Brexit Could Be Devastating for UK Tech and Creative Industries

Streaming Media Global

Britain's exit from the European Union will be "devastating" for the UK's creative industries and "negative" on the country's overall tech sector, according to pundits and analysts. It was hard to find any positive predictions following the results of the national referendum Friday morning.

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Days before the vote Juniper Research suggested that two thirds of employees it interviewed in both UK and international firms were concerned about the effects of Brexit. Most of those interviewed believed that it would be harder for UK tech firms to attract and employ individuals from EU countries. Meanwhile, nearly two-thirds believed that the industry would suffer as a result of reduced funding from the EU for the UK tech sector and that London would be less attractive as a tech hub.

Of those who believed Brexit to be positive for the tech sector, more than 80% cited less EU red tape as a benefit.

London has attracted companies like Google and Facebook, which has set up a VR development team there, in part because of the ability to access capital from the European market of which London is the defacto financial capital.

That status must now be at risk.

The tech industry has largely opposed an exit from the EU.

"A March survey of tech industry people in London, the European capital of tech, showed that almost 90 percent of those polled opposed Britain leaving the EU," reported Recode in an article published shortly before the vote.

"Britain is the leading light for open liberal markets, and if it leaves, there won't be many large countries left preaching that kind of thing," said James Waterworth, the Europe VP of the Computer and Communications Industry Association (CCIA). "The European market would potentially become a much more hostile place."

Efforts to create a "digital single market" across the EU will likely be impacted, and data sharing "safe harbor" agreements may be stalled.

The shift in balance of power could also negatively affect tech companies.

"The block of more market-oriented countries including the Scandinavians and the Dutch will shrink from 35 percent to 20 percent," added Waterworth. "All future rules that affect the tech industry are much more likely to be more restrictive, less accommodating."

Taavet Hinrikus, CEO of foreign exchange service TransferWise, is quoted in The Guardian saying that the industry will have to "wait and see" to find out the long-term effect.

"This is likely to affect regulation and the movement of talent, two massive issues for business. The two main benefits of being part of the EU are access to talent because of the free movement of labour and the fact that you can 'passport' regulation so if you’re regulated in the UK, you’re regulated across the EU. We don’t know what’s going to happen with either of those."

The film and TV sector have been huge beneficiaries over a long period of time from EU funds—money which will now likely dry up. A key reason why studio blockbusters and high-end dramas do shooting and post production in the UK is access to funds, a chunk of which is accessed through co-production deals with agencies in continental Europe.

The chairman of the Independent Film and Television Alliance (IFTA), the trade association representing the companies behind independent film and TV the world over, has described the UK's exit from the European Union as an event that is "likely to be devastating" for the creative sector.

"The decision to exit the European Union is a major blow to the U.K. film and TV industry," said Michael Ryan in a statement. "Producing films and television programs is a very expensive and very risky business and certainty about the rules affecting the business is a must."

He added, "This decision has just blown up our foundation—as of today, we no longer know how our relationships with co-producers, financiers and distributors will work, whether new taxes will be dropped on our activities in the rest of Europe, or how production financing is going to be raised without any input from European funding agencies."

Before the vote, 59% of producers, broadcasters, and distributors said Brexit would be bad for their business, according to a survey conducted by Media Business Insight (MBI).

One of the main reasons for this is that the export of British TV shows and formats to European broadcasters is worth around £376 million a year, and many were worried that this would drop if the country voted to break ties with Brussels.

The EU’s Media programme alone injected €130m into the industry between 2007 and 2015, contributing to content production budgets.

An exit from the EU would also mean the abandonment of the various EU-backed Television without Frontiers directives which include proposals to permit existing national subscribers to view their paid-for programming in other EU countries online. Also at risk are the EU-backed regulations to permit Europe-wide data-roaming and fair-prices for cellular telephony usage.

Those arguing for the UK to remain in the EU, including the Inernational Monetary Fund, had warned of economic meltdown if the UK opted out and as if to prove them right American investment bank Morgan-Stanley has today announced that it will relocate 2000 jobs from London to Dublin. 

Drama heads down 4K route

Broadcast

Netflix and Amazon are leading the charge into 4K/UHD, and producers are preparing for the transition, but the added cost of post-production is a concern.

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The look of TV drama changes in tandem with technology, and the next big technical leap is on the radar of UK indies: 4K.

“Sky Atlantic is beginning to ask for things in UHD,” reports Kudos producer Chris Fry, whose recent credits include Channel 4’s Humans. “They’re not saying it has to be 4K, but for future-proofing, they would prefer if it was.”

Red Planet Pictures head of production Alex Protherough is also gearing up for change. “UHD is the future and will be the norm for high-end drama,” he says. “For the next few years, though, the main demand will be standard HD delivery.”

None of the indies Broadcast contacted has received a UHD commission. Netflix and Amazon are leading the charge, but 4K capture is declared a ‘general preference’ by Netflix rather than a mandate. It continues to license 2K material for its UHD channel; recent purchases include Kudos’s River and Red Production Company’s Paranoid, currently shooting for ITV.

“I don’t think you can tell the difference between something shot in 4K and something that isn’t,” says Fry. “Netflix’s House Of Cards [which is shot in 4K] doesn’t look any better than something shot in HD if you don’t have a 4K TV.”

By the end of 2018, 18% of TVs in UK homes – 9.6 million – will be 4K, predicts Futuresource Consulting; by 2020, this will almost double to 17.8 million, or one in three.

“If you’re pitching a major drama for delivery in 18 to 24 months, UHD will be incredibly important,” says BBC HD and UHD head of technology Andy Quested. “As we approach 2020, UHD will become business as usual.”

However, ITV Studios’ head of production innovation Martyn Suker says it would be brave for anybody to commit budget on the basis of ‘future-proofing’ or possible future sales “if not specifically commissioned and given the funding to do so”.

For many, the transition to 4K recalls the switch to HD in around 2000, when there were concerns that craft skills, from costume to production design, would need a facelift to survive greater scrutiny.

“I don’t expect as big an upheaval this time,” says Red executive producer Tom Sherry. “HD was a more significant jump, particularly if you were shooting on Super 16mm and had to move to shooting on file.”

The absence of 4K monitors for checking the picture on set is an issue now, but Sherry says he judges by eye. “I’m looking at set painting, building and costume, and if it’s good enough by my eye, that’s as good as we’ll see on screen.”

While these elements are “likely to increase timescales and therefore cost”, says Suker, the bigger concern is the impact on post-production workflow.

Sherry anticipates data storage and wrangling will double costs. Taking HD as the benchmark, producers expect budgets to be weighted accordingly, and for costs to reduce in time.

“Managing the budget and getting the raw material out of the camera and into post will be the big killer for the next 18 months,” agrees Quested. “By 2018, the cost of storage will have halved and the speed of processing will probably have doubled, so we’ll be roughly where we are today with HD.”

Visual effects could prove a crunch point, as even Hollywood movies still process them as a digital intermediate at 2K resolution.

