcasters have less money to spend on content – threatening to curtail production activity around the world.

Hollywood production has ground to a halt. The state of California is in lockdown and studios are either postponing the release of tentpoles or planning to premiere them on streaming services. NBCUniversal, for example, is to offer titles including The Invisible Man and Emma to rent through the Sky Store, far earlier than it would normally following theatrical release.

There are genuine fears for the future of cinema as a distribution outlet. ‘Will coronavirus be the final nail in the coffin for the mass cinematic experience? Will Netflix and the other streamers manage total domination over the next few months?’ asked director and producer Kevin Macdonald in the UK’s Guardian newspaper.

JP Morgan is cutting its European media sector ‘earnings by share’ forecast by 15% in 2020, and 8% in 2021.

In a note to analysts and investors the bank said, “Broadcasters, Outdoor and Agencies see 2020 cuts of 25-35% while Internet, publishing and entertainment are more resilient.”

Live sport goes virtual

Not all live sport is shut down. The esports community are taking their tournaments online to continue competitions, which traditional sports are simply unable to do. “Esports now has an opportunity to build its presence among sports fans that ordinarily would be consuming other content,” notes Conrad Wiacek, Head of Analysis and Consulting at Sportcal, part of GlobalData.

“The esports sector also has a great opportunity in the media rights space. With the sporting calendar decimated, broadcasters will be looking for content to fill their schedules. While a boom in media rights for esports was expected, the coronavirus outbreak may see the value of these rights jump significantly.”

Traditional sports are also turning to virtual simulations. Rather than run behind closed doors, NASCAR is launching an invitational esports series to fill the void. The series begins this weekend at the virtual Homestead-Miami circuit with participation of reigning NASCAR Cup Series champ Kyle Busch. Welsh cyclist Geraint Thomas has taken to racing amateurs on virtual platforms such as Zwift. Zwift plans to add to its events such as the Tour of Watopia with new events in light of demand.

Futuresource Consulting expects a boost in viewing of game streaming sites Amazon Twitch, YouTube Gaming and Microsoft Mixer. Twitch viewership has seen a 12% year-on-year increase compared with March 2019, the analyst reports, with a rapid growth in viewers in the last two weeks. Crucially, however, there has also been an increase in the number of paying subscribers (who pay $5 per month for additional channel and social features), of which Amazon takes a significant cut.

There has also been an increase in the number of channels and content creators, with the young audience stuck at home due to school closures using the platform to interact with the outside world.

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A look at the positive steps media and tech companies have made to help during the coronavirus outbreak – plus the best brand pivots and the most dishonourable mention, from Mediatel News

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Columnist Raymond Snoddy provides his solution to help maintain the national spirit and keep the ad money flowing as broadcasts of sporting events and soaps face the chop.

Television viewing has sky-rocketed, including among the young

Even moderate GDP growth reductions will hurt Pay TV 18 months down the line, says Ampere Analysis

The increasing trend towards personalised viewing, something that consumers are said to desire, is morphing our behaviour so much that we are increasingly identifying as solo viewers.

Recent research by Ampere Analysis found that solo viewers no longer find watching TV with other members of their household particularly attractive – in fact they actively disagree that watching with others is important. It found that the numbers of solo viewers are greatest in those markets with highest OTT video usage, indicating that it is specifically the rise of VOD, and the huge variety in content choices that it enables, that is driving the phenomenon.

It’s only going to continue. As new streaming services launch, the content pot grows larger, while the ability to serve content tailored to individual preferences is improving all the time.

Ampere believes this won’t make much difference to how content is marketed .“I don’t think SVOD platforms will want to position themselves as advocating watching things on your own all the time, because watching TV is always seen as a communal activity that brings people together,” says Minal Modha, Consumer Research Lead and report author. “Also, in an age when people are allegedly becoming more insular due to social media and smartphones, SVODs wouldn’t want to contribute to anything that could be perceived as having a negative impact on mental health.”

