The State of Mobile Video 2019

Streaming Media

Mobile viewing is already on the rise even before mobile operators prepare for 5G to skyrocket data demand. But monetisation remains up in the air.

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There’s a perfect storm brewing. Mobile video is growing at a phenomenal rate putting current networks under strain, at the same time as 5G looks as if it’ll ride to the rescue. Subscribers may love it, but monetizing 5G is easier said than done and with more video traversing mobile networks than ever before, quality of experience (QoE) is becoming a major headache.

"That’s because when subscribers experience poor quality when streaming video our research found that consumers blame the operator, not the OTT [over-the-top]," says Indranil Chatterjee, SVP of products, sales, and marketing at mobile traffic management firm Openwave Mobility, in an Openwave blog post. "And it is only a matter of time before they churn."

Numerous forecasts point toward the rapid growth of video, often in tandem with breathless predictions for the rollout of next-generation wireless broadband. Ericsson’s November 2018 Mobility Report, for example, predicts video traffic to grow 35% annually through 2024—increasing from 27 exabytes (EB) per month in 2018 to 136EB in 2024. Put another way, video’s share of the global mobile traffic will rise to 74% from 60% today "as 5G establishes itself as the fastest generation of cellular technology to be rolled out on a global scale," the reports states.

According to findings from Ofcom’s Communications Market Report in August, some 95% of UK 16to 24-year-olds own a smartphone. The average amount of time spent online on a smartphone is 2 hours, 23 minutes a day. This rises to 3 hours, 26 minutes among 18–24s.

Ooyala’s Q2 2018 Video Index shows video plays on mobile devices were up more than 13% from a year ago, the biggest increase for smartphone plays in five quarters. It was also the first quarter ever to see smartphones top 50% of all plays. The previous best share for smartphones was just 47.5%.

"As solid as these mobile numbers are, they’re just the precursor to higher mobile share coming in the next several quarters as content providers—especially sports teams and leagues—begin to cater to an audience that is slowly, but assuredly, moving away from traditional video delivery," according to principal analyst Jim O’Neill.

Ready for the 5G Rush

In western Europe, nearly a third of citizens will be on a 5G contract by 2024. Ericsson reports: "It has become apparent that 5G anticipation is much greater than that experienced in the lead-up to LTE."

The adoption of 5G will lead to the continent consuming the second-highest amount of data via user handsets. Europeans will use 32GB per month in 2024, compared to 6.1GB today.

"The increase in video data traffic per smartphone user has three main drivers: increased viewing time; more video content embedded in news media and social networking; and an evolution to higher resolutions and more demanding formats," according to Ericsson’s report.

While most mobile video today is streamed as low as 360p, higher-definition streaming is already on the rise. "The average resolution of a YouTube video in some LTE networks is already up to 720p," states Ericsson.

Openwave tracks the same trend. While most operators it suggests experienced growth in mobile video from 2010 to 2015 as a result of increased video viewing, in the last 3 years, growth has been driven more by moves to higher-bandwidth content (from Netflix, YouTube, etc).

"As operators prepare for the dawn of 5G, there is one sure-fire certainty," says Chatterjee. "HD content (including 4K and soon 8K content) and therefore mobile video will soar."

Some operators yet to fully monetise 4G are already looking at 5G as "an enterprise vertical enabler" according to Dimitris Mavrakis, research director at ABI Research, quoted in the Openwave blog post. "5G will initially be used to improve the consumer user experience—and surprise surprise—mobile video will spearhead this strategy," he says.

In 2016, mobile video represented 48% of traffic, and ABI Research predicts that 5G’s mobile video growth will accelerate in 2022. By 2025, video will reach 78% of traffic, a whopping 40% of which will be 4K video.

By Q1 2018, there were 465 million unique mobile subscribers in Europe, equivalent to more than 85% of the population, with 4G having now established itself as Europe’s leading mobile technology, according to the most up-to-date figures of the Global System for Mobile Communications (GSMA), presented in it’s "The Mobile Economy: Europe 2018" report (go2sm.com/ gsma18). It expects 4G adoption to peak in 2023 before declining as consumers upgrade to 5G.

In fact, according to this report, the mobile operators’ body is predicting that by the middle of the next decade, there will be 203 million 5G connections in Europe, representing 29% of total connections. Significant capex by mobile operators in the post-2020 period will expand 5G network coverage to three-quarters of the region’s population by 2025.

Another priority for mobile network operators remains identifying the commercial returns for the fifth-generation network.

The GSMA, for one, predicts that Europe’s mobile economy will account for €720 billion, or more than 4% of the region’s entire GDP, in just 3 years’ time.

"5G networks in Europe are expected to provide coverage to almost three-quarters of the region’s population by 2025 and Europe is set to become the world’s third-largest 5G market behind Asia Pacific and North America by this point," says Mats Granryd, GSMA director general.

5G Commercial Rollout

Although there is still headroom for 4G growth in many markets, the first 5G launches by European mobile operators are already happening. In the UK, EE is leading the charge. It demoed a number of 5G live trials at the end of 2018, including switching on 10 trial sites across East London by end of December aimed at business and consumers.

The operator, which has the advantage of a fixed line operator in its parent BT Group, also made the first live broadcast using remote production over 5G 10Gbps backhaul for the soccer final EE Wembley Cup in November, delivered from Wembley Stadium (North London) to BT Sport’s base in East London.

Analyst Paolo Pescatore, SVP of consumer services at MiDIA Research, called this hugely significant. "There are plentiful opportunities for BT Sport to be more creative with its editorial and production output as well as gain additional benefits from cost transformation," he says in a November 2018 post (go2sm.com/midia). "[R]emote production and live contribution ... means lower costs with few cameramen needed to cover an event onsite. Other broadcasters, media and content owners should be looking at seeing how 5G could be used in their own productions especially news agencies."

