The Global SVOD Market: 4 Key Trends

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.

VO svod stat

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.

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Televisions remain the most popular medium for viewing live programs

In a recent global survey of consumers of OTT and live services, conducted on behalf of Nevion, almost three-quarters (70%) of respondents said they still watched the majority of programs on a television, while only one-fifth (20%) regularly view content on their laptop.

Infographics-NEVION-Live-VS-OnDemand

The survey from Nevion, the award-winning provider of virtualized media production solutions, also found that 65% of viewers favor paid for services and Pay-TV platforms. When looking at viewing habits, Nevion discovered that the most popular time for viewing media is in the evening (71%), with only 8% saying they watch TV in the morning and just 3% saying they do so on their commute.

More than half of viewers (57%) are being driven to watch content live due to social media and word of mouth making it increasingly difficult to avoid spoilers.

“Despite the rise of on-demand services, live content is still favored by the majority of people with 73% of our sample deeming live coverage important. With so many still using their televisions to view this content and with avoiding spoilers being a major concern, it is clear that TV viewing is still often seen as an event. People want to sit down and watch it on a big screen and dedicate real time to it, rather than watching on their phone while they’re on the go,” said Olivier Suard, Vice President of Marketing, Nevion.

When looking at the most popular live TV events, sports came out top, followed by the news, reality shows and domestic or global events, such as royal weddings and presidential inaugurations.

Infographics-NEVION-Viewing-Habits

“We can see that the majority of individuals are willing to pay for good content with free to air TV the first choice for only 10% of viewers,” added Suard. “All this emphasizes the importance of producing ever more compelling live content, but more cost effectively. It proves higher-definition production isn’t being wasted on small screens as most people watch content on a TV, where it is best displayed – regardless of whether the connection is cable, digital TV or OTT. As broadcasters and content providers look to meet the demands of a growth in content, we are seeing increasing adoption of IP in production and Nevion is pleased to have been at the forefront of helping broadcasters make that move.”

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8K TV Right Here, Right Now

By Hagit Toren-Naveh

For the first time, every match at the FIFA World Cup in Russia was captured in the format and made available as part of the World Feed. And while many of the rights holders of the event didn’t have a 4K broadcast channel available to them, nevertheless it set a precedent. It is now hard to imagine any major event being available ‘only’ in HD.

We will now look at the growing momentum behind 4K, or Ultra HD as it is sometimes referred to (there are differences, but functionally the two terms are interchangeable). We will also look further ahead at the successor to 4K, 8K. One of the key takeaways is that 8K is perhaps not as far away as you might think.

2018: The Year of 4K Video

First we have to acknowledge that a good proportion of the world’s viewing is still in SD, never mind HD. Nevertheless there is a transition occurring, with the richer economies moving forward now from HD to 4K and the rest of the world following in its wake. Futuresource estimates that there will be over 100 million 4K TV shipments in 2018 (it takes a few months after the end of the year to compile the exact figure). China is the largest single market, but North America is not far behind and Europe is projected to see a 30% increase in this year alone.

Globally, double-digit CAGR is expected for 4K shipments throughout the forecasting period to 2022.

8kvs-4k-ultra-hd-sets

One of the most interesting things about this move to 4K is not so much the sheer numbers as the accelerated rate of change. According to figures from the Consumer Technology Association in the US, by Year 4 of the transition to 4K (2017) 15 million 4K sets had been sold. In contrast, by Year 4 of the HD rollout, only 2.9 million units had: five times less.

So, why is the move towards 4K happening five times faster than the move to HD? A big part of the answer is content.

Netflix is probably the single biggest differentiator. It was one of the earliest adopters of 4K, seeking to use it as a USP over its rivals. The extent it did this was impressive ― House of Cards was shot and released in the format in May 2014, while the first Ultra HD Blu-ray player wasn’t launched until February 2016. It also standardized 4K production before any of its rivals. Partly as a consequence, Parks Associates estimates that 30% of Netflix subscribers are in the 4K-capable Premium Tier.

Other broadcasters have since managed to leap the technological barriers to 4K. Both cable and satellite solutions are now on the market. By the end of 2017, the Ultra HD Forum estimated that there were 70 unique 4K TV channels in operation around the world. It projects that in under two years, by the end of 2020, that figure will have more than trebled to 250+.

8K TV Right Here, Right Now

Whether the rollout of 8K will be as fast is unknown: the 7640 x 4320 picture and accompanying 22.2 sound still represent significant technical challenges, not least in terms of compression and bandwidth. But a significant milestone has already been passed with the December 1st 2018 launch of BS8K by NHK in Japan. The channel plays a rotating carousel of 12 hours of content a day, with expansion planned.

NHK has been the prime mover behind the format. Initially calling it Super Hi-Vision, it demonstrated it for the first time at IBC2006 and in 2008 showed the first ever international 8K live transmission. It has long insisted that the Tokyo 2020 Olympics would be available in Japan in the format and looks to be well on course for making good on that promise.