Despite that, the more people a streaming service can get to watch different assets in its library, even from the same account, the more information it can collect about individual profiles. For the growing number of AVODs launching into the market, that can only be good for slicing, dicing and serving up targeted ads.

“With personalisation, I think it’s hard for SVOD platforms to know whether people are solo viewing or viewing with other people through a single profile on the account,” suggests Modha. “Ampere envisages that, as long as those profiles are engaging consumers, SVODs won’t change their personalisation process.”

Ampere found a clear correlation across countries including the U.S., Sweden, Denmark and Australia between SVOD usage and the proportion of consumers identifying as solo viewers. The relationship is especially clear once demographic effects are taken into account, and strongest in adult-only homes. The pattern breaks down among households with children. For this group, family time is still important. Regardless of whether the households have older or younger children, adults in these homes are less likely than their peers to engage in solo viewing, despite their high SVOD usage.

Live broadcasts were not included in the research, but Ampere concludes that live will encourage different viewing patterns due to the need to watch the content… live. “Therefore [live] aligns itself more with communal viewing and we would not expect that to change any time soon.” Indeed, last Sunday’s Super Bowl scored its first ratings increase in five years, with just under 100 million viewers, on average, watching Fox’s broadcast.

There is evidence that scheduling the release of ‘must-see’ content , rather than dropping all episodes into an on-demand offer at once (as a box set) for binge-viewing can still encourage communal experiences. The BBC scored its biggest new drama launch in more than five years with His Dark Materials, transmitted over eight successive Sundays before Christmas. For the first episode, 7.2 million tuned in, with the rest of the run averaging around 4 million and another million plus watching on catch-up.

Top of the agenda were ways in which broadcasters can lobby governments and work with device manufacturers to shape the future media landscape to be open, interoperable and to enshrine principals such as accessibility.

“The TV industry is not driven by traditional economics anymore, which raises concerns about public access, local culture and privacy,” warned Tom Morrod, Research Director, Consumer Services and Technology at IHS Markit. “The traditional industry should be supported by governments in order to compete with these companies.”

Taking heart from statistics showing that the TV set is becoming the main screen for streaming as opposed to the laptop or PC, the starting assumption is that the media landscape may be shifting but old patterns remain. “Traditional broadcasters will have to adapt but are well-placed to do so,” said Peter Siebert, Head of Technology at the digital TV standards development group, DVB. “OTT have challenges too, in terms of establishing a trusted brand and providing the same quality of experience.”

The EBU claims that European broadcasting is the driving force of the European creative sector. Sarah Turnbull, Senior Legal Counsel at EBU, said: “There are concerns in terms of safeguarding national culture, social cohesion and democracy through public service media content. As the European media ecosystem goes online, it is important that Public Service Media have their role in online spaces and enable citizens to access high-quality content.”

Initiatives here include revising the Audio Visual Media Services Directive (AVMSD) to level the playing field for broadcasters and on-demand services. Proposals include reinforced obligations for on-demand services such as the protection of minors and a rule that 30% of catalogues must be dedicated to European audiovisual works.

Pascal Chevallier, Director, Technical Affairs at Digital Europe renewed calls to complete the European digital single market “in order to counteract protectionist forces and proceed towards an inclusive world digital single market.” He added, “Product interoperability is becoming very complex [which] may result in 27 different flavours of the same rules and raises concerns for the industry.

“To achieve a real single market, and therefore to compete with the U.S. and China, European stakeholders should engage to ensure that implementation does not have hidden technical impacts or that the various regulations do not overlap or [have a] disproportionate burden.”

Interoperability, or lack of it, between broadcast and broadband, is a concern in Spain where a third of TVs sold annually are HbbTV-enabled. “Manufacturers are often not interested in updating the software of devices they sold recently and this creates frictions with broadcasters who want to get new services to market,” claimed Xavier Redon Hernandez, Senior Product Manager at Cellnex Telecom, the technology provider behind the LOVEStv hybrid broadcast broadband platform operated in Spain by RTVE, Mediaset and Atresmedia. His prescription to ensure interoperability across systems and devices was for constant conversation with manufacturers.

