The multi-screen model is evolving for Tier 2 and 3 operators.
The delivery of video content to multiple screens by Tier 2 and 3 cable operators has long come under the heading of sheer fantasy. Not anymore. Now it’s real.
The maturity of DOCSIS 3.0 and EBIF technologies, combined with a healthy consumer appetite for video content everywhere, most notably on iPads, tablets, smartphones and other devices, is driving the yet-to-be-built multi-screen model into what many believe will be a living, breathing business.
Mix in the advertising component, retention upside and competitive edge and the multi-screen model gets even more interesting.
“Now is a critical time for providers to deliver video content to multiple screens. There is growing demand, a mobile business model and competition is heating up, with loyalty and retention job number one. It’s time for Tier 2 and 3 operators to look at multi-screens,” said Jonathan Weitz, a partner at IBB Consulting.
If there’s any question of that, smaller operators needn’t look much farther than a recent NPD DisplaySearch report, which forecasts a tablet market increasing to 416 million worldwide by 2017 and mobile PC shipments topping 809 million.
Those hundreds of millions of consumers will need content over a growing number of mobile devices and screens, and it means a fertile market for even smaller rural Tier 2 and 3 service providers, experts maintain.
“Smaller operators are firmly entrenched with triple-play services over existing infrastructure, so if they can deliver services over the top and just provision part of their systems to deliver content to multiple screens, the opportunity is there,” said Gerry Kaufhold, principal analyst at Tirias Research.
The National Cable Television Cooperative (NCTC), which serves more than 900 members, mostly smaller rural systems, is seeing increased interest in the multi-screen model among its members, albeit with some trepidation.
“In general, multi-screen capabilities are a higher priority with members. Several have even jumped out ahead of some larger MSOs. But the costs of program rights and infrastructure will encourage most companies to wait,” said Rich Fickle, president and CEO of the NCTC.
One member that isn’t waiting is Massillon Cable TV in central Ohio, which recently launched an internally developed multi-screen delivery system it calls Watch TV Everywhere.
“Our integration was fast and efficient, and we’ve proven the platform can work. The technology simply asks the content provider for content, and it’s turned over to us for authentication,” explained Bob Gessner, president of Massillon.
He cautioned that the multi-screen model remains in the experimental stage, but so far it’s working.
“It’s defensive in nature, and we want to improve our advertising platform and full-motion video. We don’t want to be locked out of this,” Gessner added, referring to the multi-screen market.
Two of the key issues, he emphasized, are developing critical mass and convincing content providers to work with Massillon directly.
“They have felt that all Tier 2 and 3 providers would be served by Synacor or others,” Gessner said. “But they really don’t know what they want to do. That is changing.”
So is the mindset of companies like Synacor, which provides cloud-based, multi-device platforms for content service providers and is considered to be one of the leaders in that space.
“Operators may need to aggregate large amounts of metadata; authenticate; have battle-hardened DRM; and deliver content to consumers in a meaningful, clean, frictionless way. There are twenty to thirty elements needed to make that happen. But for Tier 2 and 3 operators, there is enormous opportunity in the multi-screen market, and we recognize that. The majority of content consumption is still real-time and linear, but clearly that is shifting to PCs, laptops, and then to tablets and mobile,” said Mike Bishara, vice president and general manager for TV Everywhere at Synacor.
Once those elements are “stitched together,” he maintained, an even larger payout is possible.
“As Tier 2 and 3 operators look to justify and monetize the multi-screen platform, advertising is a key component to that. Capturing viewers on tablets will be critical, so the industry is working toward a solve and for ratings across all three platforms.”
The numbers are piling up for mobile ad spends, evidenced by a recent report from BIA/Kelsey that forecasts local ad spends via mobile and online devices accounting for $21.8 billion in five years, a good chunk of the $150 billion predicted for total local ad spends.
Those numbers are not lost on smaller operators such as Buckeye CableSystem, an Ohio-based communications company. Nor is the multi-screen model far from sight.
“We’ve done testing and want to deliver content to multiple devices like Android and iOS, even game consoles, and we’re contemplating working with vendors for an authentication platform for HBO Go and Scripps. The whole authentication model is a concern, however, and we would prefer apps with a single sign-on and simple interface. The ad component is a necessity, and there are business and program cost challenges, but customers are asking why they can’t get content over multiple devices, so we have to be on all of them,” said Joe Jensen, CTO at Buckeye.
Buckeye is using Arris’ gateway for its over-the-top and QAM-based content and will begin offering services over multiple devices via VOD and linear channel streaming by year’s end, Jensen said.
Yet with opportunity come challenges, and there are plenty of them to solve before a viable multi-screen business model is in place for Tier 2 and 3 operators.
“We’re all trying to understand what the additional revenue will be; the retention opportunities; and how systems can format content to various screens, place ad insertions and find content. The technology is there. Now it’s about licensing content, business models and consumer uptake. But operators, Tier 2s and 3s included, intrinsically know they need to do it,” said Jeff Brooks, vice president of IP video product management for Arris.
And probably sooner versus later, suggested Jeremy Edmonds, director of technical business development for ActiveVideo.
“There’s interest from all tiers of service providers and lots of competition with over-the-top providers and others,” he said. “Operators must stay on their customers’ radar screens.”
No argument there, added Gemini Waghmare, CEO of UXP Systems.
“With more data pointing to Netflix and other over-the-top providers eating into VOD and linear TV, it’s a natural evolution for MSOs to deliver their products to new screens,” he said. “It just needs to be delivered in new ways.”
Most industry observers agree that with the influx of iPads, tablets and other mobile devices and the proven technologies to drive content to them, a clear opportunity awaits Tier 2 and 3 operators. And many are testing the waters.
Yet much needs to be done before all of the components in a workable business model align.
“We’re seeing a wait-and-see approach by Tier 2 and 3 operators,” said David Brouda, senior technical marketing manager for Motorola Mobility, which offers DreamGallery video navigation software that lets providers create personalized, branded TV experiences on multiple devices. “Among the problems is putting ad content into multi-screen services. But the benefit of multi-screens is targeted ads, which in the video space hasn’t taken off yet. There is also tremendous growth potential in the tablet market for content delivery.”
And content counts. Big time. Without it: No multi-screen business.
“Media companies are realizing that video is their business, and it doesn’t matter where or how it’s delivered – online or IP. It’s now about retaining subscribers, with advertising getting bigger,” said Tim Sale, director of technical sales for thePlatform.
It’s not only getting bigger, but it’s quickly becoming a must-have component to any future multi-screen model, according to Jeff Binder, a board member at This Technology.
“There is so much upside in ARPU lift with dynamic ad insertions, you can’t afford not to do it,” he said. “The lift is so significant, you have to make the investment.”
For others, the secret sauce in the multi-screen model is EBIF.
“It’s now affordable and measurable and a key driver in creating the necessary ecosystem to monetize the technology and content,” according to Patrick Peters, executive vice president of programming for FourthWall Media.
Just how the multi-screen ecosystem forms, especially for Tier 2 and 3 operators, will require many moving parts working together. Until that happens, the fantasy is morphing into reality before our very eyes.