Content Ecosystem Archive


New Muscle behind VR Looks at Ways To Enable Market-Moving Experiences

Xavier Hansen, program manager, Verizon Labs’ Envrnmnt

Xavier Hansen, program manager, Verizon Labs’ Envrnmnt

Sense of Opportunity Grows Notwithstanding Primitive State of Development

By Fred Dawson

July 27, 2017 – The prospects for virtual reality as a vehicle for mainstream entertainment have spawned new, more platform-agnostic approaches to content development among major industry players even as the most avid VR proponents acknowledge the technology has a long, long way to go.

Among the more significant activities lending credibility to the notion that VR could become a disruptive force in everyday culture are incubation initiatives mounted by Verizon and Technicolor. Employing large teams of professionals from various disciplines in sizeable facilities, these endeavors are opening a new chapter in VR development by creating frameworks for new VR architectures, developing new approaches to production and post-production and exploring use of AI machine learning, eye tracking and other advances that can add verisimilitude to interactive VR experiences.

These projects are at the cutting edge of an expanding array of activities across the emerging VR ecosystem. Most are focused on use of the technology at its current stage of development, but in the aggregate they are creating a pan-industry environment for shared learning that is sure to expedite pursuit of more commercially viable approaches to engaging mass audiences.

Among the oldest VR skunkworks are the studios dedicated to fostering content for specific VR HMDs (head-mounted devices) like Facebook’s Oculus Studios and Samsung’s Milk VR. Joining these with a commitment to the Daydream platform Google debuted in 2016 is the company’s new VR Creator Lab housed in YouTube Spaces facilities in Los Angeles.

Also of recent vintage is a growing cluster of independent boutiques like Moth + Flame VR, The Virtual Reality Company, N-iX VR, Koncept VR, Start VR and yode that have emerged in LA and New York to help producers create content for VR games, storytelling and advertising using whatever platforms they choose. Productions out of some of these studios have begun making waves at traditional venues like Cannes, Sundance and the Tribeca Film Festival, but, as compelling as they might be, they are largely short-form variations on linear narratives offering viewers a 360-degree view of what’s going on.

On a broader level, there’s also growing industry-wide cooperation on efforts to foster more coherent development in the VR space, most notably through the VR Industry Forum, a new organization that includes leading vendors like Ericsson, ARRIS, Intel, Qualcomm, Technicolor, Dolby, Harmonic, Irdeto and many more, along with CableLabs, MovieLabs and two Tier 1 service providers, Sky and Verizon. Following its public introduction at CES in January, VRIF has been making steady progress toward issuing initial guidelines aimed at overcoming the fragmentation caused by proprietary closed systems.

“Proprietary device implementations are scaring everybody,” says David Price, vice president of strategic business development for TV and media at Ericsson. “We want VR to work across any platform. We want to be able to point to standards that will allow development of compelling content.”

As in any startup phase involving development of new consumer technology the shakeout in the battle for supremacy among leading developers will likely lead to some agreement on standards that are in everybody’s interest. Indeed, preceding the VRIF announcement there was already movement in this direction with last year’s launch of the Global Virtual Reality Association (GVRA), a group that includes leading VR device suppliers like Acer Starbreeze, Google Daydream View and Cardboard, HTC Vive, Facebook Oculus and Samsung Gear.

But while standardization is a long-term goal everyone can aspire to, the most important goal is to discover a path to commercial viability. As VRIF put it in its founding statement, “[W]e come together to exchange ideas and to seek a greater understanding of a very complex creation, delivery and consumption model.”

Whether the search will pan out remains to be seen. But excitement about the possibilities has drawn enough participation to merit confidence that answers won’t be long in coming.

One seedbed for such explorations is Verizon Labs’ Envrnmnt, a big open space at facilities in Warren, NJ that program manager Xavier Hansen describes as a “dynamic, highly lateral innovation environment.” There teams led by senior technologists and staffed by talented young enthusiasts are developing templates for production which can be used to create ever more compelling user experiences as the technology matures.

“We’re taking a bold, broad architectural approach to the entire AR/VR space,” Hansen says, articulating a linkage between augmented and virtual reality development that is gaining traction everywhere. “We’ve launched units devoted to R&D, productizing and content production that are pushing the envelope not just in entertainment but other fields as well.”

Envrnmnt is working with colleagues from Verizon and recently acquired AOL as well as with outside entertainment brands on specific content development projects. But, as the name suggests, outputting specific content is not the primary purpose of the operation. “Our main focus is on building core development technology,” Hansen says.

“We’re building the engines that enable people to build apps, and then we use that core to create apps as milestones for our clients,” he explains. “But we want ultimately to provide a platform that lets people build apps themselves without necessarily requiring a team of expert developers.”

Demonstrating one of the lab’s new frameworks, Hansen introduces a virtual sports bar where people’s avatars can meet and talk, watch live sports events streaming on a virtual screen or shoot hoops. The basketball shooting experience relies on tracking of hand motions as the user tosses a virtual ball at the hoop. The current iteration of the framework uses CGI (computer-generating imaging) rather than video capture, making it easier to build an application that can be transmitted to users.

The framework is meant to support a more immersive experience of moving through three-dimensional space than commonly occurs with current VR productions. It will enable developers to create such spaces using whatever visual content they bring to the table without building everything from scratch, Hansen explains. Elements will include the avatar constructs, voice communications format, support for placement of live video screens, means of utilizing motion tracking for specific applications like shooting baskets and other mechanisms that might go into creating a VR social networking space.

The Envrnmnt team is working on techniques that will make it possible to stream richer video-recorded environments for this level of immersive interaction. “We’re reducing the weight of transmission with our algorithms,” Hansen says.

The experience Envnmnt is looking for can’t be attained by transmitting just the content that falls into the field of view as the user shifts focus, he notes. “We’re streaming the full 360-degree video,” he says. “The problem with the FOV approach is you can’t move in space. It’s okay if you’re stationary and just looking around, but it’s not practical for creating a fully immersive experience. The Holy Grail is about fixing your ability to move in a 360-degree space. We’re on that quest.”

Another part of that quest is to use hologram technology in conjunction with VR so that a music performance or other activity involving real people can be brought into the three-dimensional VR space. “You could create a club atmosphere where people can pull in the hologram of a performer like Katy Perry and watch her as they walk around the space, just as you would in a real club,” Hansen says.

Eventually the full expression of the VR potential will appear in the storytelling space, he adds. “The space race is on to create a full-scale movie where people can teleport place to place and exist in different worlds,” he says, noting it’s not a matter of if, just when. “Intel is telling us when we have the software, they have the chips.”

Another place where efforts to reach these levels of performance are underway is the new Technicolor Experience Center (TEC) in Culver City, CA, where a team of over 300 researchers is working on scriptwriting and production concepts for VR movie making. Or maybe a better way of putting it is movie-game making, insofar as when it comes to immersive story telling in VR the line between movies and games often disappears, especially in the early going where action movies are a relatively easy fit for adding immersive interactions.

But there’s a distinction between games and movies in terms of emotional engagement that’s all important. As Kevin Cornish, founder of VR content creation studio Moth + Flame notes in a recent interview with SMPTE newsletter editor Michael Goldman, “We are talking about experiences that are emotion-based. And stirring emotion is, of course, the feature that is the most intentionally cinematic aspect of VR.”

Placing the user in the middle of the action to the point that the emotion-generating force of a good story becomes possible is not just a major challenge for script writers. From a technical standpoint it involves the ability to support immersive interactive experiences where the reaction of characters in the movie to the user needs to be realistic.

The key to giving characters the ability to interact with real people lies with adaptation of the machine-learning capabilities of AI to VR, which is one area of focus at TEC, according to Nick Mitchell, TEC’s vice president of immersive technology. Speaking with Goldman, he notes there’s a lot to work with given the progress in machine-human interaction capabilities derived from AI by the likes of Google, Facebook, Amazon, IBM and others.

TEC researchers are tasked with enabling authenticity of the most detailed aspects of characters’ appearance and physical responses to the interaction down to the finest details. “We have people studying behavioral patterns to try and get things right, like getting micro expressions correct in facial movement,” Mitchell says.

TEC is also putting a lot of effort into development of production and post-production processes for VR, where it has a significant leg up, given its long history in cinematic production. Discussing some of these efforts in a recent blog, Marcie Jastrow, head of TEC, says, “I think the biggest challenge is going to be learning who the new storytellers will be. What is often written out for creative is not something that can translate into immersive experiences.”

But there are major technical issues that need to be addressed as well. “Those include motion sickness, embodiment issues, or feeling that you are not completely immersed because you don’t feel your body in there,” Jastrow says.

And there’s a need to invent production processes that work at the highest levels of quality, leaving whatever corner cutting might be needed for various modes of distribution to points beyond the initial mastering. “If your best viewing environment is a movie screen or a theatrical release, then that is your master from which everything else flows,” she says. “Now we have to create the same standards in the immersive experience world to drive mass distribution.”

