Wednesday, March 19, 2014

Olympics video headache: you can start panicking now

If you have been in the industry as long as I am, you probably smile fondly every couple of years when vendors are pitching network armageddon because of a specific (usually sporting) event.

"How will you handle the spike and growth from <insert your favourite theme here>":

  • Fifa World Cup Finals
  • Superbowl
  • New year's eve 
  • Champions League finals
  • Stanley cup's final (this is hockey for those of you unfortunate souls not freezing in Canada)
  • New show on Netflix...
In some cases, you might have reacted with an indulgent smile, recognizing the ploy from the vendor to sell more capacity and secure their vacation bonus to the Bahamas on the network upgrade forced on you.

Well... I am getting report of multiple mobile network failures during the olympics as video viewers resorted to their tiny screens to cheer for their favourite team / athletes while at work / in transit / feigning interest in boring conversation with visiting in-laws.

This might be anecdotal, but evidence shows that the variance between average and busy hour in mobile video is higher than in voice, messaging and data services. 

There is a certain amount of predictability to it (it is likely that football fans will try and catch video snippets of their teams if they are not in front of their TV when the game is playing after all), but the fact that this is video has a multiplier effect on the demand.

Because of the voracious character of some of the devices, video players and content providers attitude towards quality, networks get oversubscribed much faster and longer than with other services.
Will network operators start to consider video as a separate service and manage it actively rather than suffer its unpredictable consequences? 

This and more in my new report "mobile video monetization and optimization 2014".

Tuesday, March 18, 2014

YouTube Sliced Bread: mobile indigestion?

Since 2012, YouTube has been trying to reduce dramatically the time it takes for a video to start from the moment you press play.  Flash Networks (Mobixell at the time) was among the first to detect a new proprietary implementation called sliced bread.

The matter might seem trivial, but internal research from Google show that most users find a waiting time exceeding 200ms unacceptable for short videos. 
YouTube has been developing a proprietary protocol, based on HTTP adaptive streaming DASH to decrease latency and start time for its videos.

YouTube Sliced Bread essentially compares the DASH ABR manifest with the speed and bandwidth that is available at the moment you press play and selects dynamically the closest encoding rate. Adjacent streams segments are being prepped in real time so that any change in bit rate directs a change in encoding bit rate stream dynamically. The sliced bread analogy comes in when you think as pressing play as if ordering a pre sliced loaf of bread. Only instead of getting all slices of the same size, your video player looks at the size of the connection over time and serves you slice by slice, HD 1080, 720, 360… based on what the network can support.

YouTube claims that Sliced Bread has reduced video re buffering by 40% on fixed networks. Additionally, until recently, YouTube used to download the viewing page, the CSS script and the video player for every video you click on. The company is now implementing logic to allow the player to remain from video to video, so that it does not have to be downloaded all over again. 

Furthermore, YouTube will soon start pre-loading related video content, so that if you click on a suggested video, it is already there. These “tricks” might work well in a fixed environment, where start time is paramount and video traffic volume is not relevant, but in a wireless network that is congested; these types of features would have a negative impact on the network capacity and ultimately the user experience. I have before warned about content providers' tendency to design services and technology for fixed line first.

The protocol is starting to make its appearance in mobile networks and while not yet dominating the YouTube experience, it is a perfect example of why a video service designed for the internet, to be viewed on a fixed network can have catastrophic consequences on a mobile network if not correctly adapted. This is one of the many subjects I analyse in my report "Mobile video monetization and optimization 2014".

Wednesday, March 12, 2014

PayTV vs. OTT part VII: 6 OTT Strategies

Pay TV vs. OTT:

More developments will be presented at Monetizing OTT services - London - March 24/26

enter the discount code OTT_CORE here for a 20% discount

The internet is a perfect medium for content distribution. Storage, access, distribution is inexpensive, allowing the smallest content owners and producers to offer their wares with a small starting investment. For OTT vendors, this is both an opportunity and a threat. The long tail of the content usually find its audience through social media. Specialty content is at home on  the internet, thanks to the advances made in term of search and recommendation engine. The short tail content is pushed by advertising, rather than social interaction. The type of budget necessary to launch a new content can be staggering, as illustrated in the advertisement campaigns preceding new movies and video games. Content is king in OTT and there are a few strategies put in place by the different players in this segment to secure customers and revenue.

