Yves Gassot Directeur Général, IDATE
‘‘Mobility reloaded” will be the central theme of the 36th annual DigiWorld Summit.
Following through on ‘‘Game Changers’’ (2012) and ‘‘Digital Gold Mines’’ (2013), this year’s theme will allow us to further our examination of current and future upheavals in the digital economy by exploring the issues from a specific angle: mobility and its impact on user behaviour and on the value chain for telecoms, TV, advertising, the Internet, gaming, smart cities, etc.
- What innovations can we expect from mobile Internet disruption?
- Are fixed and mobile superfast access interchangeable?
- What new players and business models will emerge from the Internet of Things and mobile advertising?
- Will mobile devices turn TV into a one-to-one business?
- How can Europe get back in the game?
IDATE Chairman François Barrault points out that, ‘If the cloud, big data and the Internet of things are clearly the major disruptions looming on the horizon, the momentum today lies in the mantra: mobility first!’
IDATE CEO, Yves Gassot, details the key points of this year’s programme: ‘What began with the swift commercial success of 4G is segueing into the spectacular technological leaps expected from LTE-advanced and, beyond that, the prospect of 5G, the widespread adoption of software-driven networking (SDN)… But questions also linger over the accelerated pace of the migration from the fixed to the mobile Internet, spurred by the massive popularity of smartphones and tablets, coupled with the surge of emerging economies. It goes without saying that a great many stakeholders are being affected by these massive changes in the landscape, which we have chosen to explore from three angles: How revenue is progressing for mobile operators and other players, from M2M to the Internet of things and beyond; How the massively mobile Internet will affect the advertising ecosystem; and how TV industry players are positioning themselves now that video accounts for an increasingly large share of mobile traffic’.
The 36th annual DigiWorld Summit will run from 18 to 20 November in Montpellier, France, and play host to a panel of international industry luminaries who will share their views with more than 1,300 participants from 30 countries. IDATE analysts will lend their expertise to the sessions that will be moderated by Digiworld Institute members.
DigiWorld Week: the DigiWorld Summit broadens its horizons
This year’s DigiWorld Summit will kick off DigiWorld Week: a new initiative from IDATE and its key partners to explore the many facets of the digital society’s core economic issues. A series of exciting events will be taking place from 16 to 21 November on either side of the core two-day Summit:
- The Connected Things Forum
- The Game Summit
- MIG (Montpellier In Game)
- Industry Oracles
- Economic Club on m-payment
> Find the latest programme updates at www.digiworldweek.com
More than 140 speakers on hand
This year, we are delighted to welcome speakers from the four corners of the globe, come to share their views on the future of mobility:
- Mikael BÄCK, Vice President Global Strategy & Portfolio Management of Ericsson will share some of the chief findings of the “Mobility report”.
- Jean-Michel FOURNIER, CEO & Co-Founder of BitGym, a San Francisco-based start-up and winner of the prestigious Auggie Award at AWE 2014, will talk about the “quantified self” phenomenon.
- Kayvan MIRZA, CEO & Co-Founder of Optinvent will unveil his approach to new generation smart glasses.
- Patrick PELATA, EVP & Chief Automotive Officer of Salesforce.com will speak with Thierry VIADIEU, New Mobility Program Director from Renault, about the future of connected cars.
- Christophe WILLEM, Senior VP of Strategy & Marketing at Thales Alenia Space, will tell us if drones, balloons and mini-satellites offer viable solutions for connecting huge swaths of the population to the Internet.
- Michel COMBES, CEO of Alcatel-Lucent will close the “Road to 5G” session, whose speakers include Selina LO, President & CEO of Ruckus Wireless, and Atsushi TAKESHITA, President & CEO of DOCOMO Communication Laboratories Europe.
- Pierre LOUETTE, Deputy CEO of Orange and Carlos LOPEZ-BLANCO, Global Head Public & Corporate Affairs for Telefonica, will discuss how telco business models will evolve in Europe, against the backdrop of market consolidation.
