25Jan/160

Media-Telecoms: convergence redux?

Gassot-Yves

Yves Gassot
CEO, IDATE DigiWorld

 

And what if Jean-Marie Messier was ahead of his time? This is a question that many market observers are asking themselves after the deals that took place in 2015. To wit: the largest telco in the United States taking control of the second largest pay-TV provider, while Verizon entered the mobile video market, Vivendi became Telecom Italia’s majority shareholder, the head of Altice and SFR acquired media and football rights, following in the footsteps of BT which had spent over a billion euros in February to secure the exclusive rights to Premier league matches for three years…

Disintermediation of programme access?

Beyond economists’ theoretical and already ancient arguments over the limitations of vertical integration strategies, we need to recognise a new and deeply rooted trend that appears to be going in the opposite direction of a return to convergence. In this era of increasingly ubiquitous high-speed and superfast access, increasingly effective competition between access providers, and of scrupulous attention being paid to net neutrality, even though applications and Internet users are extremely polarised between a handful of platforms, there is no telling whether telcos’ and cablecos’ assets have been strengthened in a way that will allow them to become the main providers of TV products. The trend is more towards globalisation and disintermediation.

It is only a slight exaggeration to say that, with a server and a few technical service providers, anyone can monetise their media rights internationally. Hollywood may have dominated the industry, but the major studios still needed cable networks and largely national TV channels around the world to distribute their wares. Today, they see what Netflix, Amazon and YouTube are doing, and Facebook’s ambitions in the realm of video, and are diving headlong into testing and investing in direct distribution strategies. So it is media rights that matter most and, behind that, being big enough to acquire these rights or be able to self-produce, and amortise the cost thanks to tens of millions of consumers. Telcos’ boldest and most ambitious media strategies must therefore be consistent with their size, or with expectations of their sector’s international consolidation.

Investing in programmes: will it drive telco consolidation?

If this summary argument sketches out the, in many ways new, backdrop to the relationship between container and content, it of course does not mean that all of telcos’ or cablecos’ TV initiatives are bound to fail, even for the smaller ones. They have a legitimate role to play in building an ecosystem around triple and quadruple play bundles, as a way to strengthen customer loyalty. Here, technological developments make it less costly to create a pay-TV plan that combines access to TV channels, and well-crafted indexing and marketing of OTT services. But none of this makes fixed and mobile high-speed access providers the natural choice for main providers of TV programming, and the ones that rights owners will turn to (and pay a hefty fee). The largest telcos can invest heavily in acquiring rights and even exclusive rights, with the hope that these investments will pay off. In many instances, these will be marketing investments, with the aim of increasing their share of the high-speed access market, and now accelerating the pace of customers’ upgrading to superfast (fibre, 4G/5G) plans. We should mention in passing that this belief does not cancel out the belief that mergers between telcos and (even more scattered) TV networks, and partnerships between the two, can be part of an industry-wide strategy that prevents Europe from being the mere victim of a new era of TV industry globalisation. Adhering to this analysis would lead us to conclude that perhaps Jean-Marie Messier was right… albeit too soon.

From a more general standpoint, the challenge for telecom carriers still lies in making profitable investments in the new generation networks that our economies need. From this perspective, video in particular and, beyond that, the whole range of cloud applications and services, are all very positive factors. Not only because they offer opportunities to diversify – operators can of course invest in OTT services or seek to monetise their data – but also and especially because they increase the value of having access to these networks, and open up arenas of differentiation by creating competition that is not based solely on prices.

This opinion piece was published in Les Echos on 11 January 2016          
http://www.lesechos.fr/idees-debats/editos-analyses/021602940246-media-telecoms-le-nouvel-age-de-la-convergence-1191383.php

25Jan/160

Our predictions for 2016

Gassot-Yves

Yves Gassot
CEO, IDATE DigiWorld

 

What topics are likely to make headlines in 2016?

Looking at recent trends, and after having sadly dismissed topics such as – in no particular order – the onset of virtual reality, G-Fast and Docsis 3.1, 5G standardisation, IoT, AI, the introduction of E-SIM, verticals’ digital transformation… four topics in particular come to mind:

Video everywhere

This encompasses an explosion in data traffic on all devices, fuelled by video traffic, the proliferation of video products and new pricing formats from cellular operators – in the vein of Verizon’s Go90 and T-Mobile’s Binge On – associated enhancements to LTE platforms (LTE-A/B/U), Netflix’s global strategy as it marches towards the 100 million subscriber mark by the end of 2016, the race to 4K and HDR TV, debates in Europe over harmonising copyrights, geoblocking limitations…

Digital trust

The increase in a wide range of dangers in digital ecosystems has given birth to a market that is expected to grow twice as fast as the IT market as a whole. By the end of the year, Europe is due to have passed a new data protection directive. Will it provide a new foundation for renegotiating the Safe Harbour agreement and making progress with the Transatlantic Trade and Investment Partnership (TTIP)? Will the ad-blocking phenomenon be made obsolete by the expected virtues of programmatic advertising?