Harmonisation is the driver behind the DVB Project’s DVB-I (see previous story on DVB-I). Since OTT services are typically deployed through apps, and problems arise when users have to install many of them – while broadcasters need to maintain apps on multiple platforms – DVB-I is an attempt to do for IP services what DVB-T/C/S did for the passage from analogue to digital.

It appears that China is experiencing similar issues. “In China, there is a big problem of fragmentation within the terminals, as middleware or hardware specifications are not harmonised,” explained Haifeng Yan, Principal Engineer at chip maker Hisilicon. “This means that it is costly to develop new services and difficult to deploy them, and there is no unified security scheme.”

An initiative called TV Operating System (TVOS) aims to build a ‘smart media terminal operating system’ that delivers UX consistency, development efficiency, cross-hardware platform, security and sustainability. It has 120 members including operators and chip vendors and has the backing of the Chinese government. TVOS is also pushing for recognition as an international standard through ITU-T SG9 (Study Group 9) and can apparently be made compatible with other standards such as DVB-I and HbbTV.

Can TVOS be implemented in Europe? “It is up to the manufacturers to find an agreement on the delivery arrangements, but as long as receivers comply with recommendations there wouldn’t be problems,” Yan said.

ITU-T SG9 is further developing a new recommendation that defines the basic requirements and interfaces between cable TV operators and OTT providers. The group is examining Gigaband networks and aims to evolve to what it calls the era of extreme TV/video and ultra-fast broadband. This standard may also embrace AI for use in scheduling, leveraging archives or text-to-speech accessibility.

Andy Quested, Chair of ITU-R Working Party 6C highlighted the importance of accessibility, pointing out, “Access to media is a right, not an inconvenience.” An aging population across Europe makes accessibility systems ever more necessary.

The UK’s DTG, not part of the ITU meeting but an underwriter of its ambition, argues that if we are going to start mapping a future for TV across devices, we need an ordered framework. The organisation divides this into Quality of Interoperability (does something work and does it do what it should?), Quality of Experience (which emphasises the value of attributes like HDR and pushes the industry to deliver the very best for the consumer), and Quality of Security (looking ahead to Smart TV vulnerabilities of the IoT home).

Focusing on the last point, the DTG endorses the UK government’s Code of Practice, which shifts the onus for secure Internet-connected devices and apps from consumers to manufacturers, designers and suppliers.

“Innovation in consumer electronics devices, in partnership with service providers, will shape the future television experience,” declared DTG Chief Executive Richard Lindsey-Davies. “Understanding emerging developments, together with a view on how these might be implemented are critical if the viewer experience is to be protected, and industry and government are to derive the maximum economic and social value of the unique opportunity that lies ahead.”

The insights form part of a new report by NAGRA, the Kudelski Group-owned Pay TV and OTT solutions provider, which assesses the impact standalone sports streaming services are having on Pay TV. “Tier-one sports rights are critical to the future of Pay TV providers, who are increasingly consolidating their investments,” the report states. Operators are urged to look at different ways to package this content to make it more attractive to cord-cutters and to support super-fan needs.

The report, titled ‘The Global Market for Premium Sports OTT Services’, notes that an increasing number of sports rights holders are launching premium OTT services to drive additional engagement and revenues from their most loyal fans. More than a third of the world’s top soccer clubs, and six of the top ten largest leagues and federations, now offer premium OTT streaming services.

Of the new rights holder-owned services to hit the market, nearly half were launched in the past two years, a statistic which underlines the rapid growth seen in the OTT sports sector. Among the most recent and most ambitious is the international OTT platform debuted by English Premier League (EPL) champions Manchester City. ‘Man City for TV’ ‘ live streamed several of the club’s pre-season fixtures and shows live matches of its Women’s and Academy teams along with bespoke content.

Nuria Tarre, CMO at Manchester City, said: “By becoming a central hub for Manchester City content, we want to push the boundaries in technology and sports consumption and provide an immersive entertainment experience for our loyal fanbase, wherever they are.”