Clearly VR is on a path to becoming something much bigger than people have seen so far. The work at Envrnmnt and TEC is in the early stages, but these are the types of applications that have the power to generate the culture-rattling disruptions many people expect from VR.


Major Tech Advances in VR Add Credibility to Market Projections

Henrik Johansson, VP, products & marketing, Tobil

Henrik Johansson, VP, products & marketing, Tobil

Growing Public Exposure Readies Market for the Emergence of a Much Improved Experience

By Fred Dawson

May 23, 2017 – Anyone wondering whether to invest in virtual reality content or services might gain some clarity from recent technology advancements that suggest expectations for mass market adoption could be vindicated in fairly short order.

Innovations on display at this year’s CES extravaganza in Las Vegas make clear the bulky headsets, nausea-inducing effects, untenable bitrates and other issues dogging VR could disappear sooner than many observers anticipate. Meanwhile, ever more avenues for exposing consumers to VR through online, retail and amusement center outlets are delivering VR experiences that could accelerate development of a mass market once the VR experience becomes more user-friendly.

The early impact of that exposure can be seen in a comparison of results from surveys of U.S. consumers by IBB Consulting conducted last year in April and again at the outset of this year. Then the researchers found 12 percent of over 8,000 respondents expressed an interest in VR; the new survey, with 3,199 consumers responding, found the interest level has risen to 16 percent with close to 5 percent of respondents reporting they now own VR equipment.

Awareness-Accelerating Initiatives

While hardly a sign of serious groundswell, the figures show the advertising blitzes mounted by VR vendors over the past year combined with increasing first-hand exposure to the technology has had an impact. The exposure level is sure to increase this year, thanks in part to a bigger commitment immersive VR displays by retailers like Best Buy and Walmart.

Best Buy, which last year featured VR demos in only 48 stores, is now supporting displays with demos in about 500 stores and has VR products available in the “vast majority” of its stores, judging from plans first announced last year. In announcing the plans during a second quarter earnings call in August, Best Buy CEO Hubert Joy made clear the store’s growing commitment is a bet on the long-term, notwithstanding tepid market response in 2016.

“We believe virtual reality has the potential to contribute to our growth in the future,” Joy said. “But I am not expecting a material financial impact this year, given the timing of launches, inventory availability, and the fact that we are early in the cycle.”

This year VR gear owners will find they have access to a far greater volume of content with much better support for discovering the content than they’ve had before. A key facilitator in this regard is Littlstar, an online operation partially funded by a $33-million investment from Disney that provides a free app enabling consumers to view hundreds of VR titles in over 20 genre categories from Discovery, ABC, Showtime, Disney, National Geographic, PBS, Red Bull, Virgin and many other sources on all the major platforms, including Google Dreamland and Cardboard, Samsung Gear VR, Oculus Rift, HTC Vive and Sony PlayStation VR.

In a recent interview with tech podcaster Neil Hughes, Littlstar founder and CEO Tony Mugavero said the outlet will be introducing much more content this year, especially in conjunction with new partnerships tied to content initiatives by Google Daydream, Sony PSVR and game-developer Marvel. In the case of Daydream, the $79 VR HMD (head-mounted display) Google introduced last year as a step up to immersive experience from the low-cost Cardboard device, Littlstar will be displaying a rapidly expanding array of Daydream content options resulting from Google’s partnerships with Hulu, HBO, MLB, NBA, NFL and various game makers and its significant investments in original productions.

“There’s a massive opportunity for us there,” Mugavero told Hughes. “Google is making huge investments in AR (augmented reality) and VR.” As what some have called the “YouTube” of VR, Littlstar anticipates its success at evangelizing the market with free VR apps will pay off through opportunities to begin selling advertising and charge for premium content as the market base expands.

At year’s end the company took a big step in that direction with launch of Littlstar Japan, an initiative aligned with Sony Music Entertainment as its anchor partner and other partners in the offing. Mugavero said the company will be able to tailor its VR navigation strategy to tastes in the hot Asian market, where unexpected demand for the Sony PSVR after it rolled out in October led to long lines and a rushed effort by Sony to raise its manufacturing output.

VR is also starting to get significant exposure through installations at amusement parks and other locations, including New York City’s Times Square where The New York Times reported startup Void’s VR installation in the Madame Tussauds wax museum has drawn over 43,000 customers paying $20 each for a multi-room high-action Ghostbusters game experience since it launched in July. As The Times noted, Void is just one of several outfits pursuing business models built on paid admission to VR experiences in public places.

One of these, not mentioned by The Times, is three-year-old French startup Scale-1 Portal. The company is finding success with a low-cost variation on the concept, which, rather than offering a fully immersive VR experience, offers arcade vendors a $20,000 package consisting of projection equipment, action-tracking sensors, glasses and content that delivers an interactive 3-D experience with wall-projected exercise courses, games and other diversions. Visitors to the Scale-1 booth at CES witnessed staff leaping, weaving and running in place in front of an exercise routine dubbed “Future Runner,” which, when viewed without the glasses, looked like a 3-D movie in the raw.

The company, which is also engaged in custom design of products for business applications, was offering four content titles with the platform as of early January with the intention of producing one title per quarter in the future. “We add games to our installed units through the Internet, so it’s a simple process to keep sites updated with new content,” said Scale-1 president Emmanuel Icart. “We have units currently running in France as well as in Florida and Canada with more on the way.”

The New VR Experience

Expectations that all the activities driving increased public exposure to VR content will pay off for entities making big investments in equipment and content are looking ever more credible amid a wave of technology innovations that promise to significantly improve the VR experience compared to what’s delivered through today’s HMDs. That’s saying a lot, given the size and weight of HMDs, concern over nausea and eye strain, constraints imposed by cables and other issues.

One development that’s sure to impact the market is the emergence of head gear with a form factor closer to sunglasses than HMDs supporting performance matching the likes of the Oculus Rift and HTC Vive. The groundbreaking VR eyewear, on display at CES and slated for commercial release later this year, is the work of Chinese startup Dlodlo (pronounced “Dodo”) Technologies, which was handing out glasses for sampling by visitors to its booth.

Amazingly, the experience lived up to the claims made by DloDlo CEO Li Gang when the firm’s V1 glasses were announced last summer. “Dlodlo V1 is a breakthrough in Dlodlo’s VR equipment development, and is a landmark step in introducing VR equipment to the public,” Li said. “It’s smaller, smarter, better looking and offers a better experience than other VR products in the market. We’ve made progress in every part from optics and electronics to material and structure.”

With anticipated pricing in the $500-$600 range, the V1 has evolved quickly since its August debut in a short-lived fund raising effort anchored by Kickstarter. The V1 carbon-fiber glasses, 16 mm thick and weighing 88 grams, operate at a 90 Hz refresh rate with 3D displays fed through a “micro HDMI” input at 2400 x 1200 resolution, which translates to over 800 ppi (pixels per inch), nearly double the density levels of leading competitors’ HMDs.

The glasses can be connected to computers and game consoles or to the Dlodlo D1 controller, a pricey optional pocket-size high-density computing device that frees users to download and interact with VR content from Dlodlo’s growing store of games and other entertainment anywhere they find a Wi-Fi connection. In addition, Dlodlo has negotiated a tie-in with the high-end SteamVR controller platform, which entered the market last year as the supplier of motion-sensing technology and VR content for HTC’s Vive.

SteamVR, too, is a harbinger of improvements in VR experience that are destined to reach a larger audience over time. The platform utilizes saturation laser-beam coverage of a physical space to capture full-body motion signals at twitch-action gaming speeds anywhere the user moves in that space. The company has also partnered with LG in that vendor’s forthcoming second attempt at supplying the HMD market, and it’s now possible to run Rift HMDs on SteamVR. V1 users connected to SteamVR can participate in high-action games with full-body motion that matches the experience they can get with the Vive, according to some recent reviews.

Dlodlo faces a steep climb to market success, given the size of its competitors and their technological clout, especially with pricing that’s likely to be at the high end of the market. But, win or lose, the company has opened the window on a new VR HMD form factor that could well be duplicated by larger players before long.

Dlodlo has also found ways to address some of the visual issues that have continued to plague suppliers, notwithstanding recent increases in refresh rates and pixel densities. For example, the much higher pixel density reached by V1 mitigates the “screen-door” effect viewers experience when the close proximity of the displays to their eyes exposes black lines defining the contours of individual pixels.

Dlodlo has addressed another VR issue, dizziness, with a proprietary predictive algorithm that minimizes delays and distortions in the rendering process. And the company has shown it’s possible to support adjustments in display settings to help improve the experience for people with eyesight impairments.

