More than a third (36%) of broadcasters are failing to utilize their content library despite facing increasing competition from streaming services, according to research by ATEME.
Although almost all (98%) of the broadcasters surveyed use their content library to create new channels for particular events or occasions, the majority (82%) are impeded in the ability to do it quickly, unlike their streaming counterparts. 44% of broadcasters revealed it takes them up to three days to create a new channel, while over a third (38%) say it takes them up to a week, which not only hinders their ability to capitalize on events but could result in potential revenue loss.
“With a continuous influx of competition from all angles, broadcasters must begin to do more with their content libraries. Creating new, virtual channels would allow broadcasters to take advantage of topical and cultural events, such as award season, during which they could use their back catalogue to quickly develop one-off channels to celebrate winners as they are announced,” commented Remi Beaudouin, Chief Strategy Officer, ATEME.
As broadcasters explore ways to use technology to maximize their content, almost two-thirds (60%) of broadcasters are utilizing virtual broadcasting to create one-off channels, while of the broadcasters not currently doing virtual broadcasting 70% said they will do so within a year.
“For over half (52%) of broadcasters this ability to capitalize on unexpected or timely events without disrupting usual viewing schedules is seen as the biggest benefit of creating one-off channels. This approach also allows broadcasters to widen their appeal and cater to niche audiences with targeted or local content which 46% of broadcasters think virtual broadcasting would help them achieve,” said Beaudouin.
While currently very few broadcasters are able to create new channels quickly, the use of cloud technology, which 66% of broadcasters would consider moving to, could allow them to adopt a more proactive approach to creating virtual programming.
“Virtual broadcasting can be highly beneficial for broadcasters as it allows them to create tailored channels in just a few hours and use their catalogue to better effect. This will allow them to offer content that is different from that shown on their main channels and appeal to a wider audience,” added Beaudouin. “As traditional broadcasters continue to face opposition from streaming platforms, adopting virtual broadcasting is an ideal way to compete with their services as 50% of broadcasters see one of the biggest advantages of its use as the ability to offer a package other broadcasters currently aren’t. It will also enable them to cater to the increased variety the modern TV viewer has come to expect.”
While « Over IP » is the new trend on the media technology market, the number of companies adopting this technology evolves sluggishly. Following the latest IBC, the technology is clearly there, but there is a lack of knowledge on the system integrator side to provide both IT and Broadcast expertise in environments with are evolving towards the perfect blend of both technologies.
Two years ago, Broadcasting Center Europe set the ball rolling, with the first over IP headquarters including the broadcast centre, the production and postproduction platforms as well as the ingest and news workflows.
IP-based platforms allow us to rapidly setup new channels,” comments Costas Colombus, Technology Projects & Support Director at BCE. “Whereas it is for continuous or ephemeral channels, we are able to give a fast answer and start broadcasting the content worldwide.”
“We recognized a strong consumer demand for pristine content but need to also provide for that demand in the most cost-effective and efficient manner,” said Julian Ankiah, Head of Technology Engineering at MultiChoice Support Services. “We needed to take advantage of the benefits of IP signal reticulation, while ensuring tight integration with our existing platforms, and particularly our business services.”
Multichoice moved to an IP playout platform thanks to Imagine Communications, Megahertz started to work with major US broadcasters for the implementation and tests of IP, CCTV renovated its platforms with NDT and RadioFr and La Télé, both swiss private broadcasters, upgraded to an all IP broadcast centre with SLG Broadcast AG.
“MEDIAParc is the first all-IP mediahouse in Switzerland, and as such it represents the successful realisation of an ambitious vision encompassing cross-media workflows,” said Marc Straehl, CEO of SLG Broadcast AG. “RadioFr wanted all-IP infrastructure for both radio and TV sides of the house. They wanted to virtualise the production environment, so that editorial PCs could contribute programming directly via the network.”
What about audiovisual education and high schools? It is paramount to make the roots evolve as soon as possible, in order to have qualified employees in our next generation media companies. Of course, it is part of our job to train the actual staff to meet the new technology, but it would be much more effective to change the student curriculum and include immediately over IP knowledge.
Recently the BTS Audiovisual Henri Martin, in the City of Saint-Quentin in France, decided to upgrade to IP SMPTE-2110 its infrastructure. The school decided to keep both SDI and IP technologies, in order to be sure that their students will be well prepared for any type of infrastructure. The choice is quite smart, since there is still a lot of media players that are not equipped with this technology, but it will be an undeniable asset for the companies to have employees which can evolve easily with future upgrades.
