By Fred Dawson
December 6, 2013 – New vendor initiatives aimed at facilitating monetization of the multiscreen TV experience are raising the bar on what service providers must do to transition to next-generation service, notwithstanding tepid market response to what they’ve already done.
Until now, the effort to develop a viable TV Everywhere offering has been all about getting the basics handled – i.e., implementing an infrastructure capable of streaming massive volumes of on-demand and live pay TV content to authenticated connected devices of every description with a quality of experience that measures up to the expectations of consumers and rights holders. This is still a challenge, but full-bore TVE initiatives worldwide attest to the fact that service providers are finding what they need from the technology supply chain to get the job done.
Now come the hard choices pertaining to what needs to be done to deliver returns on these investments, which means finding ways to drive consumer engagement to much higher levels than have been recorded to date in tandem with implementing the technical means to support dynamic ad placements, effective upsell marketing and interactive commerce. Notably, for operators who have implemented TVE for delivery both within the home via advanced media gateways and outside the home via over-the-top IP distribution, the monetization infrastructure must include functionalities intrinsic to each environment that allow applications to be uniformly applied wherever users happen to be.
Slow Consumer Uptake
Given the costs and drain on staff time such measures entail, moving forward to prepare for monetizing TVE represents a long but necessary leap of faith at a time when consumer response to multiscreen pay TV service is nowhere near where it needs to be. As Time Warner CFO John Martin put it during an investor conference in November, TVE is “talked about a lot in the industry, but the problem right now is that it still hasn’t resonated with consumers. Consumer awareness is still very low.”
Recent research bears this out. Park Associates, in its latest report on the subject, says just 26 percent of U.S. subscribers with access to TVE service know it’s available, a mere eight percentage points above where things stood a year earlier. Just 16 percent of subscribers with access to TVE from a pay TV service provider have actually used the service, Park says.
Consulting firm Altman Vilandrie & Co., in a consumer video research report released in July, reports that a third of the people who can get TVE service, when asked if it’s available to them, say it’s not. Another big share say they don’t know if they have it. Among the five age groups surveyed, the percentage of those who said they didn’t know ranged from 19 percent in the 18-24 group all the way up to 42 percent in the 55 and older group. The youngest group was the only one where 50 percent of those who have access to TVE actually know it’s available.
A big reason for this state of affairs is that distributors “have been very slow to embrace a user experience that consumers would really find attractive,” Martin said. Moreover, he added, “The authentication process is still extremely uneven from distributor to distributor, and the grants of rights of content have made the experience less than what it fully can be.”
The Monetization Potential
Martin, who is leaving his post to become CEO of Time Warner’s Turner Networks at the start of the year, reiterated his company’s faith in the TVE concept but warned, “There is a window of opportunity here that I think the industry needs to see, because it’s not going to last forever.” That opportunity includes monetization, he suggested, but in a rational way that gets beyond fighting over scraps associated with the status quo.
TVE “hasn’t reached its full potential where we can actually put an economic value on rights,” Martin said. But, ironically, a big drag on progress has been disagreements on how to divvy up returns that haven’t yet materialized.
“So much of these discussions end up being, how much money can a programmer extract from the distributor and how much money can the distributor pass on to the consumer,” he said. “I think there needs to be more conversations within the industry about how we can work together as partners to actually drive the value proposition to the consumers in a more enhancing and constructive way…to drive subscriptions, reduce churn, allow greater monetization possibilities to advertising.”
Clearly, if there’s going to be monetization, greater consumer awareness and participation are essential. But there’s reason to expect that the monetization will come as participation scales up, as evidenced in new research from the online video ad management provider FreeWheel. In its latest Video Monetization Report, issued December 3, FreeWheel said the share of advertising in long-form online video attributable to authenticated subscriber viewing of pay TV operators’ TVE content had jumped from 5 percent in 2012 to 14.2 percent this year, which is especially notable given the far smaller increase in consumer awareness of TVE.