1.     Pay-per-view, rental, on-demand

Apple’s iTunes and Amazon on demand are perfect examples of OTT services. Without subscription, any consumer with a credit card can rent and stream content to almost any screen in minutes. Revenues are generated from the transaction. They are collected by the OTT player, which then apportion it to the studio / content owner and so on. It is the literal translation of the pay TV model on the internet. Here again, the control resides in the distribution. Apple and Amazon have been successful because they have an existing customer base that they had been able to convert. This captive audience is the equivalent of the MSO’s set top box.
Brands with a smaller footprint in term of device penetration have struggled to emulate this strategy. Sony’s “Video Unlimited”, available on its PlayStation and selected devices, has struggled to reach its audience, for instance.

2.    Subscription VOD

Inaugurated by Netflix, it has become the reference for OTT video. A monthly subscription allows consumers to watch as many shows as they want. Success in this model relies in both the depth and the range of the catalogue. Netflix had to have headline content to attract new users and enough of a long tail to keep them there. Most SVOD strategies are monthly subscription without commitment, so they traditionally experience high churn.

3.    Free to air

YouTube is the most successful OTT player with a free-to-air strategy. Acquired by Google in 2006, the web phenomenon attracts over one billion unique users each month [2]. Monetization of this strategy has been slow. Advertising is currently the main contributor, using Google ad platform, but YouTube has recently launched premium channels, allowing any channel with over 100,000 followers to go premium for as little at .99c per month. It is not yet apparent whether that strategy will be successful.
Adult content is the second largest OTT player in this category, monetizing premium content through subscription. A small percentage of their viewership base subscribes to premium and generates close to 4.9 billion dollars revenue globally.

4.    Securing content

If content is king, content rights are the crown’s jewel. Securing content that will attract and retain consumers is the principal occupation of OTT players. Studios and content producers now have new avenues for the distribution of their content, but as traditional Pay TV weakens in viewership, it still dwarfs OTT revenues. The most popular content can spur a viewership addiction synonymous with subscription and advertising revenue. It has become necessary for the likes of Netflix to secure access to content. In 2012, Netflix lost rights of diffusion of Starz, Encore and Sony catalogues over broken negotiations. Clearly, having your core value (content) submitted to third party control and threatened on a regular basis by the whims of negotiation is not a very good strategy for long term success. Increasingly, OTT players and channels have started acquiring and producing content exclusively in order to guarantee access, control and ultimately monetization of popular content.
HBO has, for instance, developed the series “Game of Throne”, which became an overnight critical and popular success, drawing fans to the network and becoming one of the most pirated series of 2012 [4].
Netflix has secured later a deal with Disney, valued at close to $300 million per year for Disney. This deal sees Netflix get exclusive access to Disney’s movies after their theatrical release. In 2013, Netflix doubles down and sign a follow on deal for exclusive Disney content “Agents of S.H.I.E.L.D”.

5.    Favoring binge watching

Consumers buying habit have changed durably, we have seen, but their viewing habits are also undergoing transformation. With the availability of whole back catalogue seasons of a series, binge watching has become a solid trend. Many viewers, when watching a streaming TV show are increasingly watching more than one show per seating. Detecting the trend early, Netflix strategy for the release of “House of cards” has been to release the full season at once, as opposed to a fixed schedule, favored by traditional TV. Netflix has since released a survey with Harris interactive showing that 61% of Netflix series viewers are binge watchers.

