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2020 lookout for value added services

According to Oliver Johnson, CEO of Point Topic, Consumer Value Added Services (VAS) Revenues are to Triple to $420 Billion in 2020. Wow! Tripling in 10 years is a compound annual growth rate of about 14%.

Johnson used the following graphic during a presentation at CommunicAsia 2012 earlier this week:

Point Topc's take on 2020 VAS revenues

 Source Point Topic (CommunicAsia 2012)

Who wouldn’t want to operate within such an industry?

That got me thinking, who indeed?

Much of what makes up these VAS aren’t yet in the scope of global juggernauts Apple & Google. On the contrary, all seem to be very Network operator centric.

So why then are my friends at major European Telcos so gloomy?

Point Topic have looked at current VAS and projected them to 2020. That’s a good approach to get an idea of market size, but doesn’t show who’ll be selling the services by 2020 i.e. in an IP lifetime.

Let’s run through Point Topic’s 8 VAS:

1. IPTV – this may still be Telco’s exclusive hunting ground but as I just wrote in a white paper, IPTV is being complemented with OTT. By 2020 there will be no distinction between IPT & OTT. If Google and Apple take too long to get their TV acts together the Netflix’ of the world will have carved out a big piece of this pie for themselves. Otherwise for Telcos to stand a chance of staying on top of this market, they’ll need the support of regulators and crazy laws like ACTA to exterminate what’s left of Net Neutrality.

2. VoIP – again what could be construed as Telco hunting ground, is already dominated globally by the likes of Skype so isn’t voice is destined to become free? I asked Point Topic to explain why they see so much VoIP revenue in 2020. Oliver told me “VoIP currently has the largest share of fixed line consumer VAS & will still grow slowly (see chart).” So what about free VoIP? “While operators are offering free VoIP, it’s often only free to other VoIP connections and sometimes only to users on the same ISP. There are still going to be plenty of calls to mobile and standard fixed phones and along with those ISPs that do charge for VoIP as part of a bundle this still adds up to a pretty good revenue stream”.

3. Gaming – Gaming is classified as just another VAS, but this industry obeys its own complex rules. Most gaming industry pundits believe that the big editors like EA or Valve will lose out to more innovative smaller outfits. Operators have been trying to capture some of the value here for over a decade. I don’t see why they should be any more successful in the future than in the past.

4. Music downloads – I’m surprised that this market is still seen as existing by Point Topic. At the last party with dancing, that I went to, people asked for a Deezer connection to play their songs, rather than hooking up their iPhone. To justify downloading, the size of files must be large relative to available bandwidth. If there are say, stereoscopic 4k videos in 2020, then maybe video downloading will still exist, but I don’t see how downloading will remain relevant for sound files in 2020. So if this revenue is generated from streaming, then network operators might just scrounge the scraps, with the lion’s share of this market remaining with service providers like iTunes or Spotify.
So I asked Point Topic why they kept this segment until 2020. Oliver answered: “streaming will become more popular, but it can still be patchy. Unless you want to use your mobile bandwidth while out of reach of free WI-FI, or eat your much larger fixed allowance then just for efficiency’s sake, users will want to download once and share that file amongst their devices. Memory/disk space if just cheaper and more reliable than having to be in the cloud the whole time. In addition we still retain the desire to 'own' something, even if it's bits on your disk drive, having something to hand is more convenient and more desirable. Just look at the Megaupload case to see what can happen to your data if you trust it to someone else.”
That’s where I beg to differ, because I think connectivity will be so much better and even more ubiquitous in 2020.

5. Security – I have no doubt that there will be a gold rush on this market. Of course anyone selling spades will make a fortune, but beyond the obvious B2B market, the jury is still out as to whether the public at large will spend significant budget on remote sensors, cameras, and the like. If the segment were to include home automation, it might stand a better chance. But it’s still a level playing field so anyone could come out on top.

6. Home networks – this is a new frontier, which I’m excited about. People are in pain and we don’t even know how to start fixing their problems. Part of the solution will include more robust and simple networking technologies, some monitoring and helpdesk services, content discovery and DLNA approaches to in-house content sharing. But if home networking can’t be made easy very soon, it may never make it as a mass market, because the Cloud is already here...