Viewers will have an increasing number of options to watch the Games on too. The first consumer sets appeared at CES 2018. More launched at IFA in Berlin later in the year, and were available in the shops not long afterwards. What was surprising was how low the price point was. A 65-inch Samsung 8K TV set had a launch price of $4999.

Of course, this is still expensive. But if you measure it against the 4K sets from roughly the same point in the 4K launch, they are half the price. Also the price of 4K sets then fell by a third over the following two years.

If that trend is mirrored, then people could be watching Tokyo 2020 on 8K television sets that cost between $1500 and $2000.

It is a big if, however. There are hurdles to overcome and the issues surrounding any speedy transition to 8K fall into two camps.

8K Content

Producing it is still difficult. While most of the big name system camera manufacturers have developed 8K models, elsewhere the small market is dominated by RED and the body alone of its entry level unit costs $20,000. Even NHK currently only has three edit suites and two recording studios in operation and there are only a handful of 8K-capable OB vehicles in operation.

This will increase, of course, but it is difficult to see how that content will get to the viewer. Broadband networks will struggle to cope with the required bandwidth. SVOD players are immersed in competition and they are unlikely to want to scale up for a new and untried format in the near term. Netflix is not going to go 8K at any point soon.

8K Demand

This is a key point: 8K is untried. Even if it eventually becomes a de facto production format, its impact in the home is uncertain. Designed from the outset for small Japanese rooms, the extremely large screens required to provide, say, the North American or European market with the same sense of immersion may be prohibitive. There is also potential for motion sickness.

8K vs 4K: Piracy for Both

Given the jump in picture quality from HD to 4K HDR, it is unclear whether viewers will want to spend the additional money to transition early, at least outside Japan. And if it is to be part of the normal TV set upgrade cycle then it will follow four to five years after the jump to 4K.

The point is that if 8K TV is coming, even in five years’ time, so is 8K TV piracy. The lesson of 4K is that pirates are happy to concentrate resources on premium content as that nets them a premium income in turn. AACS2 encryption, which was meant to prevent the ripping of Ultra HD Blu-ray discs was breached within six months; AACS2.1 encryption, which debuted over the summer, lasted only one month.

Anyone involved in the distribution of premium content, in the HD and increasingly 4K present and on to the 8K future, needs to be taking steps to protect it. As yet there is little 8K material available and fewer places to see it, but preparedness is important. The speed of technological change can still surprise. Four years after the first 8K live international transmission at IBC, influential industry figures were suggesting that 4K was not going to be a mass market proposition within twenty years, until 2032. They were out by almost 15 years.

By the time Tokyo 2020 starts, 4K will be the baseline international standard for all such global live events. But by then we may even be looking ahead to Paris 2024 and making further substantial, international plans for 8K transmission. As yet, the exact inflection point is uncertain. Whatever happens though, and in whatever format viewers round the world are watching, 4K or 8K, that premium content will need to be protected.

viaccess-orca-bannerAbout Hagit Toren-Naveh: Hagit is a Director of Orange Accounts, with over 15 years experience as a Customer Delivery Director for T1 Customers worldwide in the TV domain. In the past 10 years she has overseen the deployment of many Orange Group customers in Europe.

Kodi Video Piracy: What is the Current State of Play?

By Kevin Le Jannic, Product Manager, Security, in charge of Security Services at Viaccess-Orca.

One of the biggest video piracy threats of recent years has been the fully loaded Kodi box. An open source media player developed by the XBMC Foundation, it’s an entirely legitimate product that has been hijacked by online pirates who have used its extensible nature to add various plug-ins and add-ons that let users easily stream illegal content. Officially termed Illicit Streaming Devices (ISDs), these have been sold ‘fully loaded’, i.e. with the pirate software already installed and ready to go out of the box.

In some countries, their success has been astonishing. According to recent research conducted on behalf of the Coalition Against Piracy of the Asia Video Industry Association (AVIA), as many as 45% of consumers in Thailand are using a TV box which can be used to stream pirated television and illegal content. As a result, 69% say they cancelled some or all of their legitimate Pay-TV subscriptions, with international services marginally more susceptible than Thai ones. Perhaps more worrying than anything, that figure rises to 77% when it comes to the 18-24 age group.

Mango TV, HD Playbox and U Play are amongst the most popular of the pirate apps in Thailand, but it would be wrong to assume this is just a problem confined to Thailand. Every time you widen the focus out you come across more. As the AVIA’s Asia Video Industry Report 2019 states “Asia Pacific has some of the most egregious consumers of pirated content in the world” and while the percentage of ISD users in The Philippines might ‘only’ be 28%, given the population differences between the countries it is a similar number showing around 30 million people.

The report also highlights recent Digital TV Research data that states online TV and movie piracy worldwide will cost the content industry an estimated $37.4 billion in lost revenue this year, rising to $51.6 billion by 2022 (though it is worth pointing out that these figures don’t include sports — an increasing focus for pirate activity as illegal live streaming becomes more prevalent — or Pay-TV). In fact, while the 2022 figure is alarming, as the graph below shows this is a significant deceleration of the current trend. If the current scale of losses is projected forward the number is closer to the $60 billion mark.

piracy losses graph

Action Against Video Piracy

While rampant in some Asian countries, there are signs that the threat of Kodi elsewhere is diminishing. Partly this is as the result of the box’s increasingly unwelcome status as an attack surface for malware.