- Laurent SOLLY, Facebook’s Managing Director France, and Benny ARBEL, Founder & CEO of MyThings, a rising star in retargeting, will discuss the challenges that advertising faces as it makes the transition to mobile.
- Luc JULIA, VP & Innovation Fellow of Samsung and Co-authored Apple Siri's core patents, Erick TINICO, Director of Mobility at AT&T, one of the world’s most advanced telcos and Axel HANSMANN, Gemalto’s VP of M2M Strategy & Marketing, will share their analysis of new business models for M2M and the IoT.
- Fu SHENG, CEO of Cheetah Mobile, a growing mobile Internet powerhouse in China, with 340 million users.
- Abigail KHANNA, Head of Digital and Future Media Business Development at the BBC, Steve McCAFFERY, GM & SVP of sales for Europe Arris, Eric SCHERER, Director of Future Media, France Télévisions, and Valery GERFAUD, General Manager, M6 Web, will explore what the future holds for television, now that mobile devices are becoming users’ screen of choice.
- Guillaume de FONDAUMIERE, Co-CEO of Quantic Dream, Susan O’CONNOR, a writer whose script credits include the games BioShock 1 & 2, Far Cry 2, Tomb Raider and Star Wars 1313, along with Charles CECIL, co-founder of Revolution Software, creator of Broken Sword, are among our video game Oracles.
- Meng LI, Director of China Telecom’s Mobile Business Department Europe, will talk to us about the development outlook for mobile in its various forms in the world’s biggest market.
- Jean-Ludovic SILICANI will talk about his time as Chairman of France’s telecoms and postal regulator, ARCEP, and share his insights into key issues going forward.
- Vincent LE STRADIC, Managing Director of Lazard, will provide a financier’s perspective on the health of Europe’s digital economy. And…
- Axelle LEMAIRE, French Ministry of State for Digital Affairs will deliver the Summit’s closing remarks.
Consultant at IDATE
Average household spending on cultural goods worldwide decreased from €75.50 to €71.60 between 2010 and 2013
Electronic distribution allows households to spend less on any cultural products they buy or rent individually. The gap in price is especially significant in those industries where the cost of producing a hard copy heavily influences its retail price.
As a result, between 2010 and 2013, average household spending on cultural goods worldwide decreased from €75.50 to €71.60 a year. This figure nevertheless includes sizeable regional disparities:
• in North America, average annual spending on all types of content combined has actually increased, going from €327.30 per household in 2012 to €328.40 in 2013;
• households in Asia/Pacific and Latin America are also spending more, with average entertainment budgets rising, respectively, from €35.80 per household/year to €39.10 per household/year, and from €31.70 per household/year to €34.10 per household/year between 2010 and 2013;
• meanwhile Europe and Africa/the Middle East are reporting a sizeable decrease in average household spending on cultural products: -10.6% and -15.6%, respectively, over the past three years.
Deputy Managing Director
Director of TV & Digital Content Business Unit
At a time when Netflix is shaking up classic video distribution models, IDATE is delivering an analysis of ongoing disruptions in TV content distribution.
The television industry is having to contend with a major game changer, namely increasingly individualised viewing. This change is upending the industry’s longstanding mass media model, but also paving the way for new business models and a new period of growth.
Individual TV viewing also represents a dual opportunity: to transform the household market into individual markets, and to capitalise on the shift from mass advertising to more relevant targeted advertising.
This growing individualisation is part of the "cloudification" of the technical chain that makes it possible to better serve multi-network and multi-device behaviours, and of the process of adapting services to find the right interplay between linear and on-demand TV, to re-monetise catch-up TV, and to develop the SVoD and electronic sell-through (EST) markets.