Jacques Tabary, the headmaster of Henri Martin High School told us that they were looking forward to evolving to IP for a long time but that they did not know themselves how to start such a transition. To do so they were helped by Boite à Outils Broadcast which helped them draft a specification and publish a tender. Broadcasting Center Europe (BCE) was selected and worked hand in hand with the teachers and the students to answer all their needs in technology and training.
“We have fifteen teachers on the technical part at the BTS. You must rely on teachers who have been able to take this type of training, but also on professionals – for example we have a chief editor who comes from Canal+. As part of this project, we had not sized the importance of training on the hardware and related new technologies such as IP. BCE has trained our teachers so that they can acquire the skills necessary to use the equipment,” comments Jacques Tabary.
A few weeks ago, we heard that Orange Business Services, a network operator and a digital services integrator teamed up with BCE for the Radio France project. The massive French radio group has announced that it will transform the media infrastructure of its headquarters, Maison de la Radio, to next generation, full IP technology.
“The combined expertise of Orange Business Services and BCE, complemented by the professionalism of Maison de la Radio’s project teams, will allow us to innovate and facilitate the production and broadcast of programs while meeting the highest standards required by the media sector,” comments Patrick Fasso, Technical and Information Systems Director at Radio France.
Grabyo’s 2019 Sports Video Trends Report reveals that over half of global consumers watch sport on a regular basis, with 45% of sports fans watching it more often than anything else.
The report follows on from Grabyo’s 2019 Global Video Trends Report, which surveyed over 9690 people across the UK, United States, France, Germany, Spain, Italy, and Australia.
Grabyo’s Sports Video Trends Reports explores the video consumption habits and preferences of a segment of 2300 consumers. These are the sports fanatics who watch sports content more often than anything else.
In today’s market, pay-TV broadcasters hold the rights to the world’s most valuable sports properties. The report confirms that linear rights acquisitions are slowing the rate of cord-cutting among sports fans. Over half of sports fanatics pay for TV services today.
However, the consumer shift to online streaming has not left sports fans behind. Despite showing loyalty to pay-TV providers for live sport, die-hard sports fans watch most often on smartphones (65%) and laptop or desktop computers (53%). TV sets are used most regularly by around 40% of sports fanatics, showing the demand for sports content outside of the mainstream TV viewing schedules.
Almost 25% of sports fans use social media platforms more often than pay-TV to watch video. Just under 1 in 5 of die-hard sports fans visit social media with the intent to watch video every time.
The report defines how changing consumption habits in sport have been shaped by the changes in technology and viewing preferences, behaviors that were shaped in the entertainment industry for TV. The rise of online streaming platforms has changed consumer priorities, shifting demands towards convenience, flexibility and lower prices.
In the sports media market, linear broadcasters have an advantage by committing huge sums to acquire the most valuable media rights, but emerging sports-focused OTT platforms such as DAZN, Amazon Prime Video, YouTube TV and Kayo Sports are growing in their respective markets and challenging the status quo.
Gareth Capon, Grabyo CEO, comments: “Consumer expectations have changed. Sports fans are looking at other media services available across a range of devices and platforms and see more flexibility than is available in sports. Digital distribution has grown across online platforms and social media and consumers have flocked to these platforms. However, in today’s media rights market, linear broadcasters dominate and sports fans have no choice if they want to watch live sport. Our data suggests that the demand is there and if an online competitor – perhaps Amazon, or YouTube – invest in a meaningful live offering, then consumers will welcome this with open arms and the shift to digital media in sport will accelerate.”
Flashback on the first IP-based broadcast centre with state-of-the-art platforms and numerous innovative production and distribution applications to answer the needs of today and tomorrow media players.
The 36,000 square meter IP-based facility supports 24/7 broadcasting of more than 35 channels, among those RTL Télé Lëtzebuerg, Chamber TV, Luxe.TV (Luxembourg), RTL TVI, Club RTL, Plug TV (Belgium), RTL4, RTL5, RTL7, RTL8, RTL Z, RTL Crime, RTL Telekids, RTL Lounge (Netherlands), RTL9 and AB Groupe movie channels and Altice Group channels (France), RTL Hungary (Hungary) and Love Nature, Love Nature 4K, Blue Ant Extreme, Blue Ant Entertainment (Singapore).
