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Pace plc Technology Briefing
OTT : Over-the-top
Dr. Paul Entwistle – Head of Investor Relations & Chief TechnologistWednesday, 9th June 2010
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Over-the-Top Agenda
• I will explain :
• What OTT is
• That TV is part of a spectrum of video content services : OnDemand, DVD, Cinema,Subscription, “Free”...
• Emphasize that our customers offer “Subscription TV” and that it is a “managed service”
• That “Subscription TV” has a strong business underpinning it
• That the consumer benefits from the robust, easy to use and upgradeable “managed services”
• And conclude :
• That far from a being a threat – OTT allows our customers (the Subscription TV providers) tooffer even more services such as Video-on-Demand, Catch-up TV, Interactive applications...
• That the continuous (relentless) evolution of these services drives demand for ever morecapable STBs
• And that the STB remains the efficient, dedicated, managed device to ensure the delivery ofthose services !
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BasicsWhat is a Set-top-box?
“STB: Technically standardised, commoditized, retailed”
“STB: Service provider managed, bespoke, edge of proprietary network”
98%*
* 98% of Pace’s 2009 revenue was for service provider managed STBs
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DefinitionsWhat is OTT?
• OTT (Over-the-top) (syn. Internet TV)
• The delivery of a service – often video – using the open internet
• It can be delivered straight from the provider – who could be the creator – to the viewer
• Without the need for intervening carriage negotiations, or infrastructure investments
• (It is independent of the viewer’s internet service provider)
• However, it is “unmanaged” and “quality of delivery” can not be guaranteed
IS NOT THE SAME AS
• IPTV (Internet Protocol TV)
• A “managed” TV service delivered using “internet protocols*”
•
Closed, proprietary network, accessed via a specific internet service provider • Services are optimised and customised to suit the network and end-device capability
• Providing control over “quality of delivery” and “end device serviceability”
* “internet protocols” – a basic suite of standardised techniques for moving data packets across a network; used on and off the internet
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Over-the-TopLandscape...
“User” Generated Content
Internet “broadcasters”
Content retailers (rent / sell)
Distributing content owner
Traditional broadcasters
Multichannel Subscription TV
•Broad range of content (inc. premium)• (Movies, TV shows, Education ...)
•High Quality Material• HD, 3D, Surround Sound
•Robust high quality delivery•Managed Service•State-of-the-art Device
• PVR, HD, Hybrid, VoD, WholeHome
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Subscription TVPaying for Content
Theatrical
DVD Sale (Full price, discounted price)
Pay Movie Channels(inc. subscription bundles)
“ Free” TV
(Advertising funded)
Library
On-Demand
DVD Rental (Launch price, library price)
Pay.Per.View
On-Demand
< 3 months 6 – 12 months 12 – 15 months 2 – 3 years
Source: 4 BBC Trust : Report on the Impact of Canvas on Pay-VoD Services
“This [Canvas] is likely to shift value from the DVD Rental market to the PPV / VoD market4”
Pace’scustomers
Subscription TV, Video Rental and Purchase Are different “products” with different consumer behaviours
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Subscription TVPaying for Content
Source: 5 Entertainment Merchants Association,
Investing in sport :
DirecTV $4B NFL Sunday ticketBSkyB £1B Premier league
Multichannel
Subscription TV
US Video Revenues (2008)Total 42B USD
• Opportunity for traditional TVdistributors to offer On-Demand
• Traditional TV distributors havevery strong consumer brand
• Consumers get easy to use,seamless, integrated – managed
service
• On their TV, via an STB
• Available on today’s Hybrid STBs: DirecTV, Canal+, Viasat...
DTO
8.2
14.5
9.8
2.1
3
2.8
• DVD Rental migration to “Download-to-rent” [DTR] (eg. Netflix, Seesaw…)• DVD Sales migration to “Download-to-own” [DTO] (eg. Amazon, Apple…)
DTR
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Subscription TVHow Big is the PayTV Industry?
• Global PayTV subscription revenue (2009) : ~180 B (USD)2
• Global PayTV STB shipments (2009) : +120 M2
• Global PayTV TV households (2009) : 57%3
• US PayTV households (2009) : 94% (108 M)
• US top 10 “TV distributors” subscribers (2009) : 89.3 M1
• US top 10* “TV distributors” aggregate market cap. : 351 B (USD)
• US Cable’s revenue from residential video (2009) : 53 B (USD)1
* Based on 8 of the top 10 (excludes Cox Communications & Bright House Networks)
Source: 1 NCTA, 2 ScreenDigest, 3 IMS research
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Subscription TVPaying for Content (example US : 2008)
Source: 6 Bill Gurley, abovethecrowd.com, 7 DirecTV & Dish SEC filings
CREATORS
AGGREGATORS
TV DISTRIBUTORS
MSO DBSTELCO B’CST
Cable Networks Broadcast Networks
• DirecTV• Dish
• Comcast• TWC
• Verizon• AT&T
• AffiliatedStations
• Discovery• ESPN• TNT
• ABC• CBS• FOX
42B USD ADVERTISERS 32B USD6
Affiliate fees
21B USD1
VIEWERS
51B USD1
US Video (2008)
Reve nue (42B USD)5
14.5
8.2
9.8
3
2.82.1
home video - bought
home video - rental
Theatrical
Premium cable
Basic Cable & Broadcast
On Demand
29B USD7
Pace0.67B USD(US only 2009)
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Subscription TVPutting OTT into perspective
Source: 8 DirecTV SEC filing
• Satellite broadcaster - No IP infrastructure• Uses OTT to complement and enhance broadcast offering• Delivered to the TV via the STB
DirecTV8 : ~6000 titles
• Primarily impacts the 22.7 B USD DVD rental and sales market• Wallmart acquires VUDU (STB and OTT delivery platform)Netflix : 17000 titles
Apple : 200 TV shows, 400 movies
On-demand content:
“The television industry fundamentally has a subsidized business model that gives everyone a set-top box, and that pretty much undermines
innovation in the sector. Ask TiVo, ask Roku, ask Google in a few months. The only way this is going to change is if you start from scratch, tear up the
box, redesign and get it to the consumer in a way that they want to buy it. But righ t now, there’s no way to do that. The TV is going to lose until there’s a
viable go-to-market strategy. That’s the fundamental problem with the industry. It’s not a problem with the technology, it’s a problem with the go-to-market
strategy. I’m sure smarter people than us will figure this out, but that’s why we say Apple TV is a hobby.”