This suggests more viewing of TVE is occurring among those who are using the service, and it maps with other trend lines that are favorable to TVE monetization. One of these, as recorded by FreeWheel, is the fact that, with the number of ads appearing in long-form video (defined as content lasting 20 minutes or more) jumping from an average of 9.1 per video in 2012 to 11.6 this year, the total volume of long-form video ad views grew by 56 percent compared to a 30 percent growth rate for view of short-form video ads, again suggesting a rapidly growing volume of long-form video viewing online.
Video ad revenues, of course, still represent a small piece of the overall online ad revenue pie, as measured by the Interactive Advertising Bureau’s recurring Internet Advertising Revenue Report, compiled by PricewaterhouseCoopers. But here, too, the numbers are very encouraging.
In its latest report, covering the first half of 2013, IAB said video advertising revenues hit $1.3 billion, representing a 24 percent increase from the first half of 2012. By contrast, overall online advertising for the first half at $20.1 billion was up by 18 percent over the comparable period a year ago.
The need to create a compelling means by which every TVE viewer can be targeted in real time with ads inserted into live and on-demand video streams is prompting new strategies on the part of vendors, including a new alliance between ARRIS and SeaWell Networks and rollout of a new “manifest manipulator” solution by This Technology. And, as previously reported, Envivio’s enhancement to its edge-based Halo streaming packager with the personalization capabilities of Halo Experience represents still another approach to leveraging the emerging private CDN (content delivery network) infrastructure to add user-specific applications on a per-session basis.
There are other approaches besides stream manipulation to accomplish such ends, including outsourcing of these tasks to suppliers of video publishing platforms and cloud-based systems supporting distribution of advanced client software that supplements native device players on all authenticated devices to address the intricate details associated with rendering content, apps and advertising in ways appropriate to each device. While these options have dominated the early going in operators’ efforts to serve the multiple device requirements of TVE, the vendor strategies aimed at making everything work at the ABR manifest level represent a potentially more disruptive approach to delivering IP video where, by allocating a lot of heavy lifting at the edge, operators can cut down on the volume of streams flowing from origin servers to cache points while providing a means of scaling monetization and other essential applications cost effectively at mass market levels.
For example, choosing the integrated combination of SkyVision, the ARRIS linear advertising back office used by many MSOs to run their local advertising business, and Spectrum, SeaWell’s ABR session control solution, brings into play a wide range of capabilities intrinsic to Spectrum that are designed to exploit on-the-fly stream management to the fullest extent possible. These capabilities include device and user authentication, usage policy management, DRM translation, QoE (quality of experience) control, blackout content management and per-session watermarking, notes Duncan Potter, vice president of marketing at SeaWell. “We’re creating instruction sets on the ABR manifests for every stream across every device profile,” Potter says.
With SeaWell’s Spectrum integrated into the ARRIS SkyVision ad insertion platform, the IP streaming process, whether positioned at a headend, a CDN or on a home media gateway, can draw on the operator’s local ad portfolio to deliver ads matching pre-established profiles, whether by geographic zones, program context or personal characteristics of individual users as drawn from the operator’s database. “The differentiating piece is we’re doing targeted ad insertion across the whole ABR product set,” Potter says. “It’s theoretically possible to deliver a different ad for every individual device at extremely high levels of scale.”
These developments represent a strategic moment of truth for pay TV distributors as they contemplate how best to achieve TVE monetization goals. It’s not simply about choosing ad insertion and management solutions; it’s about embracing the service paradigm shift that goes with the ability to personalize every stream by selecting a long-term service management platform that will create a uniform experience across linear and on-demand content whether the TVE service is accessed in the home or outside.
From ARRIS’ perspective, products comprising its emerging managed IP infrastructure portfolio are designed to accommodate whatever modes of distribution operators choose, notes Stan Brovont, senior vice president of marketing and business development at ARRIS. “We’ve structured our product portfolio so that the underlying technology doesn’t change when new business models emerge,” Brovont says. “Multiscreen can be achieved many ways, but the gear you need to buy to enable OTT delivery of premium content is the same gear you use for managed services.”
