Tracking Global Multiscreen Video (MSV) Services to Profitability in IPTV, Cable & Satellite - Taking OTT/Internet Video to Mobile: January 2012

Executive Overview

Following is an example of some of the key findings in this study, not listed in any specific order. In-depth analysis is found in other sections of this report.

1. Multiscreen Video is a priority, but there are a number of inter-related initiatives that need to be undertaken, such as infrastructure upgrades and content rights, to enable Multiscreen.
2. Operators’ Freemium model. It is clear that Operators in general don’t see the client app as a revenue generator, but rather as a cost of marketing and/or sales. Given that as a baseline, it will be interesting to see if Operators might use the app as their “Freemium” model. That is, the app might serve to aggregate readily available content on the Internet and maybe even a “basic” Cable lineup of off-air, public access and public domain channels into a virtual Cable lineup. This “free channel,” available to everyone would serve as a marketing opportunity to upsell the consumers to other services such as premium video, broadband and wireless.
3. To paraphrase Bruce Springsteen, Operators are going from, “57 channels and nothing on” to a world of 500k apps and still nothing on. In this environment, the challenge for the Cable/IPTV Operator is competing for viewer’s attention, where the viewer has many more distractions, compared to the days before Broadband and handheld displays, and can easily flit from app to app possibly ignoring the limited selection of the Operator’s entertainment options.
4. For smaller Operators, being a dumb pipe may not be the worst thing, particularly if they can enable (turnkey) services from third-parties.
5. TV Everywhere or Multiscreen Video for Operators is their attempt to extend a walled garden beyond what would be their traditional franchised Cable offering and extending it to consumer-owned devices both on-net (on their franchised network) and off-net (on others’ networks). For a full discussion of the top 10 findings, see the full report.

Contents

1 EXECUTIVE OVERVIEW

1.1 Multiscreen Video – A Continuum of Features
1.2 Electronic Program Guide
1.3 Search and Discover
1.4 Control
1.5 Access within the Home
1.6 Access Everywhere
1.7 Follow Me
1.8 Quick View: Findings Overview

2 DOMINANT PROTOCOLS

2.1 Dominant Streaming Protocols & Platforms

3 MSV USERS AND OPERATORS

3.1 How People Watch Video on Different Devices
3.2 MSV Examples

4 ECONOMICS OF MULTISCREEN VIDEO

4.1 Investment
  4.1.1 An Exercise in Trade-offs
4.2 Revenue
  4.2.1 Explicit Revenue
  4.2.2 Implicit Revenue
4.3 Example: Customer Retention and Loyalty – Bright House’s iPad Application

5 ROI ANALYSIS OF MULTISCREEN VIDEO

5.1 Model
  5.1.1 The Model Assumptions
  5.1.2 Devices and Concurrency
  5.1.3 Number of Channels and Who Offers Them
  5.1.4 On-Network Versus Off-Network
  5.1.5 Bit Rate
  5.1.6 Incremental Revenue and Expense Assumptions
  5.1.7 Capital Costs
  5.1.8 Pre-Packaging Versus Post-Packaging Storage Cost Trade-off
  5.1.9 The Business Case Based on Churn Reduction Only
  5.1.10 The Business Case Based on Churn Reduction Plus Minimal Revenue
  5.1.11 Transcoding in the Home Versus the Network