The fact that such advances are destined to gain wider currency elsewhere is underscored by recent reports from academic researchers. For example, researchers at the University of Central Florida’s College of Optics and Photonics report they have overcome longstanding barriers to use of blue-phase LCD technology in a prototype application that raises pixel density to 1500 ppi. And researchers at Stanford University’s Computational Imaging Lab say they are developing HMDs that can adjust renderings for aging-related and other types of eyesight deficiencies.

Another area of advancement with major implications for VR involves the use of eye-tracking technology. The precision and speed of this technology was apparent in a demonstration at CES conducted by Henrik Johansson, vice president of products and marketing at Stockholm-based Tobil, a 16-year-old innovator in eye tracking technology.

In the demo, a viewer whose eye movements were tracked by infrared sensors at the base of a PC display saw little graphic images arrayed in rows across the screen light up instantaneously as his gaze shifted from one to the next without any head movement. Johansson said Tobil’s technology also supports what is known as foveated rendering by utilizing the firm’s EyeChip microprocessor-powered IS4 eye tracking platform to dynamically display content in gradations of resolution that realistically replicate what the eyes absorb across the field of vision in everyday experience.

Tobil’s technology, which previously gained traction in video gaming, marketing research and other fields, has now entered the VR space in conjunction with the recent introduction of the StarVR HMD, the product of a joint venture between PC maker Acer and VR content supplier Starbreeze. So far, the HMD is being used exclusively by IMAX in newly launched VR arcade centers in New York, London and Shanghai.

As explained by Johansson, the VR application, along with tracking the viewer’s gaze, divides the StarVR’s 205-degree field of vision into three zones of resolution with decreasing detail from the core circle of focus to the outer circle of perception. By eliminating unnecessary information within the field of vision as the viewer’s focus shifts in real time, “we reduce the overall bitrate by anywhere from 40 to 70 percent, depending on the degrees of resolution chosen for a particular application,” Johansson said.

Along with reducing the load on GPU processing power and cutting the transmission bandwidth required for streaming live sports and other real-time VR content, the technology introduces new level of personalized experience to VR applications, Johansson noted. For example, it’s now possible to support more natural personal interactions based on eye contact between users’ avatars in the virtual world or to peg sounds and the appearance of characters in a gaming sequence to the user’s gaze without reliance on head movements.

Acer and Starbreeze have made know their intentions to make the StarVR HMD available to the general public later this year. “While we have not yet started shipping larger volumes of StarVR, the current interest from multiple markets and from prominent brands and business sets us up well for the mass production phase beginning later in 2017,” Starbreeze said in a quarterly financial statement.

With the eye-tracking capabilities and support for 5K (5120 x1440) resolution, which raises pixel density to over 1,200 ppi, the HMD could significantly impact consumer expectations for VR. Starbreeze, which did not set a consumer price for StarVR, said it may farther refine the HMD, which in its IMAX implementation is as bulky or more so than the Rift and Vive. “Durability, field of view, hygiene, resolution, refresh rates and weight are all key aspects that we improve constantly and according to plan,” the statement said.

In a recent court appearance defending Facebook-owned Oculus in a copyright infringement case, Facebook CEO Mark Zuckerberg offered the prevailing view on the development trend line for VR. Noting his company will be investing some $3 billion to improve the VR experience in the years ahead, Zuckerberg said, “It’s going to take five or ten years of development before we get where we all want to go.”

Judging by the latest advances in VR technology, that timeline could turn out to be much shorter.


Sky Embraces New CDN Strategy Based on Nokia’s Velocix Platform

Roland Mestric, director of marketing, video business unit, Nokia

Roland Mestric, director of marketing, video business unit, Nokia

Move Harbingers Things to Come in Direct-to-Consumer Premium Video Market

By Fred Dawson

In a sign of things to come Sky’s UK operation has opted to implement CDN technology from Nokia in its own datacenter facilities at various locations across the country rather than continuing with use of public CDN services for delivering on-demand video to subscribers.

As previously reported, several suppliers of CDN technology, including Cisco Systems, Ericsson, Imagine Communications and others as well as Nokia, have launched initiatives aimed at providing content owners and distributors who don’t own local broadband networks the means to ensure TV-caliber delivery of streamed video content with functionalities suited to new monetization and personalization strategies. Such initiatives, positioned as alternatives to reliance on traditional turnkey CDN services, aim to provide distributors the kinds of benefits Sky’s UK CTO Mohamed Hammady says his company has achieved with use of Nokia’s Velocix CDN technology.

“Using Nokia’s Velocix CDN, we have greater traffic visibility in the network, allowing us to regain control of managing the network capacity,” Hammady says. “Deploying the solution deep in the network also ensures we can manage delivery more effectively to improve performance and the customer experience.”

Sky’s move, just announced after nearly a year of experience with the Velocix deployment, marks a first for Nokia, which built its position as a leading supplier of CDN technology through sales to network owners. “The Sky project represents a milestone for Nokia,” says Paul Larbey, head of Nokia’s IP Video business. “It shows that our Velocix CDN – which delivers high-quality programming – aligns with the needs of broadcasters and content providers in addition to those of IPTV and cable operators.”

Indeed, along with selling CDN platforms directly to broadcasters, Nokia and other suppliers are also working with network owners to tout use of their technologies in the creation of CDN infrastructure in edge facilities that could support a wholesale business model targeting broadcasters. Here the idea is that CDNs positioned in headends, central offices or hubs much closer to end users would offer more robust delivery along with advanced features specifically targeted to the direct-to-consumer market.

In Sky’s case, closer proximity to subscriber has been achieved by using datacenters facilities it controls in multiple locations across the UK. As a result, the company is able to take a hierarchical approach to maximizing performance leveraging a centralized as well as dispersed regional datacenters, notes Roland Mestric, marketing director of the video business unit at Nokia.

“Distribution of traffic is architected based on the popularity of content,” Mestric says. “Centrally, for longer tail content there’s a need for more storage capacity but lower volumes of throughput capacity, while, at the edges, storage capacity is lower but throughput is higher.”

In the first phase of its use of the Velocix platform Sky has focused strictly on meeting mounting demand for on-demand content delivered through its Sky On Demand service, which had grown to where the existing operations model was straining delivery resources and costs across the company’s entertainment and communications service networks. But Sky’s choice of the Nokia platform also took into account potential future needs, including support for live broadcast content, which is now in preparation for the second phase of the engagement in conjunction with delivering Sky Go, the OTT multiscreen component of the satellite pay TV service.

Support for time shifting provided by Velocix is also part of the phase two discussion, Mestric says. “We’re looking at both catch-up (short-term availability of replay of live content) and restart,” he notes.

Another consideration vital to Sky’s choice of CDN technologies was the ability to seamlessly transfer CDN operations from the public services to the new locations. “The introduction of Velocix CDN to support growth of our video on demand services was seamless,” Hammady confirms.

“Our platform includes what we call Velocix Proxy language,” Mestric explains. “This made it possible to make sure our CDN provides exactly the same capabilities with the Sky set-top boxes that they had before.” Call flows were easily customized without requiring product development,” he adds.

Another priority feature for Sky was ensuring it could have greater visibility into traffic demands and flows to ensure it had greater predictability of performance and network usage than it had before. The CDN caches are able to sense what’s going on with each device and to report useful metrics back to the operations center to ensure quality of experience is sustained under changing conditions.

Other attributes that factored into Sky’s choice have to do with support for personalization and dynamic advertising tied to the manifest manipulation capabilities that the Velocix platform can execute at the network edge. Specific plans remain to be spelled out, but it would be no surprise if Sky takes advantage of dynamic advertising capabilities enabled in the IP domain by the platform, given that, as previously reported, the company intends to expand its long-standing addressable advertising capabilities to its multiscreen feeds.

With Velocix Sky can modify how a request for content from subscribers is treated depending on a user’s location or device, Mestric says. “Customization on a per-subscriber basis is a potential future application that was quite important to them,” he adds.

Beyond the current phase 2 implementation, there’s a possibility Sky could expand use of the Velocix platform to other markets. “Hopefully, in phase 3 we’ll consider extension to Italy and Germany,” Mestric says.

Nokia has met another key requirement in the current market for software-based CDN solutions, which is to ensure the Velocix system can run on whatever recent vintage commodity hardware might be in a customers’ data centers as long as certain performance requirements are met. “We’ve moved from requiring specialized hardware to commodity platforms,” Mestric reports. “Sky is using HP servers, and we’re running on other datacenter hardware with other customers.”

Nokia is optimistic other satellite and terrestrial broadcasters will soon join Sky in use of the CDN platform. “Sky is just the beginning of this new market opportunity for us,” Mestric says, noting Nokia is in discussions with many other players in the DTC market. “We believe content owners will look at building their own CDNs for all the reasons Sky is doing. We see this as a key trend in the near future.”