Noting that the demand to migrate control over services into the broadband domain “is happening at a tremendous pace,” he says the goal at ARRIS is to extend management of IP services to “all touch points in the network.” This includes the private CDNs MSOs are deploying across their footprints.
“We’re not building caching servers,” he says. “We’re building the smarts to know where the content is to enable things like network DVR and targeted advertising.”
Personalized marketing and e-commerce capabilities are part of the picture as well, he adds. “We have a software platform called Merchandiser, which allows operators to associate processing and bundling of assets with special offers and upsell opportunities,” he says.
Merchandiser, a component of the Medios middleware and service management solution ARRIS inherited with the acquisition of Motorola Mobility, ties into the Medios recommendations engine to enable personalized marketing across all screens. Merchandiser can be used even with “clunky UIs” to encourage impulse purchases and upgrades through recommendations and special discount offers, Brovont says.
“One of our customers, Bouyques Telecom in France, is using Merchandiser to drive VOD purchases,” he notes. “They’re offering a bundle of three VOD views, normally priced at $4.99 each, for $6.99, which has produced a significant uptake on VOD.” Another customer is delivering messages to subscribers who click on a channel they don’t have in their current packages with an upsell message to drive sales at a moment of direct interest in the channel. Personalization at the ABR streaming level adds another dimension to such capabilities.
Coming at the ABR stream management space as a pure-play software innovator in advanced advertising, This Technology has introduced its “VEX” solution to accomplish many of the things touted by ARRIS and SeaWell with respect to targeted advertising and other applications enabled through control of the manifest files used with ABR. “Manifest manipulation is the next generation of linear insertion for both ads and alternate content,” says This CEO Jeff Sherwin. “However, solving for hyper-addressability at major scale is a real problem.”
Of course, getting to the level of personal profiling required for individual ad targeting requires aggregation of data into a usable database that is beyond the current capabilities of most operators. But, given the vast trove of information pouring into the back office from set-top boxes and cable modems via IPDRs (IP Detail Records) streamed from CMTSs (cable modem termination systems), the potential is there to build a reservoir for use in personalizing applications on IP video streams. Indeed, such big-data applications are now entering the market from a multitude of leading back-office system suppliers.
This Technology has moved into what vice president of product management Denise MacDonell calls the “ultimate content space” with a solution that helps operators to mine their data reservoirs for applications that heretofore were not possible. “Data is the future,” MacDonell says, noting this includes the capability to report on as well as to enable advanced applications.
“We use standard-based specifications for managing data in and data out,” MacDonnell says. “We maintain a complete auto log for every event with APIs that allow you to output what happened in a real-time flow to operations dashboards. However granular the reporting needs to be, we can do it.”
Flexibility in reporting is essential, since there are no standard metrics regarding what constitutes confirmation of ad viewing, Sherwin notes. “We’ve seen a variety of different scenarios where somebody has to see 25 percent, 50 percent or X percent of ad for confirmation,” he says. “To do this we use beaconing APIs from the manifest manipulator that call back through the SCTE 130 or VAST protocol to report on how much of the ad is seen for each session.”
Another point of flexibility in the VEX platform concerns the company’s decision to open the front end of the manifest manipulator as a source code for customers to use in determining which devices they want certified by the platform. “This Technology is offering source code licensing for the front end of VEX to help MSOs and programmers best control their roadmaps,” MacDonell says. “As a result, we are giving them the best of both worlds – a high-quality, standards-based product combined with unparalleled deployment flexibility.”
The cloud-based solution orchestrates software running on existing servers used to transcode and stream IP video content. “We work with Harmonic, Envivio, Cisco, ARRIS – we’re working with all of them,” MacDonell says. And, she adds, the VEX solution “works really well with our ad insertion and blackout solutions.”
The latter also are positioned to work with other vendors’ manifest packaging solutions, Sherwin notes. “If somebody wants to take the ad insertion solution from us and hook up with someone else’s manifest manipulator, we’re fine with that,” he says.
