Pay TV operators are being offered the chance to make leading online video services part of their television line-up without the need for IP set-top boxes or STBs capable of supporting browsers and HTML5. At the same time, online providers like HBO GO, Hulu Plus and Netflix are being told that they can dramatically expand their market reach to all Pay TV set-top boxes, including old legacy devices, without the need for any apps integrations and continual apps maintenance. The technology that makes it possible is CloudTV StreamCast from ActiveVideo, which made it into our Top Three demonstrations at IBC 2014 because of its potential to bring the Pay TV and online markets closer together.
CloudTV StreamCast uses the CloudTV cloud UI platform as its foundation, making it possible to render a user interface (including all the graphics, video and stills that make up a television picture) and stream that complete UI view as an MPEG video stream. This means the STB only needs a tuner and decoder to display the most advanced user interfaces. StreamCast takes this another step forwards by harnessing dense and scalable cloud transcoding to take online content from a CDN, transcode it and replace DRM with conditional access, then stream it over the classic managed network, which in the case of cable would mean via the QAM infrastructure alongside traditional VOD and television channels. It also works on classic IPTV.
The CloudTV StreamCast technology was unveiled at IBC in September. Anticipating the launch, ActiveVideo wrote in a blog that, â€œPay TVâ€™s own TV Everywhere services – most notably HBO GO and Showtime Anytime â€” can unlock vast new opportunities by combining, for the first time, the flexibility of the Web with the power of the 10-foot living room experience. Also, marquee online video services such as Amazon, Hulu and, of course, Netflix, can strike carriage agreements with operators that donâ€™t limit access to a fraction of the Pay TV customer base, but rather open the gates to entire footprints of existing cable STBs.â€
Then at IBC the company demonstrated the product in action, delivering the HBO GO service to a seven year-old set-top box over QAM infrastructure. ActiveVideo is predicting deployments in the near future that will make major online content services available with Pay TV operators through their â€˜broadcastâ€™ networks, rather than streamed.
â€œWe have been pleasantly surprised by how much demand there is for this,â€ declares Murali Nemani, Chief Marketing Officer at ActiveVideo. â€œThere has always been this concern about online content being a friend or foe and we are finally seeing this transition where online content is being embraced by operators. They want to deliver it as part of their integrated services alongside linear programming. It is viewed as complementary to the service bundle.â€
There are a few ways to present online content on a traditional TV platform. One is the classic app store model where you bring in HBO GO and Netflix, or broadcast player services, and the consumer goes to the store and launches them. Another increasingly popular approach on hybrid broadcast broadband (HBB) platforms is to present past content in a backwards-facing EPG. When you click on the show, it launches the broadcaster â€˜playerâ€™ app. Online portals can also be presented as a channel slot within and EPG â€“ something that Virgin Media pioneered with YouTube.
In all cases, the video is streamed over broadband. In the case of an EPG listing, clicking on the channel number launches an app rather than tunes a channel. What CloudTV StreamCast enables is radically different. The content is presented as a channel listing but when you click on it you tune to real unicast spectrum on the managed network. The pre-rendered combination of the online service UI and transcoded video (now in MPEG-2 or H.264 format so that standard STBs can decode it) is unicast over traditional infrastructure (e.g. QAM cable) to the set-top box. As you navigate through the online service, the UI screens are continually re-rendered in the cloud and streamed to the home as if they were any other traditional video stream.
This technology has already been proven in the field with UPC Hungary (part of Liberty Global). The cable operator is delivering the full YouTube experience, including its rich YouTube Leanback UI, to hundreds of thousands of existing set-top boxes (from D4A). This service was launched as part of UPC TV Apps in late May and UPC Hungary reported in September that its popularity had exceeded all expectations, reaching 1 million YouTube viewing minutes per day within the first three months. The average viewing session is 45 minutes.
ActiveVideo thinks this demonstrates the global potential for the technology. As the company pointed out at the time, Liberty Global could use the same virtualization to bring YouTube to its entire footprint of millions of D4A boxes throughout Europe and Latin America. And it believes that other Pay TV operators can overcome the limitations of legacy devices (unable to handle advanced user interfaces or streaming video) or device fragmentation (adding a cost burden for traditional UI/streaming app integration) and so source new content that will help to differentiate their bundle.
In its June blog, ActiveVideo declared: â€œWe love the idea of bringing online video to STBs. However, we believe the optimal strategy is not to limit it to a few online video services or a few hundred thousand subscribers, but rather to bring all online video content to every STB worldwide.â€ Well, thereâ€™s nothing wrong with ambition!