Consolidation

In Europe, we will wonder just how far the consolidation trend can go as we question the hoped-for synergies, the attitude of the anti-trust authorities, the potential impact on prices, on fixed-mobile convergence, on ultrafast fixed and mobile network rollouts, etc.

Meanwhile, in the United States, we don’t yet know whether:

A price war will break out in the mobile market?
Cable’s dominance of the superfast access market could be threatened?
A fixed-mobile convergence trend will take hold as it has in Europe?

FinTech

These represent as much opportunity for innovation as threats to the banks which are involved in their own digital transformation, along with hopes for the creation of a large-scale mobile banking ecosystems with a strong competition between banks, Internet platforms, and telcos, plus concepts that are creating a lot of buzz such as crypto-currency, and more precisely, blockchain technology.

Here’s wishing you a very happy 2016 with IDATE DigiWorld, and we look forward to seeing you at DigiWorld Future and the DigiWorldSummit !

> Read also an opinion from Yves Gassot published in Les Echos «Media-Telecoms: convergence redux? »

25Jan/160

Telco Video Strategies: Towards vertical integration for incumbent telcos?

BAJON_Jacques

Jacques Bajon
Head of Media & Digital Content Business Unit, IDATE DigiWorld

 

Without any surprise OTT Video represents the top traffic on both fixed and mobile networks – telcos have been investing in infrastructures without payback for traffic. In our recent study we highlight the positioning of several key players from the telecom industry and stress out the pros and cons from two-sided business models

Initially, incumbent telcos launched video services for raising customer levels and ARPU gains. They were indeed keen to capture a share of the TV market. They then added features to enhance their value proposition, facing the competition of incumbent TV players and the threat of the over-the-top (OTT) world. Time shifting, multiscreen viewing, live streaming and video on demand, both transaction-based (TVOD) and subscription-based (SVOD), have been progressively adopted by telcos.

Examples of telcos broadcast broadband TV

schema_telco_video

Source: IDATE, in Telco Video Strategies, December 2015

The market at present is a two-sided one where incumbent telcos are targeting both high- and low-income households.

As a first step, this concretises new investments in premium video content, including some initial steps in UHDTV. This again is a must for incumbent telcos, in order to:

Cross-sell: launch attractive video offerings to promote the sale of multiplay (triple- or quad-play) subscriptions

Upsell: use video as a driver to gain higher-income subscribers and to migrate broadband subscribers to FTTH

Secondly, the will to address lower-income households and the ‘new generation’ of cord-cutters and
cord-nevers is leading incumbent telcos to deepen their segmentation of video services, with
more personalisation
:

Skinny-TV bundles, generally providing a basic of TV channels bundled with Internet access for an entry-level subscription price

SVOD services (including third-party, thanks to platform openness) in order to provide the ‘best of’ breed of services and more individual subscription options

Moreover, the development of programmatic advertising, based on their consumer data, is in development and could be a driver for revenues.

The search for operational flexibility and efficiency has also be permanent for incumbent telcos, in different ways:

In order to shorten their ‘Time to video market’, operators should leverage hybrid TV broadcast-broadband solutions through DTT and satellite, to enter new markets, first with OTT-only TV delivery

Telco CDN is must-have for telcos, to better manage OTT video traffic on their network than a revenue generator

Cloud, centralised, solutions should develop step by step in order to easily integrate the unification of consumer interfaces, to create ‘super head-end’ for the rationalisation of OTT services and perhaps to develop future-proof solutions for their video service within, or eventually outside, their network and programmatic advertising services, to launch cloud-PVR services…

Trade-offs can also occur around video hardware at home, including STB-less, skinny STBs or TV dongles around such issues as the ‘operator as an app’ model, including a balance between Smart TV sets and stand-alone streaming boxes.

At the end of the day, facing the competition of Internet giants, the benchmark will be the best possible user experience, to be gained through attractions such as very high-speed networks, flexible and user-friendly service platforms, innovation in services and top-quality content.

Change in IPTV’s share of TV households worldwide, 2012-2016 (million TV households)

schema_telco_video2

Source: IDATE, in Telco Video Strategies, December 2015

Find out more details regarding market framework and players positioning for Telco Video Strategies in our dedicated market report

25Nov/150

[CR] TV & VIDEO Forum

By Alexandre Jolin

 DSC_1361

Introduction by Florence Leborgne

The central question is: Will internet replace TV? More and more users are switching from their television sets to connected devices to watch TV, including their personal portable devices. This trend is at its most prevalent amongst the youngest viewers. Will this disruptive behaviour amongst 16 to 35 year olds become the status quo?

In terms of supply, TV programmes share their screen time with the Internet and its new forms of video content, such as UGC, professional and semi-professional shorts and VoD movies.