The broadcast centre was three years in the making and features an end-to-end IP infrastructure and well-conceived data IT network that manage mostly HD (and some 4K) content and channels.
“IP-based platforms allow us to rapidly setup new channels,” comments Costas Colombus, Technology Projects & Support Director at BCE. “Whereas it is for continuous or ephemeral channels, we are able to give a fast answer and start broadcasting the content worldwide.”
The new broadcast centre is located in in the centre of Europe. All the radio and television production facilities and playout centre operations employ the latest IP-enabled equipment from technology suppliers like Arista, Grass Valley (GV), Isilon, Juniper, Lawo, Harmonic.
Advanced research and systems integration
All of the equipment and systems were installed and tested by BCE. When plotting out goals for the new building, BCE engineers wanted the new infrastructure to be both future-proof and able to adapt to new workflow challenges as needed.
When it first began to consider replacing its traditional SDI systems in 2014, the available IP technology wasn’t suitable for real-world deployments or mission-critical broadcast use, and most solutions were proprietary. The process resumed in 2015 with six months of intensive interoperable testing. For BCE it was critical that the IP solution had the same quality of service and reliability achieved in the SDI world, but with an increased level of scalability, stability, propagation delays and synchronization.
Working with engineers at The Institut für Rundfunktechnik GmbH (IRT) research centre, BCE began looking at the SMPTE 2022-6 IP spec as a way to connect all of the disparate systems and have them communicate as a fully networked system. This would streamline the production of content and get it to the right TV, radio, and web platform for its own purposes, as well as support the numerous playout and other services it provides for major U.S. content distributors like CBS, NBC Universal, Warner Brothers Television and others.
Laurent Seve, Marketing Manager at BCE, said that when their team began researching different ways of implementing IP technology, they recognized that what was needed was a facility that was significantly different to what had been done in the past.
“The new facility is flexible enough to handle all types of content creation and distribution projects,” Laurent Seve said. “The collaboration between the IT and broadcast teams led to new types of workflow methods and allowed to get the most out of the systems.”
Technology provider Grass Valley was brought in to help test a series of IP workflows. Fiber-optic cabling, which is bandwidth-friendly, supports the various systems and connects all floors of BCE. There’s also lot of Cat6 cable installed throughout the building for things like data networks, online access and a variety of control (KVM) functions.
“The IP-technology allowed the move to a fiber-based cabling infrastructure,” said Alain Prim, Technology Projects Manager at BCE. “All the areas of the building are connected through a reduced amount of cables which are able to transport a far higher number of services. The multiple changes in media services are now easier to manage without the need of modifications in the basic cable or hardware structure.”
Indeed, BCE is now responsible for the playout of over 35 regional and international channels, from its Luxembourg Network Operations Centre (NOC). This NOC also manages transmission sites, located on remote sites in Luxembourg and Germany. Online and available 24/7, the NOC team ensures the continuity of BCE’s and its customers activities by answering all queries and taking targeted actions.
Thanks to the IP solution implemented, the NOC can fully operate, and control BCE’s Teleport located miles away. All the antennas, uplinks and downlinks, receivers, etc. are remote controlled over IP by the NOC.
The core of the production activities features a 1,000 sqm datacentre with one-megawatt capacity and 366 floor-to-ceiling equipment racks that store and distribute the content (and metadata) internally and outside the building. In-row water-cooled airflows keep the systems at optimal temperatures.
“Numerous customers selected our datacentre for its flexibility, its advanced infrastructure and the access to numerous services,” comments Xavier Boschian IS&T Director at BCE. “As a result, we have already built a second datacentre and are looking to extend the platform to welcome more customers.”
System and content security
Securing the operations of its customers is BCE’s priority, the new IP workflow of RTL City facilitates connections setup to remote sites for disaster recovery (DR) platforms.
Data is handled with the utmost care and stored in BCE’s storage facility. Whereas it is administrative, financial or media content such as videos and audio, BCE holds several solutions including a 20 Petabytes nearline Digital Library, online and offline solutions as well as S3 cloud backup and storage (through its flagship solution: itstored).
There are also three diesel generators for backup power, with UPS technology everywhere for system resilience. In fact, every piece of equipment is connected to two independent electrical power supply paths—with intelligent sensing and monitoring that will automatically connect the device to a third backup supply if two live and active electrical supplies are not detected.