Writing in the AVIA report, Neil Gane, General Manager AVIA Coalition Against Piracy, says: “The more mainstream the piracy ecosystem becomes, the greater the risks of malware proliferation. Unfortunately, the appetite for ‘free’ or paying cheap subscriptions for stolen content, blinkers some consumers from the real risks of malicious malware infection including particularly pernicious malware such as spyware and ransomware.”

Whether this status is justified or not is a case of hot debate. Indeed, TorrentFreak has written an exhaustive and in-depth post highlighting the fact that, in its opinion at least, the threat has been overstated — at its time of writing only one documented case was on file — and is at a similar level to other devices.

That’s not to say that in the future it won’t become an issue, though, and since TorrentFreak’s OpEd at least one serious malware infection has been documented. ESET researchers recently discovered that several third-party Kodi add-ons were being used to distribute Linux and Windows cryptocurrency-mining malware, specifically mining the cryptocurrency Monero.

The top five countries affected by the threat were the United States, Israel, Greece, the United Kingdom and the Netherlands, which are also listed as the “top traffic countries” in unofficial but comprehensive Kodi add-ons stats. The outbreak started in December 2017, and while the main add-on repositories that seeded it (Bubbles and Gaia) have variously shut down or been cleaned, ESET estimates that close to 5000 devices were still running the malware as of September 2018.

Whether the claims of Kodi boxes as the malware Trojan horse in the living room are justified or not, however, despite the Asian figures mentioned above there is a definite decline underway in interest in the platform, with Google search volumes in particular shrinking 80% from their peak in 2017 to 2018.

kodi search volumes

The graph above is from Comparitech which attributes the decline to a range of interlocking factors:

  • The launch of the Alliance for Creativity and Entertainment (ACE)

Set up a coalition of some of the biggest content-owners in the business — major film studios, SVOD companies, broadcasters etc — ACE was set up with the express intent of “protecting the dynamic legal market for creative content and reducing online piracy.” It recently won its first litigation against ISD supplier TickBox in the LA courts, which it says sets an important legal precedent in effort to curb illegal piracy devices and applications.

Much of its activity has occurred under the radar, with cease-and-desist letters built upon various anti-piracy and copyright laws in relevant territories being fired off to both add-on developers and repositories. Comparitech notes that ‘dozens’ of prominent developers and development teams have either ceased functioning altogether or are now flying under the radar themselves since ACE’s formation. If they are still operating they are doing so via secure messaging apps or rotating subreddit groups and so on, with a subsequent diminishing of profile and traffic. Meanwhile, several high-profile repositories have shut down.

  • A Dish Network lawsuit against TVAddons and ZemTV

The Dish Network’s lawsuit against the ZemTV add-on and add-on library TVAddons was also launched in June 2017 and was the first legal action in the area. ZemTV specifically allowed users to illegally watch a number of Dish channels, while Dish maintained that TVAddons played a significant role in distributing it. The case against ZemTV was decided in Dish’s favour, while Dish settled confidentially with TVAddons earlier this year. During that process TVAddons relaunched with a lot of the previously problematic content purged from its servers. It has struggled to maintain the level of traffic it once enjoyed.

“We are no longer indexing certain types of add-ons as a result of legal pressure. This doesn’t mean that you can’t install whatever you’d like, it just means that we can’t index those add-ons through our platform,” it stated in April 2018.

  • Anti-piracy legislation

The EU law making it illegal to sell media devices that easily enabled multimedia piracy, such as ‘fully-loaded Kodi boxes’, was passed in April 2017. It also made it illegal to stream copyrighted material from unofficial sources. It has been mirrored in other countries, notably the UK.

  • Amazon, eBay, and Facebook bans on “fully-loaded Kodi boxes”

The concept of the fully-loaded box appears again with Amazon announcing a ban on copyright-infringing media devices in April 2017. eBay announced its own ban later on the same month, while Facebook announced its own ban in August 2018. This went further than previous bans, banning the sale of any device tag had ‘Kodi installed’, never mind pirate specific add-ons.

The Future of Kodi Video Piracy

To this list we would add the effectiveness of services such as our anti piracy protection, which detects and analyzes all Kodi streaming playlists and analyses them. The DMCA is then sent to the impacted ISP, CDN and content platforms. Continuous tracking provides automated 24/7 internet monitoring and enables manual monitoring with up-to-date reports of detailing any content leaked on the internet.

If, as Comparitech asserts, there is a closely-coupled relationship with Google searches for Kodi and levels of piracy on the device, then all this is starting to work and the past year’s downwards trend represents a definite victory for the industry. Industry pressure on legislators and its own efforts seem to be succeedeing in driving Kodi piracy underground and away from the mainstream. Data from the UK suggests that Kodi use is on the decline, with only 6% of online users watching content via it in 2018 compared to 7% in 2017.

