Videonet’s recent report – The Hybrid Platform Operator – highlights the market implications of the hybrid platform operator and explores the challenges in creating a unified service through multiple networks and devices.

Our last posting highlighted a Q&A with John Moulding, the author of the report, to discuss his perception of the pay-TV landscape. This posting recaps a conversation with Steve Christian, VP of Marketing at Verimatrix—one of our close technology partners—to get his perspective on this timely topic. Following is a transcript of the conversation.

Why do you think this report has been so well received?

SC: Pay-TV operators around the globe are rapidly deploying multi-network services to meet subscriber consumption patterns and enable lucrative new business models, presenting operators with many opportunities. However, creating and operating a multiscreen video service across different managed and unmanaged networks and devices is no easy task — even for the most innovative operator. Videonet’s report explores what a successful user experience looks like and offers operators practical guidance on how to best leverage hybrid networks — all very useful information for competitive pay-TV operators today.

What kinds of “hybrid” configurations are you seeing in the marketplace?
What are the challenges associated with deploying these types of networks?

SC: We are primarily seeing two types of hybrid network configurations:

• DVB-Hybrid – building on a largely unconnected client device base
• IP-Hybrid – based on a largely or fully connected client device base

Each configuration has its own challenges, ranging from mitigating risk to ensuring a consistent, high-quality user experience (UE) across all devices. These challenges are balanced, however, by the revenue opportunities and competitive advantages presented by the offer of compelling multiscreen services, which are inexorably becoming the new frontier in pay-TV competition.

Why is it important to have a harmonized security rights strategy across multiple networks and devices?

SC: Exploiting the benefits of a hybrid delivery system does not mean that operators forego the compelling advantages of an integrated consumer experience. And, because rights management can so easily corrode that service experience, having a robust multiscreen strategy is becoming increasingly important. It can be a critical competitive differentiator, especially in emerging markets.

Many operators are choosing to deploy cardless security solutions. Why is that and what are the benefits of such an approach?

SC: Cardless security solutions offers operators a range of cost and logistical benefits, including the ability to proactively upgrade client features and security on a routine basis using the network itself. The operator perspective on cardless security is well covered in our two recent white papers, Future of Cardless Broadcast Security and Cardless Content Security: The Smarter choice for Hybrid Networks.

We also consider that operators benefit in a transition to a cardless security solution by positioning themselves more directly to expand or upgrade for multi-network delivery. Deploying a unified cardless security solution to secure both live and interactive content delivery via single security headend will help reduce OPEX and CAPEX as operators expand their services.

What does the future of pay-TV look like to Verimatrix?

SC: The pay-TV landscape will continue to encompass an increasing number of device types and an evolving world of network configurations and delivery protocols. Taking a unified approach to managing and integration security will enhance operators’ ability to manage across these changes while also enhancing quality of experience QoE for its customers and accelerating the growth of new revenue streams based on this paradigm. Leveraging such an approach will help operators prepare for the future by extending the reach of their existing service offerings for increased revenue security.

Last month, Videonet released its report on The Hybrid Platform Operator, which looks at the market implications of the hybrid platform operator and considers the challenges in creating what should be a unified service through multiple networks and devices. Issues addressed include matching broadcast quality of experience (QoE) on streaming services, the user experience, integrating over-the-top (OTT) video into the set-top box (STB) offering, the role of adaptive bitrate STBs, and streaming versus broadcast.

Our partner, Verimatrix, had the pleasure of sitting down with John Moulding, the editor of the Videonet report, to discuss the evolution of hybrid network offerings, and the challenges facing hybrid operators today. Following is a transcript of the conversation.

VMX: How has the definition of a “hybrid network” evolved over the last couple of years? How would you define a hybrid network today?

JM: The most important change is that we have to account for OTT video services — including managed broadband delivery — now. When the industry started talking about “hybrid” it meant a DVB broadcast mechanism plus classic IPTV. An example of this is an IPTV service using their DSL network for video on demand (VOD), but the local DTT bouquet as the linear channel offering.