Netflix prefers a full 4K workflow, including plates, foreground elements and renders. In some cases, when background material is intended to be blurred to convey perspective, those elements can be 2K and scaled to the 4K image, according to the OTT service.

Will Cohen, chief executive of VFX shop Milk, anticipates a 10-20% upswing in charge for 4K. “That’s no different to what the industry has been through before,” he points out. “In five years, everyone will be working in 4K as standard.”

He disputes a perception that only post houses with an abundance of resources can handle a 4K workload. “If I need to get 1,000 machines for a day of rendering, I can do it,” he says. “People are naturally nervous of change and there will be talk about who pays for the upgrade in infrastructure, but facilities are constantly upgrading. The gap between 2K and 4K can be eradicated quickly.”

Thanks to the influence of bluechip US cable series in particular, the look of high-end drama has edged further towards the cinematic.

“Creatively, shows look more like films than ever, since the market demands beautiful-looking, high-end productions,” says Eve Gutierrez, executive producer of New Blood indie Eleventh Hour Films.

In part, this is attributed to the influence of US shows and “their understanding of the necessity of making TV visually exciting”, says Wolf Hall cinematographer Gavin Finney.

He points to the increasing size of domestic TVs, which informs framing: “Wider, more cinematic shots work well on 42-inch-plus screens.” More over, he says, a more visually literate audience is “able to process many different kinds of look within a sequence, emboldening directors and DPs”. In the longer term, producers will be expected to deliver a High Dynamic Range (HDR) grade as part of their UHD deliverable. Series like Amazon’s The Man In The High Castle and Netflix’s Jessica Jones are already being produced this way.

“For the BBC, UHD and HDR are symbiotic,” says Quested. “We probably won’t accept one without the other. It is important for high standards of programming with a long shelf life that UHD be delivered with HDR.”

Suker agrees that HDR and Wide Colour Gamut, the Adobe-created process by which UHD offers a broader spectrum of colours, will be “much more significant” in changing the look of drama than higher resolution or higher frame rate. “It’s something that ITV Studios will certainly take up as soon as we can.”

Most cameras already capture a dynamic range that can be used in HDR post grading, so it should have little impact on the shoot. However, HDR currently requires a second grading pass, attended by the DP, in addition to the SDR version. “No one has indicated who will pay for this,” says Finney. “I don’t know a single line producer who has put this extra cost into their budget, and who can say where the additional funding will come from.”

He warns: “Badly graded HDR can look terrible, with massively overbright highlights distracting the viewer from the important part of the frame – like the actors. The system can work if it is budgeted for and sensitively done, resulting in more highlight detail and richer, more textured shadows.”

There’s an outside chance that 35mm fi lm could make a comeback as an acquisition choice for UHD drama (see box, page 20), but producers need to be convinced of its cost.

Sid Gentle Films managing director Lee Morris likens 35mm to the upsurge of interest in vinyl music. “I wouldn’t be shocked if a DP said they’d like to shoot fi lm. You do get a different visual quality, but I don’t think it will used for any more than an occasional project.”

Several producers told Broadcast they feel that neg cutting and lab processing expertise are either lost or non-existent in this country. In fact, facilities like Cinelab London and i-Dailies are thriving on the back of feature films including Spectre and Star Wars: Episode VIII.

“Low rental costs compared with high-end digital, along with stock and processing deals, continue to make 35mm fi lm a viable option,” says Finney.

“Producers will listen to you if you make a case for 35mm, but you have to budget carefully and, to be honest, a lot of production companies are not familiar with how to go about the route,” says cinematographer John Conroy (Fortitude, Penny Dreadful).

Ironically, it is the aggressively sharp look of digital that has forced directors and DPs to mimic the organic texture of film.

While Panavision dusts down optics last used in the 1960s to lens new features like Ben Affleck’s Live By Night, cinematographers are also intent on dirtying the pristine (derogatorally called ‘video’) look of digital by using anamorphic lenses and filters for TV.

Protherough says: “As we move through HD to UHD and HDR, the image can start to become too clean, too sharp and too bright. My concern is that drama might look unreal. I love the grain and depth of field, but now we have a choice of lenses to give digital a filmic look.”

The terms 4K and UHD are often used interchangeably, but there are some important differences between them.

4K

4K is understood to refer solely to resolution and is a reference to the number of horizontal pixels in an image (4096 × 2160). It is the standard used by the cinema industry.

UHD

UHD (Ultra High Definition) is a broadcast term that refers to an image that contains 3840 x 2160 pixels, which is four times the resolution of HD (1920 x 1080). The second phase of UHD, which is often referred to as 8K UHD, has resolution of 7680 x 4320. UHD includes other image quality parameters, notably greater contrast levels (or High Dynamic Range) and a richer colour scheme.

THE DPP’S UHD GUIDELINES

In its UHD acquisition guidelines, the Digital Production Partnership (DPP) relies on an EBU test published in March 2015 (R118 ‘Tiering of High Definition Cameras’).

The document benchmarks UHD TV cameras according to strict criteria, principally around resolution. The only cameras that qualify in the top of the range, Tier 1, are the Sony F65 and Arri Alexa 65 – both specialist cine cameras – plus the Red Weapon 8K.

All other cameras with a 4K rating, including the Blackmagic Design Production Camera, used on BBC1’s War And Peace alongside the Arri Alexa XT (pictured), would fall into Tier 2.

DPP members will accept Tier 2 UHD, according to Andy Quested, speaking on behalf of the DPP. “We recognise there are only a few cameras in Tier 1, so Tier 2 is acceptable. The issue is around the lens, the codecs and the route into post. A broadcaster would need to be clear how the material is treated.”

The DPP is advising producers not to use a camera like a GoPro 4K for landmark UHD programming. “The tiering approach anticipates that as we move forward, more cameras will become available that reach Tier 1, and that those cameras currently in Tier 2 will become less acceptable.”

Meeting the order

He cites the original Panasonic Varicam, launched 15 years ago. “It is still an incredible camera, but no longer suitable for HD work because its image quality is too compressed.”

The tiering system would rule out the use of cameras with a sub- 4K sensor, such as the Arri Alexa, which is currently used on HBO’s Game Of Thrones.

With his BBC hat on, Quested says: “The BBC can’t defend a programme that is branded UHD but was not shot in UHD. Discussions with a producer are to ensure that the broadcaster and co-pro partner get the product that was ordered.”

While Super 16mm film “is out of the question” for UHD, 35mm remains a possibility. “35mm is perfectly capable of delivering a UHD resolution, but its processing is more critical,” says Quested. “You can do a lot more damage to it in the transfer process so we’d need to be clear how a production would handle it.”

Recommendations for HDR will be introduced to the DPP spec shortly. “HDR is more vital than resolution for the impact it delivers,” says Quested. “If people are hedging their bets on introducing HDR, then in terms of a massive drama budget, they should realise it is such an incremental cost that it could be less than the catering.”

AV in Government: Video Comes Of Age

AV Magazine 

Right across central and local government consumers expect information to be available on video. This demand requires AV solutions whenever government needs to communicate with citizens ad business organisations.

