shift happens: from value destruction to value creation

Murali Nemani, Service Provider Marketing, Cisco

Shift HappensFrom Value Destruction to Value Creation

© 2010 Cisco Systems, Inc. All rights reserved. Cisco Confidential & NDA Required 2

History is No Predictor of the FuturePredictions that Flopped

1916 1916

Charlie Chaplin, the actor, producer, director and studio founder, stated:

“The cinema is little more than a fad. It’s canned drama. What audiences really want to see is flesh and blood on the stage.”

It has been proved that audience is more interested towards love stories

Charlie Chaplin, the actor, producer, director and studio founder, stated:

“The cinema is little more than a fad. It’s canned drama. What audiences really want to see is flesh and blood on the stage.”

It has been proved that audience is more interested towards love stories


“[Television] won’t be able to hold on to any market it captures after the first six months. People will soon get tired of staring at a plywood box every night.”

— Darryl Zanuck, Movie Producer, 20th Century Fox, 1946

“[Television] won’t be able to hold on to any market it captures after the first six months. People will soon get tired of staring at a plywood box every night.”

— Darryl Zanuck, Movie Producer, 20th Century Fox, 1946


1946 1946

1916 1916



1948 1948

1946 1946

1916 1916

“Television won’t last. It’s a flash in the pan.”

— Mary Somerville, Pioneer of radio educational broadcasts, 1948

“Television won’t last. It’s a flash in the pan.”

— Mary Somerville, Pioneer of radio educational broadcasts, 1948



197719771948 1948

1946 1946

1916 1916

“There is no reason anyone would want a computer in their home.”

— Ken Olson, President, Chairman and Founder of Digital Equipment Corp. (DEC), maker of big business mainframe computers, arguing against the PC in 1977.

“There is no reason anyone would want a computer in their home.”

— Ken Olson, President, Chairman and Founder of Digital Equipment Corp. (DEC), maker of big business mainframe computers, arguing against the PC in 1977.



19951995

197719771948 1948

1946 1946

1916 1916

In February 1995, just over 15 years ago, Astronomer Clifford Stoll penned an essay for Newsweek under the incriminating title:

"The Internet? Bah! Hype alert: Why cyberspace isn't, and will never be, nirvana.”

In February 1995, just over 15 years ago, Astronomer Clifford Stoll penned an essay for Newsweek under the incriminating title:

"The Internet? Bah! Hype alert: Why cyberspace isn't, and will never be, nirvana.”



2005 2005 19951995

197719771948 1948

1946 1946

1916 1916

"Next Christmas the iPod will be dead, finished, gone, kaput…"

— Sir Alan Sugar, British Entrepreneur, 2005

"Next Christmas the iPod will be dead, finished, gone, kaput…"

— Sir Alan Sugar, British Entrepreneur, 2005

© 2010 Cisco Systems, Inc. All rights reserved. 8

But Sometimes, Someone Gets it RightThe Prediction that was Right on the Money

1996 1996

“In 10 years, our television set will be large and flat and will hang on the wall much like a large painting. It will be a digital, high definition model with clarity approaching that of a movie screen. This TV will be much more than just an entertainment device - it will also be used as a computer monitor capable of networking with other computers as an interactive, videoconferencing device.”

— Stephen M. Millett, Battelle Technology Intelligence

“In 10 years, our television set will be large and flat and will hang on the wall much like a large painting. It will be a digital, high definition model with clarity approaching that of a movie screen. This TV will be much more than just an entertainment device - it will also be used as a computer monitor capable of networking with other computers as an interactive, videoconferencing device.”

— Stephen M. Millett, Battelle Technology Intelligence


Opportunity to Leverage Online Video for Differentiated User Opportunity to Leverage Online Video for Differentiated User ExperiencesExperiences

Reshaping of the Video EcosystemDominated by Online Video Growth

Online VideoOnline Video

Video = 90% of consumer IP traffic

by 2012


by 2012

Cisco VNI StudyCisco VNI Study

Consumer viewing of movies and TV shows online doubles in 2009


Web

In 24 millionHouseholds

By 2014


By 2014

44%44%

5 billion5 billion

5B Videos Viewed Online in UK in April 2009


MarketDynamic

s

MarketDynamic

s


Opportunity to Create Revenue Generating Services Using the Opportunity to Create Revenue Generating Services Using the Network as a Platform Network as a Platform




by 2012


by 2012




Web


By 2014


By 2014

44%44%

5 billion5 billion



Service ProviderService Provider

11.3 million unique visitors – Nov 2009

“TV Everywhere”

CDNCDN

ISPISP

ISP

Online Film Rentals?