IDATE has developed three scenarios to describe and quantify the potential impact of this tremendous change in video content markets:
• a growth scenario: "the new golden age" where the increasing individualisation of video consumption and Internet access leads to the creation of a market for individual subscriptions, and where video – both linear and on-demand – becomes a medium of choice for advertisers;
• a scenario of stagnation: “business as usual” wherein pay-TV plans remain largely monolithic, where on-demand products hold little appeal and TV’s ad revenue suffers from advertisers moving a portion of their spending over to the Web;
• a negative scenario of "commoditisation," characterised by an accelerated migration from a paid to a free model, and TV losing its relevance as an advertising medium.
The three TV/video market development scenarios applied to the US (billion €)
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Soichi NAKAJIMA, Senior Consultant
Just under 1.4 billion smart meters (electricity, gas and water combined) deployed worldwide in 2018
IDATE reviews the state of smart meter rollouts in various countries (Europe, USA and Japan), which form the first steps of eventual national scale smart grids. Whilst electricity meters are at the forefront of such rollouts, gas and water must also be considered. The drivers and barriers for this market are assessed, and forecasts are made for the number of smart meters to be deployed and the resulting cellular connectivity revenues, up to 2018. Finally, some future paths which may be explored for expansion into smart grids are examined.
IDATE forecasts that there will be a total of just under 1.4 billion smart meters (electricity, gas and water combined) deployed worldwide in 2018, up from roughly 500 million in 2013; a CAGR of 22.7%. Many countries now have regulation in place which targets close to 100% replacement of current ‘dumb’ meters to smart ones by 2020, and such regulations are the primary driver of smart meter rollouts.
The technological composition of communication for smart meters is divided into two main parts; the HAN (or last mile) and the WAN (or backhaul), and the approach differs from country to country. For example, the UK has specified Zigbee as the HAN technology and cellular as the WAN (with the exception of northern GB) for both electricity and gas, whereas in France the technologies specified for electricity and gas differ. In Germany, there are no specific regulations requiring replacing dumb meters with smart ones (just that new meters must be smart), and the technology is for utilities to choose. The main deciding factor for smart metering technology is thus regulation, and if not specified by regulation it is up to the utilities to decide. Whilst most countries have plans for smart electricity meters, there are fewer for gas and for water they are still rare.
There are various technologies which could be deployed for both HAN and WAN, and the main area of interest for telcos lies in providing cellular connectivity for the WAN, with their already-established networks covering large areas of the country. However, they face competition from other technologies such as PLC and RF mesh. Particularly in the USA, RF mesh had been a popular choice due to availability at low costs, whereas cellular proved expensive. However, such cellular prices have now come down significantly, from an ARPU typically over 5 EUR to now 0.5 EUR in some cases. Thus with the price now proving more attractive, telcos are increasingly becoming the WAN technology of choice, which can be expected to remain reliable for the foreseeable future. This is particularly important as the life expectancy of meters is long, in the region of ten years or more. Indeed, smart meter vendors, such as Elster and Silver Spring Networks have shifted their future connectivity plans to cellular as opposed to RF mesh. Finally, the migration to LTE allowing for higher throughput is also a positive factor in the long term when considering the smart grid.
Looking further ahead, smart meters are in fact the first steps of building a national electrical smart grid, on top of which various services and applications can be built upon. This involves various actors along the value chain, from meter vendors to network providers, system integrators and all the way up to the service providers. Here, telcos have the potential of providing ‘smart-grid-as-a-service’ to the utilities; a packaged, end-to-end smart grid solution, where the telco takes care of the overall integration and running of the solution. This is a particularly effective strategy for the medium- and smaller-sized utilities (such as municipalities and co-operative utilities), as they can outsource the large majority of resources and equipment which would simply be too expensive to provide by themselves. Such projects have already started in the USA, since 2013 with AT&T on the one hand and Verizon on the other. Telcos do however face competition from other market players, such as General Electric and Silver Spring Networks which also offer such integrated solutions.
