Underestimating 4K Potential Poses Mounting Risks for SPs

Reed Hastings, CEO, Netflix

Reed Hastings, CEO, Netflix

By Fred Dawson
October 7, 2013 – Suddenly the challenges to pay TV service providers posed by 4K Ultra-HD and the attendant need for support from HEVC encoding technology seem more imminent and formidable than previously supposed.

4K UHD at four times the resolution of 1080p HDTV is coming into play much faster than was the case with the emergence of HD by virtue of the pace at which consumer electronics manufacturers are bringing the technology to market as a built-in component of their latest HD set models. In other words, people in the market for a new high-end HD set are purchasing 4K capabilities, which represents a way for manufacturers to drive penetration without a need for 4K content, in contrast to the early days of HD when lack of content was a drag on market adoption.

“HD looks great on 4K TVs,” observes Benoit Fouchard, chief strategy officer for encoding technology supplier ATEME. “To persuade people to replace their current TVs, CE manufacturers are saying it’s not necessary to have 4K programming because you get better HD. This creates a bigger market, which helps drive down the costs.”

This in turn is creating a growing consumer market foundation for providers who are inclined to introduce 4K-quality content, starting with on-demand movies. With the help of HEVC (High Efficiency Video Coding), also known as H.265, the successor to AVC (Advanced Video Coding)/H.264, 4K content can be delivered over broadband networks at 15 megabits per second or less, depending on the encoding platform and picture motion.

From an encoding standpoint, the opportunity to use HEVC to deliver on-demand 4K content is here, as attested by several suppliers of software-based transcoding systems. “We’re showing 4K at 60 Hz with excellent quality between 11 and 15 megabits per second,” Fouchard says.

Arnaud Perrier, vice president of solutions marketing at Envivio, says his company is ready to begin supplying the most likely early suppliers of 4K content, namely over-the-top competitors to network service providers. Citing a 12 mbps bit rate for Envivio’s HEVC-encoded content, Perrier says, “HEVC and 4K provide an option for Internet players like Netflix and Hulu to differentiate their services from traditional operators by being the first to market.”

Moreover, he adds, OTT players have the luxury of being able to target HEVC-ready devices without having to worry about upgrading set-top boxes with new codecs. “There’s an installed base whether it’s new TVs or smart devices that are capable of handling HEVC with software decoders, maybe with some hardware assist, but it’s there,” he says.

Indeed, Netflix, having joined in demos of 4K at the CES show in January, is signaling it’s getting close to moving ahead. In a video interview conducted in Copenhagen on September 13 by Claus Bülow Christensen, producer of the Future of TV conference, Netflix CEO Reed Hastings said his company intends to begin offering content in 4K next year. “We’re not sure exactly when,” Hastings said. “But by next year there will be enough sets out” to create a “special audience” for Netflix content.

Hastings confirmed the bitrate using HEVC will be about 15 mbps, adding, “If you have a 50 megabit connection you will be fine. Only a few people in any given neighborhood will be watching 4k at one time, so as an overall system load it will grow quite slowly and steadily, giving people lots of time to build the infrastructure.”

Hastings also emphasized the importance of other types of devices in driving the market toward 4K. “I don’t know that many people are going to run out and buy a 10,000 euro television because it’s 4k,” he said. “But what will happen is you’ll have a 4k laptop, a 4k tablet, because the screen resolutions are improving so quickly in the next few years. And then eventually there will be no premium, no extra cost for a 4k television. And then, just when you need a new television, you’ll get a good television and it will be a 4k, because the costs eventually won’t be any different than the current televisions today.”

In fact, prices for the costly 4K sets are already falling, notes Envivio’s Perrier. “The panel costs are coming down faster than we’ve ever seen,” he says. “You can already buy a Chinese 4K set for $2,000. You can expect the brand names are soon going to be half the cost of today.”

Currently, non-Chinese brand names like Sony, Samsung and LG are priced around $3,500-$4,000 for 55” sets and at $5,000 and up for 65” sets. A year ago there were no 4K sets available at retail; today there are over 20 models on offer ranging from 39” to 85” at price points from $700 to $40,000, according to the latest tabulation from Cnet.

As for the availability of content in 4K, Hastings suggested there will be plenty of movies and TV shows, including original productions from Netflix, although there will be “gaps,” meaning older TV shows that weren’t produced with sufficient resolution density to allow conversion to 4K. But films are produced at 4K-equivalent quality, making conversion relatively straight forward, Hastings noted.