6.     Costs reduction

In the same vein as Verizon, Netflix has undertaken to control its delivery network. Unlike Verizon, it is not an acquisition but organic development that sees Netflix launch its own CDN called Open Connect in 2012. Recognizing that delivering massive amounts of video over the internet can be costly and unreliable at scale, major OTT players look at controlling the end to end user experience and leverage economy of scale from a dedicated network infrastructure. Common CDNs are perfect for general purpose internet content but their business model and quality start to be stretched to their limit when it comes to massive video delivery.

Tuesday, March 11, 2014

PayTV vs. OTT VI: 5 MSO strategies

5 MSO strategies

If you haven't read the other posts in this series, you can find them here for context.
Pay TV vs. OTT:
Part I: The business models
Part II: Managed devices and services vs. OTT
Part III: CE vendors and companion screens
Part IV: Clash of the titans
Part V: Appointment vs. on-demand

More developments will be presented at Monetizing OTT services - London - March 24/26
enter the discount code OTT_CORE here for a 20% discount

There are a few strategies that have been enacted by MSOs to counter the erosion of their margin and viewership brought forward by OTT.

1.     Vertical integration

As control of the value chain shifts from distribution to content, it is only natural that some MSOs start to look upstream and concentrate channels, studio and production with distribution in order to regain a dominant position in the value circle. As an example, Comcast owns NBC Universal, which owns the MLB network (in a joint venture with MLB) and the Philadelphia Flyers. In one company you find premium content, production, channel and distribution.
This strategy allows to control the content, with either exclusive or preferential rights for distribution, which enables a captive audience and in return higher advertising revenues, as long as the content remains popular.

2.    Multiscreen

This strategy allows MSOs to offer a portion of the live and on-demand TV programming available to mobile devices (smartphones, Tablets, Phablets…) and hybrid devices (hybrid set top boxes, video game consoles, PCs,  smart TVs…). In this context, while the medium of delivery is still the internet, it is not a true OTT play. To access the content, the user must authenticate herself as a MSO subscriber. This strategy enables MSOs to “spill out” of the traditional TV screen and to offer programming on a growing medium that is favored by younger generations. Verizon’s FiOS is, for instance available on cable, internet, on ipad, on LG, Samsung TVs and on Xbox and Playstations. This strategy is one of retention, where, recognizing that consumers want to watch in a more flexible manner, it is made available on a variety of new devices, included in the regular subscription. This is about keeping people loyal to the MSO programming, countering pure OTT by offering an OTT-like experience. The strategy has not proven to increase revenue, as it is usually included in the regular subscription. It is used to reduce churn and increase loyalty.

3.    Social TV

As Facebook, Twitter, LinkedIn and other social media become part of our daily life, new usage patterns have emerged. Social TV is such a trend, where content success relies on recommendations, likes and sponsoring.
Popular content can, in days become viral and amass millions of views. Psy, a South Korean rapper became an overnight internet celebrity, with over a billion views in six months on its YouTube channel with the release of “Gangnam style”. The virality effect is hard to predict or influence, but live TV, particularly sports and game shows are well suited for audience social interaction. By creating interactivity, content becomes simultaneously more popular and more “sticky”, as consumers watch more and longer shows when there is an emotional connection. MSOs have started to try and integrate apps for social networks in their managed devices in order to reinforce this engagement with users. The lack of standards across platforms has hindered this integration to date and Social TV remains more an experiment than a service at this stage. The strategy relies on the assumption that engagement drives viewership, which drives revenue.