According to ZDNet EE has begun upgrading hundreds of towers to 10Gbps transmission in city centres, including Birmingham, Cardiff, and Belfast, as it preps for a nationwide 2019 commercial launch. The network is being focussed on densely populated hot spots such as London’s Hyde Park and Manchester Arena, which it says carry 25% of all data across the whole network, despite only covering 15% of the UK population.

5G smartphones from multiple (unnamed) partners are expected to be available this year. EE also plans to make a 5G Home router available.

Rival Vodafone UK plans to switch on 1,000 5G sites by 2020, including commercial launches later this year in rural parts of Britain like Cornwall and the Lake District, according to Telecoms.com.

It grabbed attention by claiming the nation’s first holographic call using 5G in autumn when England women’s football captain Steph Houghton appeared live from Manchester as a hologram in Newbury near London.

Vodafone in Italy spent €2.4 billion to acquire the spectrum that will underpin its national 5G network. This spectrum became available in January, with Milan earmarked by the operator as "Europe’s 5G capital," with near blanket coverage expected soon.

In December, Vodafone and Sky Italia partnered on a claimed first live new broadcast via 5G in Italy.. Rival Telecom Italia (TIM) is also investing heavily in its 5G network build and has undertaken a number of high-profile trials, to showcase its efforts, including lighting up "Europe’s first 5G state" when it turned on 5G base stations in the principality of San Marino and operating drones over Turin using 5G.

A major 5G field trial continues in Munich to investigate large-scale TV broadcasts over 5G. The project is supported by Telefónica Germany and Bayerischer Rundfunk, the Bavarian state broadcaster.

The auction in Germany this spring of the 2GHz and 3.6GHz radio spectrum is being keenly watched by those concerned that Telekom Deutschland, Telefónica Deutschland, and Vodafone will monopolise the bidding according to an August 2018 post by MVNO Europe.

MVNO Europe (MVNO stands for mobile video network operator) claims German operators are holding back innovation and disrupting competition by not giving other operators adequate access to the spectrum.

According to the same August 2018 post, "MVNO Europe believes that the behaviour of incumbent German operators runs counter to enabling competition and innovation." Chairman Jacques Bonifay adds that "such a market evolution may prevent the emergence of pan-European and global 5G-based services delivered by European companies, given that it will be impossible to ‘scale-up’ in Europe if Germany cannot adequately be served."

Betting on Short-Form Content

Looking to capitalise on the mobile explosion, funding is being pumped into short-form content.

The biggest bet is by Quibi ("Quick Bites"), the $1 billion network spearheaded by Jeffrey Katzenberg with investment backing from Disney, Fox, NBC Universal, and Alibaba. It will hope to succeed where the likes of mobile content ventures Studio+ from Vivendi and go90 from Verizon failed.

BBC Studios, which launched a high-end, short-form fund with Anton Capital, and Viacom Digital Studios are among big media attempts to capture new audiences with premium-produced short-form content.

Their target is social media channels Facebook Watch, Snapchat Discover, YouTube, and Instagram (with its new video app IGTV).

"There is an increasing realisation that the days of trying to build your own network and website then acquire and monetise an audience is hard and incredibly expensive," said Kelly Day, president of Viacom Digital Studios (VDS). "On the other hand, our ability to scale up by distributing across the social landscape is such an enormous opportunity that it is worth revenue sharing with those platforms. If you do the math, it works out [in] your favour."

Viacom is busy reversioning its show brands like Spongebob and The Daily Show for social media.

Facebook’s decision to move to mid-roll, non-skippable ads has also fuelled an appetite for mid-form content between 10–25 minutes.

Amazon Prime Video’s acclaimed Julia Roberts’ thriller Homecoming was made as a 10-part, 22-minute series with mobile on-demand viewing in mind.

In her talk at IBC, Day continued, "In the early days of online video platforms there was a perception that digital short form was all cats on skateboards. We’ve evolved to a place where you are no longer at the mercy of the linear clock. How long your content is, is dictated by the story, by the platform, and your budget."

Capital Outlay

Prioritising customer satisfaction and preventing churn are the cornerstones of telco operator (fixed and mobile, or increasingly converged) strategy. Consequently, the more grounded take on 5G is that it won’t be a big bang in which we are all switched onto blazing fast speeds but a gradual uplift in which winning applications will only become apparent over several years, perhaps a decade, of evolution.

What is most notable is that there is no one-size-fits-all technology approach, no magic bullet to next-gen networks. The huge increases in capacity, performance levels and increased speeds must be supported by an efficient fixed infrastructure. This includes installing millions of small cells for network densification as well as buying spectrum licences. Almost all applications require getting a fixed (wireline or optical) network close to the user. Operators are weighing the merits of a wide toolkit of solutions to achieve this, often in combination, including the cable technologies of DOCSIS 3.0 (Data Over Cable Service Interface Specification 3.0), G.fast, NG-PON (Next-Generation Passive Optical Network), and fibre to the home/premise/building, as well as 5G wireless. And satellite can’t be dismissed either as a valuable backhaul channel to carry the sheer load of data or its continued unmatched ability to broadcast to digital outcasts.

Although market research firm Ovum expects adoption of 4K video and other such bandwidth-intensive applications to grow quickly, it will remain difficult to convince the mass-market consumer to pay a premium for 10Gbps over lower-speed tiers such 1Gbps. Consumers do want higher quality, especially for video, says the research firm, but most consumers will not even need a 1Gbps pipe within the next 5 years, since a 50–100Mbps throughput will be sufficient for most consumers’ internet apps to work and work well.

It seems that, in Europe at least, market competition and regulation, rather than consumer demand, are driving the trend toward gigabit services. For all operators, a gigabit upgrade offers the opportunity to appeal to the tech-savvy, high-spending customer, perhaps with new VR/AR game streaming, but Europe-wide connectivity objectives are also jump-starting national governments into action.