“And now, of course, all new things are being captured in 4K,” he added. “Going forward there will be more and more 4K, and that will work really well over the Internet.”

But when it comes to live TV programming, the lag on 4K could be substantial, which raises the specter of there being a high-end user experience across a large share of on-demand content long before sports, news and other real-time programming is available in 4K. “When it comes to live sports we’re not ready,” Fouchard says, noting there will be a need for different degrees of scene panning, approaches to slow-motion replay and much else affecting what’s on screen and the textual and graphics trappings.

“We’re not sure anybody could launch live 4K service without there being a huge risk that people would be disappointed,” he says. But it’s a moving target, prompting uncertainty as to when the market will need a live 4K HEVC encoding solution. “We’ll definitely be offering live 4K encoding by 2015,” he says. “Right now we’re assessing whether that may be necessary in 2014.”

Much of the skepticism about the market appeal of 4K has centered on the perceived lack of improvement over really good HD. Indeed, much of the early sales push on 4K as shown at CES and subsequent shows was predicated on demonstrating that it’s possible to get a good quality HD picture on a very large screen. As Fouchard notes, “The sad reality is most people viewing at a normal distance from their new TVs won’t see a difference in quality from what they saw on smaller screens. But the industry is working on many ways to improve that perception.”

So far, says Ken Morse, CTO of Cisco Systems’ Video Services Group, “All the current demos of 4K have been shown at 30 frames per second.” However, with just completed ratification of the HEVC standard with 60 fps and 10-bit encoding added at the last minute, a significant difference in quality will soon be evident. “By the middle of next year, HEVC supporting the next level in 4K will be available, with silicon supporting these levels available in demos starting in January. HEVC is coming on strong,” he says.

The wow factor for 4K is definitely coming, Fouchard asserts. “We’ll see higher frame rates, better color definition, much higher sound density,” he says. “If you combine all these things in 4K, it’s not better just because there are more pixels in the picture. It’s not all about resolution, but we can’t rush it too much.”

Moreover, as Perrier notes, there’s a natural quality boost associated with HEVC, regardless of which generation of HD is in play. “I think that’s one of the attractive aspects of HEVC,” he says. “People talk all the time about lower bandwidth, more channel capacity opening up, but we’ve also noticed you do get sharper pictures, more details you weren’t necessarily able to see with H.264, just because of the characteristics of the codecs.”

Certainly there aren’t any doubts about quality holding Netflix back. “Once you’ve seen the picture, if you’ve got 4k source material, it’s really pretty extraordinary,” Hastings said.

As for bandwidth improvements, Envivio presently is seeing in the neighborhood of 30-40 percent efficiency gains with on-demand content compared to H.264, with 25-30 percent gains on live content. “We’re excited about HEVC,” Perrier says. “It’s going way faster than we anticipated. The ramp is faster than we saw for H.264.”

These new developments add up to a serious conundrum for pay TV providers, especially if they want to maintain comparable quality of offerings between their set-top-based services and their OTT multiscreen offerings. In the latter case, network operators who have deployed software-based transcoding systems to deliver premium content to connected devices will be able to upgrade those systems at relatively low costs. But when it comes to their hardware-based headend encoding systems, not to mention their legacy set-tops, moving to HEVC and 4K entails a costly forklift or a shift to a software-based infrastructure for their legacy content.

“There’s a lot of consternation among cable engineers who have persuaded their companies to spend millions of dollars on next-generation set-tops pegged to AVC,” says an industry executive who has been consulting with cable operators on this issue. Requesting anonymity, he says, “How do you tell the boss that all those boxes are about to be outdated because you underestimated the need for HEVC?”

Providers of software-based systems see this sea change in encoding requirements as an opportunity to extend their reach into the traditional headend space. “This market is moving so fast now with new 4K TVs, HEVC-capable handsets like the latest Samsung Galaxies, new graphics and rich program guides designed for 4K screens – operators are asking, ‘How do I address all this?’” Perrier comments.

“It’s very scary,” he adds. “You can wait for another hardware-based solution, which doesn’t yet exist for encoding for 4K in HEVC, or, if you already are operating a software solution, you can simply buy a license to transition that to HEVC and turn on 4K in a few months if you need to.”