Scalability has been another primary focus for This in developing the VEX platform. “The question we ask is, if the cue tone comes down calling for dynamic insertion on a particular program, can you handle millions of devices signaling decisions calling for specific ads in that spot at one time?” Sherwin says. “You have to be able to support hyper-addressable multiscreen video splicing for adaptive bitrate streams served to smartphones, tablets, gaming consoles, connected TVs and IP-enabled set top boxes. And you have to do it at scale.”
Another major challenge in the anyplace, any time world of streamed IP content is the need to ensure rights policies are always enforced, which means being able to enforce blackouts and replace the gaps in programming with alternative content. “The service provider has to know whether I’m entitled to see a certain football game if I’m, say, in New York on a trip,” MacDonell says.
“We’re not using recommendation engines to control blackout replacement content,” she says. “Our model is policy driven so that, if there’s a blackout on ESPN content where you happen to be, what you see instead is based on what ESPN’s rules say.” In fact, she adds, the first use of VEX is by a Tier 1 operator “specifically for blackout applications in the QAM and IP realms.”
Dealing with the Nuances
Faced with choices among compelling solutions such as ARRIS, SeaWell, Envivio and This provide, operators will be doing a lot of testing and trials as they take the momentous step toward supporting personalization and monetization on their TVE services. The nuances they will have to watch for in gauging performance require a deep understanding of issues outside the normal expertise of telecom and cable engineers.
For example, notes SeaWell’s Duncan Potter, the ABR fragmentation and packaging processes must be tuned to the discontinuity that runs across generations of devices and how they comport with various streaming modes. “This is where you get into the guts of knowing what you’re talking about,” Potter says.
Android devices are especially daunting in this regard. According to a recent report from OpenSignal, a provider of cellular signal coverage maps, there are now 11,868 distinct Android devices running on the eight versions of Android that have emerged since the original Cupcake launch in April 2009, compared to 3,997 distinct devices a year ago.
“You have to fix the fragments to make them play,” Potter says. “There’s a massive population of older Android devices. Some run HDS (Adobe’s HTTP Dynamic Streaming). Some run variants of HLS (Apple’s HTTP Live Streaming).” While things aren’t quite as bad with variations among generations of Apple iOS devices, “even HLS behaves different ways across different Apple devices,” he adds.
Further complicating matters is the need to support Microsoft’s Smooth, especially as the Xbox becomes an ever more important bridge for delivering TVE content to the TV set. “When you start supporting Xboxes, you have to be able to provide the same functionalities there as you do with the other ABR protocols,” Potter notes.
And then there’s MPEG DASH (Dynamic Adaptive Streaming over HTTP), the emerging standardized approach to ABR that’s meant to bring HDS, HLS and Smooth together in the packaging and DRM processes. “A lot of our partners want a full demonstration that we can work with DASH,” Potter says.
But DASH is a long way from settling down, with Apple still a holdout with HLS and current implementations of DASH varying from one device manufacturer to the next. Samsung’s profile of MPEG Dash, for example, is different from others. “We’re doing ad insertions with them, which means we have to be responsive to their profile,” Potter says.
Verifying ad performance and handling blackouts also involve details that must be well understood as operators’ parse solutions. When it comes to using the packaging approach to report ad performance, thereby avoiding having to run device-specific clients with such reporting capabilities, SeaWell, like This, uses a beaconing approach to confirm the ad was slotted exactly as required. “Our beaconing technology is something we developed with our lead customers, and it has been delivering proof of performance in commercial operations for some time,” Potter says.
As for managing blackouts, one of the things to watch for is whether ads tied to the replacement program are included with the new insertion. “You have to manage the blackout insertion and exit marks with great precision,” Potter says. Moreover, he adds, outside the U.S., where blackout policies are fairly well defined, the details of rights management across borders present a challenge to the streaming process.
Obviously operators have their work cut out for them in vetting vendor claims to determine whether the performance meets expectations. But it must be done.
As Sherwin says, “There is all this stuff you need to make the vision of reaching the consumer on any device anywhere a reality, and you have to do that by supporting business models that justify the costs of creating and distributing the content. That stuff has to be there.”