NAGRA Pursues Unique Paths To Fostering UHD TV Services

Christopher Schouten, senior director of product marketing, NAGRA

Christopher Schouten, senior director of product marketing, NAGRA

Smart TV and Anti-Piracy Service Initiatives Mark Departure from Proprietary Traditions

By Fred Dawson

January 23, 2017 – NAGRA is taking groundbreaking approaches to overcoming security-related barriers to the licensing of UHD services with the goal of changing market dynamics in two key areas: one related to enabling more effective use of forensic watermarking in the battle against piracy and the other aimed at making sure the new content is readily available to buyers of smart TVs.

While the two initiatives are operating on separate tracks, they have in common a shift toward licensing of capabilities that can be decoupled from use of NAGRA’s proprietary watermarking and conditional access products. Elements of the smart TV initiative, known as “TVkey,” were publicized at IBC and CES, but aspects pertaining to applications in North America have not been publicized. The anti-piracy initiative, which will extend the vendor’s services to a broader global market, has yet to be announced.

A Smart TV Platform for UHD Content

The NAGRA TVkey dongle

The NAGRA TVkey dongle

The TVkey platform, developed in cooperation with Samsung Electronics, has already been adopted by Samsung to enable secure delivery of pay TV providers’ services directly to its high-end smart TV models. Now the joint initiative is moving forward with creation of a licensing entity that will enable access to TVkey technology by third-party suppliers of chipsets, TVs, dongles and conditional access systems.

The first announced licensee, pending finalization of the new licensing body, is MStar Semiconductor, which plans to implement the platform in its EMC SoCs for 4K UHD HDR sets. This will ensure availability of the solution on smart TVs offered by a broad range of OEMs, says JongHee Han, executive vice president of visual display business at Samsung Electronics.

“TVkey technology will ultimately help provide a faster route to market of 4K services for pay-TV operators and the 4K value chain as a whole,” Han says. “By opening access to the technology, we are committed to establishing TVkey as the de facto standard for access to premium pay services directly on TV sets.”

The TVkey framework is based on a NAGRA-designed root of trust embedded in TV chips that communicates securely with a TVkey dongle containing operator-controlled CAS and DRM that plugs into TV sets’ USB ports. As described by Christopher Schouten, senior director of product marketing at NAGRA, this creates a secure media path for strict enforcement of high-value content usage rules in accord with the Enhanced Content Protection recommendations of MovieLabs, the technology consortium formed by major Hollywood studios. The platform meets other ECP requirements as well by supporting hardware-based watermarking and operator-controlled device service revocation.

“TVkey is now enabled on all the latest Samsung series 6000 or higher models,” Schouten says. “Through the licensing authority with Samsung we will enable any CE or CA provider to license this on a not-for-profit basis.”

One unnamed satellite pay TV provider has reached agreement with Samsung to be featured as a subscription option for buyers of the OEM’s TVkey-compatible sets who are in reach of that provider’s signals, Schouten notes. He says expectations are high that many more distributors will be signing up with Samsung this year and with many other CE firms in the future. “By the 2018 or 2019 model year we expect to see much wider distribution of TVkey-compatible TV sets,” he says.

NAGRA and Samsung cite multiple advantages for the TVkey approach as the means of making pay TV services and especially UHD services available for viewing on smart TVs without the use of set-top boxes, starting with the low-cost USB form factor. “It’s a smart card on a stick,” Schouten says.
This contrasts with the more costly PCMCIA (Personal Computer Memory Card International Association) form factor used with the DVB CI+ (Common Interface Plus) model employed in Europe. Of course, there are many regions of the world where the CI+ option is not available, which is one reason Samsung’s Han views TVkey as a potential de facto global standard for the smart TV market.

Moreover, in places where CI+ is available users must acquire a CI+ card supporting the conditional access technology specific to any given service provider to gain access to that provider’s service. In contrast, the TVkey approach is designed to provide users of the dongle protected access to any pay TV service that has contracted to be featured with an OEM’s implementation of TVkey.

“TVkey gets virtualized for each operator so that it works with whichever service the user selects from the options displayed on screen,” Schouten says. “Through a simple sign-up process via TV app, web portal or call center consumers can sign up for any featured pay-TV service package.”

This opens a wide range of business models that can be beneficial to both CE manufacturers and service providers, he adds. By bundling TVkey dongles with their sets, manufacturers can enhance the appeal of their products by giving consumers multiple service options right out of the box.

Service providers can use the TVkey-equipped TVs to avoid the costs of providing and installing set-tops with the HEVC decoding capabilities that are essential to delivering UHD. And they can leverage the platform to enable free trials or other special offers such as one-day passes or skinny bundles for people who might not be inclined to subscribe to the provider’s full service.

Beyond the basic hardware advantages, TVkey will free service providers from reliance on the CE manufacturer’s user interface by providing a customizable template based on NAGRA’s Gravity Edge, a UI platform closely mirroring NAGRA’s OpenTV 5 that has already been ported to Amazon Fire and Roku. The UI will be introduced as a second phase in the unfolding TVkey strategy, Schouten says. And, he adds, because the platform includes support for DRM as well as CAS whether from NAGRA or other suppliers, operators will be able to include access to OTT options like Netflix as part of the branded experience.

Making TVkey Viable in North America

All these benefits apply in most of the world where smart TVs are equipped with tuners supporting access to cable, satellite, IPTV and over-the-air services. But it’s a different story in North America where tuning for anything other than ATSC broadcast services remains under control of the set-top box.

NAGRA, however, sees a way around this issue in conjunction with efforts to persuade CE manufacturers to bring multi-tuner capabilities into play with TVkey-capable UHD sets. “There’s going to have to be pull from U.S. operators who tell the CE people they want those tuners included in their TV sets,” Schouten says. Samsung, with its commitment to TVkey, is already offering such capabilities with its newer models in the North American market.

Another part of the strategy involves gaining support from the major suppliers of headend gear and set-tops, again, with a push from operators. “Because we’re making this an open CA, we will license it to anyone who wants to use it,” Schouten says. “We see operators telling their traditional suppliers, ‘We’re taking a new direction. If you want to participate and continue to have a piece of the business, we need your cooperation.’ ”

DBS operators might be especially ripe for the TVkey option, he adds. “Dish and DirecTV are offering skinny bundles over IP,” he notes. “By using TVkey they could lower costs and marry the satellite with the broadband operations.”

It remains to be seen whether a USB-based approach to enabling pay TV security on smart TVs will gain traction in North America, but the winds of change are clearly blowing in that direction elsewhere. The DVB standards organization is already well on its way to moving the CI+ platform onto USB with a preliminary blueprint introduced in July.

On a parallel track, three years ago a spate of vendor initiatives emerged with the aim of supporting virtualization of the set-top via cloud-based software connectivity to HDMI sticks. While many of these efforts fizzled with pushback from operators who felt the solutions lacked the robustness of traditional set-tops, HDMI dongle-based solutions have made significant inroads not only in the OTT domain but with traditional service providers as set-top replacements for second and third TVs in homes where traditional set-tops serve the primary TV.

The emergence of a solution that offers next-generation security on a non-proprietary basis for delivering UHD services to smart TVs could be a game changer. “We see TVkey as an important element of our future chipset strategy in terms of content security,” says Wayne Tsai, marketing director at MStar. “Our adoption of the TVkey technology ensures robust content protection for 4K Ultra HD content, and ultimately benefits everyone from us to the end-consumer.”

A Global Anti-Piracy Initiative

A police raid in Paraguay was part of enforcement action in a case against retail stores Casa Litani and Nadia Centerfiled filed by NAGRA and Discovery Communications in June 2015.

A police raid in Paraguay was part of enforcement action in a case against retail stores Casa Litani and Nadia Centerfiled filed by NAGRA and Discovery Communications in June 2015.

Meanwhile, as another component to making UHD content available, there’s a need for better collaboration on making forensic watermarking an effective tool against piracy, as mandated by the MovieLabs ECP specifications. NAGRA, by expanding its anti-piracy capabilities beyond customers who use its watermarking platform, believes it is well positioned to help in this arena as well.

The company, which last year acquired watermarking technology supplier NexGuard Labs, has been a long-time provider of anti-piracy services to network operators and broadcasters who use its content protection products, allowing them to benefit from a global tracking operation that works with law enforcement and various organizations to identify and take down distributors of purloined content and illicit viewing devices. Now, Schouten says, the company is beefing up its anti-piracy operations with plans to offer such services more widely.

“We’re investing a lot more, including a whole new team in Spain, to increase automation in monitoring and tracking as well as to do follow-up with people,” he explains. “We’re expanding our service on a global basis in both the traditional pay TV and the OTT spaces with the intention of offering it to the entire market whether or not entities are using our conditional access and watermarking products. It’s a true alliance-based anti-piracy model.”