7. File transfer / cloud – I would have guessed this would be the big one in a 2020 market. Watching Dropbox make an impact in both business and consumer segments in parallel shows that there is a clear demand here. In an 8-year window I could easily imagine the descendants of Dropbox taking a slice out of whatever I’m willing to pay for access to content. Amazon seams to believe in the link between hosting services and the content therein. The experts at Point Topic have plotted a line based on today’s typical file transfer service. Again I have no issue with the method to get to a market size, but this is an area where services in 8 years will be so very different, that it probably doesn’t mean much anymore.

8. Teleworking – Teleworking was always going to be so very important so very soon. The technology has actually been available for many years. The success or otherwise of teleworking will now be driven by what is socially and / or professionally acceptable in terms of behaviour and work ethics more than by any new service or technology. So I see no reason for the tiny size or the stakeholders of the Teleworking market to change over what is - for social change - a short period of time.

You can see Point Topic’s press release here.

 

 

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New horizons for CAS and DRM companies beyond security.

It has always been a mystery to me why security vendors like Verimatrix always seem to punch above their weight in the pay-TV business. If you look at other value chains, beyond the content industry, stakeholders are credited with a relative importance directly proportional to their financial standing yet Verimatrix has even more mind-share than market-share.

During IBC this year, Steve Christian set me straight and gave me a glimpse into Verimatrix’ future, opening a world of possibilities for the Pay-TV security industry. It was a humbling “why on earth hadn’t I realized that before?” moment.

I was completing a small scouting project on cross-media content recommendation (expect a post soon on this) when we met last month, so I started by picking Steve’s brain on this topic.

A critical mass of users is required before an operator can map behaviour and usage patterns. You need lots of users to get a great service, but you need a great service to get any users. The end game is to understand the patterns of content consumption.

The problem is not only theoretical. Like all Telco’s, the one I worked for was very proud of owning precious customer data. Huge data mining projects on months-old data was the only use that data usually got. TiVo is an exception in collecting data used in almost real time.

Steve’s first point was that CAS and DRM vendors are already in the right place to transparently capture the critical real-time subscriber intelligence needed to deliver a recommendation service.

In their just-released white paper (Arming Digital TV Operators with Real-Time Subscriber Behavior and Usage Data), Verimatrix quaintly call this enabling Progress and Profit. C’mon Steve, these things always come in threes, so what’s it going to be: Profiling for Progress & Profit? Hmm not so quaint, because that’s where there’s still an unresolved issue: privacy. That’s the nice thing about white papers; you can skip the tricky bits.

If privacy does prove difficult, it could however be handled in a very transparent way. The whole recommendation concept requires transparency. People need to know why they are being recommended something to willingly make more personal information available.

The hard part to fix, in getting recommendation to work well, is collecting and understanding user data collected implicitly or explicitly.

Of course understanding the content metadata and classifying all the movie genres TV programs and whatever other content available, isn’t trivial either. This is no longer a real issue as there are now dozens of companies out there with variations on semantic analysis and other approaches with which to do this. Many of the algorithms are even available as open source. Suppliers range from TV specialists like TV Genius, bee TV or Orca to web-based solutions like hunch.com, with people like Jinni somewhere in between. Of course, if you want to build a solution from scratch there are also some pure-players in the algorithm side like Think Analytics.

But all these solutions amount to nothing if you can’t get access to significant user transactions. That is why Verimatrix can solve one of the hardest parts of the problem in a more timely way than many of the above-mentioned vendors.

I didn’t discuss with Steve whether Verimatrix would be looking to develop such features, but the company’s track record suggests they are more likely to partner with whoever is best in class in this area.

Once you able to intervene in, or just under the TV, there are at least two other key areas you can intervene on: Quality management and social networking.

The burden of managing the quality of experience with an ever-increasing range of devices, and with a broadening scope of features and services, is becoming difficult to bear for operators. Some standards like TR-069 have at last emerged for basic requirements like firmware upgrades, but no standardized solutions are available for managing more advanced issues such as monitoring the service delivered.

After many years of caution, focussed on the risk of devices creating a storm of traffic if they all had the same issue to report at the same time, even the big safety-conscious Telcos are looking to deploy agents into both their STB and their home gateways.

Whether using a standard like TR-135, or as-yet proprietary products from the likes of Agama, Mariner, Witbe or Cisco, operators actively engaging in monitoring will develop a dynamic view of how services are being delivered into people’s homes. These operators will find themselves in a position to initially deliver services with a higher quality of experience and eventually deliver even better services altogether.