By 2025 all European households in EU member states need to have access to at least 100Mbps connectivity (upgradable to Gbps). In addition, major terrestrial transport paths should have uninterrupted 5G coverage.

Where’s the Return?

To make their 5G services viable and profitable, Europe’s operators are looking beyond their core telco business in order to unlock new revenue streams. By far the biggest use-case is enhanced mobile broadband, including 4K streaming.

On the enterprise side, the shift in workloads from centralised cloud to a distributed mobile workforce, as well as new workloads at the edge, is eyed as an immense opportunity for service providers. These applications include smart sensors, autonomous vehicles, and real-time VR/AR—this despite VR and AR headsets and glasses sales declining last year, according to a CCS Insight report. The research firm does expect sales to pick up in 2019 and to accelerate as more standalone or wireless mixed reality gear comes to market (go2sm.com/ccsinsight, registration required).

5G will need to provide the foundation for comprehensive services that solve major challenges for applications like self-driving vehicles, drones, public safety systems, and smart grids. Network slicing will virtualise a single network to support a wide array of new services that are not possible with today’s best-effort mobile networks.

While the new 5G "killer app" may not yet be defined, mobile operators will likely treat the network itself as a new revenue resource, perhaps selling a slice of their 5G network to another provider to deploy different services and offer a service level agreement to guarantee a minimum speed and low latency.

Despite the excitement surrounding 5G, initial consumer uptake will be limited, MiDIA Research’s Pescatore says. "Telcos need to generate revenue in order to recoup the investment in 5G with the acquisition of spectrum and rolling out a network. Therefore, expect other converged telcos [like BT and including Deutsche Telekom and Orange] to focus on specific verticals such as broadcast and media."

The State of Video Monetisation 2019

Streaming Media

Ad revenues are up, but challenges with measurement and subscriber churn remain

If it wasn't already clear, 2018 demonstrated that the lines between traditional and digital are blurring, driving the growth of cross-channel video strategies and with mobile taking an increasingly significant share.

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Digital advertising in Europe grew by 10% to €25.7 billion ($29.3 billion) in the first half of 2018, on track to surpass €50 billion by the end of the year, according to the AdEx Benchmark Study, a collaborative report  published by the Interactive Advertising Bureau (IAB) and IHS Markit (registration required). The prior year's study recorded 2017's market value as €48 billion

The study revealed that mobile is set to take a 50% share of the total ad spend in 2018 with Eastern Europe leading the charge. Belarus, Serbia, and Russia were the fastest-growing European countries for mobile ad spend during 2017, according to full-year IAB Europe research, up 33.9%, 23.7%, and 21.9% respectively.

Native advertising spend (such as sponsored content and in-feed ads that blend into the format of the site rather than traditional banner ads) is expected to top $85.5 billion across Europe by 2020, also per the IAB.

Indeed, the growth of digital advertising as a whole has doubled in size over the past five years according to IAB Europe, a rise it attributes in part to take-up of programmatic formats.

Automation allows ads to be targeted at a very granular level at lower cost than traditional advertising. By focusing more on programmatic advertising, advertisers are trying to break free from traditional media buying methods in a hope to get hold of the attention of millennials and Gen Z (13- to 17-year-olds) who are bombarded with endless content every second. 

"As programmatic advertising becomes increasingly popular and pervasive, it will become more complex to engage the desired target effectively and, in time, execute successful campaigns," advised Nielsen.  "To successfully break through the clutter, advertisers must focus on two crucial objectives: effectively reach Gen Z in their environment and provide compelling addressable content."

Programmatic Scales for Live 

Appointment viewing used to be broadcast's domain, but even this is being eaten into by digital, and with it another chunk in broadcast's sales armour.

Yet there's a problem of scale, argue ad tech vendors like YoSpace whose CEO, Tim Sewell explains, "In live OTT, all viewers go to an ad break at the same time, putting huge strain on an ad server which will have to manage a bombardment of ad requests. Delivering addressable advertising at scale is the next big challenge for broadcasters and rights-holders."

YoSpace addresses this with Prefetch a technology which is able to detect an upcoming ad break before it happens. Ad calls are made early to an ad server, such as SpotX, which then have more time to instruct the programmatic marketplace and generate the highest possible CPM and fill-rate for the rights-holder, Sewell explained.

Among users of Prefetch is BT Sport. "Live inventory is a growing sector of our business and as audiences continue to consume content across multiple platforms like OTT, monetizing live video becomes even more important," SpotX CEO Mike Shehan noted in a YoSpace blog.

Building Back Trust

Given all this growth it would appear that digital has shrugged off the frailties of the last couple of years, when question marks were placed against the efficacy of social media channels in particular.

However, ad-tech has still not emerged from its identity crisis. The UK's DPP (Digital Production Partnership) released a report in September on the future of video advertising which concluded that a series of new, collaborative relationships need building if the historically close relationship between advertisers and content makers is to be successfully reshaped.

"Advertising models still have a very strong reliance upon linear TV at the same time that advertising, video content and consumer behaviour are all shifting online," explains DPP managing director, Mark Harrison [go2sm.com/dpp]. "The question is: Will a whole new advertising model around online video be formed, or will we see a brand new commercial model emerge?"

Following, Proctor and Gamble's decision in 2017 to pull £72 million ($91 million) of digital ad spend (with little impact on its overall sales) from social, the start of 2018 saw Unilever unleash its own critique of Google and Facebook.

Its chief marcoms officer Keith Weed called on the giant social channels particular to clean up the "swamp," although Unilever stopped short of removing ads from YouTube. He argued that simply threatening to withhold advertising dollars from digital platforms while expecting them to solve their own content challenges wasn't the proper course for the industry.