That is not to say the threat is over . As is constantly pointed out, Kodi is just an open source platform, and new software is appearing for it all the time. TVAddons list of banned and infringing add-ons stands at 19 current and 18 abandoned (non-functional), while the latest significant threat was a new feature called Orion on popular Gaia add-on which ‘phoned home’ with streaming links scraped by end users. As TVAddons pointed out, the way it functioned meant that users could effectively be considered distributors of illegal content under the letters of the law, not just consumers.

“The worry is that by having end users automatically contribute links they scrape to the Orion database, they could be considered distributors under the law. This could open certain regular Kodi users to significant liability, possibly fines in the tens of thousands.”

Meanwhile, Kodi v18 Leia is getting ready for official release and emphasizes the XMBC Foundation’s desire for legitimacy with the addition of DRM. A Eurosport player and YouTube plugin add-ons already use it, as do unofficial Netflix and Amazon add-ons. Kodi will be hoping that those unofficial players become official ones as it seeks to attract more legitimate mainstream content and leave its checkered past behind it. And the industry will be hoping that measures that have proved effective in Europe and elsewhere can also start to gain traction in countries such as Thailand.

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Is This the End of the Golden Age of Television?

By Alex Kent

Many industry figures pointed out that we are living through a Golden Age of Television. Essentially they boil down to the fact that we are spending more money making more television for more people than ever before. And, crucially, the quality of what is being made is becoming better all the time.

Critical and commercial success is a difficult feat to pull off, but there have been many in recent years. ‘House of Cards’ transformed Netflix overnight from a company that posted out DVDs to the SVOD leviathan we know today, while simultaneously introducing the concept of binge-watching new series to the world. HBO’s ‘Game of Thrones’ has redefined what we mean by event TV while raising the quality bar to feature film level and, arguably, beyond. ‘Mad Men’, ‘Breaking Bad’, ‘The Handmaid’s Tale’, ‘Westworld’, ‘Stranger Things’… Each has had an impact on the shows around them and that come after them.

But, while for viewers it may have been a Golden Age, for operators it has been a challenging one. The best are competing by using data analytics to maximize the efficiency of their catalogue and surface the right content to their viewers at the right time, and transitioning to the cloud to reduce costs and allow for frictionless innovation. And there may be more storm clouds brewing too. If the consensus is that we have just witnessed a Golden Age, more and more people are mentioning it in exactly those terms: in the past tense.

What are the implications? First, let’s take a look at some of the reasons why FX CEO John Landgraf told the Television Critics Association summer press tour back in August that: “The golden age of television has become the gilded age of television.”

From Golden to Gilded: Four Factors Pointing to the End

There is a lot going on here, all of which is combining to create a mythical perfect storm putting pressure on the OTT market, but let’s start our list with Landgraf. He was the first to coin the phrase about reaching ‘peak TV’ several years ago. As it turns out, we’ve not there yet.

1. Too Much Content

When we first wrote about this subject in February 2017 (Have We Really Reached Peak TV) the estimation was that during the course of 2017 the US market would top out at 500+ scripted shows made in a single year. As it is, as the graph below shows, we pulled up just short of that at 487.

Will that figure be broken this year? As of August, Landgraf says that 319 series had premiered on linear and streaming television, up 5% on the same time as the previous year . And noting that the macro-scale acquisitions we have seen so far this year (and more of that in a bit) are all geared towards content streaming, he doesn’t see growth tailing off anytime soon.

FXNET_Research_number_series.jpg

As Variety reported: Speaking of “an epic battle between very large companies that are going to be competing in the streaming business” against Amazon and Netflix, he said that the volume of original scripted programming on TV will continue to increase “as long as that battle is red hot and as long as those companies are scaling up.”

2. Narrative Exhaustion

So, where’s the problem? It’s twofold. Time and again, survey after survey is revealing that viewer frustration at being able to find something to watch is mounting. In a post we wrote earlier this year highlighting the importance of efficient content discovery, we mentioned two statistics from a recent PwC survey.

55% of consumers find themselves looking for something new to watch every week 62% struggle to find something to watch. This has been known about for some time, and is why we see so much interest in our own content discovery and personalization solutions. But it is being made worse by another growing factor, and that is narrative exhaustion.

The phrase was coined by screenwriter Paul Schrader back in 2009 and the rise in total content since has only made it worse. As Landgraf put it in his August speech, everything “feels vaguely familiar.”

The problem is that there is a general sacrifice of quality for quantity. It’s a difficult one to calculate, especially as more and more resources are being pumped into the marquee shows, but talk to anyone in the business of making television and they can point to the rarely visited hinterlands of the huge SVOD catalogues and find any number of programs that would likely have been culled at some stage by a traditional route. Netflix alone will have around 1,000 originals in total on the service by the end of 2018, with 470 of them coming to the screen between May and December this year. They can’t all be critical and commercial successes.