MarketDynamic

s

MarketDynamic

s





by 2012


by 2012




Web


By 2014


By 2014

44%44%

5 billion5 billion



Broadcasters and MediaBroadcasters and Media

27% Owner

44 million unique visitors – Nov 2009

2XOnlineVideo

BrandVisibility

$$

Sony’s On-Demand

Movie Service 2010

Opportunity to Increase Popularity of the Content and Revenue Opportunity to Increase Popularity of the Content and Revenue Through CollaborationThrough Collaboration



“TV Everywhere”

CDNCDN

ISPISP

ISP


MarketDynamic

s

MarketDynamic

s


Innovate to Transform Consumer ExperienceInnovate to Transform Consumer Experience

Consumer ElectronicsConsumer Electronics

Walmart Buys Vudu Movie Service

Walmart Buys Vudu Movie Service




by 2012


by 2012




Web


By 2014


By 2014

44%44%

5 billion5 billion



Broadcasters and MediaBroadcasters and Media

27% Owner

44 million unique visitors – Nov 2009

2XOnlineVideo

BrandVisibility

$$

Sony’s On-Demand

Movie Service 2010



“TV Everywhere”

CDNCDN

ISPISP

ISP


MarketDynamic

s

MarketDynamic

s


Content FragmentationBroadcast, Premium, UGC

Device & Screen FragmentationTV, PC, Mobile, Gaming, PDA

Interactivity Fragmentation Lean back, Lean forward, Social




Subscription FragmentationBroadband, TV, Mobile, Movie rentals, OTT

Free vs. Paid

Ad Dollars FragmentationTransition from linear TV to online


Free vs. Paid


Fragmentation Takes Hold

Consumer Experience Business Models









Free vs. Paid



Free vs. Paid





2nd Wave2nd Wave

1st Wave1st Wave

3rd Wave3rd Wave

IP Video On-net or Off-net

TV, PC, Mobile

Highest Service Velocity

Business Model: B2B2C

IP Video On-net or Off-net

TV, PC, Mobile

Highest Service Velocity

Business Model: B2B2C

IPTV On-net only

TV

Higher Service Velocity

Business Model: B2C

IPTV On-net only

TV

Higher Service Velocity

Business Model: B2C

Traditional Cable On-net only

TV

Limited Service Velocity

Business Model: B2C

Traditional Cable On-net only

TV

Limited Service Velocity

Business Model: B2C

More Open, More Flexible, More Monetization OpportunitiesMore Open, More Flexible, More Monetization Opportunities

The Quest for Value Creation Propels a 3rd Wave: IP Video


Next Generation Platform Built on Web Services Protocols

Accelerates universal reach and 3rd party innovation

Next Generation Platform Built on Web Services Protocols

Accelerates universal reach and 3rd party innovation

How do we get there?Key Architectural Tenets for IP Video

Next Generation PlatformNext Generation Platform



Large-scale Unicast Large-scale Unicast


Content networks scale exponentially for large-scale unicast services

Leveraging multicast technologies for efficient distribution

Content networks scale exponentially for large-scale unicast services

Leveraging multicast technologies for efficient distribution




Video Intelligence Video Intelligence


Video intelligence propagates deep into the network edge

Providing media, device, and network awareness

Video intelligence propagates deep into the network edge

Providing media, device, and network awareness





Common Client ArchitectureCommon Client Architecture


Common Client Architecture

Multi-device support – for PCs, set-tops, gaming consoles, mobile devices, etc.

Common Client Architecture

Multi-device support – for PCs, set-tops, gaming consoles, mobile devices, etc.





Common Client ArchitectureCommon Client Architecture

Managed / UnmanagedManaged / Unmanaged


Services Across Managed and Unmanaged Networks

Common experience no matter where the user connects

Services Across Managed and Unmanaged Networks

Common experience no matter where the user connects


MedianetThe Architectural Blueprint for Delivering Next Gen IP Video Services

Content Providers

Contribution

Core IPNetwork

News Gathering

Production

Sport Events

Studio to Studio

Ingest

Media Data Center

Post Production

UCS

Real-timeTranscoding

Storage

Data CenterSwitch

Media Data Center

Tighter Linkages Between Core, Data Center and EdgeTighter Linkages Between Core, Data Center and Edge


MedianetThe Architectural Blueprint for Delivering Next Gen IP Video Services

Content Providers Service ProvidersService Providers

Contribution

Core IPNetwork

News Gathering

Production

Sport Events

Studio to Studio

Headend

Primary SecondaryDistribution

Headend

Headend

Direct To Home

Telco

Cable

Mobile

IP

IP

IP

IP

Ingest

Media Data Center

Post Production

Proximity Routing

Core + E-MSE

Core + E-MSE

Aggregation Router

Aggregation Router

Storage

Storage

Storage

Aggregation Router

Aggregation Router

Distribution Router

DistributionRouter

Storage



Medianet

Consumption

The Architectural Blueprint for Delivering Next Gen IP Video Services

ConsumersContent Providers Service ProvidersService Providers

Contribution

Core IPNetwork

News Gathering

Production

Sport Events

Studio to Studio

Headend

Primary SecondaryDistribution

Headend

Headend

Direct To Home

Telco

Cable

Mobile

IP

IP

IP

IP

Ingest

Media Data Center

Post Production



Shift Happens: Will SPs Lead an Ecosystem Searching for Value Creation?

shift happens: from value destruction to value creation

Technology

cisco systems

cisco confidential nda

cisco shift

future predictions

video ecosystem

online doubles

television wont

movie producer