But the main issues operators have encountered, with embedded monitoring has been software integration. Vendors promise trivial two-week integration efforts, but this has often dragged on to yearlong projects. Here again the CAS vendors come up with a trump card: they are already integrated with all the end devices, that is: connected TVs, STBs, Tablets, smart phones and of course PCs.

But another angle Steve Christian developed was that CAS vendors are already doing monitoring. They maintain and monitor the security of pay-content. Extending from traditional pay-content to other types of content is not necessarily a huge step to take. As anyone who’s dared to get their hands dirty with something like wireshark (this is a free network protocol analysis tool) will know, there is almost no technology barrier to getting to grips with quality metrics like packet loss or network jitter. The most important metric of all is service availability that security vendors are in a prime position to report on.

Working in an ecosystem is part of a security vendor’s daily routine. To improve the quality of experience of the end user, security vendors could easily partner, say, with an EPG meta-data provider like Rovi to ensure that the right data is available at the right place at the right time. They could also use one of the EPG quality specialists like EPGenius to add value to the EPG data by analysing it, correcting discrepancies and adding things like missing series links.

The third point Steve Christian mentioned was Social networking. We didn’t really get into any details here. We were running out of time, but also the business case isn’t so compelling. Verimatrix can enable better Social-TV implementation, but I don’t yet see any clear path to market. I do believe the Social TV will be a reality soon (see my blog here). It is not yet clear who will prevail. The most compelling demos are multi-screen with the TV as a basic video output device and a laptop, smart-phone or tablet to interact with. Fitting into that ecosystem will require agility.

My talk with Verimatrix happened just about when Toy Story3 was released, which I still haven’t seen. Steve’s passion reminded me a bit of Buzz Lightyear’s mantra “From infinity to beyond” except that his could maybe be “from Security to beyond”.

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IPTV World Forum reports on Videonet

IPTV World Forum blogs are on videonet.

Overall there was a great attendance, with lots of people coming to Olympia to do business. The booths were decent although I didn't spot many exciting innovations this year and as usual the conference was of varying quality, from gems to blatant sales pitches.

The 2010 conference taught me that Canvas is a purely British thing for now, and a few companies companies stood out for me:

  • Netgem for their ability to do fancy stuff with run-of-the-mill chipsets,
  • Echostar for finally winning a deserved award for Sling-loaded
  • BeeSmart for their interesting freebee initiative,
  • Intel for getting Sodaville up and running, most impressive with Amino.

But overall it was a good show on my subjective scale.

Day 1 blog post is here

Day 2 blog post is here

Day 3 blog post is here.

Also some in depth analysis of some of the issues I became aware of at the show to follow.

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Why I’m going to IPTV world forum – March 23rd 2010

I’ll be staying for the three days at the event next week. I always spend long moments hesitating whether such a time commitment is reasonable. I thought I’d share my thinking in case it helps you make your mind up (and helps me decide whether to fork out a couple of k€ to go to NAB next month or not).

When I worked at Orange, heading international IPTV deployment, I gave one of the first talks from a major IPTV player at one of the first versions of the show in 2005 or thereabouts. It was about the technical challenges of IPTV deployment from a Telco perspective. IPTV World Forum holds a little sense of nostalgia for me.

In the early days Junction ran the show, and I remember it feeling like a special occasion. It’s probably the nostalgia speaking or maybe the fact that as it wasn’t yet mainstream we all felt a bit more leading edge. I suppose I can replace "feel good" factor from being a pioneer then to a "feel good" factor from knowing I was here first. To illustrate the newfound importance of the show, big decisions now get initiated at Olympia and the IPTV WF awards get fought over more and more.

We’re not supposed to decide which show to go to based on the quality of the tea and biscuits (no don’t pretend you never do). In this respect IPTV WF is pretty good on logistics, except maybe fort the A/V equipment that forces me to sit in the front rows if I want to both see and hear.

The main reason I’m going is networking. There’s only so much you can do with LinkedIn & Co and face-to-face meetings do make a difference. I know at least half the companies exhibiting and over a dozen speakers so it’ll be worthwhile just to catch-up. I also need to generate some new leads for my consulting business (;-€).

I'm looking forwards to awards ceremony at the end of day one. Only the English can make a pompous event fun as well (mind you the great food & drink helps). As I'm a judge, I can’t really talk about that till the results are out … but there were loads of good entries this year.

