Maintaining VOD’s Competitive Edge
Centralized content management solutions are continuing to play a key role in advancing the management, distribution and monetization of video on demand (VOD) programming.
A decade ago, the industry tapped into the potential of centralized solutions, such as content delivery networks (CDN) and super headends (SHE), in order to reduce the capital, infrastructure and management required for receiving traditional set-top box (STB) VOD assets from a variety of content providers.
These solutions were introduced at a time when the number of VOD content providers was expanding from a handful to dozens. A centralized approach to VOD content management eliminated the need for purchasing and managing local servers dedicated to each content source. Instead, content from multiple video sources was ingested and aggregated at the SHE and then shared with a server at the local cable headend.
Thanks to this approach, the number of sources for VOD content using this shared solution has risen to as many as 300 providers delivering tens of thousands of hours of on demand programming per month.
As the quantity of VOD programming has expanded, so has both the number of VOD households and the amount of time they are spending with VOD content. About 43 million televisions accessed VOD content each month last year, which was a 5 percent increase from the previous year and a 13 percent increase from 2010, according to the latest report from Rentrak, a media measurement and analysis firm. In fact, Comcast Cable recently reported it is averaging more than 400 million VOD views per month, putting it on track to exceed 30 billion total views since launching VOD in 2003.
As we enter the next decade of VOD, centralized solutions continue to represent a highly effective method for maintaining a competitive edge and generating additional sources of revenue. VOD now serves as the cornerstone for TV Everywhere, providing premium and ad-supported content that is enjoyed on a cable customer’s smartphone, tablet and other connected devices. Deriving these video assets from a centralized source allows cable operators to enjoy the economical advantages of a shared solution while also addressing cross-media quality assurance requirements.
Additionally, cable customers have a growing number of alternatives for VOD content. When the same content becomes available over competing platforms, the content provider that delivers a better quality of experience (QoE) for the viewer has the distinct advantage. QoE is also a factor in helping cable operators take advantage of VOD advertising opportunities. Advertisers want to associate their message with the best looking content possible.
The VOD arms race
Today’s competitive landscape for the delivery of VOD is analogous to a quality and quantity arms race between video provider platforms. A decade ago, cable operators used their VOD offerings as a deterrent against losing digital video subscribers to DBS carriers, which then offered only linear channels. Today, DBS platforms also offer thousands of VOD assets.
Online video distributors are also expanding their lineups of on-demand programming that can be acquired “over-the-top” via both wired and wireless access to broadband Internet CDNs. These customers have immediate access to scores of online video service providers, ranging from Netflix and Amazon to YouTube and Facebook. One thing is clear from these developments: offering a robust lineup of VOD is no longer a value-add; it’s a core ingredient in delivering and monetizing a quality-driven TV Everywhere experience for cable customers.
The Growing Importance of VOD Advertising
The trend toward time-shifted viewing has also continued to grow, with viewers spending twice as much time watching nonliner television compared to five years ago, according to Rentrak. With advertising playing a major role in the business models of both cable programming networks and cable MSOs, the latest advances in VOD content management are helping to ensure that the industry provides the audience measurement and engagement opportunities for the advertising community.
To get an idea on the scope of this market for advertiser, consider the latest market analysis from Rentrak, which found the total time spent watching all time-shifted TV programming increased by 40 percent in 2012 over 2011, with the total number of free-ondemand TV (FOD) programs watched increasing by 29 percent from the prior year. Rentrak estimates the potential value of the ad inventory for FOD TV amounts to a $1 billion opportunity.
To help the industry realize that value, Comcast Media Center (CMC) and other VOD distributors capture Nielsen watermarks that may be used to measure timeshifted viewing.
CMC has also implemented technologies that foster rapid delivery of VOD content, making network TV shows available in local VOD libraries within hours of the live broadcast. Today’s audience measurement solutions are also addressing the need to reach and measure cross-platform viewing.
The Importance of QoE
QoE is vital to achieving satisfaction from both cable customers and advertisers. Content providers, advertisers and cable operators all want their brands associated with a quality viewing experience. Market analysis conducted by online streaming company Conviva gives us an idea on the financial importance of this objective. The firm found that in 2011, every 1 percent increase in buffering time for VOD content led to three minutes of fewer viewing, while today that 1 percent increase leads to eight fewer minutes viewing, which “could mean as much as $20 billion lost for content owners through 2017.”
The importance of quality assurance for video on demand cannot be overstated. Viewers gravitate toward a better-looking product. As a recent Frost and Sullivan report on the money being invested in QoE concluded, "the link between customer churn and QoE has been clearly established.”
Managing mezzanine files
Similar to content management solutions for linear content, we know that the viewer’s QoE is closely linked to how well we maintain the integrity from source content. To do so, VOD content management solutions work from the most pristine or best source content.
With this in mind, one of today’s challenges for offering VOD customers more choice and a better QoE requires addressing the disparity that can exist between the mezzanine files for source content provided by the video content community. Some content providers are sourcing their content at levels as high as 1.458 Gbps (gigabits per second), others at 200 Mbps (megabits per second), others at 50 Mbps and others are delivering their mezzanine files at 15 Mbps, the current CableLabs spec for HD VOD.
Because it isn’t feasible for each cable headend to manage these files at their native bit rate, a localized content management solution may seek to adopt a “one size fits all” approach in order to reduce capital and operating costs. The downside of this approach is that it can be less efficient and, as a result, more costly. In contrast, a centralized content solution working with mezzanine files can deliver better-looking HD VOD at rates that fall below 15 Mbps, achieving a boost in both QoE and efficiency.
Equipping the Content Management Hub
To provide an optimal solution for managing the scope of mezzanine files acquired from content providers, centralized VOD “transcode farms” are equipped with a range of transcode capability, including traditional STB (set top box) and newer formats like ABR (adjustable bit-rate) encoding, that allows the content management hub to ingest VOD content at as much as 50 Mbps or higher and produce better output in the various formats. In the case of traditional STB VOD, this includes delivering HD content below the traditional CableLabs 15 Mbps by using mezzanine source files combined with advanced encoding algorithms. Since it is derived from a higher source file, this lower bit rate file looks as good as or better than its 15 Mbps counterpart. Additionally, these files reduce the burden placed on both local content storage solutions and on the local plant, thereby improving contention ratios.
Centralizing costs to maximize the investment
This approach toward managing source files demonstrates the advantages of a centralized VOD content management solution, which can be shared across an MSO-wide or industry-wide user base. Operating expenses, including the expertise to operate the gear and to provide 24/7/365 quality assurance monitoring, are also centralized.
These latest innovations to the centralized content management model are on their way toward implementation. CMC, which has served as one of the leading providers of VOD, currently delivers over 12,000 hours of VOD programming each month, making us one of the industry’s largest VOD content management resources. As part of helping the industry to meet the demands for delivering more choice and better quality, CMC is already working with several MSOs served by our footprint of 56 million VOD-enabled households and a range of content providers on incorporating these latest advances into our industry-wide content management platform.
Saving on capital and operating cost while providing customers with greater choice and a more enjoyable viewing experience: that’s the kind of innovation that point the way toward a second decade for VOD that’s even better than the first.