4.    Going OTT

If you can’t beat them, join them. There are a couple of sub strategies here. The first one is to create a web site to serve content exclusively over the internet. For instance, Hulu plus, the joint venture between Comcast (NBC Universal), Disney and News corp. (Fox) allows its customers to watch ad-sponsored current and back catalogue TV show for a monthly subscription.
A second strategy is to package a channel as an internet content provider. For instance, it was announced in October 2013 that Comcast is launching a new plan for cord-cutters and cord-nevers, offering Xfinity Streampix, HBO and HBO Go together with broadband for $39.99. A US Comcast customer will be able to watch HBO over the web on their broadband subscription without having to be a cable customer. The FCC (US regulators) mandates that premium channels have to be bundled with basic broadcast, so that's in it as well, but this is a clear tipping point moment. For the first time HBO is going head to head with Netflix, going pure OTT. The implications are profound and it is a floodgate moment. On one hand, Netflix has now more subscribers than HBO, which prompts Comcast to start the self cannibalization. If you are losing subscribers, you might as well lose them to yourself and a friendly content provider rather than a competitor.
Verizon’s Redbox instant is another example of a Netflix me-too strategy relying on monthly subscription.

5.    Cost reduction

The last strategy implemented lately has been about creating the infrastructure necessary to deliver a massive amount of video, securely with high quality. While MSOs have traditionally relied on third party infrastructure, Verizon has recently innovated with the acquisition of EdgeCast in January 2014. By purchasing the CDN, the MSO will be able to reduce its delivery costs, while controlling user experience and offering wholesale service to other MSOs and OTT alike.

Monday, March 3, 2014

Mobile video monetization and MWC14 wrap up

This year's Mobile World Congress proved itself extremely busy, with many vendors graduating from slides to demos and customer announcements in the mobile video field.

As usual, my "Mobile Video monetization and optimization 2014" report, now in its 3rd edition, will be released at the end of March. It features the dominant market (net neutrality, privacy, sponsored data, service prioritization...) and corresponding technology trends (analytics, big data, NFV, encryption, TCP, web and video optimization, DASH, LTE broadcast, H.265, VP9, SPDY. HTTP 2.0, 4K...) as well as in depth analysis of vendors strategy in this market.

Haven't had a chance to look through all the mobile video related announcements at mobile world congress?

Here is a list of releases issued by some of the companies followed in this blog.

As it is now customary, Allot releases its "mobile trends report" in time for the show. It features a few interesting findings such as the facts that laptop dongle users seem to be more tolerant of stalls than smartphone users, continuing to watch videos after repeated stalls where smartphones tend to stop. Additionally, it shows that in the case of the network studied, the network was inefficiently allocating bandwidth, unable to recognize larger devices, video encoding and hungry video containers to alleviate video stalls...

Avvasi was one of the busiest companies in mobile video, with no less than 4 announcements, including 2 named customers: Video minutes solution launch, Wind Canada customer announcement, Virgin France customer announcement and GSMA award shortlist. The 2 named customers are both for the product launched last year to manage mobile video. Complete analysis of the solution in my report.

Citrix-ByteMobile released its latest Mobile Analytics report at the show as well. Findings include the fact that video constitutes now 32% of social networks traffic and statistics showing that while mobile advertising in 2013 doubled its audience from 2014, only one in twenty subscriber is likely to see today a mobile video ad. In other news, the company launched a new offering in the analytics space with ByteMobile Insight, fruit of a partnership with Zettics. Big data analytics seemed to be a recurring theme with many vendors this year, with virtualization a close second.

Busy with Mobixell Network's acquisition, Flash Networks nonetheless made a noticeable change in its communication and positioning with the launch of its "game changer" campaign and the celebration of Layer8, its successful carrier OTT monetization tool now deployed commercially in several networks.

Openwave Mobility launched a new engagement tool, for customer self care and operator notifications as well as the new release of its media optimization solution.

Opera-Skyfire were not overly present on the PR front, beyond an announcement related to poor video quality in Russia's 3G networks. They will certainly be able to announce new customer wins shortly.

Vantrix made the news with two releases. A follow up to their standing partnership with Kontron on NFV and big data analytics, backed by the customary product new release announcement.

All these companies, together with Affirmed Networks, Connectem, Divi Networks, Ericsson, Huawei, Mahindra Conviva, NSN, Saguna Networks, Vasona Networks... and many others in the "Mobile video monetization and optimization 2014" report.