Director of Media & Digital Content Business Unit, IDATE DigiWorld
The development of connected 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. TV sets 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,
- a streaming box or stick,a connected game console,
- or a smart Blu-ray player.
In 2015, almost three-quarters 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:
- the way users access and employ connected TV services has become more simple, and 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;
Technological progress in a variety of areas is helping to bolster the market’s development, be it the growing ubiquity of broadband and superfast broadband access in the consumer market, major improvements in video optimisation and compression (HEVC), or the advent of innovative features such as casting which allows users to send video content from a personal device to the television. 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 connected TV could enable them to renew ties with consumers, and better monetise their plans. Broadcasters and pay-TV providers, especially in the United States, are therefore starting to roll out complete OTT plans which include a live component
- Lastly, companies such as Google, Amazon, Facebook 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.
In this way, many scenarios are emerging for Connected TV to 2025, and will determine which industries are likely to increase their control over this environment:
The size of the OTT video market will vary considerably under these scenarios, depending on how the environment evolves and so which industries prevail, and The popularity of the different devices will also evolve along the same lines.
For the publication of the 16th edition of the DigiWorld Yearbook (pre-order now), IDATE is organizing a conference based on the detailed analysis of the current situations and some forecasts by IDATE experts on the major digital sectors, the discussion will deal with the great trends and challenges that will disrupt the digital markets by 2025.
Florence Le Borgne
Director of Studies, IDATE DigiWorld
since the deep dip in 2009 one sole direction: upwards!
Regarding the latest update of IDATE’s half-yearly TV & video services observatory, Alexandre Jolin, Senior Consultant at IDATE, claims: “TV revenues are stronger than ever: from €366.8bn in 2015 they will hit the €413.1bn mark in 2020: still six times higher revenues than generated by video services (both physical and online). Within TV revenues, ad spending will grow at a tremendous pace until 2020 – It will increase by 14.6% – and will be relatively close behind pay-TV revenues. This is particularly notable because the European TV ad spending revenues dropped hardly in 2008, followed by a sluggish growth until 2015. In order to put in relation: Online advertising (both fixed and mobile, video and non-video altogether) worldwide revenues are skyrocketing, nevertheless they will leave behind global TV ad spending at best up from 2019. With this in mind, traditional TV still seems to have a bright outlook for this decade, both for ad spending and other related revenues.”
Key TV facts and outlook
The global TV industry’s revenue will come to €366.8 billion in 2015 and €413.1 billion in 2020.
• Pay-TV revenue will grow by 11.7% between 2015 and 2020, to reach €199.0 billion in 2020.
• Ad revenue will increase more rapidly (+14.6% between 2015 and 2020), to reach €178.3 billion in 2020.
• Public financing/licensing fees will continue to increase significantly (+8.3% in 5 years) to reach nearly €35.9 billion in 2020.
Breakdown of TV market revenue in 2015
Source: IDATE, State of TV & Video Services worldwide, December 2015
Regarding TV access, the number of TV households worldwide will reach 1.742 billion in 2020 (+9.1% since 2015).
• Cable will the remain the chief access channel (623.8 million households in 2020) but will gradually lose ground to satellite and IPTV which will account for 33.4% and 10.3% of TV households, respectively, at the end of 2020.
• Despite the development of hybrid TV solutions, terrestrial TV should continue its decline on the first TV set and drop down to number three spot by 2020, with a 20.5% share of the global market.
• The development of hybrid solutions that combine live programming on broadcast networks (terrestrial and DTH) and OTT video services over the open Web is a key variable in the future development of the various TV access modes, and may well shake up current trends.
Video hard copy sales and rental will total €10.8 billion in 2020
• This means that the global market will decrease by 40.8% compared to 2015.
• Blu-ray will be the most common format and help temper plummeting hard copy sales.
On demand video revenue will reach €54.3 billion in 2020, which is 119.6% more than in 2015.
• OTT video will continue to be by far the biggest earner, generating 83.9% of total revenue.
• VoD will still be the dominant model on managed networks. It will generate €5.8 billion in 2020 versus €2.9 billion for subscription video on demand (S-VoD).
Breakdown of on-demand market revenue in 2015
Source: IDATE, State of TV & Video Services worldwide, December 2015
Learn more about our ongoing monitoring of TV & Video Services covering 39 countries, 10 regions and world consolidated.
Debate over the crucial role that trust will play in the digital economy’s future
The 38th annual DigiWorld Summit will run from 15 – 17 November 2016, and have as its central theme: The Internet of Trust. It will be an opportunity to engage in a meaningful international debate over digital trust issues – starting with security and privacy – which have become major sources of concern for all of the ecosystem’s stakeholders.
