The Video Business is in the Best of Times or the Worst of Times? Mark Donnigan Marketing Leader at Beamr
Get the original LinkedIn article here: The Best of Times & Worst of Times in the Video Business
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Mark Donnigan is VP Marketing at Beamr, a high-performance video encoding technology company.
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Are we in the good times or the bad times in video? Mark Donnigan Marketing Head at Beamr
Can a 4 character innovation conserve us?
This is an intriguing concern due to the fact that there is a paradox emerging in the video organisation where it seems like the the finest of times for lots of, however the worst of times for some.
Here we have Disney revealing that they have actually currently accrued one billion dollars in loses, and this even before introducing their direct to consumer company. And then we have Verizon Media announcing sweeping layoffs which represent an exit from some of the core home entertainment service and innovation organisations that were running under the Oath umbrella.
And obviously there isn't a reporting interval that goes by where the cord cutting numbers haven't grown, which puts increasing pressure on the video side of the provider organisation.
Yet, Netflix stock is on the increase once again, enabling the company to invest in material at levels that should mystify their competitors. And after that we have news of PlutoTV selling for a mouth watering $340 million dollars in money to Viacom (deal was revealed on January 22, 2019), showing that the AVOD business design can be viable and quite important.
5G is going to save us all?
This is where I wish to get in touch with the enormous investments being made in 5G and provide my perspective on why 5G may well break some video business while at the same time make others.
Let's look at AT&T.
So in the last four years AT&T has added 80 billion dollars of extra debt leaving it with more than 160 billion dollars of brief and long term debt. Now, 50 billion of this staggering number was the result of the 2015 purchase of DirecTV.
My point is not to break down the AT&T financial obligation numbers, I'm not an expert, but rather offer a point of view that the monetary circumstance for AT&T entering into its huge 5G investment cycle, while at the exact same time making known their strategic effort to develop their video service capacity through Warner Media direct to customer offerings like HBO, and DirecTV, is going to be challenged, unless they do something really different with video.
What can a service company like AT&T do to deal with the economic capture, and the general headwinds to the video company? Such as declining pay TELEVISION subs, and fragmenting OTT service offerings. This is the question on lots of minds who are analyzing the future of the video service.
It is my strong belief that ubiquitous high speed mobile networks powered by 5G will let loose a video tsunami of traffic on the network like we've never seen before.
This will be great news for the PlutoTV's of the world and other innovative video services like Quibi who will be able to reach more consumers with a much better quality experience as a result of having the ability to utilize a faster network thanks to 5G.
But, it's bad news for network operators without a plan to monetize this extra traffic load, and naturally incumbents who are hoping to get by with incremental improvements to their services; such as switching from managed to unmanaged, or OTT distribution, while continuing to use aging video standards like H. 264 to deliver low resolution mobile profiles.
Video suppliers who continue to under serve their clients will quickly be at a disadvantage, and ripe for disruption, I believe, from brand-new organisation models such as AVOD and the latest and most effective video innovations.
The four character video technology that may save the video company.
The four character video requirement that I believe will play a key function in the success of the video business is HEVC, the video codec that is now deployed on 2 billion gadgets. The following slide presentation provides numbers regarding HEVC device penetration which deserve seeing.
There has actually been much blogged about HEVC royalty concerns, something that triggered development of an alternative codec which most likely is royalty free. However, while some in the market ended up being preoccupied with questions around licensing and royalties, major advancements have actually been made on the legal front, consisting of nearly every CE device producer including HEVC playback assistance.
HEVC Advance waived all royalties for digital distribution of content. This indicates, HEVC encoded material that is streamed will only bring a royalty for the hardware decoder and this is currently covered by the receiving gadget. Provided that you are delivering bits over the wire and not via a physical mechanism such as Blu-ray Disc, your company will not have to pay any extra royalties, a minimum of not to HEVC Advance.
Now, if it's any convenience, the business who have actually already done their due diligence on the royalty concern, and are streaming HEVC content to consumers today, include: Amazon, Comcast, DirecTV, Dish Network, Netflix, Sky, Sony, Vudu, Vodafone, and Orange, just among others.
What about HEVC playback assistance?
This is a great and essential question and possibly the area of advancement around the HEVC environment that is least recognized or comprehended.
Starting with at home playback, if your users have acquired a TELEVISION, game console, Roku box or Apple TELEVISION in the last 3 years, you can be almost ensured that assistance for HEVC exists with no requirement for additional licensing or player upgrade.
HEVC is now resident in practically every SoC that goes in to any mid to high-end CE video device. That's 400 million gadgets that support HEVC natively.
The information company ScientiaMobile preserves the biggest dataset of network gadget access profiles by receiving data from the biggest cordless operators worldwide. This business reports that a tremendous 78% of all iOS mobile phone requests come from gadgets that support hardware-accelerated HEVC decoding. And though iOS devices are predominant in most industrialized markets, Android is still an exceptionally crucial device profile, and here the ScientiaMobile data is extremely motivating with 57% of Android smartphone demands coming from devices that support HEVC decoding.
These 2 numbers are where the image of HEVC as the most rational video requirement to follow H. 264, begins to take shape. Here we have major video distributors and tech business currently encoding and dispersing content in HEVC. And given the HEVC gadget more information penetration and hardware support any stress over an early relocation to HEVC are not warranted. What other aspects verify the concept that HEVC will be a booster to the video business?
LiveU recently released a report called 'State of Live' that revealed growing trends in HEVC broadcasting, especially in the world of sports. And simply in case you have ideas that making use of HEVC is a passing trend on the method to some alternative codec, think about that in 2018, 25% of all LiveU generated traffic was streamed utilizing the HEVC video standard while the only other codec used was H. 264.
In truth, the report mentioned that the high HEVC use was a direct reflection on the increasing demand for professional-grade video quality, a pattern that was plainly obvious at the 2018 FIFA World Cup in Russia.
What does this mean for the market?
The patterns we simply examined expose that we have an ever more demanding consumer who wants material that shows off the full abilities of their seeing gadget, which indicates greater resolutions and advanced video standards like HDR. But, this same user is now consuming more content, which contributes to further crowding the network.
This consumer usage pattern is hitting a shift from managed services to unmanaged, or OTT distribution and producing technical stress inside incumbent service operators who are dealing with technical shifts and business model fracturing. Incredibly, in spite of an extremely clear hazard to the incumbent services who are seeing video customer loses installing into the numerous thousands over simply a few short quarters, some are continuing with the status quo even while new entrants are releasing services that offer the consumer more for less.
This is where completion of the story will be written for some as the very best of times, and for others as the worst of times.
HEVC is more than an innovation enabler. It's a video requirement that is set to interfere with a lot of the traditional operators and early OTT streaming services. Not due to the fact that the consumer knows the distinction between H. 264, VP9, and even HEVC, but since the consumer is ending up being aware that better quality is possible, and as they do, they will move to the service who delivers the very best quality cost effectively.
At Beamr, we think that the evidence of our product and technology excellence must be knowledgeable and not simply talked about. Which is why we have actually created the best offer that we have actually seen in the market where you can utilize our codecs in mix with our VOD transcoder, 100% free of charge.
HEVC is now resident in nearly every SoC that goes in to any mid to high-end CE video device. These two numbers are where the picture of HEVC as the most sensible video requirement to follow H. 264, starts to take shape. Here we have major video suppliers and tech business already encoding and dispersing content in HEVC. And offered the HEVC device penetration and hardware support any concerns about a premature relocation to HEVC are not called for. What other aspects validate the idea that HEVC will be a booster to the video organisation?
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Author: Mark Donnigan