Unilever is, however, experimenting with how blockchain might achieve complete transparency on digital ad transactions. 

In October, SpotX and five other ad tech vendors (including Sovrn, OpenX and Pubmatic) promoted programmatic ads as a means to underpin a "trustworthy marketplace." Its mission includes a fully auditable supply chain and clear auction rules and is backed by the industry (IAB/ Association of Advertising Agencies) accountability program the Trustworthy Accountability Group.

"Programmatic advertising has provided a scalable way for advertisers to leverage the massive amounts of data available today to serve consumers the right content at the right place at the right time," claimed SpotX's Shehan. 

Measurement Not Solved

It is not dubious content so much as the lack of digital measurement standards and the potential fraud that comes along with it which is the chief concern for Unilever and all major advertisers.

As Weed told the IAB, "One viewability measure makes sense from a perspective of clarity and simplicity, but advertisers don't currently agree on what this should be."

Advertisers, of course, have to deal with myriad devices, platforms, shows, live, catch-up, and VOD, in order to find the right audiences. ITV Hub, the VOD service for broadcaster ITV, for example, is available on 27 platforms. In turn, many of those platforms will give advertisers better opportunities to target specific audiences. 

Multiple efforts are underway to bridge the gap between the sample-based methods used for measuring broadcast audiences and digital measures of multiscreen viewing.

In the UK, the Broadcasters Audience Research Board (BARB) finally released Dovetail, its multi-screen project. But it was only part one of a three-phase introduction, with dates of rollout for parts two and three still to be confirmed. The phase it has launched is to report multi-screen programme ratings across TV, tablets, PCs, and smartphones.

To do this, BARB is now combining census-level data from software embedded in broadcaster-operated VOD services like BBC iPlayer with cross-device panel data from its panel of 5,300 homes.

Phase two will report the extent to which tablets and PCs increase the number of viewers and average weekly viewing time for BARB-reported channels; the final stage of the process, multiple-screen advertising campaign performance, is in development but requires the co-operation of service providers like Amazon and Netflix—co-operation which has not been given.

Incidentally, the European Broadcaster Exchange (EBX—a joint venture of broadcasters including Channel 4 and Germany's ProSiebenSat.1 to unite their online and digital platforms for programmatic media buys—has yet to launch, despite being scheduled to do so early in 2018.

In the first half of 2018, EBX said it "invested heavily in a first-of-its-kind tech stack with a unique remit to aggregate and streamline the supply of advanced TV formats across multiple European broadcasters, resulting in greater media buying efficiency.".

Impact of GDPR

Distrust in the scraping of personal data came to its (possible) zenith with the furore over Cambridge Analytica's secret gathering of 87 million Facebook users' data. The introduction of the General Data Protection Regulation (GDPR) just two months after the Analytica story broke should stem such breaches in future, with the strengthened privacy practices believed to shore up the digital ship. 

The new legislation means users have to give explicit consent for personal identifiable information to be processed. This is particularly relevant within the digital sphere when working with such data as a device ID, a cookie ID, or an IP address.

The deadline for GDPR in May impacted data-driven activations in the first half of 2018, reckons IAB Europe, making key market players cautious. 

"Uncertainty associated with GDPR impacted advertiser confidence in most markets, causing slower growth in digital ad spend between March and June," commented Daniel Knapp, Executive Director TMT at IHS Markit. 

The overall impact, though, has been positive in building trust in the industry. "GDPR doesn't prevent the collection of audience behaviour data, but does ensure that consumers are fully aware of what data is being captured and how it is being used," says Aditya Ganjam, chief product officer at Conviva. "Ultimately this will help weed out bad actors and should prove beneficial to the industry."

Ecommerce Spends Big on TV

UK TV ad revenue declined in 2017 for the first time in seven years, according to figures from Thinkbox. Revenue totalled £5.11 billion ($7.07 billion), down 3.2 percent on the record high set in 2016, although the commercial broadcasters trade body expected sales to bounce back by end of 2018.

It attributed the decrease to "ongoing economic and political uncertainty with a weakened pound and inflationary pressure leading some advertisers to reduce TV investment;" i.e., Brexit. Perhaps unsurprisingly given its cold shoulder to online, P&G was the most viewed advertiser on UK TV in 2017 with 33.5 billion views. Thinkbox was also at pains to point out that e-commerce brands such as Amazon, Netflix, and Expedia are spending heavily on TV for reach and influence.

According to figures compiled by The Global TV Group, a grouping of broadcasters' and sales houses' trade bodies in Europe, the U.S., and Australia, Airbnb'sTV ad spend in Germany increased by 44% between 2015-17; Amazon's TV ad spend in Spain went up 100 times in three years to reach over €11 million ($12.4 million); Brands such as Trivago and Google invested £682 million ($868 million) in TV advertising in 2017, up from £590 million ($751 milliion) in 2015.

SVOD Overtakes Pay TV 

Global SVOD revenues topped $35.04 billion in 2018, an increase of more than 40% since 2017's $24.87 billion and 214% since the $11.16 billion in SVOD revenue during 2015, Digital TV Research. While the biggest gains came in China, the researcher suggests Germany has the third-highest revenue climb since 2015 at 248%, a total of $1.038 billion, up from $298m in 2015. However, Germany's SVOD revenues are exceeded by Japan ($1.093 billion, up 43%) and the UK ($1.758 billion, up 186%).

Such figures are correlated by latest research from the Nagra/MTM developed Pay-TV Innovation Forum (registration required). In the UK, for example, the total number of subscriptions to the UK's three most popular online streaming services—Netflix, Amazon Prime and Sky's NOW TV—reached 15.4 million in Q1 2018, exceeding for the first time the number of pay TV subscriptions, at 15.1 million.