Of course, the traditional TV market is feeling the effects of this behaviour. Cord-cutting and cord-shaving are growing in the United States: 10% of TV households in the US are cord-cutters, 7% are cord-shavers and 3% are cord-nevers. Most of them are young people in the workforce who have never subscribed to a multichannel pay-TV service. In Europe, the situation is more mixed, and it is still impossible to say whether cord-cutting is becoming a trend, based on subscriber statistics.

We can, however, confirm that video on demand (VoD) is hugely popular across the board. Consumers still appear to be willing to pay to access the content they want. This willingness to pay is also contingent on price points which, for VoD, vary between 10 and 15 USD a month, compared to an average 60 USD for classic multi-channel cable, satellite or IPTV pay-TV plans.

SVOD services are also contributing more and more to financing TV productions, and becoming key actors in the rights market. In 2014, Netflix spent more than HBO on programming rights.

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Even if the approach to marketing the content is completely different, the channels run by YouTubers are attracting as many if not more viewers than most pay-TV services. Moreover, we are seeing a sector of professional and semi-professional content produced specifically for distribution on social media sites emerge.

For now, the revenue generated by on-demand channels, SVOD and video advertising is still a far cry from the revenue generated by traditional linear TV.

But what does the future hold for television? Several models are emerging: syndicated offerings such as Hulu and Freeview Play, online multi-channel platforms such as Molotov TV, multi-channel networks that make it possible to target viewers who are still interested in TV content, but have abandoned classic distribution channels.

Interview – Olivier Huart

OTT services appear poised to oust traditional media in all areas. Should we be afraid of these new entrants, or instead welcome their arrival, and the innovation momentum they are setting off?

"OTT and live TV are bound to complement one another for several more years to come.” Live TV is still by far the most popular mass medium around the globe, including France. Even in the United States people still watch an average 4 hours and 30 minutes of live TV a day, compared to an average 30 minutes of OTT video.

Plus OTT video’s share of screentime far outweighs its market share in terms of value. Linear TV channels account for 96% of spending on TV production in France. Some content also remains fully the dominion of live television, namely sport. To paraphrase Mark Twain (or Steve jobs): "Reports of linear TV's death are greatly exaggerated".

Despite the massive popularity of mobile devices in everyday life, TV is still the device of choice for watching video content: 75% of the content viewed on Netflix is watched on a television. Smartphones, meanwhile, are tending to be used as a controller, a remote control for multi-screen platforms.

From an economic standpoint, there are clear advantages to using alternatives to broadcasting to distribute video content. The terrestrial TV network covers more than 97% of the population in France. Internet connection speeds still do not make it possible to deliver programmes in HD with the same high picture quality as broadcasting networks. Plus TDF was one of the first broadcasters worldwide to conduct trials on 4K UHD broadcasting. But additional spectrum resources will be required. This transition to UHD also depends a great deal on the willingness of channels wanting to monetise this new value proposition.

The future will be a mosaic of solutions, and less and less of a monolithic model. And consumers are the central ingredient. Seventy percent of them want a package that includes live TV and on-demand content they can play on multiple devices. So traditional channels have three paths available to them:

  • create proprietary applications, such as myTF1;
  • pool the content belonging to several channels onto a single platform, as with Freeview Play;
  • have live TV viewers foot the bill for the transition to the open Web.

Round table – Ingredients of an OTT-only success story

François Abbé – Mesclado: moderator / Britta Schewe – gretegrote Interproduktion UG / Luc Reder – producer Page & Images

DSC_1504

 

Luc Reder: Page & Images produces chiefly television documentaries, institutional films and transmedia storytelling systems. For now, the producers are still taking a wait-and-see attitude. “OTT models are seen as not lucrative enough compared to linear TV channels”. A lot of people are working on these avenues, but few on what we are putting out.

Production costs for video content dropped significantly when we made the transition from an analogue to a digital production chain.

Britta Schewe: I began working on the Internet before going to work for VIACOM and Deutsch Telekom, before realising that the Internet was a more dynamic sector. The keys to success on the Web are the same as on TV. “On both the internet and on television, you need to be able to produce attractive content and know how to reach your audience".

Luc Reder: The economic equation of TV production is still very much tied to the TV screen. Some of the content we are seeing on the Internet is either experimental or just what’s in fashion. Web documentaries, for instance, are tending to disappear. On the other hand, we are seeing a growing maturity in the production of video content for the Web.

Britta Schewe: The future of OTT distribution as a whole is hard to predict. I think that some TV channels will disappear. “The more a television channel bases its programming grid on purchasing broadcasting rights, especially to American shows, the greater its chances of going off the air.” “In the future, in-house production will be the dominant business model for channels.” Content is still king!

The issue of content discovery is key to successful online distribution.

Keynote Speaker – Nicolas Weil – AKAMAI TECHNOLOGIES

Our message is one of inverting yield curves between linear TV and on-demand services, mainly on the open internet. Every day, Akamai delivers 30% of the world’s internet traffic. Akamai believes in fully OTT channels, but picture quality is a crucial criterion. As the number of available 4K services grows, the bandwidth needed to receive these programmes increases dramatically.