In North America, all four of the major sports leagues have long operated their own streaming services that show live and archived games both domestically and internationally. Of Europe’s top domestic soccer competitions, four of which rank inside the world’s top ten leagues and federations by revenue, only Italy’s Serie A currently transmits live match action via its own OTT service. Spain’s La Liga already operates LaLigaSportsTV, a free service that provides coverage of Spanish sports content but has yet to stream live La Liga games. The EPL is reportedly considering launching its own streaming platform.

Another property that ranks among the world’s top ten by revenue, but which has yet to be shown via a standalone streaming service, is the UEFA Champions League – although UEFA, European soccer’s governing body, announced the launch of UEFA.tv in June. That service will initially offer live match streaming from UEFA’s women’s, youth, and futsal competitions in certain markets, as well as carrying a channel dedicated to the Bundesliga, German soccer’s top club competition.

At the club level, half of the top ten soccer sides by revenue, and a third of the top 25, now operate a paid OTT service, the NAGRA report notes. These services typically offer complementary programming such as behind the scenes footage, interviews and original shows, as well as live coverage of non-first team matches or pre-season matches.

Formula 1’s F1 TV Pro is an exception to the general rule of leaving the best content out of the direct-to-consumer offers, featuring live races in markets where they have retained digital rights.

While many more clubs and leagues are investing in DTC services, the NAGRA report notes that rights holders “must weigh the benefits of DTC revenues against the risk of diminishing the value of the rights packages they sell to distributors”. It adds: “To date, [rights holders] have mainly chosen to leave their rights deals intact and focus instead on creating supplementary, value-added content for loyal fans.”

Tier-one sports could be lured away from Pay TV by global digital giants, which have the deep pockets to outbid operators like BT Sport or NBCU in future rights rounds. However, their strategies remain unclear. To date, Google and Facebook have focused more on partnering (e.g. YouTube’s Champions League partnership with BT in the UK, in which it shows live matches free-to-air), whilst Amazon has acquired some tier-one content, including a small package of EPL content in the UK.

As Pay TV providers increasingly focus on tier-one rights they are leaving a gap for lower tier rights to be snapped up by OTT sports aggregators including DAZN, Eleven Sports and FloSports. These disruptors, as well as clubs with DTC offers, are experimenting with different pricing and packaging models, which is something Pay TV operators need to emulate.

The report urges Pay TV providers to “evolve their service offerings in response to agile challenger brands who are offering innovative viewing experiences for sports fans.” There is some evidence this is happening. Some Pay TV operators are experimenting with skinny bundles to attract consumers unwilling to pay for full-fixed contracts. These bundles come in a variety of flavours, from OTT-only bundles of a whole Pay TV package to sports-only bundles such as Foxtel’s Kayo Sports in Australia.

However, skinny Pay-TV bundles tend to be the most expensive. The report compares DirecTV Now (AT&T TV NOW)’s premium OTT offer in the U.S. of $50 per month to club services like Manchester City at £1.99 ($3) per month and the NBA, which offers a single game for $6.99 and a last quarter pass for $1.99.

Most of the major players have a wide range of tiered prices and packages and there is considerable innovation, the report warned. ‘Innovative pricing and packaging models are critical [for Pay TV] to attracting cord-cutters and younger viewers.”

The answer to whether we need 8K depends on where you sit in the value chain. TV brands see 8K as the next big thing to upsell at retail – though beware the mess they made of 3D. Component suppliers like 8K because it demands higher performance components and subsystems. Content creators appreciate the archival value and oversampled information of 8K capture.

Content distributers see 8K as a market differentiator, particularly for OTT delivery (as Japanese-owned Spanish streamer Rakuten plans later this year). Consumers might be persuaded of the ‘4K on steroids’ immersive quality of the visuals.