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Governments are very complex organisations comprised of multiple departments with different offices, plus international branches and representatives. They need to be able to provide information to citizens as well as to the businesses within their jurisdictions.

“Today, we see AV technology in briefing rooms and council chambers, from a live broadcast outside 10 Downing Street, to the top level conversations taking place in secure government bunkers,” says Jim Fitton, business development manager – Public Sector and Government at Crestron. “Wherever the need to share a message or a piece of content exists, our governments are using AV.”

Video solutions are particularly important to the state machinery. From summits between presidents to enhancing citizen engagement, AV solutions such as video collaboration, allow government bodies to conduct face-to-face meetings ideally resulting in improved coordination, faster decision-making and a help to those in greatest need. For example, services can be offered in different languages more easily and cost effectively, which becomes crucial in countries where immigrant communities are thriving.

“Real-time face-to-face collaboration is key for government organisations across the globe,” says Andrew Graley, Polycom, Director - Healthcare, Education & Government. “AV technology makes this possible while keeping costs under control.”

AV technology helps governments react and respond to crises and emergencies. A good example is the recent Ebola outbreak in Africa in 2014, which the World Health Organisation had to respond to on a global scale. Using Polycom’s solutions the WHO was able to get experts on the ground to quickly assess the situation and offer advice immediately.

AV solutions are also used in the justice system create to reduce the amount of time it takes to handle cases. “This helps reduce the costs and risks associated with transporting offenders and inmates between facilities such as prisons and courts,” says Graley. “Video collaboration technology also allows for witnesses to be interviewed remotely and, more importantly, for testimonies to be given from secure locations; which is often a key concern in difficult cases.”

Video content management has a huge part to play in the public sector, in terms of internal training for staff, but also as a resource library for citizens. National and regional governmental organisations can create video libraries of content with advice on healthcare, education, tax, finance and more. Many governmental services already record calls for due diligence and training purposes, as prescribed in the UK legislation.

“The increased use of video comms means that services need to record and store this content in a searchable way, like they would audio calls or emails,” says Graley. “This will become more prevalent in the future, as more services go digital.”

A broad trend driving change across the public sector is delivering on the expectation which consumers have for receiving information by video whether that is over digital signage or a more personalised environments like meeting room VC or IPTV in schools, hospitals or a government's own offices.

A case in point is Coventry City Council which last year deployed a signage and IPTV solution to deliver internal messaging, TV into communal and public spaces and a more modern approach to visitor communications. Fourteen screens with Amino STB players were implemented at the council’s head office with Tripleplay Services software used to manage bespoke content.

“Digital media is integral to people's daily lives; they see it in the high street, they interact with it on their phones, so when they go to see their local government why should that be any different?” argues Tripleplay marketing manager, James Keen. “Digital communication is a massive expectation among users which county councils are having to embrace.”

There are a few basic boxes that need ticking for any public funded solution.

Longevity means designing as much future proofing as possible into the initial concept, “as well as ensuring they are quick and easy to maintain, reducing or eliminating any downtime,” says Fitton.

Another is security, as required by parties often handling confidential documents. Indeed, governments are more than ever concerned about security and cyber threats. For instance, before RealPresence Centro became part of NATO’s operations, it had to be cleared as a secure solution and be integrated into its restricted network.

The Chinese government recently adopted new regulations requiring companies that sell computer equipment to its banks to turn over secret source code, submit to invasive audits and build so-called back doors into hardware and software, according to the New York Times. [http://www.nytimes.com/2015/01/29/technology/in-china-new-cybersecurity-rules-perturb-western-tech-companies.html?_r=0].

“This [type of demand] is fast becoming a trend as governments all over the world demand some form of monitoring control or open access to products,” says Shayne Thomas, global marketing for Peavey Commercial Audio. Apple's fight with US intelligence services to unlock the iPhone is another example. “If you do not comply, your products will be blocked from those territories. Now that free trade agreements are forcing companies to become more competitive this may further cripple foreign manufacturers but favour local companies which are more willing to comply with their own government’s security regulations.”

Another criteria is for AV systems to easy to use by unfamiliar users. In crisis situations this will include persons under extreme pressure.

“There are few integrators who are able to work at the highest level in this sector, due to the security and approvals required,” says Fitton. “Often these projects are not widely publicised, which keeps the work within a small group of pre-qualified contractors.”

Winning EU tenders

There has been a recent tendency to move away from running local competitions for tenders because of financial regulation in the public sector. Tenders are found either by the system integrators working with the establishment to create the RFP, or by the organisation advertising a tender on the relevant journals such as OJEU (Official Journal of the European Union).

At the same time, it is also becoming increasingly common for competitions to go on the national or the European tender framework where people are already signed up as a provider.

Graley's advice is that if you are not registered on a framework in your country that supplies into the public sector, then you need to be, and very soon. “If you feel you are too specialist and not big enough to go on a framework agreement then you need to partner with a prime contractor who is already registered.”

Westminster events venue

Government-owned venue, The QEII Conference Centre, prefers to be seen as a flexible centre available for a range of different clients (albeit a number of them still being public sector).

With 32 potential spaces on site the QE2 requires a substantial freelance labour force. It also hosts flagship events where heads of government attend a summit or a large sporting event, often led by a central government department. “The in-house team may only assist but our client chooses to use our links and network,” explains Deborah Jones, AV/IT sales manager & director AV User Group. “Ultimately, the public sector represents a quiet but powerful event sector.

“At one level we have a number of teaching organisations using the venue as a large training facility and they regularly book and use our AV in our larger 'classrooms' for 700 people,” she elaborates.

Other clients desire a 'stock' look: stage set with a coloured lighting wash, a little bit of branding, audio, PowerPoint (not always HD) and some digital services, such as social media.

“They require an efficient 'no frills' service,” explains Jones. “At the other end of the scale we might do a multi-day conference that uses the whole building with endless small inspirational seminars for every area within the civil service. They demand a huge amount of AV kit.”

New cinema technologies set to stun

Screen Daily 

A growing arsenal of immersive technologies is being deployed this summer by international exhibitors to tempt consumers off the sofa and into cinemas. 

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When the USS Enterprise comes under attack in Star Trek Beyond, audiences at Barco Escape screenings will experience uniquely the alien onslaught from horizontal projections to the left and right. 

The 20-minutes of additional footage was created specifically by Bad Robot for the tri-screen presentation from outtakes and new CGI, and is described by Barco as a ‘director’s cut’. “What is shown on the centre screen is the same as any 2D presentation, but with more canvas to play with, [director] Justin Lin is creating a more expansive experience of the Star Trek universe than you will see anywhere else,” says Todd Hoddick, CEO of Barco Escape.

The most high-profile title yet issued in Barco’s panoramic format will compete with other versions of Paramount’s summer tentpole mastered for Imax and Dolby Cinema. “The industry is working to create an experience so compelling that consumers will put down their iPad and leave the sofa to enjoy an experience they can’t get anywhere else,” says Hoddick. “Experiential cinema is the future.”