3. The Ever-Expanding Bottom Line

This all costs too. According to Variety, the final series of Game of Thrones, due to screen next year, has cost $15 million per episode. Other notable large budgets include Netflix’ The Crown ($10m per episode), Starz’ ‘America Gods’ ($8m) and Amazon somehow managed to pay $5m per half hour of The Tick. Even Stranger Things, whose breakthrough first season was considered a sleeper hit, had $6m an episode lavished on it to get that ‘80s Spielbergesque look.

Given these sort of figures, it’s no wonder Netflix has been looking at debt markets to continue to finance its growing slate, taking on $2bn in new debt by offering unsecured bank notes last month. Its publicly stated content budget — original productions and licensed content — already stood at $8bn for the year.

As The Guardian reported: However, Netflix’s liabilities now dwarf its annual revenues, which reached $11.6bn in the nine months ending in September….The firm reported $11.8bn in total debt obligations at the end of September, plus another $18.6bn in payments for content, bringing its total long-term liabilities to well over $30bn. Ampere Analysis, meanwhile forecasts that the combined Netflix and Amazon spend will pass $20bn by 2023.

The cancellation of high-profile expensive shows such as Sense8 proves that even for Netflix there are performance criteria that have to be met, and more shows are facing the axe too (though admittedly, Netflix has, to date only cancelled 26 shows in total).

4. Next Stage: Content Silos

So, we are in a situation of over-supply and rising costs. Often that leads to consolidation, but the market for OTT content is not a homogenous one and what is looking increasingly likely as the companies evolve their strategies is actually an increasingly diversified offering.

Rather counter-intuitively, this is being brought about in part by some of the high-profile media mergers of recent months — the AT&T/Time Warner merger, Disney taking control of 21st Century Fox — which are coalescing plans for companies to move aggressively into the streaming space with their own offerings rather than licensing content.

Disney is the highest-profile new entrant due into the market in 2019, but the new WarnerMedia has also announced plans for its own service. And as The Verge puts it, this has significant ramifications for viewers as studios pull back licensed content and silo it into paid subscriptions.

“Right now,” it writes, “a single Netflix subscription will get you Marvel movies and DC shows alongside in-house originals — but soon, both of those may leave for parent-company subscriptions at Disney and Time Warner respectively. It’s a kind of streaming Cold War, as each company tries to leverage its own franchises into a standalone subscription bundle.”

The Post Golden Age Television Industry

How that new landscape will shake out is, as yet unknown. However, there are clues. With the rise of the skinny bundles having pulled the rug from under the increasingly bloated looking Pay-TV offers in the US market in particular and contract lock-ins becoming a thing of the past, we could see an era of turbo-churn as subscribers sign up to a service to watch a show and drop it soon after. It’s a behavior that is already being indicated by the rising levels of churn, and one that may become more pronounced as the market expands.

As has already been stated, when we talk about a Golden Age of television the tendency is to relate that to the viewer. Certainly for the existing linear broadcast market the past handful of years have been more defined by turbulence and uncertainty than they have by profit and abundance. However, we argue quite strongly that for agile operators prepared to embrace the latest innovations in the industry to date in the shape of TV business analytics, cloud TV, content recommendation et al, it has also been a time of almost unmatched opportunity.

The fact is that there have always been significant gaps in the market. The temptation is always to assume that Netflix is the only game in town: it generates the lion’s share of the hype and is producing an unprecedented level of content. However, as the graph below from Ovum shows, it has never been the only game in town.

As the analyst puts it: Despite the hype, Netflix still won’t have won a majority of OTT video subscribers in at least 19 countries by the end of 2018. Its rivals share no single strategy in common, with various offerings from pay-TV operators, broadcasters, and local start-ups beating the US-based OTT video giant to the top spot. Key success factors will include first-mover advantage, exclusive local content, live programming, and more affordable pricing, especially in developing markets that differ greatly from the US.

2019 might well see the OTT industry transition from golden status to gilded, but a contraction of some sorts is probably overdue after a long period of largely unchecked expansion. But for those with the right systems and technologies in place and product offerings that can evolve quickly to meet changing consumer demands, the opportunity shines as bright as ever.

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Automated Captioning in the multi-platform Delivery Age

By Ken Frommert and Eduardo Martinez

Automation has been infused into innumerable elements of our daily lives. From production and assembly lines to broadcast facilities around the world, the transition to automated processes and workflows now have deep roots, and have forever changed the way we work, shop and entertain.

In broadcasting, the production and transmission of live, manual captioning has long been challenged by high costs, availability, varied latency, and inconsistent accuracy rates. While perfection is impossible due to the speed of live captioning, the transition to more automated, software-defined captioning workflows introduced a new series of challenges.

Closed-captioning is in large part driven by government mandates worldwide to ensure that deaf and hearing-impaired viewers can fully understand and enjoy on-air programming. Closed captions are typically encoded within the video stream and decoded by the TV, set-top box or other viewing/receiving device.

While different mandates on closed-captioning in broadcast television exist around the world, the unifying purpose ensures that deaf and hearing-impaired viewers can fully understand and enjoy the shows they watch. Beyond the hearing impaired, statistics show that one in six viewers worldwide prefer to receive closed captions with their content. This means that has viewers continue to consume content in different ways, technology must evolve to serve changing viewer habits.