It will also be interesting to monitor entities which offer both utility and connectivity services (such as the triple play of Internet, TV and phone). Such entities tend to be municipalities and regional providers, and do not combine these services. However, as smart metering becomes more standard, there is the potential of packaging these two services (utilities and connectivity) as one, to create advantages over their rivals.
Deputy Managing Director
Director of TV & Digital Content Business Unit
It is no secret that the shift to digital has had a huge impact on the music sector: the multiplication of distribution channels, the shift from owning albums to listening on the fly, along with piracy have resulted in a significant drop in revenue for the sector, the arrival of new unlimited music services and, more generally, the core revenue stream shifting from the sale of recorded music to exploiting all of the rights attached to an artist.
The role of live performance has also changed. While it has always been a special event, providing a venue for fans to meet the bands as well as being a promotional vehicle, concerts had long been a by-product of records. Today, they have become not only essential revenue streams, but also an essential means for music lovers to discover artists, and for artists to develop their careers. In addition to the their growing weight in music industry economics, the live concert market is also being affected by the internet: the use of social media to promote an event, online ticket sales, the importance of metadata in creating and maintaining ties with fans, new forms of interaction during concerts, etc.
Among these many developments, digital technologies open up new opportunities in the realm of recording and broadcasting concerts. As with recorded music, video, news and now books as well, the rise of digital and the web is steadily creating new ways to distribute recordings of live concerts, which had long been the sole dominion of a handful of TV channels, and so confined to only the most popular artists. The proliferation of online distribution channels is already driving up demand. At the same time, on the supply side of the equation, new, cheaper recording and distribution solutions continue to lower the barriers to entry. So more and more players are getting in the game. They are coming from new sectors of the digital ecosystem: pure player concert sites, internet giants, telecom and consumer electronics industry players… but very few live event organisers.
It is within this new environment that IDATE was commissioned by musical, concert and variety show union, PRODISS, to provide an analysis of what impact digital technologies are having on live performance.
> The report and its summary (in French) are available online at: www.proscenium.fr/thinktank/
Deputy Managing Director
Director of TV & Digital Content Business Unit
Original production in the US had long been the fiefdom of the top TV networks and a limited group of premium cable pay-TVs. Today, however, all cable channels are developing an original production policy, operating alongside their reruns of series produced by the big networks.
Some of the most popular series in the United States have been produced not by these heavyweights, or by HBO: Mad Men, Breaking Bad and The Walking Dead (AMC), The Americans (FX), Rectify and Top of The Lake (Sundance).
This new strategy has been especially profitable for AMC which originally aired only reruns: in 10 years, its earnings from cablecos has gone from $0.22 to $0.35 a month per subscriber.
Consultant at IDATE
IDATE estimates that industry losses due to the various forms of illegal video consumption – namely P2P, downloads and streaming – totalled €6.3 billion in Europe in 2013, which translates into 37.8% increase from 2010 to 2013.
The main reason for this rise in online video piracy is the lack of attractive video on-demand (VoD) services in Europe, which is due in large part to:
• a very scattered offering, which is hard for users to navigate through;
• the fact that legacy pay-TV providers have captures the rights for the most premium content, and are taking a defensive approach to new distribution channels;
• very few online sales options;
• certain regulatory restrictions, such as the media chronology in France and Germany for feature films.
The VoD sector’s consolidation, and the inroads being made by American companies, especially in the subscription VoD segment, is expected to breathe some life into Europe’s video-on-demand market, and contribute indirectly to scaling back users’ reliance on piracy. IDATE estimates that industry losses due to piracy should decrease by 6.5% between 2014 and 2018.
Head of Research, Telecoms Business Unit, IDATE
From less than 40 EUR to more than 100 EUR per month for 100 Mbps access
IDATE’s latest report focuses on the services offered by telecom and cable operators via their FTTx infrastructures. It analyses the various speeds offered, the services included in the offering, pricing tiers and also highlights disparities between regions.