While some presentation technologies are not new, combined together they are designed to retain cinema’s edge over home entertainment. These include 3D, 4K, high dynamic range (HDR) — which includes wider colour gamut (WCG) — motion seating, screens with enhanced audio, laser projection and high frame rates (HFR). IHS Technology analyst David Hancock dubs it “the premiumisation” of cinema. “You could argue this began with Imax and premium large format (PLF) screens but the segmentation is increasing,” says Hancock, who includes Secret Cinema events and in-cinema dining in the same bracket.

“Audiences are responding to being in an immersive entertainment environment,” says Framestore chief technology officer Steve MacPherson. “Gravity gave the audience a feeling of being with the characters in space, yet it was filmed without HFR or HDR and while it used 3D, was only mastered in 2K. Advances in technology are giving film-makers a new creative palette to deliver immersive experiences.”

But those technological advances are also being felt on the small screen and consumer electronics vendors are flooding retail with 4K TVs. Most will be in sizes of 50 inches and larger, as services becomes available in ultra high definition. Episodic content is also beginning to compete as series such as HBO’s Game Of Thrones bring a new level of sophistication and prestige to the medium.

“Home cinema worries me more than debates over the windowing of screen releases,” says Hoddick. “But we need to innovate and give the audience something special. VoD releases from Amazon or The Screening Room are an inevitable evolution. The industry can’t keep things the way they were for 100 years because any number of new technologies and business models will disrupt us.”

“Traditional cinema as a place to go and watch a movie has dramatically evolved over the last decade,” says Stuart Bowling, director for content and creative relations at Dolby Laboratories. “Exhibitors have to offer consumers choice and are turning to technology for new ways to reinvent their business.”

Exhibitors are keen to enhance their real estate but face a bewildering investment decision. “They are being asked to upgrade to a multiplicity of different technologies and have to make a choice about which will provide ROI,” says Hancock. 

This rapid development of technology has caused confusion, believes Andy Scade, senior vice president of global mastering operations, Deluxe Technicolor Digital Cinema. “It’s difficult from a commercial point of view to understand what the best long-term decisions are. However, there’s enough square footage in the industry for [exhibitors] to go down different routes and prosper. We want continuous innovation rather than for one technology to exist in isolation.” 

Perhaps key to weighing investments are assurances of content coming down the pipe. Barco’s solution is to subsidise a large portion of Escape while charging exhibitors $100,000 up front and taking a flat-rate fee per title and auditorium on release. “We lose money on the install,” admits Hoddick. “We guarantee to exhibitors that if we don’t bring content, we will never break even. With no virtual print fee, exhibitors will see right through you if you’re not prepared to back up your proposal. If there’s no content, the exhibitor doesn’t have to pay. This model has been well received by exhibitors.”

Barco is timing 50 Escape locations for Star Trek Beyond, including two Kinepolis sites in Belgium and two Euroscoop theatres in the Netherlands. By the end of 2016, a further 50 Escape-equipped theatres will be rolled out, mainly in the US, followed by another 350 by 2017 and 500 a year after that. 

On the studio side, Barco has deals with Everest producer Cross Creek Pictures and Shanghai-based Fundamental Films to produce multiple features in the format. Fundamental’s only announced title is 24 Hours To Live, starring Ethan Hawke and due summer 2017. Three further releases are scheduled this year, including the first in a six-picture Escape slate from Minds Eye Entertainment and Scott Waugh’s snowstorm thriller 6 Below from Tooley Productions, which will release exclusively in Escape over a several-week window. Eight titles are lined up for 2017 and a minimum of 12 per year targeted from 2018 (Jerry Bruckheimer is developing titles for the format and joined the Barco Escape advisory board in 2015).

Including Star Trek Beyond, all titles to date were retrofitted in the format after production. The first to be shot entirely for the format is 6 Below. “It is less expensive and more impactful when you design a movie from the outset in Escape,” says Hoddick. “For business reasons, we had to give everybody a taste of the format so that they could see how consumers would respond before committing to make movies in it from the beginning.”

Dolby has arguably been the most successful in promoting studio content into theatres outfitted with its technology. More than 1,800 cinemas worldwide can play films mastered in Dolby Atmos sound, including The Secret Life Of Pets, Suicide Squad, Ghostbusters, Inferno and The Lego Batman Movie. 

This excludes the 23 Dolby Cinemas, a branded screen experience that packages Atmos with Dolby Vision (its own high dynamic range grade) for projection using twin Christie lasers. The five Dolby Cinemas in Europe include two in Austria, two in the Netherlands and one in Barcelona (there are none in the UK), with estimates of 70 installations worldwide by the end of 2016 based on plans by AMC in the US and that chain’s owner Dalian Wanda’s own Chinese circuit, Wanda Cinemas, which signed deals for 100 sites each by 2024. 

“HDR is happening because Dolby essentially manages a closed system,” says Hancock. “They are feeding the technology into theatres with a guarantee of content. But there’s no similar argument for high frame rates.”

Titles in 2016 with a Dolby Cinema release include Finding Dory, Independence Day: Resurgence, The Legend Of Tarzan, Jack Reacher: Never Go Back, Fantastic Beasts And Where To Find Them and, in 2017, Wonder Woman. Consumers can enjoy many of the same titles in Imax, as the year brings The Magnificent Seven, Doctor Strange, Sully, Ghostbusters, Suicide Squad, Rogue One: A Star Wars Story and, in 2017, Christopher Nolan’s Dunkirk. 

While Dolby Vision is exclusive to Dolby Cinema, many of the presentation technologies can be mixed and matched by exhibitors. For example, a screen could be outfitted with 3D and Dolby Atmos or Auro. Barco Escape permits use by theatres of Dolby Atmos as well as Auro. Theatres with digital projection might offer 4K and 3D but not immersive audio. Being reintroduced to the mix are high frame rates. Sony Pictures’ Billy Lynn’s Long Halftime Walkwill be tweaked with all manner of masters relating to different frame rates, resolution, 2D/3D and dynamic range to give it the widest possible release. Potentially, 60,000 theatres worldwide are capable of projecting at least 48fps. None, though, are able to match director Ang Lee’s 120fps creative ambition without the DCI spec being rewritten.

“From the exhibitor’s point of view, HFR needs to be part of a whole package of image enhancements including resolution and HDR to really give the audience something they will notice and come back for,” says Richard Welsh, CEO of Sundog Media Toolkit. “Increasing the ticket price means providing plenty of bang for the buck, which is why we will have missed a big opportunity to advance the cinema experience if we choose only one or two possible improvements from HFR, HDR, WCG, 4K and 3D. All of them together are cinema magic.”

The multiplicity of technologies is leading to what Andy Scade, senior vice president of global mastering operations, Deluxe Technicolor Digital Cinema, calls “version explosion” and what IHS Technology analyst David Hancock terms “the opening of a Pandora’s box of formats increasingly less guided by the DCI” (the digital cinema initiatives that set the standard for digital cinema). “A major tentpole will be delivered in at least 300 versions,” says Scade. “We can’t keep multiplying iterations and put added pressure on the studios and content versioning and distribution services to make delivery deadlines.”