This is a model NAGRA has been pursing in Latin America for some time through its affiliation with Alianza contra Piratería de Televisión Paga, a group encompassing most of the region’s major players in pay TV that was formed in 2013 to collaborate in the fight against Free-to-Air (FTA) piracy, which uses illicit satellite receivers to decrypt signals.  The alliance, an outgrowth of an anti-piracy collaboration between DirecTV and NAGRA that began in 2010, has led to a string of successful enforcement operations resulting in arrests, shutdowns of illegal retail operations and seizures of FTA devices and pirate headends supporting hundreds of thousands of illicit subscriptions in Brazil, Argentina, Colombia, Venezuela and other countries.

“Some members of Alianza are using our security solutions, others not,” Schouten says. To support its more expansive approach to anti-piracy operations NAGRA is “investing a lot more in building our tracking and response capabilities,” he adds, noting this includes assembling “a whole new team in Spain to increase automation in monitoring and tracking as well as to do follow-up with people.”

If successful, the new NAGRA strategy will break with the current modus operandi where forensics and enforcement activities are largely a function of services provided by vendors to just those customers who use their watermarking and content protection technologies. An ecosystem-wide, pan-regional approach to beating piracy is widely acknowledged as the key to making it possible for content distributors to live up to the enforcement mandate embodied in the ECP specifications.

Along with generating support for enforcement NAGRA is focusing on compiling data essential to demonstrating the impact piracy is having on service providers. “One of the challenges to building the anti-piracy effort is many companies lack knowledge of the impact piracy has on their bottom lines,” Schouten says. “They need this information to drive investments in these measures.”

It’s also important to engage OTT providers in these activities, he adds. “We’ve always provided service of this nature in broadcast and pay TV, but now increasingly we’re working in the OTT space,” he says. Already, he notes, more than half of NexGuard’s customer base consists of content providers delivering high-end video direct to consumers.


Results from VR’s ‘Breakout Year’

Tim Bajarin, president, Creative Strategies

Tim Bajarin, president, Creative Strategies

Small Global Market, Lack of Content Augur Long Haul Ahead

By Fred Dawson

January 5, 2017 – As another CES gets underway with the virtual reality hype machine running full tilt it’s clear that network operators are justified in their cautious approach to embracing VR as an emerging service opportunity.

But it’s equally clear service providers are well advised to stay tuned with enough resources devoted to understanding what it would take to get involved if they want to avoid being blindsided when the time comes to get serious about delivering VR services. Certainly content producers aren’t taking VR lightly, notes Tim Bajarin, president of Creative Strategies, a consulting firm that advises content creators on the use of new technologies.

“All the companies we talk to see VR as an opportunity,” Bajarin says “Hollywood directors are getting into this. Steven Spielberg has invested in the Virtual Reality Company.”

But, he quickly adds, “They’re all waiting for a product that will sell in the millions. Goggles that people will accept on a mass-market basis are probably years away.”

Indeed, notwithstanding heavy advertising and other marketing efforts by some of the major players, the fact is 2016 didn’t measure up as the predicted breakthrough year for consumer acceptance. And despite CES demos that will be teeing up VR applications in everything from mainstream games and entertainment to porn and industrial use, the measured approach to content development signals a slower-than-expected uptake by VR gear buyers is discouraging a pace of content rollout that would serve to drive more gear sales, raising the likelihood of an extended run for the usual chicken-and-egg conundrum.

That doesn’t mean, as some have suggested, that VR will go the way of 3-D TV. As the enthusiastic purveyors of reports predicting the emergence of a multi-billion-dollar VR market note, VR has transformative potential in how content is produced and consumed as well as how business-related tasks are executed that 3-D never had. Moreover, even as VR cuts users off from interaction with people in their immediate vicinity, there is a social component to the technology that may well be the primary reason Facebook spent $2 billion on its purchase of VR equipment maker Oculus.

At an Oculus developers’ conference in October Facebook CEO Mark Zuckerberg wowed attendees with a demonstration of what a Facebook VR experience will look like. Wearing an Oculus Rift headset he met with co-workers, played cards and engaged in other activities in virtual space to demonstrate, as he put it, that VR is “the perfect platform to put people first.”

Not that Facebook doesn’t see the content potential as well. Zuckerberg said his company has already invested $250 million with the content development community to drive VR content development and expects to funnel another $250 million into the effort, with an additional $10 million devoted to a new fund for educational applications.

A year ago, Goldman Sachs predicted VR and augmented reality, which brings digital imagery into a viewer’s field of vision, together could generate anywhere from $80 billion to $182 billion in hardware and content revenue by 2025. In August IDC issued an even more aggressive prediction, suggesting global VR and AR revenues would each $162 billion in 2020.
But by year’s end it was clear 2016 VR HMD (head-mounted display) sales were not as robust as expected, which was inadvertently underscored by Best Buy in a pre-CES email promotion touting all the great new things to be featured at CES that are now available on Best Buy’s shelves. 4K/UHD TVs, new smart phones and much else were mentioned in the promotion; VR wasn’t.

There’s a lot more convincing to be done before a significant portion of the public is ready to buy in. In December market research firm SuperData revised downward an already pessimistic prediction for 2016 HMD sales it had issued in October, suggesting Sony’s PlayStation VR, launched in October, had gotten off to a much slower start than expected.

Sony was on track to sell about 745,000 units rather than the previously predicted 2.6 million, SuperData said. Its predictions for the other major players, HTC’s Vive, the Oculus Rift and Samsung’s Gear VR, were unchanged at 450,000, 355,000 and 2.3 million, respectively. The heavily advertised Gear VR, offering a less immersive experience tied to use of Samsung smartphones lodged in the HMD to generate images, costs much less than the others at a listed price of $100.

Expectations that the Sony PlayStation VR, priced at $400 for use with PlaysStation4 consoles, would do better than the Oculus and HTC displays was based in part on total costs insofar as the base of over 40 million PlayStation4 owners needed to spend just $400 to obtain a VR experience. With the purchase price of the PlayStation4 starting at $300, the Sony VR experience could be obtained at $700 by people who don’t own the console, with the added benefit of gaining access to all the non-VR benefits of owning the console, whereas buyers of the Rift at about $600 and Vive at $800 needed to have a high-performance PC, which adds another $1,000 or more to the cost.

In addition to costs, dearth of content was widely seen as a drag on sales, which, as previously reported, was the mantra at the beginning of 2016. In October The Seattle Times reported the content void remained a point of major concern among developers and investors gathered for the Immersive Technology Summit in Belleview. The paper summed up the mood with a quote from Chris Donahue, a senior director at chipmaker AMD, who said, “It’s all about the content. I don’t have an answer to what the ‘killer app’ is going to be.” It wasn’t just a matter of absence of content; it was the quality of experience associated with much of the content that reached the market, which, as the paper noted, often had the feel of “technology demonstrations or physics experiments.”

For example, live sports events offered in VR for viewing on Samsung’s Gear VR, such as games at the NCAA’s March Madness tournament and events at the Summer Olympics, were less notable for immersive experience than they were for the poor viewing quality, which fell far short of the viewing experience on TV sets. And, generally speaking, video game reviewers found VR gaming experiences available on various platforms to be hampered by less-than-realistic limitations imposed on player actions.

But an impressive and growing range of activity focused on development of content beyond gaming as 2016 progressed suggests things could improve in the year ahead. For example, NextVR, producer of the aforementioned VR sports events and others such as the U.S Tennis and Golf Open tournaments for Samsung’s Gear, has expanded its reach to include the new Google Daydream View, a recently introduced $79 HMD for use with smartphones, and promises to add what could be better viewing options in conjunction with use of the higher end HMDs in the months ahead. NextVR has also begun producing one NBA game per week for VR viewing at no extra cost for holders of the NBA League Pass.

Motion picture studios have been getting their feet wet with VR clips promoting movies such as Martian, The Blair Witch Project, Assassin’s Creed, episodes of Star Wars and many others. Doug Limon, director of the Bourne movie series, has created a VR episodic series titled Invisible, and Disney released a short VR video that puts people on the back of a dragon appearing in the remake of Pete’s Dragon.

There are also a number of startups devoted to VR content production that have been drawing significant investment funds, such as Within, Lucid, Immersv, VirtualSky and Vertebrae. The question is, will any of this be enough to draw a significantly larger market of users.

Verizon thinks so. The company has built an end-to-end AR/VR platform utilizing Amazon Web Services’ EC2 GPU and CloudFront resources to support content creation, hosting and delivery. As described in an online presentation by Verizon executives Christian Egeler, director of AR/VR product development, and cloud architect Vinay Polavarapu, the initial iteration of the platform scales to support 100,000 simultaneous HD video streams to customers worldwide.