Piers Moore, Global Insight Director at Kantar’s Worldpanel division (which is focused on consumer panel research), suggests any transition to ITU spec UHD-2 is not imminent. “As proven with 4K, there are three keys: price, content and consumer buy-in,” he says. “The price is too high to make it viable for a large consumer base. There isn’t the 8K content, so AI is needed to upscale lower resolution content, but that still doesn’t give you the full 8K experience. That leads into consumers not believing it is worth the price, and without the price being aligned with consumer perception it is hard to sell.”

These concerns might be condensed further: there is virtually zero native 8K content, production costs are exorbitant, let alone the bandwidth for distribution, which no-one outside of the Japanese government’s NHK-run project is prepared to underwrite. And what is the point anyway, since you cannot see the extra resolution? To which the reply is: “Yet”.

“In reality, these are nearly the same benefits and concerns that were voiced 5-6 years ago as we started down the UHD transition path,” argues the newly formed cheerleader for 8K, the 8K Association. “Clearly, these concerns were overcome.”

If we ignore the fact that the bulk of global transmissions are SD (some 60% of Globecast customers in Europe, for example), then 4K UHD has indeed been cracked. So, what’s next?

From a broadcast point of view, it seems like 8K will be introduced by the back door. Several manufacturers exhibiting at IBC, Sony and Blackmagic Design included, view the corporate video market as leading the 8K charge, principally for digital signage. Blackmagic Design’s marketing at NAB centred on 8K even if its 8K-ready video switchers and standards converters operate in SDI in defiance of the leaner, flexi-workflow possibilities of IP. That’s because transporting 4K UHD over SMPTE ST 2110 in live production remains tricky and not necessarily as rock-solid as coax.

“As a manufacturer, we can certainly see the benefits of 8K,” confirms Craig Heffernan, Technical Sales Director EMEA at Blackmagic. “It is crucial when it comes to future-proofing content and down-sampling with better quality. Shooting at such a high resolution also gives editors and VFX artists more data to work with, and an opportunity to zoom deeply into images and reframe without losing as much information.”

There is also interest in Virtual Reality projects. With an 8K frame, it is easier to pull out regions of interest, whether that is  for standard 2D delivery or 3D work. The greater the resolution within that VR sphere that can be stitched together, the smoother the stitching itself. This makes  the whole experience much more realistic for the viewer.

“Content providers will not  be the only sources of 8K material,” suggests Juliet Walker, CMO at Globecast. “UGC, like family videos, GoPro sports footage and also next-generation gaming console-generated video will bring 8K content to the home.”

Even so, 8K television sets are not expected to fly off the shelves. You can buy an 82-inch Samsung 8K telly at PC World today for £10,000 but only 56 million homes worldwide will own an 8K TV by the end of 2025, according to Strategy Analytics.

8K over mobile is a non-starter. Matt Stagg who heads up BT Sport’s mobile division says, “The optimum format for the small screen is HD HFR (high frame rate) and HDR (high dynamic range). We don’t advocate 4K, other than for casting to larger screens in the house (over Wi-Fi). This is the strategy for BT Sport and it should be for every operator.”

He is saying this partly to cap data costs for both consumers and operators as 5G is rolled out, but also because of the genuinely held view that the industry should concentrate on better pixels rather than more pixels.

But home TV screens are getting bigger – about an inch a year according to some reports. Overall sales of 8K TVs are expected to be concentrated in the 60-inch and above screen size categories. More significantly, the fundamentals of TV display R&D are changing. If costs can be brought down, technologies like microLED promise millimetre-thin modular designs, perhaps filling whole walls. The wallpaper screen real estate could be divided for multiple smart home functions.

And why stop there? After all, 8K at 7680×4320 pixels is equivalent to around 33 megapixels and there are relatively affordable still cameras on the market today that record 100 megapixels or more. “8K does not represent an upper limit but it is at the limit of what is commercially practical today,” says William Cooper, who runs the strategic consultancy informitv. “There may be diminishing returns beyond that.”

The DVB has just completed a study mission designed to bring together information on media formats beyond UHD-1 4K.“These formats have the potential to be commercially viable in the coming years,” says Peter Siebert, DVB Head of Technology.

