The Pay TV industry is on the verge of another generational refresh of its Customer Premise Equipment (CPE), driven primarily by the need to introduce hardware-based HEVC (H.265) decoding, deliver multiscreen TV around the home, support advanced user interfaces (UIs) and possibly embed Wi-Fi.
New operator devices can lead to new video revenues, with multiroom TV being one example, but also revenue diversification through services like gaming and, perhaps in the longer-term, Smart Home applications. The forthcoming refresh cycle holds much promise but it is also forcing platform operators to think through their entire medium-term video strategy, starting with whether they want to deploy separate HEVC set-top boxes to cater for HDTV and then UHD, or deploy one new box that will be future-proofed for ultra high-definition.
Jason Blackwell, Director, Service Provider Strategies Digital Consumer Practice at the research and consulting firm Strategy Analytics says the value of new gateways on the bottom line has been clearly illustrated at operators and it is the growing importance of these devices that is driving the forthcoming round of CPE upgrades. â€œHEVC is only one of the upgrade drivers. Pay TV operators are also interested in deploying additional services, advanced user interfaces, and even integrating OTT content,â€ he observes. â€œThey are looking for more capable boxes to support all of these requirements.â€
The new HEVC/H.265 codec, with its promise to double compression efficiency, is proving a major agent for change. â€œIt is not every year that a technology comes along that offers the ability to enable new business models,â€ notes Joe Del Rio, Associate Product Line Director, Broadband Communications Group at SoC provider Broadcom.
HEVC will improve HDTV but Del Rio says: â€œI would have to say that it is UHD that creates the excitement because this is a new experience that you cannot offer with H.264.â€
For Portugal Telecom the big benefit will be the ability to extend multiroom PVR. The company offers a client/server multiroom service where up to three zapper STBs can access recordings from the gateway, but on some DSL lines the telco cannot support enough simultaneous streams. HEVC will enable more multiroom clients and therefore more ARPU. The IPTV operator will probably introduce HEVC capable set-tops during 2015.
Anthony Zuyderhoff, VP for CPE Solution Sales at ARRIS, says HEVC and support for 4K/UHD is the biggest driver for new CPE alongside the need to support advanced user interfaces. When it comes to telcos, a two-stage upgrade strategy is emerging, he reports.
â€œThey want to support full 1080p HD on their mainstream STB as quickly as possible but they are willing to wait for a separate, high-end device to support 4K video for customers who demand that service,â€ he explains. â€œSome telcos hope that HEVC will enable them to extend the reach of better quality HD without pushing fibre deeper.â€
Mustapha Bouraoui, VP of Digital Marketing and Applications, EMEA, at STMicroelectronics, another leading SoC provider, agrees, adding that this applies to satellite as well. â€œThere are definitely two markets with asynchronous ramp up. There is a demand for HD HEVC set-top boxes immediately in order to increase the spectrum efficiency. Later on, when the content and the full delivery chain is operating, UHD will need HEVC compression.â€
Videonet has just published a report called â€˜The Future Of Pay TV CPEâ€™ which looks at the factors that will drive the forthcoming generational upgrade in operator Customer Premise Equipment and highlights important strategic decisions that need to be made, like whether to use a headed or headless gateway, whether to favour operator-supplied whole-home TV clients or CE device cooperation, whether to embed Wi-Fi now or wait another generation, and whether to deploy HEVC on HD boxes immediately and on UHD set-tops later or launch with boxes that can support both. This report considers the factors driving the current CPE refresh cycle, which will result in more device diversity and new revenue-generating opportunities. The report is free and you can download it here.