Nagra/MTM notes, however, that UK pay TV subscription revenues—£6.4 billion ($8.1 billion) in 2017—continue to dwarf subscriptions revenues from OTT services, which reached £895 million ($1,139 billion) in 2017 (figures taken from its most recent research).

Nor is SVOD revenue growth likely to slow. DTV reckons it will chart above 40% for several years to come, not least a result of the arrival of 5G mobile services and the continued trend toward adoption of multiple OTT services. 

Juniper research found that UK consumers acquire an average of 2.5 subscriptions each. Other research from Nagra/MTM states the number of UK households with at least one SVOD subscription as 11.1m.

An Ampere survey of Q3 2018 found that Germany, Spain, and the UK now have more SVOD-only homes than pay TV-only homes (joining countries which already hit this mark like the U.S., Australia, Sweden and Italy) while France, Poland, Turkey and the Netherlands have yet to make the transition. 

This comes at a time when more and more SVOD services are launching, not least from broadcasters and content producers attempting to go direct to consumer.

As Ooyala's global sales development manager David Gordillo observes, if all new services go SVOD OTT, viewers can't subscribe to them all. 

"That creates a really high barrier to entry for start-ups and traditional broadcasters who want to go DTC with a subscription model. If the OTT bill starts to look as fat as the cable TV bill, with thousands of channels that viewers will never watch, this opens the door for a disruption to the OTT market, similar to what we saw happening with Netflix and traditional TV."

As the new "post-OTT" pay TV landscape becomes increasingly fragmented, many industry executives expect to see a second wave of content re-aggregation. According to the Pay-TV Innovation Forum, this model—where companies offer a range of pay TV and OTT content and services via a single subscription—is seen as a way of simplifying a fragmented marketplace for consumers, while also offering additional growth opportunities for some of the well-established telcos and pay TV platforms. 

"The lines between pay TV and OTT are blurring," states Nagra/MTM. "Most traditional pay TV providers are now looking to offer converged pay TV/OTT services to their customers, as service providers move towards a platform-agnostic model. As a result, the pay TV market is transitioning into a paid-for-video market."

In many markets, pay TV providers are moving beyond core content services delivered via the set-top box. "Many industry executives believe that network infrastructure and billing relationships – rather than proprietary set-top boxes – are now the gateway to the customer," it states.

The astonishing near monopoly on pay TV middleware made by Google's Android TV in the last 18 months fits this trend. Android TV (operator tier) offers all but the largest pay TV providers (like Comcast, which remains wedded to its huge investment in RDK) a cost-effective and rapid on-ramp to adding OTT (notably YouTube and Netflix) with inbuilt voice control. In theory all that's needed is a customised UI to differentiate each operator.

Churn Levels Unsustainable

There's also a considerable risk of churn. Parks Associates research suggests up to 30% of OTT subscribing households have cancelled one or more services within the past year.

Ampere projects that even Netflix (which does not publish churn rates) is estimated to churn between 20-25% of its subscribers (in the U.S.) over a six-month period, according an article in Advanced Television.

By comparison, most successful pay TV operators with very satisfied customer bases much lower churn rates, with various reports showing numbers from below 2% to as high as 12%. SVOD's typical one-month rolling contracts mean that there are fewer barriers to churning and re-subscribing. 

"In an increasingly crowded and competitive marketplace where subscriber acquisition costs are already high and soaring, the 20-30% average is an unsustainable level of churn," says Dime Serafimov, demand generation manager at Cleeng.

Cleeng's prescription is a better gathering and analysis of subscriber to be able to proactively nip potential app-cutters in the bud.

"The simple truth is that churn rate optimization—reducing the number of customers who abandon your product or service—is more essential to SVOD profitability and long-term success than conversion rate optimization," he says.

Video Codecs Today: Minefield, Muddle, or Multiple choice?

Streaming Media

The pressure to optimize delivery of video at ever higher bit rates is growing such that the traditional once-in-a-decade leap in compression standards is on the verge of disintegrating.

It’s not that codec development is being outpaced; rather, that advances made in this area driven by the explosion in video over IP are creating heated competition and a fragmented market.

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The latest to join battle is MPEG-5, (AKA Essential Video Coding/EVC), which standards body MPEG has put on a rapid track to ratification by this time next year. MPEG will talk about this at the NAB Show next week.

It’s yet another attempt to bypass HEVC, which has been bogged down by perceived or actual high cost of implementation even while its technical benefits are not in question and its install base of 2 billion device continues to rise.

EVC will be royalty-free and aimed to be at least as efficient as HEVC. In tests, this target has reportedly been exceeded by 24%. But royalty-free codec AV1 is already in the market while MPEG’s own Versatile Video Coding (VVC) which targets immersive media applications and has greater target efficiency is due October 2020.

Meanwhile, Samsung began proposing its own AV1-style codec through MPEG seemingly because Apple is a member of AV1-backers Alliance for Open Media. Since the South Korean firm has just announced its own participation in AOM it's unclear where the fate of this proposal resides.

V-Nova is hoping to get its Perseus Plus codec accepted by MPEG as a standard means to enhance the deployment of codecs processing H.264 and H.265. This is something it already does, but you can’t blame V-Nova for wanting official MPEG backing. It’s an approach, though, that rivals Content Aware Encoding for OTT, a technique that also does not require clients to swap out their hardware decoder.

An outside alternative is from Sweden’s Divideon whose XVC codec is being pitched as a compromise between HEVC and AV1.

The Media Coding Industry Forum, which launched six months ago and includes companies like Canon, MediaKind, Sony, Nokia, and Apple, will have its work cut out policing all of this to avoid another HEVC licence debacle, although it’s worth noting that HEVC patent holder HEVC Advance is also a member.