Mastering houses such as Technicolor are now being asked to create different deliverables per projector. “We create unique HDR deliverables for the Barco-Imax laser projector, the Christie-Dolby laser projector, the Cinemark configuration of laser projection and for those films being projected in 3D,” says Sherri Potter, senior vice president and head of worldwide post-production at Technicolor. “The proprietary nature of these systems will create an inconsistent experience as only certain content will play on certain devices or in certain theatres.”

While HDR creates more artistic opportunities, it also requires more time to process. “Paired with the fact that we now create deliverables for each proprietary ecosystem, and are often required to provide all the theatrical and home deliverables at or immediately after the release date, there is a strain on the pipeline with this condensed timeline,” notes Potter. 

Jim Whittlesey, chief technology officer of content mastering specialist Eikon Group, feels the distribution challenge will be met. “The DCI is constantly evolving to support new formats and the pipeline will adapt to manage it,” he says. “All these new tools are enabling consumer choice.”

Goldcoast to coast

AV Magazine

The geography of this continental scale island nation, a cultural zest for technology and a fading mining boom defines AV in Oz

http://www.avinteractive.com/features/goldcoast-to-coast-25-05-2016/

One of the largest countries in the world it may be but Australia’s biggest issue is that 85 per cent of its 24 million population live within seven major cities all separated by plane rides.

“The most significant challenge is the distance and not having the ability to enjoy the level of face-to-face interaction with our customer base we are accustomed to in the US or Europe,” says Bob Michaels, ceo at video distribution gear maker, ZeeVee.

“Australia’s location means there’s limited opportunity to get involved in international opportunities,” agrees Geraldine Shine, general manager at production and staging specialist, Technical Direction Company (TDC).

Logistics are a big challenge. It takes a week to ship product to Perth from Sydney 3,300 kilometres away on the west coast. Being an island adds additional constraints on imports.

“The distance between cities makes quite a dramatic difference in the ability to sell AV product since it’s hard to move products around. Plus, with a limited electronics manufacturing base, the import cost is higher than in most countries,” says Travis Anderson, country manager Australia and New Zealand, Exterity.

Russell Bennett, a Brisbane-based live event and AV business consultant points to Australia’s invention of the first black box flight recorder in 1953, and Wi-Fi developed by the Commonwealth Scientific and Industrial Research Organisation in 1996. “While our vastness and scant population have been our biggest technological issue, at the same time it has born innovation out of adversity,” he says.

Currently, the biggest infrastructure project in Australia’s history, costing AU$35.7 billion (£18.2 billion) will ensure that most of the country will have access to some form of high speed broadband in the next decade.

“Australians just love technology but it’s not the willingness to take up AV but more a case of a limited population which leaves us missing out on new technologies as the market is viewed as too small,” says Bennett. “If suppliers and marketers take the time to know the market, the take-up is often better than other counties based on sales to population.”

“As big as Australia is geographically, it is also a very small place,” observes Chris Ware, v-p engineering at Audinate. Its first customer was Bruce Jackson (legendary sound engineer and founder of lighting and staging outfit, JANDS) in Sydney in 2006. “That was a fantastic break for Audinate to have a local team as our lead customer, especially one as connected within the industry as Bruce was.”

ZeeVee’s Michaels says he finds Aussie business culture similar to that of the US, perhaps because of their shared frontier spirit.  “There is true ‘can do’ attitude and a bit of brashness in the approach that exudes confidence and thus credibility,” he says.

His company has only been active in the country since 2014 but is looking to make Australia one of its top three export markets within the next 12-18 months.

“There’s a strong desire to be educated and a deep belief in understanding the benefits of products as opposed to a superficial understanding of the features,” says Michaels.

AV/IT integration trend

The country doesn’t deviate much from the macro trends in other developed markets: the integration of AV with IT concentrating minds. “A great example is the Sydney metro network which is rolling out a networked AV system that can provide tightly synchronised, high quality audio throughout the train system (using Dante), resulting in real cost and performance advantages,” says Ware.

Sennheiser reports a swing towards AV falling under the IT banner in education and corporate local AV markets. “IT departments are increasingly looking to have AV specialists as part of their teams as they’ve recognised the need for specialist knowledge and know-how for AV products,” says Andy Niemann, director of business communication.

This is not quite the opinion of Simon Fourie, md at local distributor Audio Visual Distributors: “There are not a huge amount of IT skills in the AV industry here and general resistance to the merger of AV and IT is high.”

Early adopters of technology they may be but some clients appear innovative only from the influence of what happens internationally. “Clients are sacrificing quality over price,” Shine says. “The market is entirely price driven which limits the ability to offer innovation or creative solutions.”

The characteristic brashness of the Australian culture is transparently on display when its cities host fantastic architectural projections. Vivid Sydney is billed as the world’s largest light festival.

“Clients are generally quite innovative and open in their approach to AV, especially in the visitor-experience sector where we’ve seen a number of outstanding projects,” says Dean Stevenson, ceo, Interactive Controls – Dataton’s premium partner. He name-checks the recent WW1 re-development at the Australian War Memorial, and the immersive Antarctic attraction at Phillip Island. “Urban Yoga’s studio is another a good example of a non-traditional context taking a fresh look at AV,” he adds.

Mining for more

Australian’s economy is closely linked to China and as this has weakened in the past 12-18 months its business climate has softened.

“We’ve seen a downturn in the mining and raw material sectors which are two of the main drivers of the Australian economy,” notes Niemann. “There are still projects to be won but the level of optimism in the market is not what it was.”

Perth, capital of Western Australia is home to Australia’s mining billionaires, and “a mecca for AV integrators working with the major mining operations and mining company office AV fit-outs and home automations,” says Bennett.

Now the government is looking to develop the wealth of minerals, agriculture and aquaculture in the north of the country. Darwin in the Northern Territory (closer to the capitals of Asia than to any other major Australian city) and Cairns and Townsville in North Queensland are set to become the big winners. “The region is also on the receiving end of much of the country’s defence spending,” adds Bennett.

Brisbane and South-East Queensland which encapsulates the Gold Coast will stage the 2018 Commonwealth Games. The largest sporting event in the country this decade will inject more than AU$2 billion into Queensland’s economy with NEP Australia landing the host broadcast job. As is the way of such events, AV investment will be mainly temporary.

Brisbane’s airport precinct is the focus of a AU$4 billion development to make it a major international hub. It’s home to Christie’s Australian operations and an example of how a company strategically places its offices in a location to also assist in servicing its Asia and Pacific needs.

“Australians love to gamble,” says Bennett, observing that Australia is in the midst of a casino revolution. “New casinos are being built in Sydney, Gold Coast and Brisbane with major extensions to existing developments elsewhere.”

Working with the weather

The country also works around its weather patterns and natural disasters, he notes. The tropics of Northern Australia, for example, have a dry season when road and rail transport to Darwin and Cairns are heavily reliant on road and rail freight which is often cut by monsoons and cyclones in the summer with extreme humidity.