“Competition for content is at unprecedented levels, driving stakeholders to be involved earlier in the process,” says Jack Davison, EVP, Consultancy at the content consulting firm 3Vision. “The traditional TV market structure continues to evolve from what was once nation-based TV services to truly global media groups, controlling all stages of the content value chain,” adds Richard Cooper, Research Director at Ampere Analysis.

Netflix has sought economies of scale in taking permanent and exclusive production space at Pinewood’s Shepperton stages near London. The long-term lease, reportedly over a decade, is a vote of confidence in the viability of the UK’s film and TV tax breaks, as well as a sign that the streamer plans to double-down on its originals content strategy.

“Netflix is increasing its production presence around the world, with a view to not only satisfying local market tastes and demand, but also producing content with international appeal,” says David Sidebottom, Principal Analyst at Futuresource Consulting, the market research and insights firm.

Netflix ordered 153 original shows from European producers in 2019, double that of 2018, and 221 productions in total from a budget north of $1bn. Netflix’s annual spend of $12bn has forced other media companies to invest more on making shows in order to keep up.

Among them is pan-European Pay TV giant Sky which, with the backing of Comcast, will double its investment in original programming from £500m ($650m) to £1bn+ over the next few years. This will be delivered by Sky Studios, a new Europe-wide development and production unit that will create productions for Sky channels, NBC broadcast and cable, and Universal Pictures, as well as for other distribution outlets.

“Sky’s originals strategy was driven by a desire to secure great content but through its distribution arm and European platforms it can make the ROI calculation easier,” says Davison. “Now, as part of the NBCU family, there are even more ways to justify its content investment.”

Sky must strive to compete with the seemingly bottomless pockets of the global tech-giants to create the bingeworthy international programming that is essential for subscriber acquisition and retention for its Pay TV platforms and SVOD services. Cooper argues, “Through deepening investment in content creation, Sky becomes less dependent for high-quality, high-profile programming from what are increasingly its direct competition.”

Disney, WarnerMedia and Apple are among the companies building SVOD services that compete, armed with exclusive and fresh content. In the case of Disney and WarnerMedia these services will also use content that has been repatriated from Netflix (though Pay TV deals with the likes of Sky remain).

AT&T will launch HBO Max next spring with content like Friends from the WarnerMedia stable returned at vast expense from Netflix, plus seven original series including a Dune spin-off from Blade Runner: 2049 director Denis Villeneuve.

While Netflix’s content acquisition (as opposed to production) had slowed even before studios started withdrawing content from the market, 3Vision thinks there will still be plenty of opportunities for the SVOD pioneer to find and acquire third-party content. “New window continuums, co-exclusivity and straightforward deals are likely to still be possible for many,” says Davison.

Sidebottom predicts: “Moving forwards, non-scripted content may become more relevant, whilst the sports rights battleground will be redefined. Both [content categories] face the challenge of moving beyond local relevance and rights, to global.”

With competition ramping up, the multi-billion dollar outlays will be unsustainable for some. While subscribers are already paying for multiple SVOD bundles, the industry should be braced for push-back. Ampere suggests that the dominant players —Netflix, Amazon Prime Video and Hulu—are already stretching people’s spending limits and so creating the risk of viewer payment fatigue.

An emerging strategy to deal with this is more ad-supported services. Amazon’s rebrand of its IMDB movies and TV service, now called Freedive and ad-supported, is an example.

So, among the four-in-ten Pay TV customers who first look somewhere other than their Pay TV offer for content, where are they going? This depends s on which Pay TV service they have at home. TalkTalk customers are most likely to turn to iPlayer and Netflix, along with other apps available on their set-top box. Virgin Media customers are turning to Netflix, while BT customers go to Netflix or Sky.

Although Sky and Netflix have the highest overlap in subscribers, Sky customers are least likely to select Netflix as their first choice. “It would be interesting to see how this changes, with Netflix now on the [Sky set-top] box,” remarks Fateha Begum, Principal Research Analyst at IHS Markit.