Linked via dark fibre to BCE’s headquarters, the DR site features emergency workstations, playout platforms for the premium channels, a digital library with several Petabytes and a datacentre.
Flexible production and remote control
Due to its IP backbone, several production studios can share control rooms if necessary, with one control room controlling various productions at once. There are also several audio mixing rooms, and advanced lighting grids in the production stages.
About 30 post-production suites support a number of radio and TV channels as well as other outside client needs. These are based around GV edit stations with networked Isilon storage.
All the radio studios have voice-activated broadcast cameras in them so that when a particular on-air talent is talking, the appropriate camera goes live. The system has proved to be very flexible for full spec broadcasting on a main channel as well as generating a web stream.
“We have always anticipated the merge between IT and Broadcast technologies and decided to stop talking about new solutions and change the complete workflow of our activities to IP,” said Andreas Fleuter, Technical Infrastructure & SLA Director at BCE.
IP backbone makes the difference
While the internal network can be expanded as needed, the initial deployment is based around the VSF TR-03 protocol for distributing video over IP, using SMPTE ST 2022-6/7 and AES67 redundant IP streams. This includes multi-level routing support of the VSF TR-03 protocol for audio breakaways.
The building’s architecture supports 10Gbe, 25Gbe and 40GbE connectivity. GV provided an end-to-end IP routing system to meet this, complete with full SMPTE ST 2022-7 redundant hitless operation and seamless recovery from interruption to one IP link. GV also supplied a massive routing matrix that can handle 1036×1584 2022-6 video flows and 1180×1728 AES67 (each x8 AES3) audio flows.
Other GV IP technology in use includes its Kahuna IP production switchers, IQ-Edge IP processing systems, IP routing control systems and multiviewers. These are fully networked to a Lawo Virtual Studio Manager (VSM) control layer that manages all of the IP signals and tells the routers where (and when) to send them. There’s also a GV monitoring system that collects data from the IP sub-system, along with a direct interface to a Skyline Communications DataMiner network management and monitoring layer.
Evolution and Revolution
With the new IP infrastructure in place, any room or machine in the building can be accessed and used by any other with just a few router settings. In addition, operators at RTL City can now launch a new channel in a few days, as opposed to the 4-5 months it took previously.
“Technology and innovation are in BCE’s roots,” comments Tun Van Rijswijck, COO at BCE. “This all-IP infrastructure was meant to break the barriers and open to new linear and non-linear developments. Our recent acquisitions and innovations strengthen our conviction that we are on the right track.”
As a matter of fact, since the opening of RTL City, several channels selected BCE as their technological partner: Altice launched a multiplayout control room broadcasting numerous channels over Europe including a Live sport channel in 4K over IP and Blue Ant Media (BAM) launched Love Nature in HD and 4K in multiple languages.
With the acquisition of Freecaster, BCE enriched its portfolio with new hybrid solutions directly connected to the Cloud. Freecaster’s platform was perfectly integrated in BCE’s IP workflow, granting access to live streaming solutions, reaching new horizons with social network but also delivering OTT solutions, VoD portals, replay platforms and more.
“Freecaster is a strong asset for BCE, on one hand it answers our customers’ expectations for new OTT solutions and extension of our content delivery network and on the other hand it opens new markets like sports, institutional, music and fashion related customers.” Adds Tun Van Rijswijck.
On the production side, BCE created a new solution (StudioTalk) facilitating the launch of new programs. StudioTalk is geared up with PTZ cameras, microphones, digital branding and a touchscreen interface to manage the content, the production and the delivery. The solution gives an affordable alternative to cover events that were not financially viable before.
The results are clear, radio goes visual, television shows production is easier, events are covered anywhere, ephemeral studios are installed everywhere… BCE is steering the market to video and screen multiplication.
“Innovation has always paved the way of BCE activities. The all-IP infrastructure leaded our company to hybrid and cloud while increasing the distribution of media content on a global scale. The acquisition of Freecaster and its integration in our workflow was a significant move to the non-linear market. Tomorrow, the engineering of new solutions will enhance the development of BCE in the digital media world.” Concludes Frederic Lemaire, CEO at BCE.
By Chem Assayag. Chem Assayag is VO’s Executive Vice President of Sales and Marketing. With a strong experience in the world of digital television and content services, and during his tenure at OpenTV, the worldwide leader in interactive television, he managed operations in Europe and the Middle East, growing revenues in the company’s largest business region.