“AV rental companies and integrators tend to have a transient workforce as mining is the major industry all year,” Bennett reports.

Outside the mining areas “cities are very traditional, limiting their infrastructure development to restoring what once was,” reckons Fourie. “As you can imagine, this puts limits on new project roll-outs to gear that can be adapted to older infrastructure. An exception is the AU$1 billion International Convention Centre which opens in Sydney later this year.

If the mining boom is over, investment in healthcare represents an opportunity. “This is an ageing nation and right now there’s a huge healthcare push,” says Anderson. Exterity distributes IPTV through Midwich in Australia. “Staff and patients in hospitals expect the same information and entertainment environment as they can get at home.”

Systems integrator Rutledge was awarded a multi-million dollar contract for the AV install at the AU$1.2 billion Perth Children’s Hospital and AV services for the AU$1.8 billion Sunshine Coast University Hospital.

Fourie links the idea of the Nation’s relative youth with its cultural focus on family. “There is a great impetus on education. Development around this vertical is most prevalent.”

Sennheiser’s Niemann reckons the weakened Australian dollar means tertiary education has become more attractive to overseas students “causing universities to invest in the teaching spaces and infrastructure to lure students”. Universities, he adds, also see full fee-paying foreign students as a way to supplement income, “as the federal government has decreased funding to this sector.”

The biggest challenge for foreign AV companies tackling Australia is best summed up by Audinate’s Ware: “Building the customer base in the early days took effort, and a lot of travel,” he says. “In our experience the AV industry is fairly common the world over but Australians are definitely a little more relaxed by nature so that isn’t exactly a bad thing.”

Racecourse revamp

The Australian Turf Club’s AU$168 million redevelopment of Sydney’s Royal Randwick Racecourse includes an Exterity IPTV system of 800 networked HD displays. Displays are located throughout the venue including suites, ballrooms, outdoor spaces and management facilities.

The Exterity system enables control of each display and associated content centrally and from AMX control panels. In the hospitality areas, each of the 200 tables has its own Sony Vaio touchscreen — effectively a self-contained tablet PC — which allows visitors to change one of 60 channels.

Celebrate Sydney

Vivid Sydney, now in its eighth year, is recognised as the largest event of its kind in the world combining light, music and ideas. Owned, managed and produced by Destination NSW, the NSW Government’s tourism agency, the 23-day programme features large scale light installations and projections, music performances and collaborations intended to celebrate the city as the creative capital of the Asian Pacific. Production companies involved include 32 Hundred Lighting and Technical Direction Company. Locations include Circular Quay and the Sydney Opera House, The Rocks, Martin Place, Darling Harbour and for the first time, Taronga Zoo and The Royal Botanic.

Multichannel Networks and the Changing Face of TV

IBC

Just as multichannel networks (MCNs) threatened to pull the millennial audience away from TV for good, operators have spent big to get them on board. It's a synergy that benefits both parties and a topic covered in depth at the IBC2016 Conference.

http://www.ibc.org/hot-news/multichannel-networks-and-the-changing-face-of-tv

MCNs started out linking millennial content creators with video aggregation platforms, principally YouTube. Sandwiched between the content creators and the audience for YouTube channels, “uncharitably you could call them middlemen,” says Ampere Analysis research director Richard Broughton, and “that model had to evolve.”

YouTube revenue was $5bn in 2015 of which the Google-platform took 45% with MCNs taking the remaining $2.9bn, most of which flowed back to the original content creators leaving MCNs with little margin.

In response MCNs began to verticalize to get closer to content creators. Broughton explains, “If you can produce content you no longer have to give away the majority of revenue that comes from advertising.” For example, Tastemade, for example, concentrates on food, Stylehaul on fashion.

A parallel strategy was to work more closely with brands and ease the reliance on pre-roll ads. Examples include Fullscreen's partnership with GroupM to form influencer marketing group Playa, which will exclusively service GroupM and WPP clients.

“Influencer marketing matters where the big agencies, that have historically bought lots of TV and lots of preroll ads, recognise this as a way to market and reach customers," says Fullscreen CEO George Strompolos.

MCNs gained greater leverage to negotiate distribution deals when Facebook entered the video game. Snapchat, Instagram, Twitter offer other options, in particular to reach millennials on mobile devices.

In a flat to declining market broadcast and payTV stakeholders have identified MCNs as a source of growth. Those who bet early have seen some serious returns on their investment. DreamWorks acquired Awesomeness TV for $95m in 2013 then sold a quarter stake to Hearst valuing the MCN at $350m. Verizon took a subsequent 24.5% stake to value the network at $650m.

“MCNs are typically being sold at 25 to 35 times revenue, a figure which reflects their massive growth rate and longer term strategic importance,” says Broughton. “They are seeing 100-200% growth every year so you can imagine, over the course of five years, that the initial 35 x ratio might come down to something of a more typical 5 x ratio.”

MTG took control of Swedish MCN Splay; Fullscreen is owned by AT&T and The Chernin Group; The RTL Group has invested in MCN Divimove and Canadian MCN BroadbandTV which itself recently acquired Indian MCN YoBoHo.

Aside from large dividends for their founders - what do MCN's get out of the deal? “Many MCNs have very low margins, almost negative numbers, so allying with a major broadcaster or content creator makes sense,” summarises Broughton. “They can access ad sales teams for cross media campaigns and tap into big brands and production expertise. Alliances also offer a way of getting content onto broadcast platforms which is still where the bulk of money is. Plus it means investment. There are only so many times an MCN can go back to the market to raise capital.”

With fewer MCNs left to snap up, media organisations have a choice: build their own, buy one at great expense, or attempt to curate them.

Going the latter route, Sky, has launched Sky on Demand via Sky Q which curates content from digital creators including Barcroft Media and GoPro. Vice is launching European linear channel Viceland, with Sky in September.

While Google thinks millennials will pay for ad-free content on YouTube Red, MCNs are also launching their own SVOD initiatives as Fullscreen did in March – cutting out the middleman.

“MCNs exist less as aggregated networks of channels for advertising and more as sophisticated organisations that encompass the entire spectrum of content creation and delivery,” says Mano Kulasingam, Co-CEO, Digiflare. “Whether through direct-to-viewer models or by integration with pay TV platforms, MCNs will be able to enhance production values, acquire new talent, and obtain a higher degree of personalisation in the design and functionality of the platform.”

In the next few years, the ability to exercise control over the way their content is discovered and delivered is going be a fundamental part of any MCN’s strategy for reaching and engaging new audiences.

Explore ‘The New Broadcasters: The rise of internet TV networks’ as part of the Platform Futures conference stream at IBC2016 and network with executives running MCNs including Damon Berger, VP, Business Development, Fullscreen;  Matt Campion, Founder and Creative Director, Spirit Media; Scott Ehrlich, CEO, The QYOU; Sam Barcroft, Founder and CEO, Barcroft and Bengu Atamer, Co-founder and Director, BuzzMyVideos.