This kind of hybrid service is not that common but it is becoming more commonplace to see a broadcast service combined with OTT/broadband. An example of this is a satellite operator using their satellite DVB-S/S2 signals for linear TV and broadband to deliver VOD into IP-connected DVRs.

The really big change, now underway, is that even platform operators who already have a two-way network (like cable) are adding broadband/OTT delivery into their STBs to further enrich the service. Virgin Media in the UK is an example: they offer classic cable VOD, but they are also dedicating DOCSIS bandwidth to broadband video that is delivered into their TiVo DVRs. The broadband is used for catch-up TV, YouTube and for streaming video that is accessible via channel partner apps, among other things. So OTT is not just a way to enable two-way services, it is a way to enrich existing two-way services.

It is probably worth drawing a distinction between a hybrid service (what we would call a hybrid platform operator) and a hybrid network. There are some hybrid networks where an operator uses both cable and IPTV footprint to reach homes, but as a customer you only sit on one footprint or the other. To be defined (by us) as a hybrid service/operator, there needs to be more than one network input into the customer premise equipment.

VMX: What are the biggest challenges facing hybrid platform operators?

JM: If we are talking about OTT/broadband delivery as the second part of the “hybrid” (by far the most interesting version of hybrid today), a key challenge is to ensure that the services you offer via this “pipe” meet the high expectations that TV viewers have when turning on a STB. We are all used to television just working, for pictures to look great (especially if you get HDTV) and for them to remain consistent.

You need to ensure that the service blends easily into the overall television package, so that people can access streaming video (including catch-up TV) easily. This user experience is where platform operators can differentiate themselves from pure-play OTT services and smart TV vendors, so it should be (and is) a major focus area. And depending on what content you want to deliver via broadband, the content protection must be up to the job.

VMX: How can operators overcome these challenges and position their company for success?

JM: While operators might not be able to offer the same quality of experience (QoE) as classic TV today when using OTT, they must make that an ambition. Guaranteeing the bitrates for the OTT services is a good start and clearly the quality of the content delivery network (CDN) arrangements and video compression are going to impact what is possible within the bandwidth that is available.

The new generation of pay-TV platforms (e.g. Virgin Media TiVo) and indeed the next-generation free-to-air platforms (like YouView and Freesat’s in the UK) are all addressing the user experience (UEX) challenge. They are using backwards-facing electronic program guides (EPGs), Now/Next, Search and apps, etc. to help people find streamed on-demand content easily. There is a distinct feeling that all the content is in one place — and the source of the content is hidden.

When it comes to content protection, you need studio confidence in the quality of the digital rights management (DRM) implementations on broadband, and the best solutions seem to manage conditional access (CA) and DRM in one place and translate business rules into entitlements for multiple DRMs while removing most of the complexity from the platform operator. Unified content protection management becomes even more important once you start throwing in multiscreen services, which also use OTT and could well use the same video streaming that is delivered to a STB.

VMX: How can operators differentiate their pay-TV offerings from those of their competitors?

JM: When it comes to the broadcast/OTT hybrid, the most obvious way to differentiate is the addition of VOD and catch-up TV if you are currently relying on a one-way broadcast network, like satellite. This is a potential game-changer if you are in competition with two-way providers like cable and IPTV.

If there is a level playing field, in the sense that all providers now offer VOD (including any broadband delivered content) then you can differentiate by the volume and quality of the content available via OTT, whether that is the number of catch-up TV channels or the number of compelling content-rich apps.

The more important the OTT delivered content becomes to consumers (and catch-up TV, if nothing else, will ensure we do start to rely on it more) the more important QoE becomes. This can be a differentiator, assuming competitors neglect it, although there is clearly a point where ‘good enough is good enough’ and a triple-play consumer is not going to churn in order to get a 10% improvement in their catch-up picture quality. But if only one provider in a market can give you a reliable catch-up TV service on a 32-inch screen and everywhere else it pixelates, then this could be a competitive weapon.

VMX: What was the most surprising discovery when talking with industry experts for The Hybrid Platform Operator report?