Elements include a VR content authoring service for ingest; media library service for content consumption; ads service for ad integration and monetization; real-time stitching and encoding service for live and on-demand ultra HD VR content from a variety of cameras and rigs; adaptive streaming capability to stream to any device using HLS and MPEG-DASH, and a mobile VR rendering platform for IOS and Android.

Another entity getting into the cloud-based VR distribution business is NeuLion, which has built an international business providing OTT video management, distribution and monetization support for content owners, including major sports entities such as the NFL, NBA, Univision Deportes and Euroleague Basketball. In a partnership with Nokia that utilizes that firm’s OZO VR camera and player SDK, NeuLion is offering content owners an end-to-end integrated platform enabling a single stitched live video feed from OZO cameras to NewLion encoders for packaging and distribution to consumers worldwide.

The question for network service providers is whether any of these developments merits serious investment in a VR service business. “VR is on the radar of almost every mobile, cable and media client we work with, and the most frequent question we get is whether this makes sense for their business right now,” says Jefferson Wang, senior partner at Interactive Broadband Consulting Group (IBB).

In a recent survey of over 1,000 U.S. consumers who say they are interested in VR, IBB found that just 31 percent had actually tried the technology. For network operators that have a retail store presence, there’s an opportunity to provide that experience in demos that can lead to subscriptions to a VR service, Wang notes. “Initially, IBB predicts that the VR market winners will be companies that can break down the barriers to entry with an end-to-end play,” he says.

But any such initiatives will have to wait until there’s enough content to fill a VR service pipeline. That still looks to be well off in the future.


AVC at HEVC Compression Rates Scrambles Next-Gen Codec Picture

Keith Lissak, senior director, product marketing, Harmonic

Keith Lissak, senior director, product marketing, Harmonic

Harmonic Introduces Technique that Works with Existing Client Base

By Fred Dawson

October 10, 2016 – Harmonic appears likely to shake up industry-wide efforts to save bandwidth with new encoding methods offering HEVC-level bitrate reduction on AVC encoders without requiring any change in device codecs.

“This is something we’ve been working on for some time,” says Keith Lissak, senior director of product marketing at Harmonic. “We’ve gotten AVC (Advanced Video Coding) up to HEVC (High Efficiency Video Coding) levels. Our solution works on all existing AVC-enabled devices, including devices that use HEVC codecs.”

The company’s EyeQ software system, slated for commercial release before year’s end, enters the market amid much uncertainty among mobile, pay TV and OTT content distributors over how to accommodate the rising tide of IP video transmissions as 4K UHD, HDR and other next-gen formats come into play. While HEVC has long been positioned by the ISO and ITU as the successor to the Moving Picture Experts Group’s AVC, the search for lower-cost and more easily implemented solutions has spawned a flurry of initiatives from proprietary codec suppliers such as V-Nova and RealNetworks and from promoters of royalty-free solutions such as Google and the Alliance for Open Media (AOM).

V-Nova, for example, continues to make strides, building on previously reported successes in several market segments with recently announced wins in mobile, OTT and 4K contribution. But, as confirmed in recent testing by independent research firm informitv, V-Nova’s Perseus codec, in the hybrid version designed to work with existing MPEG codecs, achieves just a 33 percent bitrate reduction on AVC-delivered 1080p HD  at comparable quality levels.

Google’s royalty-free VP9, used with YouTube and in many other parties’ OTT operations, last year achieved parity with HEVC, as confirmed by several testing organizations. Perhaps more significantly, the company has moved what had been its VP10 successor initiative into the AOM technology pool.

AOM’s first codec, AV1, slated for release in March, is targeted for Internet Engineering Task Force (IETF) standardization as a royalty-free platform precisely tuned to the requirements of streaming live as well as on-demand HD and 4K UHD content over the Internet with a 50 percent efficiency improvement over HEVC and much lower use of CPU power in the encoding process. VP9 uses almost as much processing power as HEVC, which, with the exception of improvements engineered by encoding companies like Elemental, consumers ten times as much processing as is required by AVC.

While long-term prospects look good for AV1 as a potential force in IP video, the opportunity to exploit the vast embedded base of AVC codecs to achieve HEVC-level performance in the near term promises to expedite efforts to raise the quality of user experience in the congested OTT video space. According to Cisco’s latest VNI Global IP Traffic Forecast, video now accounts for over 60 percent of global Internet traffic and about 60 percent of mobile data traffic.

Viewing of TV shows, movies and other long-form video is now a big part of the video flow, which makes viewers less tolerant of sub-par performance. “Viewers now expect a first-screen quality of experience on every device, with increased video resolution and no buffering, despite network conditions,” notes Bart Spriester, senior vice president for video products at Harmonic,

Harmonic’s EyeQ is designed as an enhancement to the PURE Compression Engine used with Electra X encoders in the cloud-based suite of VOS video processing solutions the company developed to give distributors an alternative to purpose-built hardware solutions. According to Harmonic, EyeQ will allow these encoders to deliver live as well as on-demand video at a 50 percent reduction in bandwidth without resorting to HEVC in complete conformance with AVC specifications.

Lissak says the Q4 implementation of EyeQ will run on the Electra X2, Harmonic’s first software-based encoder designed to achieve performance levels on Intel processors comparable to the capabilities of ASICs used with its E8000 and E9000 hardware platforms. Harmonic’s software-based Electra X3, optimized for delivering broadcast-ready content at 4K resolutions and 60 frames per second, currently employs HEVC Main 10 profiles.

How the company intends to utilize EyeQ to enable 4K UHD over AVC remains to be seen, but Lissak makes clear the new technology represents “an opportunity to accelerate the rollout of UHD.” X3 implementations are slated to appear in mid-2017, he says.

More immediately, Harmonic’s emphasis is on the benefits to be realized with current video streams. Along with cutting bitrates by up to 50 percent, an especially important benefit to bandwidth-squeezed mobile operators, EyeQ directly improves the bottom line for video content and service providers through reduced storage costs at the core and network edges and by enabling a more consistent viewing experience with enhanced video quality and less buffering, Spriester says.

“By lowering CDN and storage costs by half, EyeQ has the potential to help deliver significant CapEx and OpEx savings, and increased profitability, for operators,” he says. “And when viewers spend more time in front of the screen, there’s more opportunity for content monetization.”

EyeQ is not a revamp of AVC encoding. Asked whether Harmonic is simply using extensions available in the AVC profiles, Lissak replies, “This isn’t some patch. If it were, there would be a lot more people doing it. What we’re doing represents a whole new way to analyze and optimize compression performance in real time.

“The optimization is happening based on the human visual system,” he adds. “If the human eye can’t spot the detail it gets cut out in real time.”

In other words, EyeQ executes “quality awareness” analysis of encoded frames using what Harmonic calls “in-loop artificial intelligence” to determine which bits are needed to hit quality targets based on what matters to the human visual system. These adjustments are then communicated to the encoding system, which reprocesses the frames accordingly. All of this is done without adding latency to the encoding process, Harmonic says.

EyeQ relies on variable bitrate (VBR) rather than constant bitrate (CBR) encoding. It is totally different from capped VBR processes, which rely on pseudo-linear scaling of picture- and scene-level quantification to cut bitrates.


Market Focus on HDR Intensifies

Michael Wise, CTO, Universal Studios

Michael Wise, CTO, Universal Studios

Resolving Production Workflow Issues Is Now a Key Goal

By Fred Dawson

October 3, 2016 – The pace continues to quicken in the long march to full realization of the enhanced quality potential of new video display technologies, especially as regards attempts to capitalize on stunning High Dynamic Range enhancements without the encumbrances imposed by the bandwidth-hogging 4K component of UHD.

Industry acceptance of the primacy of HDR is reflected in the recently adopted ITU HDR–TV Recommendation BT.2100, which, among other provisions, extends the luminance range and Wide Color Gamut (WCG) for 4K resolution displays embodied in the BT.2020 standard to content formatted for both HDTV 1080p and 8K displays.

There are still many issues to be worked out with HDR, which technically refers just to luminance range but in general parlance these days also includes WCG. But with growing consensus on HDR as the surest path to wowing the huge base of viewers who own 4K displays, content producers now have more reason than ever to weave HDR into the production process..

“Content shot and mastered with HDR, in my mind, looks better than any 3D content I’ve seen,” said Michael Wise, CTO at Universal Studios, who spoke at a symposium sponsored by the Society of Motion Picture and Television Engineers (SMPTE) in June. “It’s like looking out a window.”

HDR is now a key consideration in Universal’s and other studios’ production processes, although more needs to be done to reduce the labor involved and to improve creative use of the enhancements. “It’s about educating cinematographers, colorists and filmmakers about the art of the possible,” Wise said. “Honestly, there are some titles that don’t look as good as they could, but we do have really good ones like [20th Century Fox’s] Revenant.”