Steve Jobs
• Remember 32 B USD of Affiliate fees at stake !!• 9.95 USD pcm to be introduced on some content• Owners: News Corp/Fox, Disney/ABC, NBC (Comcast tbc)
Hulu : 190 Content Providers
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Any time, place, ... deviceGiving viewers what they want (as long as they subscribe)
• TV Everywhere
• TWC & Comcast initiative to allow their subscribers to access content “on-line”
• “Free access” to subscribers
•
Giving subscribers greater choice of device (and therefore time and place)
• Federated approach allows Content Owner portals
• No single gatekeeper
• Supports important brand identity of creators / aggregators
• BSkyB Sky Player
• For subscribers:
• Access live streaming and On-demand
• Through XBox360 and PC
IP is the common communication language of Connected Deviceswhether Games Console, Phone, PC or STB...
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Over-the-TopSummary so far…
Successfully being used by Subscription PayTV to complement and enhance
their broadcast offerings with “on-demand”
“Free” OTT TV is highly unlikely to replace subscription PayTV (businessmodel dependence on distribution fees)
Most likely to impact traditional video rental
Initiatives to meet consumers’ multi-device demands are underway (any time,
any place)
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TechnologyTechnology
Technology
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InteractivityOTT is an interactive app.
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Connected TVStandards & Specifications
• (Software) components of an OTT enabled device:
• IP delivery :
• Signalling and broadcast service integration :
•
Presentation and navigation :• Security / DRM :
• Metadata :
• Audience measurement :
•
Application run-time and management :
Many pieces – no common solution
Technical StandardsDVB, ETSI, IEC, IETF…
Solutions for specific technicaltasks
Platform SpecificationsDTG
Profile and selection of TSs for aspecific service
Device & Platform SpecificationsCanvas, Bespoke
Further includes detailedspecification of user experience
(interaction, presentation, quality)
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Connected TVTechnology : choices, choices …
HbbTV “Hybrid Broadcast Broadband TV”• European broadcaster supported initiative
• Blended not alternate experience• TV optimized browser (HTML / JS / remote control)• Minimal specification to ease implementation• Middleware and device friendly• Completed Nov2009 sent to ETSI for Standardisation
DTG DBook 6.2• Connected TV feature : MHEG xPlayer
• Published Mar2010DTG DBook 7• Working with Canvas and other stakeholders
BBC + Arquiva, BT, C4, Five, ITV, TalkTalk• Detailed and “open” specification of an internet TV device & platform• Technical details currently confidential / and not yet all available
• A solution available without [a content] subscription
• (that also allows a pay/subscription business model)• Keeps control over user-interface / navigation and presentation• Seeks to avoid a defacto proprietary solution emerging
• Started Dec 2008 – products due Spring 2011
Technical homogenisation can not provide the Subscription TV industry with competitive differentiation
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Connected TVTV’s with web
CE Industry(Walled garden aggregations)• Sony – Bravia Internet Video• Panasonic – Viera Cast
• Samsung – Internet@TV• Philips – NetTV…
Custom integrations…
Is there a long-term commitment to maintaining portfolio of “content” / device software?
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Connected TVThrough a Managed Service Platform
• Pace - Innovation Partner
• Remember STB is a bespoke managed service platform… software updates...
• Pace is currently demonstrating Flash Lite apps running on our US HD Cable STBs
...
“Internet” applications :• Social networking• Video streaming• Information
FlashLite
Pace’s EnginewareTM
Network Services:
• In-band• Docsis• OTT
Subscription TV managed STBs offering video rich, OTT applications
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Over-the-TopSummary
• Pace’s customers (Subscription TV Providers)
• OTT expands their service offerings
• Being used today : DirecTV, Viasat, Canal+, ...
•
Robust, secure, upgradeable “Managed” service
• Pace : Trusted Partner, Innovator and Leader
• Delivering : Hybrid (OTT), Whole-Home, ...
• Demonstrating : Advanced interactivity (OTT)
• Increasing need for higher performance and connected STBs
Convergence : expanding Subscription TV with Over-the-Top
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