JM: We have been excited about ‘Pay-TV Lite’ services since they started to appear. These are OTT bouquets offered by existing pay-TV operators and targeted at new homes, rather than existing subscribers. NOW TV from Sky in the UK is a great example, offering movies and sports on a per-month (and even per-day for sports) subscription basis.

One surprising insight was that in the U.S. a cable operator is looking to offer an OTT subset of its normal bouquet to persuade cord cutters to come back to them in some form, with the eventual aim of upselling them back to the full ‘traditional’ package. That means they will only use the Pay TV Lite service within their current footprint (because that is the only place you can offer the full package), even though you can, in theory, go off-net with OTT.

I was also surprised at how forthright Guy Bisson, Research Director for Television at IHS Screen Digest, was when he told us that Pay TV Lite platforms like NOW TV are a marker in the sand for pay-TV operators who are hedging their bets in case the world becomes increasingly OTT. We always thought these services were more than just a Netflix-busting movie service, but did not look upon them as a parallel platform that could accommodate an OTT migration.

I was also surprised by the amount of interest there apparently is in using IP/ABR-only (adaptive bit rate) STBs as the primary receive device in pay-TV homes. We were told about one cable operator that is looking to provide a replica cable TV offering via an ABR STB. Ironically this would take us beyond “hybrid” and back to a single delivery system into the customer premise equipment, only this time that single stream is going to be OTT/ABR rather than DVB-C, for example.

To view Videonet’s full report on The Hybrid Platform Operator, sponsored by Verimatrix and RGB Networks, please click here.

If you’ve been following us lately, you’ve probably already guessed that our big focus for this year’s NAB show is ‘Multiscreen 2.0’ and the array of solutions that we offer under this umbrella to help video service providers streamline and monetize their TV Everywhere and OTT offerings.

If you’re going to be in Las Vegas this week, stop by booth #SU5924 for demos of all of our latest and greatest solutions. Here’s a quick list of what you’ll see and you can read more details in this press release.

• High-Density Transcoding without Compromise: RGB’s new, carrier-class VMG Gen 2 performs the industry’s highest capacity real-time transcoding. Tightly integrated with RGB’s TransAct Packager for delivering live video services to any device, this unique pair can scale easily to meet growing demand for multiscreen services. Come see the pristine video quality achieved by the new platform, without compromise.
• nDVR and VOD for Multiscreen: Complementing our powerful live delivery solution, RGB offers a flexible set of options to meet a wide range of on-demand and time-shifting delivery needs. A demonstration will illustrate how RGB’s TransAct Packager and TransAct Encoder/Transcoder support a variety of VOD and nDVR applications.
• Multiscreen Monetization: RGB’s Ad Insertion for Multiscreen (AIM) solution enables VSPs to migrate to a proven model for monetizing video services to the multiscreen environment. RGB will demonstrate the VMG and TransAct Packager delivering three different targeted ads to three separate iPads inserted within the same linear feed.
• Adobe Primetime: As a key Adobe Primetime ecosystem partner, RGB will highlight its TransAct Packager performing Adobe HDS encapsulation. It also supports Adobe Primetime DRM encryption (formerly known as Adobe Access) for secure content delivery.
• Surround Sound for Multiscreen Ad Insertion: This audio demonstration will show the integration of Dolby® Digital Plus with RGB’s AIM ad insertion solution, performing seamless audio bitrate switching across network and ad content, allowing VSPs to deliver surround sound via various adaptive streaming protocols to any device.
• Audio Loudness Correction with DTS Technology: This demonstration will highlight how the DTS/RGB solution takes loudness correction to the next level, ensuring a premium audio experience across all IP devices—both large and small screen. Download this white paper for more information now >>
• OTT Swipe from Siemens: RGB will highlight an exciting new technology – OTT Swipe – developed by Siemens Convergence Creators. This web-based “swipe” technology allows users to quickly and easily move video content from a mobile device to a TV and back again with the swipe of a hand. Together with RGB’s multiscreen transcoding, packaging and ad insertion, VSPs can deliver an exceptional user experience to their subscribers. Come use the swipe technology yourself and learn about end-to-end multiscreen solutions, brought to you by Siemens.