The user experience is the central consideration, especially on mobile devices. Lag time affects usage. “50% of users are lost if a video does not launch within 10 seconds.” Only around 10% of households in Europe are able to receive video content in 4K over the open internet.

As the datarates required for online video increase exponentially, the investments that ISPs need to make in content delivery networks are becoming far too high. So the logic that governs CDN needs to be extended to users’ devices. There are several technical solutions that address this: Peer-Assisted Delivery (P2P), Store and Play Later and Multicasting.

Round table – From live TV to OTT: an inexorable shift for veteran players

Moderator: Eric Scherer – Director of Future Media – Groupe France Télévisions / Matthias Buechs: Director of Online – RTL Interactive / Roux Joubert: General Manager Platform – BBC Digital / Richard Lucquet: Verizon onCue – Director, Business Development Technology, Partnership & Licensing.

22498344813_72a54fac84_k

Eric Scherer: The road to OTT will be slippery for broadcasters. Linear TV start to show decreasing aspects. Cord-cutting appears to be real. Among young people in the US, 65% of video consumption happened on demand and mostly online. The online traffic on CBS news has shifted from 6% on mobile devices in 2011 to 60% in 2015. SVOD is surging everywhere but its growth remains lower in France and Germany.

The consumer is now at the centre of a new demand side driven economic paradigm. Consumers are now involved in the editorial process. They can help to fund the production of content with crowdfunding solution or even deciding of the deprogramming of a TV Show.

New internet players aren't only distributors. They tend to become producers & content creators including the creation of new format and story-telling schemes.

Matthias Buechs:Television is highly under pressure in Germany but still profitable. Amazon is the dangerous competitor as the service doesn't need to be profitable by itself. Video sharing platforms are competitors in terms of time consumption but not yet on consumer spent market.

Roux Joubert: The BBC has always been an innovator. Last year, it has been the first broadcaster to stop airing a linear TV channel to transfer it on Internet on an on demand format. It also provides pre-TV programs on BBC i>Player and broadcasted content available until 30 days after being aired.

Richard Lucquet: "Millennials are spending more time using their mobile devices than sleeping" on a daily base. To reach that audience, Verizon launched the go90 application, a service melting the best of TV and of online content on just one platform including social features. Verizon is planning than go90 could generate as much revenues as Fios TV within 5 years. "Internet is alive because of video".

22489311354_08e458af39_b

Sumrise

30Sep/150

Digital First

DWS2015

ICT industry players vs. the new disrupters

 


From 17 to 19 November 2015, the 37th annual DigiWorld Summit will bring together 140 top-tier speakers from around the world to Montpellier, to share their views with the more than 1,200 participants from over 25 countries. French Tech will also be in the spotlight during the 2nd annual DigiWorld Week and at the inaugural DigiWorld Awards.

For IDATE Chairman, François Barrault, the theme of “Digital-First” – which was chosen in concert with DigiWorld Institute members – “refers to the tremendous rise of digital technologies in the business world, and huge changes in consumer behaviours. This astonishing acceleration is upsetting the status quo and shaking up the traditional economy, paving the way for new business models ushered in by the digital economy”.

Supervising the programme is IDATE CEO, Yves Gassot, drawing on IDATE consultants’ knowledge and expertise. “Once again this year,” says Mr Gassot, “the participants coming to Montpellier will get an invaluable, detailed snapshot of all of the latest digital industry events, thanks to the plenary sessions and the many forums, and to a large and prestigious panel of speakers from Europe, the United States and China who will be on hand to debate the multifarious questions raised by the ongoing digital revolution”:

What are the promises of this new age of knowledge? with Jimmy WALES, Founder, Wikipedia
How is the Internet changing the travel industry? with Peter VERHOEVEN, Managing Director EMEA, Booking.com and Alex SCHLEIFER, Head of Design, Airbnb
How are veteran toy companies reacting to the video game invasion? with Dan JUDKINS, Head of Global Design and Development, Hasbro Inc.
How are the Internet giants adjusting to the changes at work? with Carlo d'ASARO BIONDO, President EMEA strategic relationships, Google
In with the new for a telco going global, with Michel COMBES, COO, Altice
Is everything about to change for telcos? with Santiago Fernández VALBUENA, Group CSO, Telefónica
What services will be attached to smart devices? with Bruno BARLET, Executive VP France, LEGRAND, Vincent CHAMPAIN, Operations Director, General Electric and Xavier BOIDEVEZI, VP Development & Digital, SEB
Just how far can telcos go in helping their customers’ digital transformation? with Thierry BONHOMME, Senior Executive Vice President, Orange Business Services
Do we really need new dedicated networks for the Internet of Things? with Geoff MULLIGAN, Chairman, LoRa Alliance and Ludovic LE MOAN, CEO, Sigfox
Will the next Netflix come from China? with WEN Rui, Director of national Business Development, Youku Tudou
Will new gen mobile TV be the new killer app for video? with Richard LUCQUET, Director, Business Development Technology Partnerships & Licensing, Oncue (Verizon)
What does the future hold for a top, integrated telecom equipment supplier? Vincent PENG, President Western Europe, Huawei
Does regulation need to adapt to Internet rules? with Fatima BARROS, Chair 2015, BEREC, Sébastien SORIANO, Chairman, ARCEP and Bruno LASSERRE, Chairman, French competition authority
Can we count on digital markets to deliver a new period of growth? with Georg GRAETZ, Associate-Labour Markets, London Economics School and Jean-Hervé LORENZI, President, Cercle des Économistes
As well as: Accenture, BBC, Bouygues Telecom, Deutsche Telekom, Ericsson, France Télévisions, edX, IBM,
JC Decaux, NEST, Nokia, Qualcom Life, SEB, SNCF, Studio Bagel, Wilseed Studio…