As the number of reported cyber-attacks worldwide is growing by close to 40% a year, we expect that upcoming stages in digital technologies’ evolution will only amplify the phenomenon. And this to such an extent that any future scenario is possible: from a continuation of the current chaos to a breakdown in trust that would lead to the construction of a new digital economy, which will no doubt differ in many respects from the one we know today.=
• Are we reaching a tolerance threshold for online trust?
• How can veteran digital industry players (equipment suppliers, telcos, IT companies) capitalise on the current climate?
• Are verticals threatened by the situation or, on the contrary, on the winning side of trust and security issues?
• Do we need a new regulatory framework to govern, or reassure, market players and consumers?
The need for a profound reassessment of security and trust issues seems inevitable: massive increases in spending on security solutions, rise in protectionist behaviour (use of ad-blockers, battle against botnets, etc.), avoidance tactics (piracy and circumvention), clarification of the terms governing access to private data and the management of digital identities and online reputation… There is no shortage of issues and threats affecting the rate of adoption of digital technologies, but which could also prove to be opportunities for all market players.
> Use and misuse of trust
Will trust be a key parameter in tomorrow’s Internet?
• The privacy paradox: Usage is high, trust is low: Are we reaching a tolerance threshold for online trust?
• Digital trust at the heart of customer relations? How do Internet companies and verticals gain their customers’ trust?
• Can we trust digital world players? Can the Internet giants continue to be both the arbiters and targets of their users’ trust issues?
• Can the digital world trust us? Focus on piracy: Can businesses trust their customers?
> Trust technologies
A broad field of innovation for market leaders and start-ups
• Innovative security solutions: biometrics, etc.: What can we expect from the next wave of innovations in the arena of cyber security and data control?
• Blockchains and decentralized trust: Will today’s trusted third parties be cut out of the loop?
> Trust altering the digital value chain
Will trust be a game-changer?
• Trusted third parties & digital coaches: Will we see new trusted third parties emerge (banking, post, health…)
• Do we need more secure enablers? New growth enablers for telecom and IT industry leaders?
• What role for telcos? Monetise data or become trusted third parties?
> Business model crash test
Will the current and future business models for trust-sensitive advertising and IoT markets be suited to the new climate?
• Real time biding and programmatic ad buying: Can online advertising survive and adapt to the loss of trust?
• Big Data and the Internet of Things: Will successful trust management be key to the future of IoT and monetisation initiatives?
> Regulation of trust, and trust in regulation
How can regulation stimulate usage and innovation while also safeguarding against threats and transgressions in the digital economy?
• Trust and anti-trust: what about platforms? Can and must online platforms be regulated?
• Safe Harbor and Privacy Shield – the new deal: Can a balance be struck between conflicting European and US positions?
• Cybersecurity and terrorism: Are the future credibility of and trust in the digital economy bound up with the fight against global threats?
A unique international forum for debate and networking
> Thematic Forums
> DigiWorld Week
A full week of symposiums and partner events (13 – 21 November 2016)
> The DigiWorld Awards
Recognising the best digital start-ups created by French entrepreneurs abroad
Key facts & figures
Europe’s trailblazing conference on the digital economy
The DigiWorld Summit is an annual event organised and hosted by IDATE experts, with the support of DigiWorld Institute members. Every year it holds ultra high-level international debates on the core issues shaping the digital economy, with the finest speakers and industry insiders.
• Participants: 1,200 participants at the DigiWorld Summit and more than 5,000 at DigiWorld Week
• Speakers: 120 speakers from around the world; 400 at DigiWorld Week
• Partners and sponsors: over 100 partners and sponsors (businesses, public sector, media…)
• Social media: 15,000 tweets (trending topics) and 2,000 live followers
Speakers in 2015 included: Jimmy WALES, Founder, Wikipedia – Peter VERHOEVEN, Managing Director EMEA, Booking.com – Alex SCHLEIFER, Head of Design, Airbnb – Eric DENOYER, CEO, Numericable-SFR – Dan JUDKINS, Head of Global Design and Development, Hasbro Inc. – Carlo d’ASARO BIONDO, President EMEA strategic relationships, Google – WEN Rui, Director of national Business Development, Youku Tudou – Sebastien SORIANO, Chairman, ARCEP – Bruno LASSERRE, Chair, French Competition Authority… > for more, go to www.digiworldsummit.com
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
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:
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…
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?
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?
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? »
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
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
• 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)
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
By Alexandre Jolin
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.
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
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.
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".
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
Follow us on Twitter: @DigiWorldIDATE
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, %)
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
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
· 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
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
· Digital Rights Lockers (DRL)
· 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
· Centralised billing
Source: IDATE, "Cloud TV", March 2015
Find out more about Cloud TV in our dedicated market report