IBC recently ran a feature looking at AI in the broadcast industry and came across real world projects as diverse as using AI to automatically generate metadata, generate intermediate frames and thus super slo-mo from regular camera feeds; analyze audience behaviour patterns, provide speech to text, refine complex workflows, and much more.
Much of it is to do with automation in the value chain and currently it is mostly this that is driving the broadcast industry uptake. Broadcast is a very process-oriented business and many of these processes — think of Quality Control, monitoring channels for rights purposes, conforming, closed caption generation, ingest… the list is a long one — map well into automation. The use of technology to increase speed and efficiency while at the same time cutting costs, is an attractive proposition.
Where is AI in Broadcast in 2019?
First off, it has to be said that, at time of writing, there is a lot of hyperbole regarding AI technologies and their impact in the value chain. A lot of what is being talked about is either projection, prototypes, or concerns projects that have a so far rather limited scope. The hype machine is in full flow as companies looking to leverage AI technologies look to raise funding and maximize interest.
This is not helped by a media that is fully buying into the more fanciful elements of the AI story. Sometimes these showcase legitimate concerns as well as rattling the funding tip jar, such as the story headlined ‘New AI fake text generator may be too dangerous to release, say creators’, which highlighted the problems of text-based deep fakes. On the whole though, there is a depressing willingness to buy into the trope of the inanimate becoming animate and leading to disaster, which is a cultural artefact you can trace from Talmudic stories of golems, through Frankenstein, and on to the Terminator movies and SkyNet; a point which the same newspaper as the previous link adroitly made a few months earlier in a piece titled ‘The discourse is unhinged’: how the media gets AI alarmingly wrong’.
Indeed, in its introduction to a gated reportexamining the hype cycle in relation to AI, analyst Gartner wrote: “AI is almost a definition of hype. Yet, it is still early: New ideas will surface and some current ideas will not live up to expectations.” Away from there alarmist mainstream headlines the AI-based technologies it sees as currently sliding into the Trough of Disillusionment (see here for an explanation of the Hype Cycle phases) include such high-profile cases as Computer Vision, Autonomous Vehicles, Commercial Drones, and Augmented Reality.
So, where are we in broadcast? Gartner has also produced a useful AI Maturity Model (see below) where companies and industries can measure their progress along a line that illustrates the growing deployment and impact of the technology.
As a whole, at this stage early in 2019 the broadcast industry is probably strung out in a line somewhere between the start of Level 2 and the early stages of Level 3. Level 2 is Active, and defined as AI appearing in proofs of concept and pilot projects, with meetings about AI focusing on knowledge sharing and the beginnings of standardization.
The Level 3 Operational stage sees at least one AI project having moved to production and best practices, while experts and technology are increasingly accessible to the enterprise. AI also has an executive sponsor within the organisation and a dedicated budget.
Things are moving swiftly though. IBC2017 was, after all, only eighteen months ago. But one of the accelerants for the introduction of technology is that the broadcast industry has been moving into the cloud at the same time. Companies no longer need to invest in their own infrastructure, hardware and software to implement AI in the value chain; they can outsource it via the cloud.
This is becoming easier to do than ever as well. As an illustration of what is available, AWS has a Free Tier that it bills as offering ‘Free offers and services you need to build, deploy, and run machine learning applications in the cloud’. The cloud-based machine learning services organizations and individuals can hook up to for no cost include:
Text to speech: 5 million characters per month
Speech to text: 60 minutes per month
Image recognition: Analyze 5000 images and store 1000 face metadata per month
Natural language processing: 5 million characters per month
Even the full costed versions can make a compelling argument. The Amazon Transcribe API is billed monthly at a rate of $0.0004 per second, for instance, meaning a transcript of a 60-minute show would cost $1.44. And, of course, though it is enormous and has a global reach, AWS is only one of a growing number of cloud-based companies offering AIaaS.
AI is Augmentation over Automation
One key point to make about AI in 2019 is that the industry is still largely working out the use cases. Automation is only the start of it, and indeed only looking at the places in a broadcast workflow where AI can automate processes is to underestimate the potential of the technology. AI holds out the promise of augmenting human actions, of being able to analyze information and make predictions based on those results faster than humans can.
That means when examining loci in a workflow where the technology can help, there are a few key considerations:
Does expert knowledge add value?
Is there a large amount of data to be processed?
Is the organization looking to affect an outcome included in that data?
If the answer to all those three questions is yes, then that is a business point that can be further augmented by AI.