The DigiWorld Summit programme has grown in 2015, to give us a chance to explore the ins and outs of the tremendous and wide-reaching effervescence at work in digital industries today: “This is why we are hosting the second annual DigiWorld Week, which was designed as a collaborative space for partner events. We will also be hosting the first ever DigiWorld Awards, which were created to identify and reward French talent abroad, with special guest, Axelle Lemaire, French Minister of State for the Digital Sector,” explains IDATE’ deputy CEO, Jean-Dominique Séval.

> View the complete programme at:http://digiworldsummit.com

DigiWorld Week 14 – 22 November 2015
IDATE expands on the two days of the DigiWorld Summit, and plays host to an exciting event-filled week. Delving deeper into the issues and shaking up ideas through symposiums, workshops, hackathons, exhibitions, festivals, master classes, digital café… Exploring a host of topics, including the cloud, IoT, eHealth, FX, digital arts, smart agriculture, management, …

> Get the latest news at: www.digiworldweek.com

DigiWorld Awards 19 November 2015
In partnership with Business France and French Tech, IDATE will be hosting the first annual DigiWorld Awards, recognising French digital start-ups (Equipment and devices, Networks and telecoms, Internet services and application, M2M and IoT…), created abroad. Awards will be in four categories: Africa and the Middle East – The Americas – Asia – Europe. The winning start-ups will be added to the international innovation support programmes being run by Accenture, Capgemini, Ericsson and Orange.

> For more details: http://www.digiworldsummit.com/awards

For all the latest information, go to: www.digiworldsummit.com and www.digiworldweek.com

Follow us on Twitter: @DigiWorldIDATE
#DWS15

20Aug/150

Connected TV

BAJON_Jacques

Jacques Bajon
Head of Media & Digital Content Business Unit, IDATE DigiWorld

Who will come out on top?

 

 

The development of smart TV is inextricably bound up with the widespread availability of high-speed Internet access, a shift to more and more individual viewing and the proliferation of smart devices in the home. Together, these three elements are steadily revolutionising how viewers access their TV programmes, and providing them with an array of new functions and features.

Televisions can be connected to the Internet in several ways. Using:

a smart or connected TV (direct connection, via Ethernet or Wi-Fi)

a connected set-top box/DVR,

a connected set-top box/DVR

a streaming box or stick

or a connected game console. or a connected game console.

Today, close to half of the televisions being shipped are smart TVs, even if their owners may not systematically take advantage of the Internet connection. At the same time, the market for streaming devices – whose main purpose is to play online videos – is progressing rapidly.

Within this market that is still populated by a great many solutions and services, several trends are taking shape:

smart TV has shifted from "Internet-centric" to "video centric";

managing connectivity with users’ personal devices has become a key issue, with app systems playing an increasingly central role;

OTT services are moving to the TV and making real strides;

viral platforms, which are “systematically” included on smart devices, are steadily consolidating their position in the video distribution chain.

Technological progress is also helping to vitalise the market, whether by increasing users’ connection speeds, through progress in compression thanks to the use of HEVC, or functionalities that improve the user experience, such as casting – i.e. the ability to send content from a personal device to the TV set.

The main stakeholders in the connected TV ecosystem can be broken down into three categories, based on their original sector of activity: consumer electronics (CE) companies, TV market players and the Internet’s leaders.

CE industry players are working to improve their software interfaces, either through dedicated developments such as Samsung has done with Tizen, or by acquiring another company, as LG has done with WebOS. The aim is to capture the added-value in the marketplace, whether in the arena of services and/or by selling high-end devices.

Players from the TV universe are developing their OTT products, and working to bolster their position on the software side of the equation with more open and hybrid platforms. The smart TV could enable them to renew ties with consumers, and better monetise their plans. Veteran TV market players nevertheless remains threatened by the shift to more individual viewing, the risk of being cut out of the equation and a dramatic loss of revenue. Smart TVs can actually accelerate the growth of on-demand services, which naturally threatens the business of TV channels, and especially specialty channels, as well as the business of those who assemble pay-TV packages.