Deep Neural Benefits

A common concern across all appliances of automation is the reduction, or outright elimination, of the human element. Closed-captioning is just the latest platform to which these conversations have shifted.

These concerns are beginning to subside as speed and accuracy of speech-to-text conversion continues to improve with the emergence of deep neural network advances. The statistical algorithms associated with these advances, coupled with larger multi-lingual databases to mine, more effectively interpret – and accurately spell out – the speech as it passes through the automated workflow.

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Ken Frommert, President of ENCO

Today’s strongest automated captioning systems, like ENCO’s enCaption4, today approach accuracy rates of 90 percent or higher. The statistical algorithms associated with these advances, coupled with larger multi-lingual databases to mine, more effectively interpret – and accurately spell out – the speech coming through the air feed or mix-minus microphone.

Meanwhile, the faster and more powerful processing of the computing engines within automated captioning technology has significantly reduced the latency to near real-time. This achievement is particularly impressive given that automated captions took between 30-to-60 seconds on many systems as recently as one or two generations ago.

Additionally, as closed captioning software matures, emerging applications to eliminate crosstalk, improve speaker identification and ignore interruptions is improving the overall quality and experience for hearing impaired viewers. Furthermore, the technology is also advancing to support closed-captioning transmission across multiple delivery platforms.

New Efficiencies, New Services

One recent innovation is the introduction of multi-speaker identification, which isolates separate microphone feeds to reduce confusion from cross-talk.

Live talk shows represent an ideal use case. In this scenario, each speaker on the stage is assimilated into the captioning workflow based on their assigned microphone positions, while the software ignores distractions such as low voices and interruptions. The end result is a seamless transition as the conversation shifts between each speaker, eliminating cross-talk and other events detrimental to the viewer experience.

Many of the above improvements are related to recent breakthroughs in machine learning technology for voice recognition. Machine learning not only strengthens accuracy, but it also provides value through detection of different languages and the different ways that people speak.

That intelligence as it relates to different dialects will provide an overall boost to accuracy in closed captioning. Consider a live news operation, where on-premise, automated captioning software now directly integrates with newsroom computer systems with the need for a network connection. This will now help broadcasters strengthen availability – no concerns about a network outage taking the system down – and take advantage of news scripts and rundowns to learn and validate the spelling of local names and terminology.

Automated captioning also enables the applications to be achieved efficiently on a larger scale. The costs are lowered due to the transition from human stenographers to computer automation. And as there is a need to captioning a growing amount of content, there is an economy of scale that drives the cost down even further as broadcasters automate these processes.

As systems grow more reliable and broadcasters grow more comfortable with the technology, they will also find new efficiencies and opportunities along the way. For one, broadcasters that need to cut into a regularly scheduled program with breaking news or weather alerts will no longer forced to find qualified (and expensive) live captioners on short notice.

Streaming, the Cloud and Closed-Captioning

As with many technologies, captioning systems are applicable in both on-premise and cloud configurations. In the latter case, some systems are now offered as SaaS platforms, with monthly fees that include the hardware costs coming out to as low as approximately $15 per hour for the average rate of use. With stenographer rates sitting at approximately $150 per hour, this equates to a tenfold savings that can return tens-to-hundreds of thousands of dollars to the broadcaster annually.

However, establishing captioning software in the cloud also extends the service for online audiences outside the local facility, opening the door for efficient delivery of captioned content over streaming networks and delivery platforms. One emerging opportunity for this is the automatic generation of transcriptions for live and archived, pre-recorded content.

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Eduardo Martinez, Director of Technology at StreamGuys

As more systems move to software-defined platforms, the captioning workflow for pre-recorded and/or long-form content has been greatly simplified. Post-production staff can essentially drag-and-drop video files into a file-based workflow that extracts the audio track for text conversion. These files can then be delivered in various lengths and formats for a TV broadcast, the web, mobile and other platforms.

This trend aligns especially well for broadcasters and content producers with large volumes of stored media, providing tremendous flexibility to very quickly archive, search, find and recast content tailored to specific audiences and on-demand requests.

Content repurposing software from companies like StreamGuys, previously used for podcasting and specialty broadcast streams, are being tailored for closed-captioning in streaming applications. In this architecture, previously ingested content is recalled through an archived search process. This level of integration also enables users to label and search for specific speakers for improved recognition and tracking, and later search the system for all content related to a program – down to exact, spoken sentences.

With multiplatform reach, broadcasters now have opportunities to caption live and on-demand streams, ensuring that hearing-impaired and multi-lingual audiences watching online are properly served as well. The future of this technology is very exciting, especially with the knowledge that we’re really just beginning to reap the fruits of this technology.

Ken Frommert is President of ENCO, and Eduardo Martinez is Director of Technology at StreamGuys. 