The speed race has not yet reached the finish line
Over the past few months, many operators have announced the launch of new offerings with even higher speeds, thanks to their FTTH/B networks. In the space of six months, no fewer than five operators in Europe have launched 1 Gbps offerings! Up until then, 100 Mbps was considered the norm for ultra-fast broadband (UFB), but now there are many offerings with 300, 400 or 500 Mbps speeds. These are not always very visible and are sometimes not even available as part of a bundle (this is the case with Verizon's 500 Mbps offering, which is only available as a stand-alone service). However, this strategy allows telecom operators using FTTH to differentiate themselves better from cable operators whose peak speeds are normally around 150 to 200 Mbps.
Segmentation of services: speeds and TV/video services prioritised
UFB players do not always go for strong segmentation based on available speeds. As a general rule, plans are built around 3 to 4 speeds, but for some, the offering is limited to 1 or 2 speeds, continuing on from the positioning they adopted in the traditional broadband market.
As for TV and video services, segmentation is sometimes stronger due to providing customers with themed packages (sports, movies, kids), especially for players from English-speaking countries. Generally speaking, telecom and cable operators from English-speaking countries have a very specific approach because they mainly promote video services and TV channels. Speed is only a secondary selling point. Their offerings are characterised by an increasing number of plans available with the ability to customise bundles (or, for more pragmatic players, to help select a pre-configured bundle).
In other regions, the approach seems more pragmatic, with fewer bundles and a more limited choice for end users.
With a lack of innovative services, prices are remaining stable
None of the players studied here offers a particularly innovative service. Most bundle add-ons, such as new set-top box features, cloud-based storage, antivirus, etc., are systematically added to the basic offering. Therefore, operators are unable to differentiate themselves from each other. A very small number of players, such as Altibox in Norway and HKBN in Hong Kong, are exploiting the technical characteristics of FTTH networks to offer genuinely differentiated services with symmetric upload/download speeds. In the short term, it seems very likely that speed (including symmetry, guarantees, faster speeds) will remain the main area to exploit for UFB operators.
This should impact prices offered, which have remained relatively stable in each of the major regions over the past year.
Jacques Bajon, Head of "Video Distribution" Practice
Cloud TV solutions being developed in a new video consumption environment that is having a profound effect on distribution modes.
In its latest report published in its monitoring service “Cloud & Infrastructure”, IDATE analyses Cloud TV solutions the advantages and the issues that still remains.
The cloud TV phenomenon is part of the massive changes taking place in our TV and video viewing habits and, by extension, in video distribution. This cloud-based approach to distributing TV programming refers to the fact of offering services from a central platform connected to the Web, and which can serve any user device.
A cloud platform can be operated by OTT (over the top) content providers who deliver their solution directly over the Web, or by telecom operators who use their own networks. In this second instance, the service is typically not assimilated with the cloud per se, even if we will include it in our field of analysis.
What cloud TV brings to the industry
• It is above all a response to a growing demand among consumers to have access to TV everywhere.
• It paves the way for more personalised video viewing and targeted advertising.
• The fact of centralising the solution enables more flexible rollouts and the abilty to offer a broader array of services.
• The growing move towards virtualisation allows vendors to achieve more cost-effective capital and operating expenses for their video distribution business.
• And brings vendors one step closer to deploying concept of TV as a service, so creating ties with users, or of operator as a service, for distributors looking to achieve more operational flexibility.
But certain unknowns remain
In addition to increasing quality of service (QoS) to meet users’ demands, the gradual switch to cloud-based video solutions will no doubt also generate a sizeable increase in traffic on the Internet and managed networks, and with it the inevitable challenges of maintaining a steady level of quality.
New challenges are arising as barriers to entry into video distribution are being lowered, through expansive platforms that are not subject to any network coverage, device compatility or geographical imperatives.
• We could thus see an acceleration in the rise of independent video offerings, which could include libraries of self-distributed content. This type of configuration could result in telecom operators being cut out of the loop and losing control of consumers.