Lastly, companies such as Google, Amazon and Microsoft that dominate the Internet, are very knowledgeable about software, and changing consumer habits. So they are in the best position to deliver a top-notch user experience, whether in terms of smooth and intuitive interfaces, or providing recommendations based on user data. Their increasingly vertical positioning – covering everything from the content to the device – is also bolstering their potential to capture a growing portion of the video entertainment market.

Impact of the three scenarios on the smart TV market in 2025: size of the OTT market and smart devices used (billion EUR, %)

Connected_TV_schema

Source : IDATE, Connected TV, June 2015

The purpose of the three scenarios for “smart TV in 2025" is to determine which industries are likely to increase their control over the smart TV environment:

TV market players: "Smart TV ";

CE market players: "Consumer Electronics+";

or Internet specialists: "Internet video".

The size of the OTT video market will vary considerably under the three scenarios, depending on how the environment evolves and so which industries prevail. We estimate that the market could climb to:

41 billion EUR under the most conservative scenario, “Smart TV”;

57 billion EUR if consumer electronic gain the upper hand, with earnings based on revenue sharing;

105 billion EUR if Internet companies prove the most successful, with an ecosystem tailor made for OTT video services.

The popularity of the different devices will also evolve along the same lines:

the television will be used less to access services as the more disruptive scenarios come into being;

eventually, the PC will be marginalised, replaced to a large extent by personal devices.

 Regardless of the scenario, smartphones and tablets will be used more and more to watch videos, especially as viewing becomes an increasingly individual pastime.

Find out more on Connected TV in our dedicated market report

4Aug/150

Cloud TV: Video embraces IT

BAJON_Jacques

Jacques Bajon
Head of Media & Digital Content Business unit

 

 

 

The development of cloud TV solutions is part of the massive wave of change in today’s video market, and fuelled by users taking increasing control over their video viewing (on-demand, personal, multi-device, etc.). These changes require all service providers to adapt to the new paradigm and tailor their products to new viewer behaviours, and this inside an increasingly fragmented and competitive marketplace. The transition will also require them to find new ways to monetise content. The inherent uncertainties and complexity of this new state of affairs derive from the need to flexible, both from an operational standpoint and in the ability to roll out new services.

 The cloud TV market can be broken down into three components. Cloud TV is said to be private when the service is being supplied over the vendor company’s own infrastructure, and public when the infrastructure is located in a data centre outside the company’s premises, while hybrid solutions employ a combination of the two. These elements are combined with the various levels of service integration, ranging from infrastructure (IaaS) to PaaS (platform) and SaaS (software).

 The business model for cloud TV solutions is very similar to the one used by classic cloud computing products, i.e. payment based on consumption, or a monthly or annual subscription. It is the vendor of the cloud solution that invoices the TV provider. From a more general standpoint, adopting cloud solutions allows companies to convert their Capex into Opex by switching from a system of purchasing and amortising infrastructure to one of infrastructure rental.

 A number of players are involved in providing cloud TV solutions: the Internet giants and software specialists, telecom equipment suppliers and TV solution specialists who have beefed up the cloud dimension of their services. The television and home equipment sector has also expanded its product line to adapt to this new paradigm.

 Taking a broader perspective, the changes being forced on solution providers require them to acquire new skillsets, especially in the arena of software, but also in digital marketing, analytics, security, etc. These new skills can be acquired either through partnerships to create an ecosystem of solutions, or by taking over a specialised company.

 Cloud TV solutions are tailored to the customer’s needs, and typically rely on an ecosystem of partnerships, which can in fact cover the entire video content technical chain, from production to viewing, by way of post-production.

 Cloud TV products can occupy one or several niches, all aimed at satisfying customers’ new requirements. The market has been heavily influenced by video on-demand systems (incorporating nPVR), multi-device and unified interfaces, and systems for managing traffic surges on the network, notably thanks to hybrid cloud solutions.

 But there are still a number of lingering questions and obstacles in the cloud TV market. The infrastructures’ ability to manage a growing number of unicast streams raises concerns over quality of service further down the road. Regulatory uncertainties, notably over the use of private data and content copyright, continue to impede monetisation and product development. We expect that finding the optimal way to monetise video products will be the next big challenge the market will tackle. Because it lowers barriers to entry, the development of cloud TV will also increase competition in the video distribution market.

 It is also true that these solutions have helped make it easier to launch new video services – and especially more personalised and multi-device ones – by reducing the financial risks involved. This positive trend is on the supply side, where a great many vendors are positioned – including those from a TV industry is in the throes of a profound transition. But fully outsourcing content management does not seem to line up with market realities. What we are seeing instead is the development of hybrid cloud formats.