Nickelodeon’s Revolutionary VR Experience Turtle-Powered by NDI®

by Brian Leopold

“Hey,” Donnie says. “How are you doing? I hear you’ve got some questions to ask us.” You take another step forward and glance down at your feet. A wide puddle of water spreads across the cracked concrete floor and you catch a glimpse of your reflection. It looks like you, but somehow, your head has morphed into… Hey Arnold. Awesome. You love Hey Arnold.

This is the experience journalists and a few choice super fans were treated to at this year’s Comic-Con Convention in San Diego, thanks to an incredible virtual reality environment cooked up by the talented staff of Nickelodeon Entertainment Lab. And at the heart of the experience, working tirelessly behind-the-scenes to allow layers of disparate technology to interact seamlessly with one another, NewTek’s NDI® was doing the heavy lifting, bringing the new world of Rise of the Teenage Mutant Ninja Turtles to life in a way that’s never been possible before.

Chris Young, Senior Vice President of the Nickelodeon Entertainment Lab, headed up this virtual reality project, designed to create the ultimate PR splash to publicize the reboot of the Teenage Mutant Ninja Turtles franchise. Nickelodeon’s new turtle series Rise of the Teenage Mutant Ninja Turtles is a prequel to the original show, and features the TMNT crew before they became crime fighters. The new show is set in a dense, urban background reminiscent of New York City, along with NYC’s mythical, hidden underground worlds. By creating a virtual press junket, Young was hoping to be able to immerse journalists into the Turtles’ new world.

“At the Nickelodeon Entertainment Lab, we believe the future is rendered in real-time,” Young says, and at 2018’s Comic-Con, he and his crew of engineers and dreamers set out to prove it.

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Chris Young is Senior Vice President of Nickelodeon Entertainment Lab, established to take a long-range look at emerging technology and new platforms to deliver content

“We wanted journalists and superfans at Comic-Con to have this unique opportunity to step inside the Turtles’ art-directed world,” Young says. “We wanted them to get a first-hand look at the new show and be able to interview Mikey and Donnie in virtual reality. Our plan was to film the interview using live-action cameras composited with gaming footage in mixed reality. Then, at the end of the interview, we would hand the journalist a thumb drive of their interview with the turtles.”

All of which sounds like a tremendous idea, but how to pull it off? “Well,” Young admits. “The devil is in the details.”

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David Gerhardt uses Adobe Character Animator to give life to one of the two TMNT characters taking part in the virtual press interviews. A different animator was responsible for the control of each of the two Turtles

How Did They Do It? NDI, of course Fortunately, this is just the sort of challenge that the Nickelodeon Entertainment Lab was created to take on. The Lab was set up a few years ago to experiment with emerging technologies in the hopes of identifying outlets for Nickelodeon’s universe of characters, both present and future. Pulling off a project as ambitious as a virtual press junket proved to be quite a challenge for the Lab, and required bringing together technologies from a number of different disciplines and forcing them to play together nicely. That’s where NewTek’s revolutionary NDI technology came into play. NDI acted as the unifying force in the Lab’s virtual reality project, allowing a wide range of programs and devices to interact with one another.

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Using TriCaster allows live editing between animation and live action angles and iso-recording of all feeds as well as outputting the program feed to a thumb drive for take home and easy sharing and iso-editing

Chris Young explains. “It all starts with Adobe Character Animator. We stream that into Unreal Engine, (the source-available game engine developed by Epic Games) using NDI technology to get it into the game. So, the person wearing the VR headset in the game is seeing the animated Turtles streaming over NDI in the game. From there, we’re also streaming NDI into live compositing software, where we’re compositing the footage together, both virtual camera shots of the Turtles, and live action footage of the journalists.”

The journalists are shot on green screen,” Young explains. “And that green screen key is composited into a back plate coming out of the game.”

But that was only the first step in the complicated virtual-reality universe concocted by the fertile minds at the Nickelodeon Entertainment Lab.

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A journalist immerses himself in the virtual Turtle world wearing a VR headset in front of a green screen

“All of those signals were then live-streamed back over NDI to our TriCaster® system,” Young tells me. “Using the TriCaster, we were able to live edit between all the animated and live-action camera angles, as well as record iso-feeds of all the different angles, in addition to the program edit. Then, once the interview was over, we were able to throw the program feed on a thumb drive to give to the journalists. From there, they could either share the interview immediately over their social channels, or go back and use the iso-edits to repackage the interview in a way that worked best for telling the bigger story they wanted to tell.”

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The same journalist as above interviews the Turtles inside the new show’s virtual reality environment. Each interviewer was given the option of choosing one of several Nickelodeon character heads to cover their virtual reality headsets

Keeping Someone Else’s Head on Straight

Through experience, the staff at the Nickelodeon Entertainment Lab has come to realize that nothing ruins a virtual reality experience faster than seeing yourself wearing a clunky VR headset rig. So, rather than destroy the illusion for journalists, the Lab’s designers came up with an ingenious solution to the headset problem; they gave the journalists new heads. Before the interview, each journalist was allowed to select their favorite character from the Nickelodeon universe of animated characters, and that head was keyed over their own, eliminating those pesky, illusion-destroying VR headsets.