If striking the right balance between not enough and too much of a good thing when it comes to avoiding unintended perversions of creative intent is as much art as science, at least the science has reached a point where HDR can be used to consistently good effect across a wide range of displays in people’s homes. What matters most is that content be produced in multiple versions optimized to different HDR formats so that any display designed to work with one of those formats and even some that aren’t can render frames in accord with the intended variations in colors and brightness.

The ITU’s BT.2100 helps distributors make efficient use of these different format versions by  navigating a key area of technical complexity that has to do with the so-called “gamma curves” that determine the range of brightness values executed by different types of TV displays. The prevailing gamma curve used with the new generation of HDR sets is SMPTE’s ST 2084 dynamic range electro-optical transfer function.

ST 2084 defines a standardized approach to breaking with the 100-nit luminance limit used with the traditional gamma function on SDR (Standard Dynamic Range) displays. But there’s also growing support for what is known as Hybrid Log-Gamma, which was developed by the BBC and NHK and standardized as ARIB STD-B67 by the Association of Radio Industries and Businesses as a way to enable a degree of compatibility with legacy displays by more closely matching the traditional gamma curve while utilizing whatever capabilities they have to extend beyond the 100-nit limitation.

BT.2100 embraces a newly developed simple conversion process to enable use of either HDR gamma function for rendering content depending on the type of display in use. But the onus remains on producers to devise workflows that can deliver HDR versions suited to different display environments.

Simply scanning a finished film and enhancing it to HDR is not an economically viable solution, Wise noted. “Going forward our studio workflow will incorporate digital migrations that derive versions of HDR for different display environments,” he said, suggesting these would include the two leading TV formats, Dolby Vision and HDR10, as well as versions suited to tablets and other small-screen displays.

Right now this is a laborious process. Better cooperation among producers on formulating common parameters and procedures associated with mapping content to the various HDR format is essential to normalizing and streamlining how things are done from camera operations through all stages of production and distribution.

“We have to get together on this,” said Mark Lemmons, another SMPTE speaker, who at the time served as CTO at Deluxe Entertainment Services Group, a job he left in July. “It’s something that we have to do in partnership with others across the industry.”

But, as Ron Sanders, president of Warner Home Entertainment, noted at the symposium, it’s far easier said than done. Notwithstanding monthly meetings of studios, CE manufacturers, OTT companies and others under the auspices of the Digital Entertainment Group to work through technical issues, the consensus-building process “is like herding cats,” Sanders said.

HDR processes had yet to be incorporated into Warner’s workflow, he said, noting how hard it was to accomplish such formatting under tightening deadlines. “Windows are shrinking,” he commented, which leaves little time for remastering during the home entertainment post-production process.

“We have to get directors and producers to understand HDR,” Sanders said. “Once HDR is in the production process and the tools are more efficiently priced, [HDR-formatted] content will flow.”

The first Blu-ray players supporting the Blu-ray Disc Association’s UHD standard, which establishes HDR10 as the baseline requirement with Dolby Vision as an option, entered the market this year with under 50 titles ready for viewing in the new format. “We expect to have over 100 by Christmas,” Sanders said, speaking of titles from all sources. “You’ll see a huge ramp-up next year.”

Adding to the building HDR momentum is the emergence of content produced in HDR for OTT distribution. As previously reported, Netflix started down this road last year with a couple of series with ongoing expansion this year and now is reported to have about 100 hours of content available in the format. In June Amazon launched its first HDR-formatted series along with support for a handful of HDR-formatted movies with a promise to hit 150 hours of HDR content by year’s end.

Efforts to extend HDR benefits to owners of flat screens not equipped to support HDR per se but with luminance and color ranges exceeding the SDR parameters plays well with the expectations of consumers who purchased 4K UHD sets, especially as that base of users inspires expectations among distributors that there are monetization opportunities tied to delivering content in 4K resolution. According to Futuresource Consulting, worldwide shipments of 4K UHD sets reached 32 million units last year, representing a 160 percent increase over 2014 and 14 percent of all sets sold. Futuresource expects 4K UHD shipments will account for 52 percent of the market by 2020.

A recent global survey conducted for Irdeto by SNL Kagan found that 64 percent of service providers and 73 percent of content producers among the nearly 500 respondents believe consumers will be willing to pay 10 to 30 percent more on their subscriptions for access to 4K UHD content. Ninety-six percent of all respondents believe 4K UHD TV services will be widely adopted by 2020.


Pay TV Tech Execs Shed New Light on Core Issues

Topics Include Collaboration, Monetization, New TV Formats and the Role of Wireless

Gene Reznik, group technology officer, communications, media & technology practice, Accenture

Gene Reznik, group technology officer, communications, media & technology practice, Accenture

A wide-ranging discussion of the disruptions and opportunities impacting the pay TV business at the INTX Show revealed key players’ latest thinking on issues that will shape their fortunes in the years ahead.

Led by Gene Reznik, group technology officer for the communications, media & technology practice at Accenture, the panel included:

  • Tony Werner, executive vice president & CTO, Comcast Cable
  • Steve Shannon , general manager, content & services, Roku
  • John Honeycutt, CTO, Discovery Communications
  • Kevin Hart, executive vice president & CTO, Cox Communications
  • Darcy Antonellis, CEO, Vubiquity

The final day keynote session drew little attention, as is often the case on the last day of events like INTX, but it bears scrutiny by anyone interested in these companies’ perspective on topics such as collaboration, monetization, new TV formats, organizational approaches to innovation and the role of wireless. An edited transcript of the full discussion follows.

Gene Reznik, group technology officer, communications, media & technology practice, Accenture – The theme here is “From Chaos to Opportunity.” I’ll start, Tony, with you. Chaos to opportunity – clearly Comcast is at the forefront of leading innovation in the cable sector and more broadly now with your X1 platform. With the keen interest you have in the Internet, wireless, Wi-Fi, how do you see the opportunity  that chaos and all the over-the-top (OTT) disruption is creating in terms of what you need to be doing?

Tony Werner, executive vice president & CTO, Comcast Cable

Tony Werner, executive vice president & CTO, Comcast Cable

Tony Werner, executive vice president & CTO, Comcast Cable – I’m not sure there’s necessarily chaos. There are opportunities for us as an industry to go after across the spectrum.

We all feel at Comcast the digital world is well upon us, and we’re embracing a lot of it. But there’s still a lot we can do. Where we’ve turned our sights in the last 12 months in a big way is – we’re still pushing products out the door; we’re still coming up with cool new things and features, and that’s going quite well – but making it a true digital experience for the customer from the time they find you on a website until they have service.

A digital experience isn’t to go there and dial 1-800-Comcast and talk to somebody and then a guy comes out to your house and drills some holes and runs some cables. We’re going across that whole suite to where you have instant gratification. You go to the website, and before you leave the website you have service on an app and you’re starting to be able to already consume the service.

Then we’re app first on walking you through the installation. And we’re putting a lot of effort into wireless devices and the rest of it so that in the vast majority of the homes this is a self-install. And it’s the same way you do a Roku box and you do another box across your suite of services.

That’s going to be a great thing for the customer. Most customers like this a lot. And at the same time it makes our experience a lot more economical and allows us to put more money back into innovation.

Reznik – Steve, Roku has been wildly successful – ten million active customers, 50 percent growth, international expansion. How do you think Roku and where the entire box OTT industry is headed?

Steve Shannon , general manager, content & services, Roku

Steve Shannon , general manager, content & services, Roku

Steve Shannon , general manager, content & services, Roku – We’ve been on fire. Growth has been phenomenal. We’re up to 3,400 apps now and streamed five and a half billion hours last year with the most popular TV-connected platform in the country. We’re starting to expand internationally and we’re also putting the system in televisions.

You know, it’s essentially an operating system. And the reason we’re at the show here is we’re partnering with operators around the world to deliver the best pay TV experience. [Part of] the panel name here is “Harnessing Disruption.” I think a lot of folks call us disruptive, but we are here to be harnessed [laughter].

The goal really is to deliver experiences people love. And how exciting is that for folks to be thrilled about their set-top boxes? Our software is beloved. It’s not just Roku. Apple TV, [Amazon] Fire TV – these are good products.

The change in consumer experience is dramatic, not just from the usability and simplicity of it, but the fact these are developer platforms that third parties can put apps onto is really transformative for the value proposition.

And on top of that they’re way, way less expensive than the set-top boxes that have been used historically. When you sell them profitably at 39 bucks, you can imagine how low the price to make them is. We think that’s going to be pretty transformative.

Reznik – You mentioned 3,000 apps on Roku. Clearly navigation becomes an important part of the story. How do you start to navigate through it all? I know, Tony, that’s a big part of the X1 platform. John, you’re coming at it from a content producer, a production standpoint. How do you think about the whole customer experience and navigation part of the story?