MPEG may feel the more pressure put on HEVC, the more it will give in over licence issues, but the genie is well and truly out of the bottle.

What seems more likely is that a number of these options could enjoy wide adoption. As analyst Futuresource points out, “Broadcasters may favour VVC and streaming services could utilise XVC or AV1.”

The market needs a codec that delivers high compression efficiency, reasonable encoder complexity, broad decoder support, and a clear licensing scheme. There are clear questions of scale and the market will need to move to an all-software base, but just as cinematographers now pick digital sensors as they would film stock for different applications, so broadcasters and service providers might one day be able to cherry pick, swap, and replace codecs with automated ease.

Our Planet: building a global landmark

Broadcast

Silverback Films reveal its ambitions for Netflix’s biggest factual bet to date.

https://www.broadcastnow.co.uk/netflix/our-planet-building-a-global-landmark/5138329.article

The current golden age of TV drama is well established but does that halo now encompass natural history filmmaking? Alastair Fothergill thinks so.

The former head of the BBC Natural History Unit, and maker of Planet Earth, Blue Planet and Frozen Planet, has been running indie Silverback Films since 2012.

Tomorrow comes the long-anticipated release David Attenborough-narrated series Our Planet on Netflix.

“Natural history is going through a boom and there’s no doubt about that,” he tells Broadcast. “New commissioners have come in, including Apple and Netflix, investing a huge amount of money into the business.”

He admits that where the boom, they may eventually be a bust, but adds that the BBC, which has just sold exclusive SVoD rights to its factual programming to Discovery for its upcoming service, is “going great guns”.

He says: “National Geographic is likely to be an even bigger player as a result of the Fox/Disney merger, so it’s clear that not only is the whole industry in a rush to get into streaming but there’s a lot of money being invested everywhere. That’s fantastic for a content producer.”

Fothergill founded Silverback with Keith Scholey, the former BBC controller of factual, ex-head of BBC Studios Natural History Unit and director of Disneynature films African Cats and Blue.

“Our USP is to do a few big projects well,” says Scholey. “We tend to specialise in blue chip landmark natural history shows for TV and cinema.”

The bulk of these to date have been singles for Disney brand Disneynature for theatrical. The latest of these, Penguins, co-directed by Fothergill, premieres on 17 April. It also produced the 7 x 60 minutes miniseries North America for Discovery in 2013 and Netflix’s order of the eight-part Our Planet five years ago has helped to double the firm’s team in Bristol to 80.

 “It’s Netflix’s biggest factual commission so far,” Fothergill says. “They are stepping into new territory, but they’ve always carried BBC programming [including Planet Earth II and Blue Planet]. They’ve tracked very carefully who has watched the genre so they understand how audiences react to natural history.”

Global reach

Netflix wanted a “global landmark” show, he explains, and Silverback’s pitch was to focus the entire series on the environmental challenges facing the planet.

“The series is wildlife-based but when people watch they will see how climate change is impacting the natural world,” Scholey says. “We’re not presenting this in a finger-wagging way, but we and Netflix both that the time was right to go into some detail about the challenges we all face.”

The ability to reach a global audience with this message was a strong enticement.

“I’ve done these big landmarks and I’ve been satisfied that they’ve been very successful globally,” says Fothergill. “But I feel that Our Planet is more than just a TV series, and that’s our ambition with it.

“Netflix’s influence on 16-30-year-olds cannot be understated, nor can availability of the whole series at once in 190 countries to over 140 million subscribers.

“The nature of co-productions done by terrestrial broadcasters to finance their big series means that nobody, apart from Netflix, can offer this global transmission at the same time.”

Equally important to the producers is the show’s availability in perpetuity on the platform. Partnered with the World Wildlife Fund (WWF), Silverback and Netflix have created an online destination to accompany the series.

Leaving a legacy

Ourplanet.com is being funded by Netflix, run by the WWF and populated Silverback content and the aim of being kept up to date for at least a decade.

“Sixty minutes of documentary can only carry so much when there’s a much bigger and urgent story around the issues,” says Scholey. “No-one has dedicated so much resource to an online site supporting a landmark series of this type.”

Fothergill adds: “It means you can have a conversation between audiences and the series over months and years. That’s not been done before. It’s very important for the conservation message and builds an audience in a unique way. Netflix spotted this from the word go.”

With clips already screened to business leaders at Davos, and to the IMF and World Bank, Silverback hopes momentum behind Our Planet will continue to 2020 and the UN’s next major conference about biodiversity.

Further collateral around the show includes an augmented reality ‘interactive globe’ experience destined for install in Singapore, New York and the Natural History Museum developed with the WWF and Google.

The show itself has suitably blue-chip credentials. Largely shot in 4K UHD, it has been mastered in 4K with a High Dynamic Range finish and Dolby Atmos surround-sound track.

Filming involved 600 crew in 50 countries and a cumulative 3,500 days in the field – more than on any production the producers have been involved with.

Technical breakthroughs include adapting a Cineflex gyro-stablised gimbal to fit a snow machine tracking polar bears and recording aerial materials in 4K from drones such as bluefin tuna attacking shoals of anchovies in the ocean.

The success of the show will likely influence Netflix’s future commissioning strategy with Silverback and with the genre overall.

“The first step is to see how audiences react to Our Planet,” Fothergill says.

Beyond Our Planet

In the meantime, the indie is putting the finishing touches to two series for the BBC. The Mating Game, a 5 x 60 minutes series for BBC2 this autumn, is a “deliberately playful” sequel to The Hunt focussing on the dramatic tension of male and female animal courtship rituals.

Then in 2020 comes another five-part series, Perfect Planet, co-produced with Tencent Penguin Pictures, France Télévisions and The Open University. It examines the forces of nature, from volcanoes to hurricanes.