There will be demos of some really new things I want to see at the exhibition. This year I’m looking forward to seeing the BeeSmart free middleware that’ll be launched during the show. I’m also hoping ROVI will show their new promising looking EPG offerings. As I missed the NDS widget demo at IBC I was hoping to catch up on that but I can’t see them on the exhibitor list :o( - maybe I’ll have to go to the NAB show after all.

I wrote an blog entry here on the rosy future for the IPTV Monitoring market so I’ll be asking all the vendors like Mariner, Bridgetech, Ineoquest, Agama and the new kid in town from India called First Media what they think about that i.e. do they too see a blue ocean of opportunities?

I hope to do a post-show blog on the future of interfaces so I’ll also hop into booths from some middleware people like Dreampark and Nagravision.

Many of the usual suspects from the STB arena will be at the show so I’ll be checking out where they are in terms of chipsets & new deployments (although these tend to boringly all be confidential). But the ecosystem is constantly changing as the box makers move upwards or sideways in the ecosystem so I’ll be looking out for any exciting demos from booths like Netgem, PACE, SoftAtHome, Echostar, Awox and Amino.

I’m a bit disappointed in the content recommendation supplier line-up. Recommendation is still a stumbling block that we haven’t fixed. Hopefully Gravity R&D will have a better demo than they showed at the Prague show. I don’t know why the more mature suppliers like Jinni aren’t coming to the show. That’s food for thought for another in depth analysis.

I always drop into the Edgware booth not only because it’s invariably one of the nicest but mainly because they are a surprisingly interesting company to talk to; they have a real vision.

Oh and I’ll make a point of having a proper talk with the Canadians from Evertz because I kind of botched it last time in Prague and have heard they deliver a monitoring good job for Sasktel in conjunction with Mariner Partners who btw will also both be presenting at the show.

With over 100 exhibitors I expect it will take me at least a day and half to see everything I want to, and As I’m chairing during day one I’ll be there the whole time.

There’s some luck involved in choosing the best conference to listen to unless you know the speaker beforehand. Most speakers do go to the trouble of writing interesting fresh slides and are really worth listening to. However as with any mainstream conference, some vendors that pay a lot to get to say basically what they want amazingly get away with too much sales pitch. You should complain to the organizers if you see this. I certainly do. Telcos with big IPTV deployments who also get red-carpet treatment sometimes go around with the same slide deck from conference to conference; I’ve identified the speakers by now, but it's always worth listening to them if you haven't heard it before.

In the end I clearly do recommend going (twitter me @nebul2 to meet). If you decide not to come, several of us will be reporting from the show on Videonet.

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Why Iid invest in TV monitoring if I were a banker

When Justin Lebbon, the guy behind videonet, read my latest blog post on the significance of Ineoquest’s winning a deal with France Télévisions, he pointed out that to get onto Videonet, posts have to be longer. It probably wasn’t meant that way, but it felt a bit condescending.

Hmmpf! So I started wondering why I'd felt the urge to write just a short post on a seemingly run-of-the-mill press release about yet another sale.

I had written about the customer being a TV station and the vendor being the leader in head-end monitoring from the IPTV space, so that maybe we were going towards a global leader in the IP TV (notice the space) monitoring space. So with just one small point to make I had one short blog entry to post.

But Justin’s point has been irking me to dig a bit deeper.

It turns out I wrote about a tree that was hiding a forest.

The TV world relies more and more heavily on IP for contribution, transport and distribution to and within the home. At the same time, the whole marketplace is also maturing. Different stakeholders are beginning to emerge and a new content economy will eventually stabilize.

We still don’t know if our IPTV world will become a market dominated by vertical or horizontal stakeholders or maybe something in between.

In the vertical world, content would flow from one stakeholder’s environment through another’s to be delivered to customers of yet another network. To catch-up on a missed Channel 4 program you might use a C4 widget on you TV that stream content through a network managed by Cable & Wireless. But for a BBC program you’d use iPlayer. We would seem to be headed in that direction if the Ineoquest - France Télévisions deal is at all significant. Service Level Agreements or SLAs are paramount to remain competitive in such a world. What better than QoE measurement to manage such agreements?

In the second more horizontal world, the same stakeholders would be producing and delivering content-based services to their own customers. Walled garden IPTV or Telco-TV is of this world. TV stations would carry on not caring all that much about IP quality because it wouldn’t be their problem. Although not IPTV, Sky’s products are from this world where the same company produces much of the content and delivers it themselves. Market regulators would hopefully ensure that customers would rarely be more than a click away from the competing service and in this world (looks like Britain pulled a short straw on this), QoE would remain the best metric to work on to control churn.