We hope to see you in Las Vegas!

OK, so the answer is fairly obvious: over-the-top (OTT) is a thropportunity. That is, it’s a threat that is creating an opportunity for traditional video service providers to offer their subscribers enhanced services and ultimately change a video delivery model that has been in place for decades.

As streaming services from the Hulus, Rokus and Netflixes of the world have gained popularity—with consumers enjoying the ability to watch video anywhere and on any device—the established operators are being forced to expand their offering beyond the television for viewing on iPads, PCs, smartphones and other mobile devices.

The ‘TV Everywhere’ model being undertaken by most operators around the globe—with recent launches by Cox, Rogers and Ziggo—is for operators to leverage the advantages of their managed network to deliver video streaming services with quality superior to what the OTT competitors can deliver piggy-backing on their networks. Simply, operators can apply considerable quality of service (QoS) controls to their own IP streaming services, ensuring adequate bandwidth is provided and that streaming traffic is prioritized. OTT providers have no control over the cable modem service and consequently cannot provide any real quality assurance. Rights issues are still at play in this scenario, but starting with a service confined to subscribers’ homes gives operators an entry into the streaming world as they negotiate rights with content owners to expand for on-the-go viewing.

And as they implement multiscreen IP video services, operators are learning that they can be technically quicker and easier to deploy. On the beta launch of their steaming iPad app, David Purdy, Vice President of Video Products at Rogers told CED Magazine, “The cycle times for innovation are much faster in the IP space, for sure.” He also stated that ultimately Rogers plans to move to all-IP for their entire video offering.

Despite the initial challenges, it is clear that video service providers need to move forward with a multiscreen offering in order to fight off the threat from OTT competitors and take advantage of the benefits of this new model (an added revenue bonus is the opportunity for hyper-targeted advertising that IP video opens up).

CNN just published their list of the top 10 tech trends for 2012, which includes TV Everywhere at #5, showing that this service is going mainstream—a clear sign that operators aren’t backing down from the threat, but instead seizing the opportunity.

The coming year should be an exciting one as we see more operators—large and small—taking control of their destiny. We look forward to continuing to help our customers to maximize the opportunity as they deploy this new generation of IP video services.

Andy Salo, RGB’s new Director of Product Marketing, responsible for the TransAct product line acquired from RipCode, offers his perspective on last week’s IBC show.

From the perspective of a new kid on the block at RGB Networks, this year’s IBC was an outstanding event. So much is going on in the industry right now it’s hard to catch your breath. The official attendance topped out at over 48,000 people – the second highest ever. If you missed the show, here are some quick highlights:

1) 3D was everywhere. Clearly there is a lot of interest in 3D content development and delivery. RGB Networks did our part to show our wares with an amazing 3D video transcoding demo. We even managed not to lose our two pairs of expensive 3D glasses, which the accounting department is happy about.

2) We won a top award. Our VMG transcoding product was bestowed the ‘Best Digital Video Processing Technology’ award at the CSI Awards 2010. The runner’s up included Harmonic and Cisco. Not bad company to keep, much less beat. Marketing tells me this is actually the fourth first place award in a row for the VMG, so our customers must be on to something.

3) Over The Top (OTT) is buzzing. Everywhere you turned, there was new product, service, client player, set-top box, DRM provider, or partner integration that made delivering OTT and IPTV solutions easier. To that end, we had a lot of interest in our three screen delivery to mobile devices, where we demonstrated real-time video transcoding and adaptive streaming to iPads, iPhones, laptops and more. It was great to hear all of the questions and positive comments from customers.

What became clear among the big boys, and will be very interesting to watch over the next twelve months, is what is happening in the adaptive streaming space. Between Apple, Microsoft, and Adobe adaptive HTTP streaming protocols, it’s going to be a battle for mindshare and market share. Ease of DRM integration will likely play a huge role in who dominates. Microsoft appears to believe that. At IBC Microsoft demonstrated their PlayReady integration with IIS Media Server, which will be shipping soon and offered free of charge.

I’ll cover adaptive streaming more in later posts as there is a lot going on with that part of the industry.