YouTube is considered a complementary service to linear TV at UPC Hungary, with usage peaking at 5pm and dropping off quickly as television reaches prime time, then picking up again after 11.30pm. The cable operator says the viewing session lengths and the aggregated viewing patterns “indicate that the new service is a valued addition that complements the TV viewing experience well in most customer homes”.
â€œIt is content that the kids are watching and it seems that it does not compete with the core broadcast proposition,â€ Nemani concludes. He reckons that HBO GO and Hulu are other examples of content that dovetail with what you already find on a Pay TV platform.
â€œNetflix is more controversial but we will see Tier 2 Pay TV operators embrace the service most quickly, as they often see themselves more as broadband providers anyway,â€ he predicts. â€œTier 1 operators will embrace it more slowly.â€
As already indicated, one benefit of the CDN-transcode-QAM approach for online providers (as argued by ActiveVideo) is being able to avoid multiple STB app integrations. Nemani reckons the number of set-top boxes in the Pay TV market means this method does not scale. Equally, you avoid updating 25-odd STBs every time the app is updated online.
â€œOnline providers are pushing for this,â€ he declares. â€œEveryone [online providers] has the goal of getting into the Pay TV operator domain but they had given up on the idea because it was not scalable before. And for us, YouTube opened the door and has become our reference deployment.â€
There will be different business models if online providers and platforms do start making this kind of distribution deal. One likely approach â€“ almost certainly the one YouTube insists upon â€“ is that they must retain their look-and-feel and no money changes hands in either direction. Other online providers with advertising (including major ones) will be willing to share some revenue, it is thought. SVOD providers might pay a bounty for every new subscriber they sign up through a TV platform without sharing any subscription revenue.
Nemani thinks there will be a debate about who controls the look-and-feel of the online services when they are delivered using the StreamCast model. Will the online services retain control and maintain their brand identity or let operators impose some of their expectations? On this question, he has no firm predictions.
The recent announcements by HBO and CBS about their direct-to-consumer OTT offers means competition is intensifying in the â€˜OTTâ€™ video market. This must make it more likely that online providers will seek wider distribution via the â€˜traditionalâ€™ TV market. If you accept the argument that HBO and Netflix are competitors then HBO already has established distribution on Pay TV and is now going after the online â€˜Netflixâ€™ market. You would assume that Netflix might accelerate its roll-out with Pay TV, using one approach or another.
The integration of the Netflix app into the retail set-top boxes of YouView (using the ‘traditional’ app store with streaming and integrated search – which went live this week) is significant because it takes the SVOD service into the growing hybrid broadcast broadband space and gives exposure on a platform that could yet become the successor to Freeview for the UKâ€™s horizontal DTT market. The UK incumbent telco (and IPTV provider) BT is also adding Netflix to its BT YouView STBs, and this deal falls into the â€˜Pay TV partnershipâ€™ category (since BT uses the same YouView technology platform as the basis for its next-gen paid IPTV offer). In a notable world first, BT will also add the cost of a Netflix subscription to a customerâ€™s existing telco (phone, broadband and TV) bill.
Virgin Media, Com Hem and Waoo! (the Danish triple-play provider), were the first three Pay TV providers in the world to take the plunge and make Netflix available on their platforms, in each case via an integrated app. So far the model has been that the customer relationship remains with Netflix (with BT now blurring the lines slightly), you sign-up in the Netflix app, Netflix manages the content as usual and the video is streamed. It is easy to anticipate commitments to manage the QoS for the streaming video in these kinds of arrangements.
What ActiveVideo proposes would take this kind of partnership to a whole new level. Even so, the responsibility then given to the cable operator for transcoding and delivering content over the QAM network is no different to what they do daily for hundreds of content providers.
Should one of the online SVOD majors adopt this CloudTV StreamCast approach it would be a significant event â€“ an acknowledgement that, even if only to reach legacy STBs without apps (and even if only for a transitional period while older STBs disappear) the legacy QAM distribution networks still have value for a major online video provider. That would introduce yet another variation of hybrid delivery.
It would also be a big step for some Pay TV operators to open up their traditional â€˜broadcastâ€™ network to a content owner that maintains the customer relationship. Maybe this technology approach, should it become reality, would also involve closer business relationships â€“ and BT has shown one way that can be pursued with its unified billing.