Cable subscribers today are faced with too many boxes, apps and inputs as they look to discover, watch, and share the content.
They migrate across video service providers chasing advanced services, promotions and upgrades.
We hear talk of “cord cutters” and “cord nevers,” but the bottom line is that people actually like TV, with individual TV shows being a big part of people’s lives, regardless if it comes from traditional cable or an OTT source.
So consumers are forming their loyalties to programming, not providers.
This has put cable operators in an interesting position: while they carry the infrastructure and transport burden of OTT services, at the same time they put their video customers at the risk of defection as they present and enable multiple OTT choices. Consumers are inundated with libraries of apps, streaming VOD services and smart TV interfaces.
These content options are not provisioned or displayed in the traditional cable guide; instead consumers leave their existing multichannel line up, change the input on their TV and are partitioned off of their core multichannel TV service. Subscribers become less engaged with their cable package and are at greater risk of churn as they spend more time on alternative content options, often treating themselves to free trials and binge viewing scenarios.
Multiple research studies underscore the fact that worldwide consumption of Internet video is escalating at a faster clip than overall traffic or any other traffic segment. Affecting this momentum is the rapid expansion of broadband access and increased speed across fixed and mobile networks. The prevalence of devices capable of receiving OTT content is another factor contributing to the sea change in the video marketplace with over 425 million connected devices in operation in U.S. households alone.
From a consumption perspective, all of this adds up to a rapid increase in the number of people spending a significant amount of time watching video from the Internet. This surge in online viewing, which is in its beginning stage, is having a significant impact on the multichannel pay TV industry, widely contributing to a loss in traditional broadcast and pay TV viewership.
The increased consumption and fragmentation of next-generation OTT and IP services can either be a threat or an opportunity for video service providers.
As they battle for share and customer ownership, each video service provider has an opportunity to bring IP/OTT video to the TV, thereby expanding their brand and offering a superior video entertainment experience.
The ultimate success of providers will depend on their ability to create a consumer experience with the mix of multichannel and IP-sourced content that suits their customers’ needs. This must be a service that operates seamlessly and with uniformity to the TV rather than one that isolates IP video access as something that’s separate from mainstream viewing and less than consumer friendly.
To accomplish this is no small task.
Traditionally, each time a service has been developed or enhanced with the addition of new content components, updates are required in usage policies, devices, core middleware instruction sets and the communications interfacing the middle- ware with all the processing elements in the network. If a new streaming format is introduced by a source of Web content, this, too, must be normalized across all relevant end points. And when it comes to adding new content and features, the user navigation interface must be reconfigured.
The good news is a number of content companies, operators and technology companies have banded together with the Open Authentication Technology Committee (OATC), which addresses the complexity of authentication, and perhaps most importantly, standardization of metadata.
To date, video service providers have been contemplating several approaches to bring IP/ OTT video to the TV, each with its own set of considerations.
Option 1: Side-car Internet media device. Adding another vendor’s Internet set-top device is a simple addition to the TV. This is an inexpensive approach but comes at the cost of consumers switching away from their multichannel input to a different branded experience with islands of applications potentially including one from the provider.
The risk of this approach is introducing and endorsing a portfolio of potentially competitive premium services and brands that put subscribers at risk.
Option 2: Replace and upgrade legacy set-top boxes (STBs). Migrating to hybrid STBs requires complete system replacement along with significant infrastructure changes. This approach is typically employed with high value subscribers where advanced services such as multi-room are rolled out. In addition to costly STBs, service management and infrastructure dependencies are needed to address the complexity of comprehensive service redefinition.
This is capital intensive and requires significant time to execute, making this option less attractive.
The risk is a capital-intensive approach to deliver new functionality that may or may not be relevant to future subscribers’ wants and needs.
Option 3: Breath life into existing STBs. This is the ability to blend advanced functional enhancements into legacy QAM-based STBs (such as a QAMbased video stream as a click stream). On the surface this looks attractive; however, the complexity associated with a QAM dependent approach, significant server infrastructure costs and the additional human resources needed to scale are all key challenges. Perhaps most important, this approach does not address the longterm opportunity that IP enables.
The Need for a New Approach
The mission-critical challenge for every provider is the same: how do they attain, retain and generate incremental revenue across subscribers? A way must be found to efficiently curate disparate sources of licensed and unlicensed video into a unified experience to the TV in accord with all rights and usage policies and to do so without putting their multichannel service at risk while keeping their brand at the center of the experience.
“Augment,” versus ”replace,” is a very different approach to meeting these challenges that can be applied in virtually any video distribution environment to greatly expand the variety and reach of content with minimal disruption to legacy systems. This is a method that merges IP/ OTT video with existing multichannel platforms through a low cost Android pass-through device and cloud-based service management platform. The approach: • Unifies multichannel and IP video on the same TV input; • Enables multichannel and IP video control from a single remote; • Combines multiple sources of content into a single experience; • Normalizes the fragmentation of video players; • Enables each stream to map the player needed to support the consumers device; • Presents only the content that the consumer has rights to and will work on their device; • Pass-through device becomes the service provider’s IP set top when they eventually transition to all-IP from QAM.
The value proposition to the consumer is giving access to existing multichannel and new IP/ OTT video on their TVs with a unified guide and a single remote – without ever having to change the input on their TV. This approach enables operators to quickly deliver new levels of IP service to the TV without costly STB replacement or changes to existing multichannel infrastructure while providing a path to migrate to an all-IP video solution.
Approach consideration checklist
There are a number of business and operational considerations each video service provider should look at when contemplating any approach:
• Time-to-market: What is the time to implement and scale?
• Cost: How cost-effective is the approach, including impact on existing infrastructure?
• Value: What is the value the consumer receives?
• Sustainability: How will the approach hold up over the next 3-5 years; does it support a path to an all-IP video world?
• Dependencies: What are the dependencies on existing infrastructure, conditional access, billing and back office workflows?
• Content: How can we integrate licensed content, Internet content, content apps and go services into a great experience?
• Packaging: How can we package content (by device and geography) and services that provide value to us, the content owners, and the consumer?
• Branding: How can we provide a better way for consumers to access streaming video services with our brand on the TV with our UI?
• Unification: How can we provide a better way for consumers to access IP/OTT services without having to leave our traditional multichannel service?
It’s not about ripping out existing platforms, processes and infrastructure to do things a better way or about adding headcount to manage a new set of workflows. It’s about how well-conceived utilization of technologies and methodologies now permeating the distribution and device ecosystem can be applied to augment existing strategies or to mount new ones at great advantage over alternative methods.
Equally important, cloud-based toolsets and low-cost Android pass-through devices introduce new service possibilities, which haven’t been part of the strategic discussion up to now.
Consequently, putting these methods to use improves efficiency, creating a path to service differentiation and business models that break the mold of what’s been achieved up to now. ■