AI in Broadcasting: All About Context
As we’ve said, there are lots of use cases and projects involving AI currently underway across the industry, but we’ll end by highlighting one example of what can be achieved in the field, the UK’s Channel 4 and its trials of Contextual Moments. This is an AI-driven technology that uses image recognition and natural language processing to analyze scenes in pre-recorded content, producing a list of positive moments that can then be matched to a brand.
Low scoring moments are discarded, whilst all candidate moments are checked by humans to ensure brand safety. After that, to use C4’s example, a baking brand might previously have contextually advertised around a show such as ‘The Great British Bake-Off’, now it can be presented with a list of programs where baking happens in a positive light, from dramas to reality shows.
Channel 4’s initial testing with 2000 people showed that this AI-driven contextual version of targeted advertising, boosted brand awareness and doubled ad recall to 64%. It will be interesting to see how those results are mirrored in real world data.
As yet, the Level 3 ideal of AI having a dedicated budget within an organization is largely fanciful; we are at too early a stage for ROI data to be reliably collated. The tendency for it to be applied mainly for automation purposes limits its impact, even though cost reductions can be impressive. More complex projects and thus more strategic impacts are on the way, though.
Gartner’s Level 4 of AI implementation sees all new digital projects at least consider AI; new products and services have embedded AI, and AI-powered applications interacting productively (and, presumably, with a degree of autonomy) within the broadcast organization. Given the speed of the timescales so far, you wouldn’t want to bet against some of the companies at the forefront of AI development starting to push into that territory towards the end of the year.
By Jean Christophe Jubin, VP Sales APAC at Viaccess-Orca.
Few regions of the world have shown so much consistent growth in so many industries as APAC. Even if you take the economic powerhouse of China out of the equation, there is a constant increase in almost all metrics across the board as the region’s diverse economies continue to heat up. And the broadcast industry is no exception.
APAC is a large and diverse region, with notable differences between the many countries. Notable differences also exist within individual countries, especially between rural and urban populations and the infrastructure that serves them. Yet in survey after survey and report after report, the common denominator is of growth. From the vast economies of China and India, through the fragmented SE Asian market, to the developed and mature markets of Japan, Korea and Singapore and on to ANZ, more consumers are demanding more video.
According to analysis from Media Partners Asia (MPA), the Asia Pacific online video sector will double in size by 2024. The region’s online video advertising and subscription revenue will expand from $26 billion in 2019 to $52 billion in 2024, an annual growth rate of 15%. So, what is driving this expansion? And how do operators ensure they are a part of it?
Factors in OTT video services growth
Identifying the different reasons for the growth across the region is not an easy task due to the sheer diversity exhibited. Nevertheless, the interlocking three factors of an improving digital infrastructure, an increase in paid for local services, (either SVOD or Pay-TV), and the fact that the big international services such as Netflix are also increasing their attempts at localization are all at play to varying degrees.
The infrastructure picture is, of course not consistent across the region, with some countries such as South Korea far ahead of the global curve, and several others lagging behind. Ironically, one of the factors driving OTT uptake has been the slow pace of infrastructure investment in rolling out Digital Terrestrial Television across the region.Ovum estimates that a 59% digital TV penetration at the end of 2014 will increase to 88% by the end of 2020, a transition that the IABM characterizes as ‘alarmingly low’, while at the same time admitting that both MENA and LATAM are at similar points.
“The lack of DTT progress can hinder the ability of traditional broadcasters, especially public broadcasters, to compete effectively in current media markets,” the IABM continues.
With the linked issue of a transition to HD also taking place at the same time, the assumption is that consumers are being driven towards OTT services as they offer a wider range of content functionality, and superior picture quality.
As we’ve highlighted in LATAM, there is a direct link between broadband provision and OTT demand, with operators often using OTT solutions as differentiators when they launch into increasingly crowded markets. The Netflix ISP Speed Index for April 2019 highlights the uneven nature of the provision, however; the Philippines has the lowest average connection speed at 2.57Mbps, while Hong Kong leads the field of countries with 4.08Mbps. By way of comparison, the company lists the USA at 4.19Mbps.
The Netflix figures are, of course, merely a measure of prime time Netflix performance on particular ISPs, and not a measure of overall performance for other services/data that may travel across any specific ISP network. So, while of limited use in general, in the context of delivering video to consumers they are very important. And it is worth pointing out that Netflix recommends 5.0Mbps as a minimum for HD streaming.