Cloud Cover

Digital TV Europe p24

As operators recognize the limitations of traditional in-home service provision we are starting to see a steady rise in Cloud technology adoption.

http://media2.telecoms.com/e-books/DTVE/magazine/junjul16/

In order to match the heightened consumer expectation for TV everywhere, all service providers have cloud technologies on their roadmap. Rollout is hampered in many cases by existing investments in legacy on premises equipment, copyright and legislative issues and some technical nuts which have yet to be cracked.

The benefits, though, of a shift to Cloud are widely understood. As John Carlucci, president & CTO, Alticast, notes, “What’s important about Cloud is how it helps operators to break free from the bounds of the STB and use DevOps models and ubiquitous IT tools like HTML5 and JavaScript for app development.”

It's also worth observing that Cloud tech promises to revolutionise business models even further. “The next big step is providing events-based channels and disaster recovery capability and ultimately doing full linear playout of sophisticated channels in the Cloud,” says James Gilbert, co-founder, Pixel Power. “In that light, cloud DVR and ad insertion are good tests of the infrastructure, but in terms of the future, the Cloud is about much more.”

Cloud DVR

Some reflection of this shift in thinking is in the terminology, which has shifted from RS-DVR to nDVR to, now, cDVR. While increasingly being deployed, “there's no big bang shift in behaviour” as Accedo's EMEA VP Adam Nightingale.

Accedo expect over 50 per cent of cDVR penetration to have occured by 2022, roughly the timeframe which Ericsson forecasts too. Parks Associates research predicts cDVR subscribers worldwide will total 24 million by 2018.

Nokia, which took over French firm Alcatel Lucent for $17bn, says it has nine deployments for cDVR including Liberty Global, Telefonica, Numericable and Vodafone Portugal.

South Korean sat-caster KT Skylife is among those using Alticast solutions to deliver either cDVR or hybrid systems that leverage the STB and Cloud. Spanish cable service provider Euskaltel launched cDVR last year using a Nagra solution to offer a multiscreen service on legacy STBs and OTT to connected devices

Arguments in favour

The upsides are numerous. For end users, content deployed in the cloud enables multiscreen access and recording of multiple simultaneous shows (not restricted by physical set of tuners). Without the limit of a 500GB hard disk content, storage capacity is dynamically allocated, plus the relatively high failure rate of STB disks and consequent loss of personalised content can be mitigated. Customers can also retain recordings when they upgrade to new devices in the home.

For the service provider there are capital savings from using shared and scaleable storage over dedicated hard disks, and theoretically fewer service issue call outs. Ericsson says a typical truck roll costs $75/subscriber. This has been the main driver for the deployment of cDVRs by operators such as Cablevision in the U.S. and KPN in the Netherlands, it suggests.

“Associated costs quickly add up given that approximately 5 per cent of hard drives fail per year and new features and upgrades require hardware replacement,” says ays Itai Tomer, head of cloud DVR, Ericsson. “A centralized network is more reliable than distributed drives.”

More importantly, cDVR delivers a greater degree of control over content for customer, service provider and advertiser alike.

“A content provider can assign rules around which content can be recorded and for what period,” says Roland Mestric, Nokia's head of video marketing. “Such data can be used by advertisers who can place relevant ads around content when it is actually watched. You can also ensure the ads aren't skipped.”

However, technical and licensing challenges are still hampering rapid advancement of this kind of service. Negotiated rights vary programme to program and country to country, with the pivotal issue being whether a unique copy is required for every subscriber. Each scenario has its own challenges and services providers must ultimately decide between a private, shared, or hybrid architecture.

Licensing challenges

“In the U.S. for instance, the landmark Cablevision decision deemed a unique copy saved per user as the standard, although we are still seeing MSOs looking to readdress that decision independently,” says Tomer. “In Europe it varies according to region with issues ranging from high costs (of deploying a private copy solution), to securing the rights to content and consolidating within a variety of regions with different regulations.”

Matters are evolving. For example, new legislation before the French Senate should provide a legal framework encouraging the deployment of cDVR solutions in France.

Private copy cases are extremely costly to deploy and therefore less economically viable than shared copy scenarios. Explains Tomer, “A private copy system requires a unique copy of a program to be saved for every subscriber that requests it, meaning recordings cannot be shared. Each single, unique copy of the program has to be saved for each user, which requires a huge, growing volume of storage, very high recording and playout concurrency and that can be problematic to sustain.”

Technical challenges

This plays into the three main technical challenges: scalability, flexibility and reliability. Regarding the first, says Mestric, “We need storage that can scale from a few TB to tens of petabytes. We need to ensure the platform can ramp from start to full deployment.”

More flexibility in the system is vital to make sure the service is optimised based on service or use case requirements. “With cDVR you can deploy a number of end user services like live restart or catch-up,” says Mestric. “The characteristics of a system for live are, however, not the same as for VOD or catch-up, so based on the requirements of operators a system has to have the flexibility to be optimised. Moreover, if an operator starts with catch-up they need to be able to add full cDVR as it negotiates rights with content providers.”

Platform robustness ensures the consumer always has access to content and will not lose it. “If a hard disk fails it needs to be recovered very quickly. Performance and speed is the key criteria.”

At the network level the technology is now available from streaming and content delivery network vendors (such as Harmonic or Edgeware), enabling robust solutions to be deployed. Of course, 'Cloud' in cDVR doesn’t mean a 'public' cloud. “Operators are, for the most part, still skittish about public cloud due to concerns about security, quality of service, and control. So these cDVR deployments are happening on private clouds,” observes Yuval Fisher, CTO, MVPD, Imagine Communications. “The general view is that a cloud is an infinitely scalable and fungible collection of resources. But the reality for cDVR clouds is that this doesn’t scale. As a result, cDVR deployments require specialized clouds, and this is something the industry is just now digesting.”

The bottom line

“Rights holders are also starting to realize that cDVR actually offers new opportunities to monetize content with services that appeal to a new generation of multiscreen TV viewers that value convenience and flexibility more than any other market segment before,” says Simon Trudelle, Sr. director product marketing, Nagra. However, says Tomer, “cDVR isn’t a trivial deployment and legal issues, storage concerns and performance requirements must be considered.”

Cloud Ad Insertion

Generally speaking, operators are yet to fully embrace the cloud to deliver ad insertion across live and on-demand services.

According to Thinkbox 2015 figures linear still accounts for 81% of all TV broadcaster viewing in an advanced market like the UK. As overall Cloud-based on-demand TV consumption increases, the value in managing addressable ads delivered to personalised, connected screens will become more transparent to broadcasters, brand advertisers, and measurement firms.

“The deployment of next generation fully connected STB, complemented by other screens, is clearly the enabler that will drive demand,” suggests Trudelle.

Early adopters are beginning to implement ad insertion technologies, others are in wait and see mode. “It’s early days,” says Ericcson's Tomer. “One thing is clear: operators agree that changing viewing habits combined with OTT video and innovation in cDVR technology have changed the game for advertising.”

