The giant Amsterdam confab known as IBC begins next week and, as ever, the event mainly focuses on the issues important to content creators, such as content capture and post-production technology. But much of it also covers content distribution and, specifically, the systems that service providers are using to deliver programming to consumers.
In that part of the delivery chain, there are some clear trends at work. While product updates and announcements will dominate in the coming days, I thought I'd take a step back to look at the bigger picture. (Cue laughter...)
There are some up-and-coming technologies, such as virtual reality, that deserve the attention they'll receive at IBC, but for service providers the more important matters heading into the show revolve around the acceleration of existing market behaviors. These are the trends that are not only likely to feed the news cycle as IBC begins, but also guaranteed to drive new customer deals during the show and in the weeks and months afterward.
1. Huge increases in streaming
It's easy to grow bored with the news that viewers are watching more content online, but that's a dangerous response given the downright staggering rate of growth streaming video has achieved during the past year. According to network analytics firm Conviva Inc. , its top 50 content publisher customers -- a list that includes programmers and operators such as Home Box Office Inc. (HBO) , ESPN and Sky -- have seen an 80% increase on average in consumer streaming hours year-over-year. And many have experienced more than 100% growth. Nielsen also reports that as of the first quarter of 2016, streaming video services were being consumed in 50% of US households.
With streaming video continuing its massive upswing, pay-TV providers are feeling pressure on a number of fronts. Bandwidth demand is driving the need for new content caching and delivery strategies, as well as improved video compression techniques. The variety of viewing platforms available is forcing operators to refine their approaches to content management and platform support. And the growing volume of distribution channels is forcing service providers to experiment more heavily with new advertising technologies and service packages, all while staying vigilant on content security. Vendor opportunities, anyone?
2. The reality of 4K
According to research by Nagra , North America is leading globally in the 4K TV race, with 25% of service providers now offering Ultra HD content. But that statistic is a bit misleading because 4K UHD content is still incredibly limited. Take the Olympic Games, for example. Only four US service providers that I'm aware of were able to deliver 4K coverage of the event: AT&T Inc. (NYSE: T) through its DirecTV Group Inc. (NYSE: DTV) subsidiary; Dish Network LLC (Nasdaq: DISH); Comcast Corp. (Nasdaq: CMCSA, CMCSK); and EPB Fiber Optics . (See AT&T & Dish Mix 4K Into Olympics Coverage.)
Yet despite the limited content, the early effect of 4K TV on service provider networks is still tremendous. As AT&T pointed out recently, a single baseball game delivered in 4K easily generates 2 Terabytes or more of information that has to be processed, stored and transmitted. (See Hurdles Ahead for 4K, HDR.)
Adoption of 4K UHD TV has been slow, but even at a controlled rate of release, it's already impacting several facets of service provider operations from content and bandwidth management to the equipment operators need to install in subscriber homes. If 2016 represents the early wave of 4K TV adoption, imagine how the degree of impact will change in 2017, 2018 and beyond.
3. Beyond the bundle
Believe it or not, it was only last year that Dish launched Sling TV, HBO introduced HBO Now and Sony Corp. (NYSE: SNE) kicked off its Playstation Vue subscription TV service. Since then, the breakup of the traditional bundle and the trend of pairing old content with new OTT fare have only sped up. Consider what's happened more recently: More programmers have launched their own direct-to-consumer OTT offerings; big sports broadcasters such as NFL Network have joined a number of OTT platforms; Verizon Communications Inc. (NYSE: VZ) and AT&T have debuted or announced plans to debut new mobile video services; and several cable companies have started to integrate OTT services with their existing bundled content. On that last point, the coup de grace was an announcement by Comcast that it will soon include Netflix with its X1 video service. (See Comcast Confirms Netflix Coming to X1.)
The new combinations of content being offered by service providers complicate the video delivery business because the sources of content are now more widely varied. Delivering OTT content alongside traditional TV has implications for OSS/BSS systems. Cable and telecom service providers have to consider hybrid delivery systems to accommodate both QAM-based and IP-based video. And user interfaces have to evolve to support both new technologies and the business strategies operators are creating to deal with new and different types of programming contracts.
All in all, the television ecosystem has never been as complex as it is today, and that creates a lot of new challenges for service providers. But it also creates a lot of new business opportunities, both for service providers and the vendors that support them, many of which will converge on Amsterdam for IBC in the coming days.
— Mari Silbey, Senior Editor, Cable/Video, Light Reading