Unsurprisingly, a lot of the focus in the region — and especially given its geographic spread and the difficulties of laying physical cable — is currently on mobile broadband. Indeed, in many countries, mobile has overtaken fixed broadband as the primary means of internet access. This is only going to accelerate as 5G deployment starts to ramp up.
This mobile first approach has implications for operators, who need to ensure their OTT offerings are tailored as such. This is not only in terms of content and UI either, but also when it comes to payment models, which tend to be undeveloped in many countries. As a result we are seeing a lot of partnering between OTT providers and existing telecom and Pay-TV operators, who have already carved out models that work well in low income markets with poor credit penetration. Indeed, Netflix is trialling a low-cost, mobile-only subscription plan in India that brings its historically high and globally set price more in line with the local market.
The importance of local content can be seen by the importance that the global players place on it. Netflix was present in the APAC region a year before its global launch in January 2016, establishing bridgeheads in ANZ and Japan. As the IABM’s latest Media Technology Demand Driversreport for the region points out, usually Netflix offers around 20% of local programming, either made specifically or licensed. When it launched in Japan it pushed this figure up to 40%, plus entered a deal with telco and internet giant SoftBank to offer its customers easy ways to pay for a subscription.
The IABM says that “Netflix has replicated this strategy across the whole region by entering agreements with local companies producing local content.”
This though is not a new strategy. Netflix has been increasingly internationalizing for nearly two years.Ampere Analysis says that 30% of Netflix Originals were non-English language in min-2017. By the time we got to Q4 2018, the company was producing new content in 25 countries, with 133 titles originating outside of North America and 36% of its originals were non-English. APAC’s contribution, primarily from India and Japan, is illustrated below.
Amazon Prime Video has also been aggressive in this field, with 70% of its content in India and Japan local. It has also launched its streaming service free to Prime customers.
Given that governments are starting to legislate to ensure local content on streaming services (the European Union specifies 30%, Mexico is seriously considering it) and given the advantage that local content has to local audiences, we expect to see more local production ramp up in APAC and other areas. For local operators, some of whom may already have extensive locally produced content libraries, the importance of local content represents a significant opportunity to engage viewers with new OTT offerings. They may not be able to outgun Netflix when it comes to sheer numbers of subscribers, but the comparative success of operators such as iflix in Malaysia, which is aiming to quadruple its commissioning slate by 2019, HOOQ, and Viu already shows that there is definitely room in the market.
OTT Platform Providers in APAC – The Challenges
There are of course, plenty of challenges in the region too. Piracy in APAC is something we’ve written about many times before, with headline figures such as the fact that up to 45% of consumers in Thailand are using a TV box which can be used to stream pirated television and illegal content. Nevertheless, the industry is fighting back, and initiatives such as our new Anti-Piracy Center are providing valuable tools in the battle to protect content.
As a recent S&P Global Market Intelligence report points out, there is also probably too great an emphasis on AVOD at the moment throughout APAC, which detracts from any future SVOD growth. AVOD remains an important component of OTT growth overall, especially given its role in raising awareness of the services available and encouraging viewers to seek legal sources for premium content.
It is also worth pointing out that the rate of growth is starting to slow too as the market matures. This is going to mean operators will have to be rigorous in the planning and execution of their services. But, while growth might be slowing, revenues will still be on the rise for the next forecast period and, hopefully, beyond.
What is the health of the Global SVOD market? From the importance of growth in digital originals to the importance of matching content to consumer, these are the 4 key trends.
4 Key Trends for SVOD
1. Growth: a Given but not a Guarantee
Growth is on show everywhere you look in the SVOD universe. In terms of number of platforms, in terms of audience numbers, in terms of investment growth, in terms of the numbers of digital originals and the amount of content being produced…2018 was the story of all those numbers being on the rise.
It’s not an even picture across the world, and it is slowing down in some of the more established territories. Growth, as always, is finite, and over the course of the next few years there is likely to be a further slowdown followed by a stabilisation as SVOD matures first in one market and then another. The impact that will have on an industry that has been fuelled by rapid growth and investor speculation is going to be extremely interesting.
It should also be remembered that SVOD services and OTT delivery are not actually a license to print money. In an excellent blog post titled Whistling Past the OTT Video Graveyard, Brett Sappington of Parks Associates details some of the perils and pitfalls that await operators with poorly thought out or poorly executed business plans.