This wide-ranging survey threw up a number of interesting trends. In the U.S., time spent on social video viewing has overtaken online long-form video for the first time since 2011, with Facebook’s video-centric strategy credited with driving the rise. According to the IHS Markit survey, time spent on social video registered the highest level of increase, adding more than eight minutes per-person per-day.

Time spent on social video doubled between 2016 and 2018 to reach nearly 39 minutes per person per day. Facebook alone counts for more than half of the increase seen over the two years following the launch of Facebook Watch in 2016. Instagram saw similar levels of increase in 2018, taking time spent to levels seen at Snap, with 7.4 minutes.

While mobile devices have become a key area of growth in terms of video consumption, particularly out of the home, connected living room devices “present new opportunities for social platforms to reach wider audiences, particularly as consumer appetite for short-form viewing improves,” says Begum.

Other findings for the U.S. market indicate that ‘video stacking’, the practice of juggling multiple OTT subscriptions, is most prominent in Pay TV households that have recently downgraded their package or cut the cord. Cord-shavers (who downgraded) had an average of 2.94 OTT subscriptions. In comparison, those that cancelled a Pay TV service had an average of 2.3 OTT subscriptions, indicating that this second group is more likely to be cost-conscious..

The IHS Markit report shows that in France, linear TV viewing held an 84% share of total viewing in 2018 compared to a 99% share in 2008, and good weather could even have suppressed the linear total.

“Although the World Cup was the most popular TV programme of 2018, the data from Mediametrie [France’s audience measurement body] does not indicate live viewing has increased for the year as a consequence,” says Rob Moyser, Research Analyst at IHS Markit.

“An increase in linear viewing over one month would not necessarily skew linear viewing to increase over the year, especially if live TV viewing has been in decline for much of the year. It is also worth mentioning that 2018 was one of France’s warmest years since records began, and would in turn have affected total viewership.”

Meanwhile, in Germany the time spent on Pay TV VOD increased by 23% as the roll-out of PVRs continues. These next-generation boxes also give access to more on-demand services. The study counts Pay TV VOD as any on-demand content viewed via a Pay TV set-top box, excluding third-party OTT services like Netflix or YouTube. It does include broadcaster catch-up TV, content included with a linear subscription, boxsets and transactional content.

“Germany is unique in Western Europe as digitisation was slow and it only completed digital switchover in March 2019,” says Begum. “The transition to digital TV along with advanced set-top boxes is driving the number of homes capable of receiving on-demand services and thus users and usage.”

Online video services in Germany added more than 3 million paid subscriptions in 2018, taking total subscriptions to more than 15 million, while Pay TV subscriptions remained relatively flat at 29 million, adding 450,000 net in the year.

The study found that one-in-five German Pay TV homes use the service less than once a week. So, what keeps these apparently super-light users paying for the service each month? Sports keeps some of them onboard even if they do not make the most of the platform when there are no live games to watch.

“Cord-cutting has largely been confined to the U.S.,” says Begum. “It takes consumers some time to churn from the old TV box even when their consumption habits have shifted. According to our consumer surveys, exclusive content is the biggest driver of subscriptions for Sky Deutschland uptake, whereas Deutsche Telekom over-indexes on wider benefits such as bundling with broadband – although that is not the biggest driver.

“’Free TV services are often bundled and sold for a small monthly fee, and analogue cable is paid through utility bills in Germany, so many households consider it to be ‘free TV’ whereas we would consider this to be Pay TV. They are therefore less likely to churn. So, this 20% statistic [the proportion of homes who subscribe to Pay TV but use it lightly] is mainly seen in Germany out of the countries surveyed. In the UK the figure is circa 10%.”

In Spain, PVR-based time-shifted viewing accounted for a 41% share of non-linear viewing time – indicating that the country’s on-demand platforms have not grown at the same rate as the other countries covered in this report. “In France, for example, PVR viewing stands at 8.8 minutes to Spain’s 9.6 minutes, but its on-demand platforms take up a 15% share of total viewing compared to Spain’s 6% share,” says Moyser.

