Pay TV operators need to be ready for anything, thus the focus on agility and new operations models

In the early days of OTT, Pay TV operators were always catching up with early-adopting consumers who were restless for multiscreen access. Overnight, they went from being the innovators to the technology laggards and took years to cast off the label – a humbling experience. Their broadcast spectrum and expensive set-top boxes still mattered but their relative value was diminished once the world was fixated on CE devices and streaming video.

This partly explains the interest today in new operations and innovation models for television, whether it is collaborative efforts to update set-top boxes faster (like with RDK) or efforts to virtualize and orchestrate video processing so it is easier to provision new services. The television industry as a whole, and Pay TV operators especially, are determined to become more adaptable on a permanent basis. 

As a result, we are about to witness a dramatic, albeit slow, transformation of how television works as the industry harnesses IT concepts that OTT providers have already mastered, including managed services. The future of television ‘headends’ and customer premise equipment will also be interweaved with initiatives across the communications industry to virtualize network functions, such as Software Defined Networks (SDN) and Network Function Virtualization (NFV). 

Factors driving the transformation in Pay TV operations include an effort to lower CapEx and OpEx, lower the risk for new service launches, reduce complexity and increase agility. For most companies, agility is the No.1 motive. In a survey of global service providers (sponsored by Amdocs), the market intelligence and advisory firm IDC concluded that increasing service velocity is now viewed as a business-critical mission. This was rated first among the capabilities needed to survive in the digital age. 

Andy Hicks, Research Director, Telecoms and Networking for EMEA at IDC, reckons a video service provider may be able to cut CapEx by 20-30% with a new operations model, “but that is just going to improve your balance sheet, not your business.” He adds: “The reason people talk about agility is that they need to improve the top line. They have to introduce services more rapidly, with a much lower opportunity cost.”

Daniel Hesselbarth, Product Innovations TV & Broadband at Unitymedia Kabel (part of Liberty Global), has stated that, “We need operational transformation as an industry. We need to be faster to market and quicker to react to customer demand and to solve operations problems.” Sky Deutschland has made it a publicly stated goal that it should bring something new to customers – big enough to warrant press coverage – every 4-6 weeks.

If Netflix is the poster boy for ‘born in the cloud’ media companies and their agility, Comcast is the cloud cheerleader for Pay TV. The company uses its own private cloud and ‘platform as a service’ environment, using OpenStack, as the architecture behind its next-generation X1 platform. The resulting innovation, including a more personalized user interface and multiscreen access to personal recordings (using cloud DVR) has been credited with reducing churn and stabilizing the Pay TV base.

When Comcast launched X1 in 2012 the company called it a giant leap forward. “Essentially we are transforming our video product from a hardware experience to a software experience, allowing us to innovate faster and more aggressively.”

One of the things that Comcast achieved thanks to X1 was to present a huge content offer with better content discovery, including unified search and recommendations. And according to Gil Cruz, Architect for Video Software at Cisco, one of the greatest benefits of a cloud architecture in Pay TV is that it helps to exploit superior content as a service differentiator. This relates to the volume of content you can offer, where it is available and how easy it is to find. 

“Pay TV operators have always had rich content libraries but the content was hidden behind archaic user interfaces. A next-generation UI combined with recommendation boosts consumption and monetization,” he says. “We see customers with 50,000 or 120,000 on-demand assets. There are not many people out there that can compete with that but it needs to be available everywhere. You may need to process all your assets 12 different times according to target device and network technology. That requires that you can scale your operations efficiently.”

Cruz reckons multiscreen viewing is therefore the biggest driver behind the trend towards virtualized video processing and the orchestration that goes with it, two of the pillars of the Pay TV operations revolution. Brett Sappington, Director of Research at Parks Associates, the market research and consulting firm, agrees that multiscreen is the biggest driver towards virtualization, but not the only one.

“On-demand consumption is also important. On-demand services began to push operators to deliver video in a different way, but it was multiscreen video that really forced the issue,” Sappington recalls.

There is no question that we are in a new phase of TV transformation now, less visible to consumers but possibly just as important as the multiscreen apps and on-demand services that characterize the OTT era. However, Sappington thinks the migration towards more IT-centric operations could be slow, primarily because traditional Pay TV infrastructure systems are not broken.

But he also warns: “Companies that have virtualized elements of their operations and have adequate orchestration of those virtual elements will have a much greater ability to adapt quickly to a changing marketplace.”

Interested in the Pay TV operations revolution?

This story is an edited excerpt from the new 6,000 word Videonet report: ‘21st century TV operations: Ready for anything’, which you can read here, totally free. 

You can read about the motives driving the transformation in Pay TV operations including agility, the crucial role of orchestration and how video workflows can be created and consolidated, how virtualization is ready for ‘mainscreen TV’ as well as multiscreen, the potential to unify operations around adaptive bitrate streaming and the different ways in which the new operations environment will be hybrid.

The report considers how companies like Comcast, Globo, nc+, Magine, TVPlayer, Sky and Voo are using virtualization or ‘cloud’ technologies and includes insights from Parks Associates, IDC, Cisco, Ericsson and Harmonic, among others. 

View or Download Report