 How cloud TV products are positionedClients’ needs

Cloud TV products

 

 

Development of time-shifted viewing

·       nPVR: video recording in the cloud

·       catch-up TV services

·       (S)VOD

·       Time shifted TV

·       Management of consumption growth(server and unicast traffic peaks)

Multiple screens to address

·       Multiscreen delivery platform

·       Unified interface adapted to all screens, centrally managed

·       Encoding & adaptation of the video format to the consumption screen thanks to adaptive streaming

TV Everywhere

Indoor – Multiroom/outdoor

·       Multiscreen, network agnostic delivery platforms

·       Encoding, adaptation of the video bitrate according to available bandwidth and network used

Mid- to long-tail content – Personalized viewing – Live viewing

·       "Unlimited" storage

·       Consumption monitoring and recommendations for TV/VOD/Catch-up services

·       Live OTT for events and simulcasts

·       Virtualized playout centre (not ready for prime time)

Content rights management

·       DRM

·       Digital Rights Lockers (DRL)

Collaborative work

·       Centralised production, postproduction

Monetisation: Creation or improvement of advertising and pay-TV based business models

·       Dynamic ad insertion

·       Targeted ads inserted in the video stream or in the interface

·       Authentication

·       Centralised billing

Source: IDATE, "Cloud TV", March 2015

 Find out more about Cloud TV in our dedicated market report

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7Jul/150

Audiovisual Industry Going Global: what options for European service publishers

JOLIN-Alexandre

Alexandre Jolin
TV expert at IDATE

The audiovisual market has always been a traditionally multinational industry. Within the industry, content production, publishing and distribution activities have highly varying levels of internationalisation. There has been a marked escalation of transnational mergers over the recent period, indicating a new phase in globalisation of the industry.

There is now pressure coming from two main angles: producers are faced with constantly increasing production costs, and distributors are faced with continually high CAPEX levels and new competition from OTT players. European service publishers have to reinvent their strategies in this new globalised context, which is dominated by North American players.

European video service publishers are under pressure

The audiovisual market has always been a traditionally multinational industry. Within the industry, content production, publishing and distribution activities have highly varying levels of internationalisation. However, there has been a marked escalation of transnational mergers over the recent period, indicating a new phase in globalisation of the industry.

There is now pressure coming from two main angles: producers are faced with constantly increasing production costs, and distributors are faced with continually high CAPEX levels and new competition from OTT players. European service publishers have to reinvent their strategies in this new globalised context, which is dominated by North American players.

Threats and opportunities from globalisation for the main player categories in the value chain
Globalisation
Source: IDATE, Audiovisual industry going global, April 2015

Americanisation of the European audiovisual sector

 

Several markers point to a trend of increased Americanisation of the European audiovisual industry:

Increased number of US acquisitions of European players:

- in the content production segment, including the acquisition of Endemol by the private equity firm Apollo Global Management in 2012 and the takeover of All3Media by Liberty Global and Discovery Communications
- in the TV channel broadcaster segment, including Liberty Global's purchase of a 6.4% stake in ITV and the acquisition of Channel 5 by the Viacom Group in 2014
- in the distribution segment, including Liberty Global's acquisition of Virgin Media and Ziggo, and the takeovers of Ono and Kabel Deutschland by Vodafone

The emergence of oligopolistic situations in new market segments:

- iTunes dominates the global transactional VOD market
- Amazon Prime Instant Video and Netflix in particular dominate the global and European SVOD markets

Consumption focused around North American programming

Focused strategies vs. market conquering strategies

Faced with globalisation of the audiovisual industry led mainly by North American players, European players are adopting two types of generic strategy:

strategies focusing on their core business and domestic market, characterised by:

- moderate investment in native language productions
- acquisition of North American and international fictional programming to ensure high viewing numbers during prime time
- OTT strategies based on reusing content rights already acquired as part of own brand or joint-venture services

strategies aimed at conquering markets via business diversification and international development, including:

- increased investment in original content productions that can be exploited abroad, particularly via international co-productions
- acquisition of exclusive first-run premium content
- OTT strategies based around new services that exploit broader rights catalogues than what is available via broadcast networks

Find out more about the reasons behind globalization, its models and impacts for the audiovisual industry in our dedicated market report

 

6Jul/150

Future TV 2025: Internet TV & entertainment operators: disruptions ahead

BAJON_Jacques

Jacques Bajon
Head of Media & Digital Content Business Unit, IDATE

Linear TV is still the main source of revenues for the video industry – however, traditional players in mature markets see their business shrinking and have to adapt to an increasingly dense ecosystem, notably regarding competition from internet players. One of our estimates is that linear TV revenues will drop from EUR 368bn in 2015 to 344bn in 2025, against skyrocketing On-Demand TV revenues jumping from EUR 25bn to EUR126bn in 2025. In our disruptive scenario we assume the complete disappearing of home video up from 2022. Nonetheless, the total videomarket will grow with an annual average rate of 1.4% worldwide.