• In addition, service providers and broadcasters will be going head to head with their TV Everywhere applications, offering potentially identical content but being delivered by pay-TV providers and TV networks, for instance.
• The traditional TV distribution industry runs the risk of being marginalised by these developments. But it has developoled its own solutions to meet some of viewers’ new demands and, above all, has begun to integrate these new options into its own environment.
• And, finally, cloud TV represents a major gateway for the Internet giants that are currently competing against pay-TV providers and programme aggregators for a foothold in this new market.
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The global Real Time Bidding market to grow to 17 billion EUR by 2018, up from an estimated 4 billion EUR in 2013.
Soichi NAKAJIMA, Senior Consultant
IDATE forecasts the global Real Time Bidding (RTB) market to grow to 17 billion EUR by 2018, up from an estimated 4 billion EUR in 2013, representing a Compound annual growth rate (CAGR) of 36% from 2013 to 2018. RTB is a form of programmatic buying, and forms a part of the display-advertising market.
It is complementary to targeted advertising which is refined through the use of personal data, where RTB gives this targeted advertising the real-time added value. RTB was the fastest-growing segment within the advertising market in 2013.
The growth is RTB is driven by several factors, the most obvious being the increase in ROI which RTB brings for both advertisers and publishers. From the publisher point of view, they see an increase in eCPM, since RTB can provide better-targeted advertising space in real-time, which is more effective than traditional inventory. From the advertiser point of view, the increase in eCPM means that they have to pay more to advertise in that inventory. However, the use of RTB means that the advertisers have access to much more targeted, relevant, and thus effective inventory, which compensates for the increase in eCPM.
Today, RTB is used almost exclusively for indirect inventory. IDATE estimates that in 2013, at least half of all indirect display inventories were sold though RTB technology, and that by 2018 the leading countries will see almost full RTB penetration for indirect inventory. But it is also expected that RTB will expand into direct, premium inventory sales, in conjunction with increased personal data use (targeting) to further increase the premium value of the inventory. This is already starting to happen with the concept of guaranteed upfront sales entering RTB. The concept here is to trade direct, premium inventory on an RTB platform, whilst giving publishers a high amount of control and also advertisers the trading real-time benefits of RTB. This is done by the buyers (typically DSPs) sending a request for certain types of inventory, typically audience demographics (such as age, sex, income or place) and allocated budget to SSPs. The SSPs then provide the buyers with a packaged premium offer aggregating various publishers to meet the buyer request. This is different to standard indirect RTB trading, as indirect inventory is sold as spots rather than packages. The buyers then purchase this package upfront, together with guarantees from the publisher.
Another growth driver for RTB is how big brands have embraced the technology. In display advertising Google and Facebook are number one and number two respectively, and by a long way, and that RTB has been embraced by these two juggernauts has certainly helped spread the technology in the market. The Facebook launch of FBX was arguably a defining moment, adding inventory and thus liquidity into the market. This also meant increased competition in RTB, and more urgency for other large brands to embrace the technology, either as publisher or RTB provider. Also notable are commercial giants Amazon and eBay who have started to provide RTB on their sites, and the acquisition of MoPub by Twitter in September 2013. The leading specialist players along the display- advertising value chain, such as DSPs, SSPs and ad exchanges are also all embracing RTB, to maintain their value within the ecosystem.
From the perspective of personal data use, RTB does not in itself increase the use of personal data. However, it does provide real-time and further automation capabilities within the display-advertising value chain, and thus used as a tool, RTB is expected to further increase the use of personal data for targeted advertising. Since RTB is also provided as a single interface, this also means potential disintermediation of the middlemen within the value chain, especially those such as ad networks who have traditionally worked in the non-automated environment. Market consolidation may also follow, with increased competition and maturity.
Global RTB revenues and regional breakdown, 2012-2018 (million EUR)