6 FUTURE OF TVING — THE ULTIMATE MSV SERVICE?

7 GLOSSARY

8 INDEX OF COMPANIES

TABLE OF FIGURES

Figure 1-1: OTT a Direct Relationship Between the Programmer and Viewer
Figure 1-2: MSV – Where the Relationship is Between the Operator and Viewer
Figure 1-3: MSV – Viewer’s Device Authenticated By and Streamed From the Operator
Figure 1-4: MSV – Viewer’s Device Authenticated By and Streamed for Operator by Third-Party
Figure 1-5: Multiscreen Video Services – A Continuum of Features
Figure 1-6: Guide - Being Able to Extend an Operator’s Guide to a Companion Screen
Figure 1-7: Search and Discover – Being Able to Search and Discover Video Content on a Device (e.g., phone) that is Independent of the Viewing Device
Figure 1-8: Control – Being Able to Search and Discover Content on One Device (e.g., phone) & Use that Device to Control the Output of Another Device (e.g., TV)
Figure 1-9: Home Access: Access Content From Any Device, Anywhere Inside the Home
Figure 1-10: Access Everywhere: Access Content From Any Device, Anywhere Outside the Home
Figure 1-11: Follow Me: Ability to Watch Video on Any Device, Pause the Video and Resume Watching on Another Device
Figure 2-1: Streaming Protocols in 2011
Figure 2-2: Streaming Protocols in 2012
Figure 2-3: How Do You Measure Concurrency
Figure 2-4: Concurrency Bottlenecks
Figure 3-1: Conversion Rate Q3/2011 (plays/displays)
Figure 3-2: Viewer Engagement Q3/2011
Figure 3-3: Percentage of Audience that Watched at Least 3/4 Through a 10 Minute or Longer Video
Figure 4-1: End-to-End System
Figure 4-2: The Relative Amount Storage vs. Transcoders as a Function of Where Storage is Placed in the Network
Figure 4-3: Storage Location
Figure 4-4: Distributed Packagers
Figure 4-5: Transcoding & Packaging in the Home Gateway
Figure 4-6: Subscription Revenue Potential (US$)
Figure 4-7: Screenshot of AT&T's "U-verse Live TV"
Figure 4-8: Likelihood of When a Cable Operator Will Invade Another MSO’s Footprint
Figure 4-9: How Can You Earn Revenue From Third-Party OTT Services
Figure 4-10: What Other Business Models are Being Used or Considered by Operators with Regards to Monetizing MSV?
Figure 4-11: Example Bright House TV iPad App from iTunes
Figure 5-1: Client Application, How Will It Be Provided
Figure 5-2: Programmer Streaming Directly to Customer with Operator Authenticating and Authorizing Client Device
Figure 5-3: On a Scale of 1 to 10, Who Is Most Likely to Pay for the Streams From Programmer to Operator
Figure 5-4: Percent of Operator Channels that Will Be Transcoded by the End of 2011, 2012 & 2015, According to Operator and Vendors
Figure 5-5: Content Rights: On a Scale of 1 to 10 (with 10 being the highest priority), which Rights Are the Highest Priorities for You to Obtain?
Figure 5-6: Net Revenue Improvement for Churn Reduction Only Case (US$)
Figure 5-7: Net Revenue Improvement for Churn Reduction Plus Minimal Revenue (US$)
Figure 5-8: Break-even Revenue Based on Subscribers and Zero Churn Reduction (US$)
Figure 6-1: Example of tving Packages
Figure 6-2: Example of tving's Social Features
Figure 6-3: Example of tving's Advanced Features
Figure 7-1: Time Warner iOS App

TABLE OF TABLES

Table 3-1: Select Worldwide MSV Deployments
Table 4-1: Ratio of Operator-Owned Packagers to Transcoders
Table 5-1: Summary of Assumptions for the Model (US$)
Table 5-2: Net Annual Savings for Reducing Bandwidth from 1.5 to 1.25 Mb/s (US$)
Table 5-3: Capital Costs (US$)
Table 5-4: Per Subscriber Capital Costs (US$)
Table 5-5: Net Revenue Improvement 2% to 1.8% Reduction in Churn (US$)
Table 5-6: Net Revenue Improvement 2% to 1.8% Reduction in Churn with US$1.25/Month Revenue/Subscriber Example (US$)
Table 5-7: Net Revenue Improvement 2% to 1.8% Reduction in Churn with US$1.25/Month
Revenue/Subscriber Example (US$)

INDEX OF COMPANIES REFERENCED

ABC
Adobe
(Flash, HTTP Dynamic Streaming)
Amazon
Apple
(Apple TV, HLS, HTTP Live Streaming, iOS, iPad, iPhone, iTunes)
AT&T
(U-verse)
Audible Magic
Avail-TVN
Azuki Systems
BBC
Belgacom
BigBand Networks
Blackberry
Bloomberg
Bravo
Bright House Networks
Broadcom
BSkyB
(Sky Go)
Cablevision
Canal +
CCTV
Ceton
Civolution
CJ Group
CJ HelloVision
(tving)
CJ O Shopping Co., Ltd.
CNBC
CNN
Comcast
(XFINITY)
Coughlin and Associates
Cox
(Cox TV Connect)
Deutsche Telekom
(Entertain)
DIRECTV
(nomad)
DISH Network
(Blockbuster)
Disney
Dr.Peering International
EchoStar Corporation
EPIX
ESPN
Facebook
Fox
Google
(Android, Google/Widevine, WebM, YouTube)
Hauppauge
HBO
(HBO GO)
Hulu
JZ Analytics
Kabel Deutschland
KT
(olleh tv)
Liberty Global
(Horizon)
LOVEFiLM
me2DAY
Microsoft
(Silverlight, Smooth Streaming, XBOX)
Morning Bridge
Motorola
NBC
Needham and Company
Netflix
Ooyala
OpenTV
Orange
PacketVideo
Pandora
Parks Associates
PCCW
(now TV)
PictureBox
Really Simple Software, Inc.
(Simple.TV)
RGB Networks
Rogers
Rovi
(DivX Plus Streaming)
Samsung
(Galaxy S, Galaxy Tab)
ScreenPlays
SeaChange International
Shaw
(Shaw Direct Video on Demand, Shaw Video on Demand)
Shazam
Silicon Dust
Sling Media
Sony
(PlayStation, PS3)
Spotify
Stofa Denmark
(WebTV, WebTV to Go)
Suddenlink
(Suddenlink2Go)
Swisscom
(Swisscom TV air)
Synacor
Syncbak
SyncTV
TBS
Telecom Italia
thePlatform
Time Warner
TiVo
Turner Networks Television
(TNT, Turner Networks)
TVersity
Twitter
Verizon
(FiOS)
Virgin Media
(Virgin Media Player)
ViXS Systems
Vodafone
Zeitera
Zenverge
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