“Traditionally those forces have been depicted as destructive, so we wanted to a try and film those natural spectacles and to explain that these are positive force for rejuvenation of a healthy planet,” says Fothergill.

For Silverback and Netflix, the most pressing priority right now is the battle for the Earth’s well-being is ensuring Our Planet lands strongly on the SVoD service and gets the eco message out.

NAB 2019: Five trends to watch

IBC

Automated production, cloud, 5G, at-home production and streaming codecs are among the likely hot topics in Las Vegas.

https://www.ibc.org/content-management/nab-2019-five-trends-to-watch/3708.article

Prepare for 5G
With 5G network rollout imminent, one of the first areas to benefit will be wireless contribution links. TVU Networks, for example, has made its entire range of transmitters compatible with 5G modems. It is working with South Korean telco KT and Seoul Broadcasting System to launch the world’s first UHD over 5G service this month.

 “The data capacity, speed and low latency in the network will enable innovations unlike anything we’ve seen before,” declared Park Hyun-Jin, SVP of KT’s 5G Business Unit.

All the kit from cellular links vendor LiveU are 5G-ready as well. “We see 5G as a big opportunity for us,” says VP marketing Ronen Artman. “5G brings more capacity, reliability and lower latency. It’s required to support 4K/8K, VR/AR, 360-degree video and HDR transmissions where bonding is needed for stability and reliability.”

LiveU is a partner with the BBC, Samsung and BT in the EU Horizon 2020 research project - 5G-Xcast. Since neither fixed, mobile or terrestrial broadcast networks alone are believed capable of handling the increasing bit-rate demands of 4K UHD TV let alone future 8K TV and emerging interactive services, a unified, flexible and multicast 5G infrastructure is deemed a better use of network resource which is what 5G-Xcast aims to solve.

Aviwest is currently working on 5G technologies and has made several transmission tests of 4K UHD video over 5G “to demonstrate the performance level and the capacity of this new, game-changing, technology,” says Ronan Poullaouec, CTO.

“Setting up a live production with a bonded cellular transmission solution, even from overcrowded stadiums will become possible with 5G. The improved reliability will also help to drastically decrease the latency of transmissions, which in turn could help in democratising remote production workflows.”

Remote production takes off
While 5G will be a core technology for contribution (and distribution) in future, there will be much talk at NAB of the growing ability to produce live events remotely today.

Momentum is so great in this area that it will soon become the norm for most sports events outside of the big ticket matches and tournaments, though even here there are use cases around FIFA World Cup and the Olympics.

Momentum is so great in this area that it will soon become the norm for most sports events outside of the big ticket matches and tournaments, though even here there are use cases around FIFA World Cup and the Olympics.

More forces join codec battle
It may be a niche market but codec experts love a heated debate. The pressure to optimise delivery of video at ever higher bit rates over broadband is growing and at NAB, the market continues to fragment.

Enter MPEG-5, also known as Essential Video Coding (EVC), which standards body MPEG has put on a fast track to development with ratification by this time next year.

It’s yet another attempt to bypass HEVC which has been bogged down by perceived or actual high cost of implementation. EVC is being designed to be royalty free and to be at least as efficient as HEVC. In tests, this target has reportedly been exceeded by 24%. But there is already a royalty free codec of at least HEVC efficiency in the market, called AV1, in addition to which MPEG’s codec VVC which targets immersive media applications and has greater target efficiency is also due next year. It begs the question why we need yet another?

Tom Vaughan, VP Strategy at codec manufacturer Beamr argued in an online forum on the topic that while AV1 claims zero royalty cost, the compute cost versus HEVC “is extreme”. He also says AV1 is a thousand times more computationally complex than Google’s codec VP9.

“So, the opportunity for EVC is to provide a better combination of encoding efficiency, performance, and royalty cost/certainty than competing codecs. Right now, we’re at square one. It’s far too early to make any accurate predictions as to where EVC will be a year from now or beyond.”

In the same forum, Amazon Prime Video’s Principal Video Specialist, Ben Waggoner reports that EVC could potentially become the preferred codec for 8K encoding. “If decode complexity is up to three times more than HEVC, I’d want to see more than 25% efficiency improvements over HEVC for another codec to make sense from a technical perspective.”

Also launched at NAB is a new group aiming to build royalty free specifications for immersive media like light field or holographic technology. Founders of Immersive Digital Experiences Alliance (IDEA) include CableLabs, Light Field Lab, Otoy, and Visby.

Its starting point is a framework for interchange and distribution for complex image scenes, including six-degrees-of-freedom taken all the way from capture to a display for viewing. The Immersive Technology Media Format (ITMF) is due for release this year.

“We’re working on specifications and tools for a variety of immersive displays — AR, VR, stereoscopic 3D, and light field technology, with light field being the pinnacle of immersive experiences,” explained Dr. Arianne Hinds of CableLabs. “If light field technology works half as well as early testing suggests, it will be a game changer.”

AI the solution, but what’s the problem?
Cost-saving automated production tools abound especially in the sports arena, most of which are marketed as ‘AI-powered’. Many AI applications though are still just potential solutions looking for a problem. The data returned is not yet reliable enough to be implemented across the industry.

“AI-based analysis engines are improving but there can still be huge inaccuracies,” warns David Cole, CEO at asset management vendor IPV. “If you’re using AI on something that will drive an automated decision or go straight to the customer, you may still need to get a human to verify it. You’ll still save a lot of time as this is now a verification rather than primary generation.”

At the very least, if accurate metadata can be generated automatically, media producers will save time and resource tagging their media. Shipping solutions include Tedial’s SmartLive, announced at NAB2018, unites an AI with a metadata engine to automate the production of highlights packages, media logging, and clip creation and distribution.

