TV and video viewing habits have changed immeasurably over the past decade. Online services such as Netflix and Amazon Instant Video have helped usher in a generation of box-set addicts, accustomed to consuming hit shows like Breaking Bad over the internet.
No longer hostage to traditional broadcast schedules, consumers have an increasing desire to watch what they want when they want. And there is a growing demand for the high-quality supply of content to multiple screens amid the proliferation of smartphones and tablets, with their ability to handle growing volumes of data.
These changes are borne out by market statistics. According to US network equipment company Sandvine, Netflix currently accounts for more than a third of North America’s downstream internet traffic at peak times, and YouTube a further 15% – with the latter also giving some indication of the current popularity of user-generated content. And video is set to grow from 59% of internet traffic globally in 2014 to 77% in 2019, according to fresh Cisco forecasts. Alongside the changes in general viewing habits, there is demand for access to a wider variety of high-quality live events such as sports and music on a more broadly distributed, multiscreen basis – which the internet is making increasingly accessible.
To take greater control over the changing industry rather than acting as simple transporters of traffic, some international carriers are bringing out broadcast offerings that focus on using the cloud to provide more end-to-end content hosting, transport and distribution services on a multi-country basis.
Level 3 Communications was an early mover in terms of unifying its content delivery, video broadcast and storage capabilities using the cloud, through the launch of its Video Cloud Services platform just over a year ago. This pulled together its Vyvx broadcast-video product and content delivery network (CDN) into a single cloud-based offering for content partners. The aim was to provide a more compelling product through the creation of a fully end-to-end service and a one-stop-shop for both traditional and online media, says Jon Alexander, Level 3’s senior director of product management. He says that combined with the company’s extensive wholly-owned international fibre backbone, this creates a fairly unique proposition.
According to Alexander, the company’s product set is well-suited for it to acquire broadcast signals from programmers and then transport live, high-quality feeds to a platform that can encode, prepare and package them – sometimes with the aid of third parties – before distributing the content using Level 3’s CDN. “Over the last six months, we’ve seen a huge increase in the amount of live linear distribution that we’re doing within that video-cloud portfolio,” he says.
He identifies three major trends behind this: The initiation of more flexible digital strategies by holders of content rights for live linear distribution; the acceleration of broadband speeds to a sufficient level to sustain high-quality internet distribution; and the shift in user habits towards more flexible options offered by over-the-top (OTT) services. Alexander also points to drivers such as US satellite provider Dish Network’s launch of Sling TV early this year. This live OTT service reflects the changing shape of the market, allowing users to stream channels online without hardware installation or a contract.
In terms of the benefits of using cloud services for broadcasting platforms, Alexander says they allow customers to “almost outsource the R&D portion to us for the services that we’re offering”. Partners can then focus on key areas for them, such as producing and monetising content, acquiring subscribers and managing the customer experience.
Global audience
Tata Communications is another carrier making significant changes to its broadcast strategy to capitalise on the changing shape of the market. And one facet of this transformation is the increased internationalisation of content.
“We see a lot of disruption and evolution in the industry right now,” says Brian Morris, vice president and general manager of global media and entertainment services at Tata Communications. “The media industry is not localised any more, so the ability to ingest content that is created anywhere in the world and then be able to process and redistribute it anywhere in the world is becoming extremely important.”
Such factors therefore appear to provide a key advantage for carriers with extensive global fibre networks, such as Tata and Level 3. Morris adds that there’s a move away from satellite towards increasingly cost-effective IP terrestrial distribution, with fibre perfectly suited to moving large video files. Furthermore, Tata believes the technology is more secure than other delivery methods – a major consideration for broadcasters in light of the surge in global content piracy. For example, episodes from the TV series Game of Thrones were illegally downloaded more than seven million times in just two months earlier this year, according to anti-piracy-solutions company Irdeto.
Like Level 3, Tata is pursuing a cloud route for its video and broadcast services. The company has just launched its Media Ecosystem platform to help enable the global transport of content as a cloud-based managed service, supporting requirements for worldwide media distribution, OTT and mobility applications. Morris says this will help to cut capital outlay and opex, and increase speed to market for partners.
“As a carrier, when you’re trying to sell just connectivity through a pipe, it’s a much less sticky offering and it’s much more price-oriented. When you take the reins for the content owner and provide a hosted, managed service, it’s a very different conversation,” he says.