Value in targeting

“The real value of the Cloud here is targeting,” says Imagine's Fisher. “A different way to look at this is that as advertising moves towards impression-based targeting, it is also moving toward software and cloud deployment as a natural evolution in how solutions are packaged.”

Cloud enables scaling - the ability to utilise more ad insertion resources when needed (such as at prime time). This is “basically a cost saving feature” for Fisher. “So it’s not really a benefit as much as a mitigation of the extra cost associated with deploying full targeting capability. More importantly, new ad insertion mechanisms are based on software, and that brings significant operational simplicity.”

Cloud ad insertions also overcome issues with ad blockers, so operators can increase revenue from ads, although it won't totally eradicate blocking.

“Generally the user experience is better with Cloud ad insertions but probably the most important advantage is that an operator is in control of the ads, rather than having to rely on the platform owner,” says Accedo's Nightingale.

Making it happen

Whether server-side or client side, ad insertion is now well defined from a technology standpoint. Client side solutions include using one player to play the main content while a second is used to play ads. According to Nightingale, this solution “permits the app to initialise the players ahead of playing the content and then switches players (brings a player to the foreground) when required.” He says, the customer doesn't see any buffering or delays between the main content and ads. “This solution generally works well but it does requires a lot more memory on the client device.”

Alternatively, client stitching applications make use of one player, and while playing either the ad or the main content, is able to buffer the other content for the next item ready to be played when required. “No buffering is seen by the customer and the UX is seamless,” he says. The player can also be given a playlist of assets to play which plays sequentially one after another.

Dynamic stream stitching, sometimes called manifest manipulation, is performed on the server side and requires very little customisation of the client side player. Explains Nightingale, “The client tells the server what content the customer wants to play and any ad requirements and the server makes the calls to the ad server. The ads are stitched into the main content and delivered to the client.”

While Cloud ad insertion requires greater preprocessing of ad content in terms of adaptive bitrate, video quality, sound codecs and so on, the challenge service providers face is often more on the business front.

“With the exception of the U.S. market, where MVPDs actively manage some of the advertising space on behalf of broadcast networks, demand for addressable ad insertion remains low as the ad space is managed by broadcasters,” says Trudelle.

Tomer also notes the that current inventory of ads, although growing, is very low “plus they are expensive to create”.

The bottom line

For scenarios where STB connectivity and interactivity are not guaranteed or are limited to a subset of the subscriber base, the Cloud may not achieve value in the short-term. “It really means that service providers should have a plan to go 'fully connected' before envisioning deploying Cloud ad insertion,” says Tomer. “Those who can move fast will clearly reap the benefits of this new technology.”

Cloud TV UX

Transplanting user experiences to the Cloud offer many of the same advantages to operators, notably the ability to change the UX rapidly and at scale, rather than rewriting UXs for every make and model of STB, and enabling an operator to innovate discrete UIs for every subscriber.

“The always-on nature of the cable network enables the Cloud to be harnessed so that operators can deliver advanced user experiences – such as Millennial Navigation, Kids’ Modes and Sports Zones – that are not capable of being supported by the set-top box alone,” says Carlucci. “Since UXs no longer need to be resident on the STB, operators – and customers – can have an infinite number of UX variations.”

With Accedo AppGrid users can update applications in real-time across platforms and control it per user, country or time of day without redeploying and submitting applications. “Being Cloud-based means providers can easily engage with viewers, for example through in-app notifications,” says Nightingale.

UX's delivered as streams to every STB enable operators efficiently to deploy services “that are equal to – or better than – experiences that run on the box itself,” says Murali Nemani, CMO, product management and marketing, ActiveVideo.

There are a number of instances illustrating how Cloud UIs can bring a diversity of advanced UXs to existing STBs. VOD and catch-up services with Ziggo in the Netherlands; trend-driven UIs with multiple tiles of live video on single tuner STBs with Liberty Puerto Rico; and the complete YouTube experience to upwards of 500,000 existing STBs at UPC Hungary (all these are ActiveVideo deployments).

Similar innovation is taking place in the U.S. where Cablevision were the first to make the full Hulu experience available on all its current generation boxes.

Not a stop-gap measure

Cloud-based or STB strategies are not mutually exclusive. Operators are always going to want to bring the best possible user experiences to customers; the more compute power they can move to the Cloud, the more it reduces the operational burden of improving user entertainment and navigation.

“You’ll see the industry continue to use the Cloud to deliver TV UXs even as boxes become more capable,” says Carlucci. “We will leverage what the improved STB can do but we also will continue to see the cloud and the network evolve.”

There's a similar strategy at ActiveVideo which offers GuideCast and StreamCast products to ensure that next-gen services can be delivered at scale to STBs already in customer homes, as well as to new devices coming to market.

“Some [operators] are streaming the entire UX from the cloud; some are using cloud resources to complement a next-gen device strategy,” says Nemani.

U.S cable company Charter has moved to stream its entire UX from the Cloud beginning with its Spectrum Guide guide. Tom Rutledge, Charter president & CEO [speaking at CES 2015] said: “We’re taking the intelligence out of the box and putting it into the network and making the box a thin client box so that the processing power of the box is no longer a relevant issue; the processing power moves to the network. That’s a breakthrough.”

Craig Moffett, of MoffettNathanson Research, estimates that Charter will spend $2bn over five years for its cloud-based guide build compared to $8.4bn for IP-enabled boxes: a 77 per cent capex saving.

Questions of deployment

However, there are notes of caution. While agreeing that Cloud UX can tap “virtually unlimited back-office CPU power” Nagra believes this is “driving the industry to a position of compromise” because the functionality of a native embedded UI/UX “cannot be replicated with today's Cloud UI offering.”

Anthony Smith-Chaigneau, sr director, product marketing elaborates, “Cloud UX deployment has its share of issues technology challenges. These include the latency of the remote control, as each action of the remote has to be transmitted to the cloud for processing. If network resources are limited it is difficult to anticipate the actual load of the network. This is the case in particular for live/linear services where each video stream is unicast.”

There's a real question about the simplicity of the STB/CPE client, he suggests. “Both video and audio still need to be decoded, taking into account the numerous compression and transport formats, this requires a variety of computing power requirements.”

Plus, he wonders how open providers like Netflix or YouTube will be to being “proxied” by a Cloud infrastructure. Currently they have their UI implemented in the client device.

The bottom line

“Ironically TV everywhere is addressing laptops, smartphones and tablets that have enormous computing power,” says Smith-Chaigneau. “So with a Cloud UI-UEX are we just talking about the issue of 'incapable' STB/CPEs in the field? Is that is the problem that we are addressing with this solution?”

He answers his own question: “It may well be that cloud UX is the solution for small and medium operators who want to deploy similar advanced services and advanced UX without having to bear the cost of implementing a middleware in the client STB/CPE, or at least be able to support a middleware that provides mainly the video and audio rendering means: no PVR, no video gateway to home network. Network bandwidth still remains a challenge, but there might be less problems as these operators have to serve smaller number of clients.”