“Companies must accurately assess their content, target market, market potential, trends and internal expectations in order to have a shot at success,” he writes. “Even with these in order, services face a long, sometimes scary road past OTT video’s ever growing graveyard.”
2. Netflix Dominates: But Only for Now
Netflix has been extraordinarily successful. Having first established itself in its homeland USA, its overnight global expansion was first enabled by the cloud and then accommodated by it as it has scaled to meet demand. Despite a global pricing structure that makes it an expensive proposition in some markets, it has a dominant market share in many, and is consolidating its position on the international stage.
However, its position is not without threat. As well as erstwhile global competitor Amazon Prime Video and US-specific competition from the likes of Hulu and Roku, Disney and WarnerMedia are both launching SVOD services this year, and own a significant amount of media properties and franchises between them. These include such high profile names as Marvel and Star Wars for Disney, HBO and Warner Bros. movies for WarnerMedia. The Disney+ SVOD service has already confirmed a US launch at an aggressive, sub-Netflix $6.99 monthly pricepoint, while Warner is announcing its launch details in the autumn.
Then, of course, there’s Apple. Whenever a company whose valuation hovers around the trillion dollar mark enters a market, it’s going to cause disruption. Apple TV+ will also launch in the autumn and, while details are still sketchy, it is bound to have an impact.
Consumer stacking of SVOD services is increasingly popular — the average US household now subscribes to 2.8 services — but, even so, there is only so much of a household’s monthly budget that can be spent on watching television.
3. Digital Originals in the Ascendant
The growth in content over the past few years has been nothing short of phenomenal. Parrot says that 300+ digital originals were released on SVOD platforms last year; an enormous amount of programming that presents challenges on all levels. From funding the productions — which, incidentally, are typically shot in 4K nowadays and concurrently expensive to produce — to surfacing the right content for the audience at the right time, the volume is difficult to cope with.
It has necessitated a change in business plan too, especially for Netflix which now produces (or co-produces) the majority of its new titles in-house and in the face of increasing competition is aiming to become self-sufficient. This makes perfect sense, especially as US studios have started to pull their own titles from the service ahead of their own SVOD launches, but there are increasing question marks about the ability of a single organisation to keep on top of such a punishing release schedule and retain a consistent quality of end product.
4. Different Markets Have Different Demands
Okay, we lied about no facts and figures; some are definitely worth mentioning and have definite implications for operators looking to launch their own services.
First, ‘travelability’, and an indication of where in the world content produced in one country can find a ready market in another. Unsurprisingly, this largely breaks down along linguistic lines, with Anglophone content showing a large amount of global travelability, German content being mostly confined to the DACH regions, and Italian and Brazilian content travels poorly. There are some interesting outliers though such as the country with the most travelable content being Canada, which also sees more of a demand for its content in the USA than it does in its home territory. (A possible explanation for this is the amount of flyway US productions actually produced in the Vancouver area as a result of tax breaks.)
The facts and figures come with a demand analysis broken down by genre. This gives an intriguing insight into what viewers want in each country. US viewers want sitcoms more than anything, accounting for 8.6%of all expressed demand in the market, but that is slightly less than the global average of 8.8%. The big peaks in the US compared to the global picture are for sci-fi drama and anime. Spain and France, meanwhile adore crime drama but are indifferent to sitcom; Brazil likes teen drama, Germany dislikes superhero programmes, Mexico likes telenovelas, and so on.
The most popular digital originals looking across the global market are Chilling Adventures of Sabrina and La Casa de Papel, which are each number one in three markets, followed by Star Trek: Discovery and Stranger Things, both number one in two.
The Global SVOD Market: Conclusions
2019 feels like it may be a watershed year for the SVOD market. So long dominated by Netflix, despite the best efforts of its main global competitor Amazon Prime Video, there are at least three heavyweight contenders launching towards the rear end of the year. As a publicly listed company, Netflix’s worth has been tied very closely to subscriber growth and if that falters, so does the company. Its content budget this year is expected to reach $15 billion and it has long term debt to finance of $12.3 billion. These are both large and sensitive figures.
Perhaps the main takeaway though is that the growth that the Global SVOD market has seen in recent years does not have to be confined to the global players. There is plenty of room for regional variation and the importance of native language content, which is something we’ve talked about before in the context of targeting diaspora populations, cannot be underestimated. Local content can play in the global village now much easier than it ever did before.