Morris illustrates how moves are being made to meet the massive demand for smooth-running international content, such as that in the sports arena. In April, for example, Tata unveiled a deal with Red Bull Media House – traditionally known as a supplier of extreme sports content – to collaborate on the launch of the latter’s new TV channel next year, as well as act as its preferred media-connectivity partner for Red Bull events globally. “They will use the ecosystem to bring that content back into our cloud and do processing and redistribution of it direct to consumers. It’s a perfect example of that application,” says Morris.
Last September, Tata also sought to show the capabilities of its network for delivering live sports globally by sending a 4K feed from the Grand Prix in Singapore to the headquarters of Formula One Management in the UK. Morris emphasises how Tata is playing a growing part as the dynamic moves towards closer direct links between content owners and consumers, facilitating the emergence of new OTT-based models in broadcasting.
Verizon is also putting cloud-based offerings at the heart of its video-centric strategy going forward. It says that its recent acquisition of AOL indicates its ambition in the media and entertainment sector, with the carrier working with many partners to deliver linear and non-linear broadcast services over the top.
“By most estimates, the conventional broadcast market we see today will only be around for another two decades,” says Scott Spector, global leader in the entertainment and media, technology and professional-services verticals at Verizon Enterprise Solutions.
“The future of the market will be characterised by the delivery of digitised content via OTT and cloud-based solutions, all provided by extremely fast wireless and broadband infrastructure.”
Deutsche Telekom has its own portfolio of wholesale services for the video
sector, including its LiveStream Perform service that is aimed at providing global reach with quality distribution across multiple devices. “Deutsche Telekom controls one of the world’s largest IP networks, so our customers are always close to a multitude of strategically placed connection points,” says Karim El-Khazen, VP of business development and innovation Deutsche Telekom.
And Zayo Group echoes the fact that content is becoming much more global in terms of distribution, with Alastair Kane, the company’s European VP saying that broadcast rights are being allocated on a wider basis. In line with this, Zayo is seeking to further broaden its global footprint of live video services from those it already runs in the US – where it recently teamed up with the National Basketball Association (NBA) to transport live broadcast and video feeds for all games. The company is looking to roll out more managed live-to-air broadcast services in London and Paris, with plans to aggressively expand its footprint in Europe based on demand over the next 12–18 months. “From our perspective, being able to extend these types of services to different marketplaces allows us to pick up and distribute content to a wider group of partners,” says Kane.
Shifting dynamics
Other carriers similarly refer to the numerous ways in which the broadcast market is changing worldwide. “TV channels need a strong global infrastructure that includes fibre networks, teleports and satellite to broadcast worldwide,” says Fabrizio Gorietti, vice president of marketing at Telecom Italia Sparkle. A particular focus for TI Sparkle is emerging markets, where the take-off of digital TV is causing a surge in demand for new ethnic and thematic content. One way the carrier is seeking to address this is through partnerships with video players that have fibre or satellite coverage in regions that extend its own international reach. Indeed, TI Sparkle has just teamed up with Etisalat to combine global network capabilities for the transmission of media events.
Gorietti adds that the evolution of the broadcast market is resulting in changing demands on carriers’ networks, with an expectation that capacity will adapt to the altering bandwidth requirements of customers – helped by up-and-coming enabling technologies such as network-as-a-service (NaaS), software-defined networks (SDN) and network functions virtualisation (NFV).
BT has similarly noted the need to accommodate changing network demands, recently unveiling its Media Move service – which it hopes will revolutionise the transfer of film and TV content by enabling enormous media files to be sent around the world more than 100 times faster than traditional file-transfer software. Meanwhile, Laurent Maillot, VP of strategy and market research at Orange’s content division, says that both fixed-mobile convergence (FMC) and the entrance of big OTT players have changed the broadcast market in Europe, with a need to adapt to these new realities. “There is a lot of fragmentation of the market on the different points of the value chain, [in terms of] usage between linear and non-linear, and distribution. So we have to adapt,” he says.
Late last year, for example, Orange struck a deal to carry Netflix on its set-top boxes in France – and Maillot says this was more about protecting the company’s own TV offering than for economic reasons, helping to keep customers hooked in to Orange’s service. Nonetheless, he says that more than 80–85% of customers’ consumption remains on linear TV for now, so this type of broadcasting remains essential to the offer. In other European markets, Orange is seeking further FMC deals that will help enhance its TV offer. “Standalone mobile TV doesn’t work any more because the standard is a multiscreen offer,” says Maillot.
Carriers should recognise how the market is changing and introduce strategies to meet this head-on. “The main thing for telecoms operators is about understanding the speed and scale of change in the markets they operate in,” says Lluis Borrell, an analyst at Analysys Mason. “Selecting the right strategy to benefit from the opportunity to provide additional capacity and infrastructure for these services is essential.”