TV stations are still basically Content producing organisations. When transmitting through traditional broadcast networks they can always ascertain the quality of delivery by the random sampling of a few points. This worked fine for traditional analogue terrestrial and satellite, and also to a certain extent for digital terrestrial, cable and satellite.

IPTV represents extra difficulties because not only do the video streams have to go through many more layers in the network. Operators are still in many cases just learning how to properly configure IP networks for video. Fierce competition is also forcing them to use underlying infrastructure that is at the bleeding-edge of new technology.

However, if IPTV were only about Live TV, it would just be harder to get right, basically playing in the same ball court as before.

What makes quality management so different is that IPTV services have always been about more than live TV. From the source of video signal to TV set we’re moving from a one-to-many to a one-to-one architecture. As soon as VoD, delinearization or Social TV show their scary heads, we shall have to take a whole quantum leap into another level of complexity.

I haven’t seen any reliable and public stats for VoD session quality in managed networks, but you only need to glance at some Web forums to see that things aren’t as rosy as VoD system vendors and operators would have us believe, even in a walled garden environment where QoS is supposedly guaranteed. I’ve been using such a managed service at home for 5 years now and with maybe 60 films rented, I can say that about one time in 10 the VoD viewing experience gets interrupted or even cancelled. If I’m then prepared to spend 10 minutes to half an hour on the phone, I can get a refund.

Now if I ask you where are TV stations focussing their attention at the moment, the BBC’s iPlayer will probably come to mind. With an iPlayer type of service TV stations’ increase the value of their own content by making it available after airtime (I guess a very expensive premium service will one day let you access the content before airtime). Their content is being transmitted over IP on a one-to-one basis using their brand name. So TV stations are getting caught up in the Quality of Experience issues themselves.

But beyond the iPlayer example, as the IPTV ecosystem matures, different stakeholders are emerging. In some markets, one operator will provide head-end services for another competitor. Elsewhere, wholesaling is becoming commonplace. Take for example Cable & Wireless in the UK who can carry IPTV streams from a third party head end to someone else’s DSLAM. Their responsibility - enshrined in an SLA - is to deliver the content with the same quality the received it. Traditional network QoS metrics don’t always capture the whole picture. If the TV service is also monitored end-to-end wholesalers can commit to SLA’s.

Here in France one sees some pretty complex setups with for example a Bouygues Telecom IPTV customer having a service delivered through an SFR network when the video head end service is provided by Canal+. In this case Bouygues Telecom would also have an agreement with Orange to rent the last mile.

Over-the-Top or OTT content has mainly been associated with free YouTube like services; that too is changing. Even in the unlikely event that it does stay totally free, there’s only one YouTube so the quality of service delivered to people’s sitting rooms will be a key differentiator.

The emerging playing field forces the larger content creators like France Télévisions to look further down the distribution line. Even as far down as the person in front of  the screen. Their distribution possibilities are also exploding while presenting differing technical challenges in terms of Quality of Experience. In the IP space, should they concentrate their efforts on Telco-TV distribution or should they be putting more effort into their own OTT distribution? TV widgets present one of the greatest threats and opportunities they have seen for years.

To remain relevant and retain their independence TV stations will seek means of leverage to control or at least to influence different distribution channels or sometimes just to be able to make an informed choice as to which one to use. Their content represents their fundamental value so it’s only not surprising that they’ll want to protect both its quality and its integrity.

That’s why – Justin- I believe the Ineoquest deal is significant. Now will you post this?

Benjamin Schwarz

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French Public Broadcaster goes IQ

I'd don't usually comment on press releases about vendors making another sale, but this one is significant.

IPTV operators represent a red sea of cut-throat monitoring competition. Most of of the operators I know already use Ineoquest or will do so soon.

TV stations, who are relatively new to IP networks, represent a more enticing blue ocean where everyone should have a chance. But if that market also gets Ineoquested, then we’re getting closer to having a true leader in the IPTV monitoring field.

The downside is that monitoring may become like the IT market of the 1970's where decision makers always chose big blue (IBM) because that way if something went wrong they wouldn't be blamed ...

But leadership need not become dominance and the upside is that we might now get some momentum on relevant standards which will hopefully be open like TR135, so good luck IQ, as long as you remain humble and nimble, show us the way.

Ineoquest have a press release here.