Disruptive scenario: Global TV market, 2015-2025 (billion EUR)
Future TV 2025
Source: IDATE, Future TV 2025, May 2015

In developed countries, the TV sector has been suffering from what is expected to be a lasting state of stagnation, brought on by a growing number of channels; the relative saturation of pay-TV markets, and increasing competition from the Internet for viewers and advertising money.

Keeping in line with current market trends, a snapshot of the market 10 years from now includes on-demand services having a relatively small impact on revenue (accounting for around 10% of the total market in 2025) and a global market that will continue to grow by around 3.5% a year, on average – a large percentage of which will come from emerging countries. Asia/Pacific will become the world’s biggest market, while growth in the main European markets will be weak, and possibly even negative.

But another, far more disruptive picture is also possible. One where on-demand becomes the viewing method of choice amongst consumers, and live viewing confined largely to special events. Under this alternative scenario, on-demand services account for close to 30% of the sector’s revenue in 2025.

Two phenomena are at work here:

on-demand services replace linear TV but generate less revenue per customer for an equal number of subscribers;
on-demand services undermine the revenue earned by linear services by lowering both ad rates and subscription prices.

As a result, the market grows much more slowly than under the “business as usual” scenario, and even enters into a lasting state of recession in developed countries.

In this declining market, veteran market players – i.e. channels and distributors – lose a share of their income to the leading entertainment operators. Only content producers, which earn a growing share of the revenue being generated, are not affected by market deflation.

Veteran players are thus having to contend with two big issues:

shrinking TV retail markets;
decreasing share of the margin earned on these markets.

Find out more details regarding disruptions in TV content distribution and user behavior in our dedicated market report

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29Jun/150

Digital First: ICT players vs. the new disrupters

DWS2015

The place to be in Europe, to understand upcoming disruptions and their impact on telecom, IT, Internet and media markets

From 17 to 19 November 2015, the 37th annual DigiWorld Summit will bring together 150 top-tier speakers to Montpellier to share their views with the more than 1,200 participants from over 30 countries. French Tech will also be in the spotlight during the 2nd annual DigiWorld Week and at the inaugural DigiWorld Awards.

Under the banner of “Digital First” IDATE will host debates on the core trends shaping telecom, IT, Internet and media markets, with the knowledge that digital technology is entering a new stage in its ubiquity, becoming the vehicle of a major overhaul in many sectors: energy, insurance, finance, health, automotive, travel and tourism… “But,” says IDATE CEO, Yves Gassot, “this digital verticalisation also represents a new challenge for IT, telecoms, Internet and media industry stakeholders. They may see new growth opportunities, but also challenges as innovation cycles are accelerating, as they consider the shifting outlines of their business and contend with new digital intermediaries.”

This new stage in the digital transformation is being spurred by ubiquitous wireline and wireless connectivity, the economies of scale of cloud computing, and the power of real time data processing algorithms. But it is being amplified by the rise of connected objects, and the promises of 3D printing, of artificial intelligence and the collaborative economy. A profound transformation of the economy that is already materialising in changes to production and distribution infrastructures, in the accelerated shift from product to service and the profusion of channels for interaction with end users.

• What do vertical companies (media groups and TV networks, insurance, automotive, travel, retail, etc.) want from digital industry players (telcos, OTT, IT)?

• How should digital industry players position themselves with respect to the digital transformation in vertical markets?

• How can the Web’s top destination platforms cohabitate with the vertical markets’ new digital champions?

• This year’s Guest Country: China. Can China combine the power of its recently acquired positions in Internet and telecom markets with its manufacturing ambitions?

2015 DigiWorld Summit Programme

 

Plenary sessions

Analysis and debates between veteran industry players and disruptive start-ups, with insights from IDATE’s finest economists and analysts:

Digital channels
A new chapter in the platform wars?

Digital Infrastructure
From ultra smart networks to predictive analytics?

Digital Product
From goods to services

Digital Regulation
OTT rules?

Digital Europe, Digital World
Closing session

Specialty forums

In-depth seminars with the industry’s top expertsConnected Things Forum

Smart City Forum

Future Networks

TV & Video Distribution Forum

Future Digital Economy Forum

Game Summit

DigiWorld Week (14 – 22 November 2015): IDATE expands on the two days of the DigiWorld Summit, and plays host to an exciting event-filled week. Delving deeper into the issues and shaking up ideas: symposiums, workshops, hackathons, exhibitions, festivals, master classes, …

DigiWorld Awards: in partnership with Business France and French Tech, IDATE will be hosting the first annual DigiWorld Awards, recognising French digital start-ups (Equipment and devices, Networks and telecoms, Internet services and application, M2M and IoT…), created abroad. Awards will be in four categories: Africa and the Middle East – The Americas – Asia – Europe

The DigiWorld Summit, is organised under the patronage of the French Ministry of the Economy, Industry and Digital Affairs, the Région Languedoc Roussillon and Montpellier Métropole, with the support of DigiWorld Institute member companies.

More informations about IDATE's expertise and events :

www.idate.org      www.digiworldsummit.com      www.digiworldweek.com