A Broadcom-commissioned report released in November found that in a survey of 1,025 people, 62% of them would stream content that they normally watch on TV to various other devices that they own such as tablet PCs, laptops and so forth if this was supported by their operator. Furthermore, over half of them (51%) now consume more than five hours of video content a week on mobile devices while travelling.
The momentum is clearly behind the ever expanding availability of content on whatever device a customer finds most convenient at any given time. This has major implications for the complexity of content delivery platforms that have to be developed and maintained by the Pay TV industry around the world. Content is going to be delivered across multiple different networks, including broadcast and broadband forms, and consumed on many more devices, both inside and outside the home. Unlike the early days of digital TV, many of these devices that consumers want to use to watch TV will not be provided to them, nor managed directly, by the operator. And yet, the overall quality of experience expectations of the consumer will remain high across all of these different devices.
With this increased platform complexity and sustained high-QoS expectations comes a corresponding rise in cost both during the development of the platforms and throughout their lifetime. These â€œlifetimeâ€ costs have been a significant cost within the Pay TV industry for years and are still increasing year-on-year. They include costs drivers such as Consumer Premises Equipment (CPE) installation, call center customer support, on-site service technician visits, and returned CPE screening/repair, amongst others. S3 Groupâ€™s research, which has involved discussions with service providers around the world, has indicated that these lifetime costs to the global Pay TV industry will triple from $3 billion in 2011 to $9 billion in 2014.
And now, with TV Everywhere, the costs have the potential to rise even faster. According to a report released in September by Accenture, returns will cost consumer electronics companies an estimated $16.7 billion in 2011. Many of the items being returned donâ€™t impact on this story of the cost of TV Everywhere as they are non-TV related products â€“ but a large number of them do. In its study, Accenture reports a No Fault Found (NFF) rate of 68% for supposedly â€œfaultyâ€ devices being returned by consumers. This echoes similar levels we have seen in the Pay TV industry globally for returned â€œfaultyâ€ STBs. Accenture reports a slightly higher level of returns (between 11% and 20%) than we have seen in the Pay TV industry (where we have gathered evidence of high single digit return rates) but again the trend is towards more cost across the full lifecycle.
We can clearly see why Pay TV operators are attracted to the idea of a platform environment where CPE devices are bought by the consumer through retail channels and then enabled to consume their Pay-TV services through software applications. The hope is that this can isolate them from the full lifecycle costs associated with these devices.
And yet, these costs, so long as they persist, do represent lost value in our industry in general and should be addressed. Every time a consumer returns a device, whether delivered directly to them by the Pay TV operator, or through a retail channel, and consequently whether handed back to a Pay-TV technician or back to the store, there are costs of transportation, lost inventory time, screening and repair and re-issue, not to mention the increased risk of consumer churn that spikes at such device-exchange points in time.
We believe that better testing during device development through test automation can head off many of the returns associated with device functionality problems. Additionally, an increasing number of consumer devices have two-way IP connectivity, which can be leveraged to develop improved remote diagnostics capabilities and allow call center staff to perform more precise and cost-effective problem diagnosis, as well as provide improved post-sale customer education. Both of these can help to drive reduction in unnecessary returns. And when returns do occur, better root cause analysis and in-depth device testing can pay significant dividends in avoiding the re-issue of faulty devices to the field, an event which has a particularly bad impact on supply chain and customer loyalty.
TV Everywhere holds great promise both for the consumer and the wider broadcast TV industry; we just need to make sure we donâ€™t allow the increased cost of delivering on the promise to drown us all in the process.