“We thought it would be super-fun for everyone to be a Nick character,” Young says. “So, the idea was to cover the journalist’s head and VR headsets with a Nick character head. Although the journalists chose which character they wanted to be, it wasn’t revealed to them until they looked down at a puddle we put in the ground. So, there would be this great moment when they’d see themselves and say, ‘Wow, I’m Hey Arnold.” It made for a great interview.”

Bringing The Turtles to Life

Pulling off this live virtual-reality project required a well-rehearsed team, according to Young. A crew of nine worked to bring the new turtles’ universe to life at Comic-Con, as well as a room full of blazing-fast gaming computers and other video gear.

“We had two puppeteers who live-animated the characters of Donnie and Mikey,” Young says. “They worked with the Turtles’ animation show unit to extract animation cycles from the actual show episodes. Those cycles were triggered using MIDI controllers and the two puppeteers were able to puppet live, viewing the output on NDI monitors, as well as a composite feed of the two characters together. That way, each animator knew what they were doing, as well as what the other character was doing. And then, just off to the right of the animators, were actors Josh Brenner and Brandon Mychal Smith, who voice the characters of Donnie and Mikey in the series.”

Since the Nickelodeon crew only had access to the actors for a few hours during Comic-Con, it was essential that the system worked without any problems.

NDI: The Glue Holding Turtle Reality Together

And that’s why the Nickelodeon Entertainment Lab chose NewTek’s NDI technology to meld all these different platforms into a single seamless world. Chris Young has been a fan of NewTek products for many years, and using NDI was a natural extension of that.

“NDI does this amazing thing in a magical way,” Young says. “The great thing about NDI is that you can send it out as a source and pretty much pick it up on any machine and it just works, regardless of format or frame rate. It gives us an amazing amount of flexibility. We also wanted to route so many different sources from so many different systems with so many different requirements for each source into our project, and NDI is an elegant solution for moving video across your local area network.”

Rehearsal Is Key

Once the crew at the Lab came up with their bold plan to combine all these divergent systems and technologies into a single virtual reality experience, one question remained. Would it work? And more importantly, would it work at the convention, with its requirements for rapid set-up and tear-down? In order to find out, the Lab’s engineering staff set a mock-up of the system in their Burbank studio and began putting the system through its paces.

“We taped the dimensions of our booth out on the studio floor,” Young says. “Then, we set up a bunch of tables and all the computers with the right cable lengths for everything, so we could really understand the set-up. We rehearsed it for a couple of weeks straight to get the protocol down cold. We built the eight-foot-high green screen cube for our journalists. Then, we hauled people out of the hallways at the Lab, anyone we could find, and made them play the role of journalists. In the end, it turned into a mini-broadcast production unit, built around the TriCaster system. As a result of all that rehearsal, the system performed like a champ at Comic-Con, all thanks to NDI, which Young credits for holding the project together.

“Anytime you do a live event and involve advanced technology and talent, there are so many things that can go wrong,” he says. “So, we were thankful that NDI was super-solid and allowed us to find the rhythm to pull the project off.”

Using NewTek’s Connect Spark to Work Out the Bugs

The crew at the Lab also uses another piece of NewTek gear in their studio in Southern California to help design their virtual reality worlds.

“When the Connect Spark device came out, I literally bought it Day-One off the NewTek website,” Young says. “It solved a major problem for us,”

NewTek’s Connect Spark is a portable IP video encoder that converts a 4K video signal to NDI and delivers it to the network for use with compatible systems, devices, and applications. Many of Nickelodeon’s current projects involve creating large-scale roaming VR experiences, and one of the biggest problems facing game designers in that realm is understanding what the end-users are seeing with an eye toward improving the experience.

“There’s nothing worse than the player telling you, ‘I think that thing over there should move.’ And you’re saying, ‘What thing? I can’t see what you’re talking about.’ So, the minute I saw the Connect Spark, I realized I could put it on a backpack and send wireless video at sixty-frames-per-second back to the designers, so they can get a true view of what the VR players are actually experiencing while they’re playing. It’s absolutely critical to understanding what needs to be changed.”

Real-Time is the Future of Entertainment

When they’re not creating a Turtle-powered world of wonder for journalists, the engineers and designers at the Nickelodeon Entertainment Lab are focused almost exclusively on virtual reality, augmented reality and mixed reality projects. According to Young, real-time entertainment is the wave of the future, which is why Nickelodeon Labs is working so hard to be one of the first riding the wave.

“The world is going to be full of executables and binary files,” he proclaims. “The days of QuickTime and 2-D video will fall away.”

“I think the idea of immersing yourself into your entertainment is an idea that’s coming at us like a runaway train. That’s why we’re trying to understand that world with so much energy and effort.”

And most likely, NewTek’s cutting edge technologies will continue to figure heavily into the Nickelodeon Entertainment Lab’s future plans.

“There are so many projects we have in our queue, and we’re just dying to get to them all,” Young says. “We don’t have enough time in the day to do all the cool things we want to do.”

Read this article on NewTek’s website