TVU Networks’ MediaMind features an AI-based audio to text transcribing service, and Pixellot’s automatic sports production tech has AI-triggered graphics insertion. Meanwhile, Mobile Viewpoint’s IQ Sports Producer automatically produces multiple feeds from a single dome camera for live streaming.

EVS will demonstrate its X-One software editor cutting together programming from AI-controlled robotic camera feeds. This system can be operated by just a single person making production of smaller live events more affordable, the company says.

Primetime for Cloud
After years of not quite trusting whether live to air broadcasting was safe to move from bricks and mortar to software hosted at third party data centres, it seems the time has arrived.

Red Bee Media will be at NAB celebrating launch of its all cloud-based playout facility in London’s Broadcast Centre. It has branded the suite of technologies behind the service as Nucleus and says it can handle up to 3.5 million tasks annually from local datacenters or in the public cloud. It should unveil which major broadcasters have signed up, alongside long-standing client BBC Creative.

Telestream should also reveal which “major European telecoms service provider” is the first to test its one-click channel creation technology. Dubbed OptiQ, the service promises to reduce the time for new channel launch from months to just minutes. Like Nucleus it’s offered as a pay-as-you-go and also has a range of cloud partners including Azure and AWS as well as private cloud provision. A key differentiator promoted by Telestream will be OptiQ’s ability to monitor signals from inception to delivery. It is targeting service providers and content aggregators who, it believes, are turning business away due to not being able to create channels quickly for short-term events like sports tournaments.

A multiplicity of other cloud product and services cater for everything from more efficient archive to VFX collaboration. Ones to watch include Forbidden Technologies, developer of a suite of cloud-hosted live production tools, and Amazon Web Services, WekaIO and Sohonet which combined to underpin the infrastructure at Untold Studios in Hackney, London which it is claimed is the ‘world’s first’ all cloud-based creative facility.

Avoiding the crisis in a drama

content marketing for Broadcast

Television and film production can be fraught with risk. From an unforeseen hurricane blowing a location shoot off course in the Caribbean to a showrunner falling out with the commissioning broadcaster over the direction of the final episode, the impact can add time or cost and invariably both to the bottom line.https://www.broadcastnow.co.uk/futureoftv/avoiding-the-crisis-in-a-drama/5137824.article

As budgets for episodic drama soar ever higher in line with their creative ambition and producers are pressured by the twin expectations of audiences and commissioners’ desire for hits, the stakes have never been greater.

So, who foots the bill if the show goes over budget or a producer can’t complete on time? Or, worse case scenario, if the show can’t deliver at all? In feature films, particularly in indie productions, the long-established answer has been to bond the production.

In a nutshell, a completion bond is an insurance for a financier that secures their investment in a film or TV show. Put another way, it’s a guarantee that a producer will complete and deliver a programme or series to the commissioning broadcaster and distributor as contracted.

There was little need for bonds in TV drama when shows were mainly shot for local broadcast. Budgets were lower and funding was simpler, and accordingly the risk of it spiralling out of control was lower. However, with ever-more ambitious projects, funded by multiple partners shot and produced internationally for worldwide sale, the risk of a budget overrunning can easily be £250,000 or more.

“Because demand is so high and given the ever-increasing economics of production, corners are being cut in the process,” says Peter La Terriere, joint managing director of Film Finances Inc (FFI).

“Somebody has to take responsibility for a show going over budget; even 5% over could be a million pounds. Broadcasters and studios are beginning to ask these questions, and banks are getting nervous.”

Specialist companies like FFI can help mitigate risks in production and delivery by arranging a completion bond at the outset of production.

“The bond is there to provide security to all the show’s financiers, who are advancing funds against collateral such as tax credits and foreign distribution sales, that they get what they expected,” says La Terriere.

“To be very clear: we are ultimately liable for any over-budget expenses required to complete the production or to repay the broadcaster or the bank or whichever lending party is due their investment if a producer fails to deliver.”

FFI has been supporting film and TV since 1950, including – quite literally – Bond movies such as Dr No for Eon and others more recently including Slumdog Millionaire and La La Land. It has done so for premium TV series including BBC1 and AMC’s The Night Manager, Netflix’s Marco Polo and the upcoming His Dark Materials (pictured).

The company provides in-house production execs and post-production professionals expertise in understanding the nuanced technical standards for international delivery.

“Our involvement would begin with initial assessment and due diligence of production plans, budget and schedule including story outlines and director ambitions,” says La Terriere. “Once approved, it’s a matter of tracking progress from daily call sheets and wrap reports to weekly cost reports and updated schedule or script. We can assess and check that the original plan is being followed.”

Where problems arise

Disagreements that knock on to schedule and budget occur with more regularity than one might admit.

A writer may not see eye-to-eye with the project’s director; a cast member may claim to be incapacitated; broadcaster partners may want different versions of a show for their respective audiences; or a distributor might question whether final delivery meets the contracted technical specifications. “These are the type of issues we can keep an eye on and help mediate,” says La Terriere.

The business can also lean on its experience for other matters. “It’s quite common for the cost of episodes 1-3 to escalate and that savings are made to keep in line with budget in filming episodes 4-6,” says La Terriere.

“That’s something we can anticipate and help to manage. Locations and set construction might have exceeded budget but it may mean some savings on VFX set-extensions down the line.”

This responsibility would fall to the show’s line producer and accountant but few financiers or even broadcasters will have staff on their books dedicated to detailing a show’s progress.

“Ultimately, there will be a point where things go so far over budget that we can’t cut them back without massively reducing the script. That would deviate too far from what the financiers and producer had agreed to film, and, in that case, we would be liable to cover the cost.”

FFI’s bonds are underwritten by Allianz Global Corporate & Specialty (AGCS).

“As financing gets more complicated and as TV drama rises in creative ambition, there is a role for a company like ours to ensure that everything possible is being done to mitigate risk,” says La Terriere.