The IHS Markit research shows that overall, total television viewing times across the U.S. and major European markets have declined slightly as consumers increasingly use non-linear as a substitute for traditional TV viewing, rather than as an addition .

Excluding social media, total average daily video viewing time for the countries analysed stood at 273.7 minutes per-person per-day in 2018. This compares to a peak of 284.3 minutes in 2013, when linear viewing held an 87% share of total viewing in contrast to a 67% share in 2018.

“The decline in minutes suggests a shift in viewing habits as non-linear becomes the television format of choice for more viewers in the United States, the United Kingdom, France, Germany, Italy, Spain and the Netherlands,” IHS Markit reports.

Rob Moyser explains: “During previous years, non-linear television viewing was largely additive to traditional linear TV viewing, driving up the total number of minutes watched. However, non-linear has now become an alternative for linear TV for many consumers. As a result, total cross-platform viewing time is returning to levels seen prior to the rise of on-demand viewing.”

At IBC 2019, the organisation will present the first demonstration of its efforts to date, with a standardised release promised by year-end. Peter MacAvock, Chair of DVB, says: “There are very real questions about whether we have the appropriate traction in the marketplace and whether what we feel is applicable will, in the event, land with the various different stakeholders, but we are reasonably confident this is the case.

“We are not early – but I don’t think we are too late. The OTT march is fully underway, and DVB-I is designed to provide the type of standard and rigour to the OTT sphere that DVB brought to the digital TV sphere.”

The suite of specifications, which the DVB characterises as an ecosystem, is designed to improve OTT delivery, providing increased scalability and cost savings with the same user-friendliness and robustness as classical broadcast delivery solutions. In particular, DVB-I will allow you to integrate channel lists, the content guide, and simple ‘lean back’ channel selection for services available over both broadcast and IP.

MacAvock explains: “It is focussed on a world where a broadcast service may be unlinked to the broadband delivered services and therefore a question arises: How would you access and even find out about the availability of those broadband services if they are not linked to the broadcast channel?”

When you bring home a new TV set, you (or the nice guy from John Lewis), can set it to auto-tune and display all the broadcast services available. The DVB wants to ensure the same level of simplicity when working with broadband channels, using DVB-I.

Yet, even if there was an IP equivalent to scanning frequencies, many thousands of services would potentially be found. A solution is needed which allows the receiver to locate streamed services that are relevant to the user, possibly based on geographical location, language and genre. The DVB has already braced itself for this contentious issue.

“The listing of services might seem trivial, but it is an extraordinarily emotive topic,” MacAvock declares. “We must respect the individual rules of broadcasters and territories, such as watersheds. We anticipate some difficult discussions, but we are relishing the opportunity.”

One strategy is to leave the market to solve this. Another solution could be for a central authority in each country to provide a service list, and for receivers to be pre-provisioned with the URLs of those lists. However, such an authority may not be available in all countries, and this approach does not fit well with all deployment scenarios, especially those of a more open nature.

The DVB is considering whether there are other possibilities that might avoid the need for country or broadcaster-specific solutions. Clearly, having the user enter URLs manually is not countenanced. MacAvock argues that the scale and cost advantages of a standardised model apply equally to Pay TV providers as well as free-to-air broadcasters. While the television set remains the most important device for video consumption, DVB-I will support any device with an Internet connection including smart phones, tablets and media streaming devices.

“EBU members are not in a position to provide vertical stacks for each and every vendor and device, so our stakeholders are interested in providing a simplified way in which their services can be accessed on any device. With standardisation, EBU members are able to harmonise distribution infrastructure and reduce costs,” says MacAvock.

“Those arguments are also valid for the Pay TV environment. Many operators supply and support their own hardware for each consumer but if we can help them standardise elements of the hardware to minimise their need to maintain the cost of receivers, that is to their advantage.”

MacAvock adds, “It won’t not happen overnight, but many Pay TV operators are actively engaged in DVB-I. They recognise that standardisation in any form will reduce cost, and also that DVB-I can improve their performance.”