John Honeycutt, CTO, Discovery Communications

John Honeycutt, CTO, Discovery Communications

John Honeycutt, CTO, Discovery Communications – As a content provider we see in all this nothing but opportunity to get our content positioned in front of consumers in the most efficient way possible. Internally what we focus on for this part of the discussion is really about ensuring we have the right hooks, the right information to be able to provide to have it be discoverable, to have it be aligned in whatever structure makes sense for the platform we’re on.

I would say in some areas we are making a lot of progress. I would say in other areas – I think at some point we have to raise the concept of advertising in this and understanding where we are in digital advertising and those topics, which I think is challenged at this point. But as a content provider I think the headline is: Fantastic. All platforms – how do we get it there most efficiently? Working with people like Darcy in her business to [foster] a supply chain that is as efficient, quick and detailed as possible is really what we’re focusing on.

Reznik – Let’s change gears a little bit. [CableLabs] has clearly been the vehicle over the years of driving collaborative R&D, doing product development, really driving innovation across the cable industry. Now we see much different sorts of formats. We see RDK as a platform for innovation, certainly all the open-source, OpenStack, lot of technologies. We also see the destination capabilities that now Comcast is enabling in how it positions X1.

Kevin, you’ve had one of the first experiences thinking about, rationalizing and ultimately deploying the X1 platform. What was the strategy that drove you to that decision, and what have been some of the early results?

Kevin Hart, executive vice president & CTO, Cox Communications

Kevin Hart, executive vice president & CTO, Cox Communications

Kevin Hart, executive vice president & CTO, Cox Communications – Partnering with Tony, surging the X1 platform was a key part of our strategy to being scaled around innovation. With competition, consolidation, there’s more need for collaboration within the industry.

CableLabs has facilitated that, [as has] NCTA. We rolled out Contour 1, our first solution. We had very good success. We’ve looked at some of the features and capabilities and thought it would be a great idea to scale and partner with Tony.

So we did that two years ago – about a two-year development cycle. [There’s been] a lot of agile and DevOps work at play. The partnership has been fantastic. And the early success is off the charts. The customer demand, feedback came back much like the X1 feedback.

We’re now looking at some of our capital models for the year to keep up with the demand this year and next year. I think we’ve also provided some feedback and input back to Tony’s team to help make the product, the solutions and the service better. The collaboration between the teams drives more scale and ultimately a better customer experience.

Werner – The Cox guys have been wonderful partners. And so has Shaw [Communications].

Cox was our first one. We think we used it to get the recipe right. We started with a bunch of DevOps more on the Cox side than ours, but a little bit on both to get the integration layer right. And then after we did, Cox rolled out 20 markets in two and a half months, six regions. So once we got her locked and loaded, these guys went. It’s been a great partnership.          We got a lot of good feedback, and it’s helped us to make the platform more robust. And we continue to.

It’s something I think we both went into a little bit worried. I didn’t want to be a vendor necessarily, and I didn’t know if we’d be able to step up. But so far it’s been fantastic.

Hart – I think the other benefit is, the product is fantastic, but now that the technical development work is behind us, we can focus on innovation around the customer experience, around bundling, automating the home, enhancing the in-home Wi-Fi and really thinking about the customer journey as opposed to just the technology. That’s really where innovation can take on a new life.

Reznik – How do you view RDK as a key enabler of externalizing innovation?

Werner – I think we both love it. I’ll let Kevin speak for himself. Hopefully he’ll say the same. Otherwise I’ll be tackling him here [laughter].

We think on the video side what the RDK has really done is two or three things. There are 280 partners now. We have 280 people who have licensed it, which is great, because it makes it a large base and a lot of contributed software and contributed code to it. So you get this open source development model a little bit.

But the other piece that’s so good, we’re showing devices here on the floor and devices that are going into Kevin’s network and our network where the SoC has only been done for six or seven months, and we’re already able to put it into a customer’s home.

It used to be 18 months or so of development from the time the SoC came out until we could put it in the customer’s hands. That helps us to have a newer, fresher product. But to the point here, it also reduces our costs. It takes a lot of cost out, because we’re getting the latest technology sooner. We think the same thing can happen with RDKB, which is what we’re pushing for the broadband side.

Hart – RDK is a great example of open source collaboration driving speed to market, driving economics and having our partner community rally around that. I remember about two years ago on this panel Tony put his arms around the folks on the panel and said, we’re all in on RDK, right? That’s the same meeting he kept looking at my notes, reading all my answers. But that’s a different story [laughter].

Reznik – Darcy, moving into your world, Vubiquity is a leader in media services. How do you see your business evolving to support where the industry is heading?

Darcy Antonellis, CEO, Vubiquity

Darcy Antonellis, CEO, Vubiquity

Darcy Antonellis, CEO, Vubiquity – Sure. [To Hart:] Can I see your notes [laughter]? You know, I think my colleagues up here have said it best and how it’s impacted our company. Vubiquity is in a very interesting place, because we work directly with the content community from a licensing perspective as well as the service provider community.

To think about it both creatively and technically, the common theme you’ve heard is all about how do you change cycle times from concept directly into the consumer’s home. That’s had a direct knock-on effect for our business.

What we try to do, and a common theme we’re hearing throughout North America and the rest of the world, is where do our customers need to be most focused? It’s truly about taking their human and financial capital and focusing those resources on their brand experience, their best touch point with their subscribers. And our role then becomes important in [shaping] how we can make other pieces of the ecosystem a lot more frictionless. That trend just continues.

If you look at overall availability and licensing of content and how the whole windows and avails and monetization have changed, the need to have a ubiquitous method to manage those changes and availability as well as the need to make sure you’re supporting the knock-on opportunities to monetize is pretty critical. So those are the areas we’ve been investing in.

We were talking back stage about everybody needing the cloud, that it has to be as easy as in where can I get very easy access to the content I need. And, oh, by the way, it’s got to be able to function properly and pass through my infrastructure and show up with the expectations the consumers have.

These guys all make it look really easy, but we all know there’s a lot of complexity behind that. So we’re trying to stay really focused on the managed services and tech solutions piece of it so that they can focus on the content side and the user experience side.

The State of Advanced Advertising

Reznik – John, staying with the content theme, interactive advertising, advanced advertising, data monetization – what do you see happening in that space? Where’s this train heading?

Honeycutt – I wish I knew. Clearly, when we talk about disruption, that has to be one of the biggest disruptive spaces, whether it’s consistency of data, never mind access to it. What language are we talking here, what measurement methodology? That’s one part.  I think the legacy systems we’ve used on the ad sale side, many, if not all, are incapable from a functionality perspective of getting us to where the future needs to be.

Taking it all the way to the top, just simply the mall, what is it we’re selling? There’s one [opinion] that says everything should be targeted and everything should be available. I think that gets hard.

On the one hand you run the danger of putting everything as programmatic into a commodity world, [which puts us] right into the world of banner advertising. That’s not fun. But there’s probably a mix that comes from a business model perspective.

We have some brands at Discovery that have very pure audiences. Think about a business like Investigation Discovery [a Discovery crime documentary channel]. It’s very consistent with what that audience is. So perhaps that’s an opportunity for targeting in the programmatic world.

But I look at the audience on Discovery. It’s very diverse – men, women, old, young, different socioeconomic backgrounds, people from the middle, people from the north. It’s all over. So how you get to a point where you can create a meaningful, at-scale target gets harder.      But in general I will say I’m more bearish on this area than I’ve been, because it’s just not becoming clear at all the levels of the supply chain what the path is going to be. If you’d asked me two years ago, I was probably, yeah, we’re going to get there. I’m struggling right now with the path.

I want it to happen. If anybody can tell me another way to make money in this business besides subscription and advertising, I’m all ears. Clearly, we have to figure that out, but I think it’s pretty muddy right now as to where we stand.

Reznik – Tony, your view on interactive advertising. The cable industry has had a lot of very visible initiatives in this area. Do you feel we’re getting more to clarity or are we still in this uncertainty phase?

Werner – It’s a good question. This is one we’ve talked about for 20 years. So it’s hard to sometimes not be a little jaded.

I think in a number of areas we’re getting there. We on X1 have found the advertisers hard. In the beginning when we didn’t have too many eyeballs on it nobody cared that we weren’t doing advertising in the guide. Now that it’s up to about 35 or 36 percent of our base and headed toward 50 by the end of the year, they’ve been doing the limbo under our door trying to get ad spots on there.

We’ve been very careful on the guide, I’ve warmed up to advertising, [but] we’ve set several rules. It’s got to be endemic. We’re not going to have mattress ads on the front page, because we want it to look good.

We’re neighborhooding on the grid so you don’t have Wrestle Mania right after the Family Channel or something like that. They’ve got to follow exactly the same style guide. There’s a little bit of push back: nobody is going to click on it if it isn’t big and throbbing at you or something like that. [But] I think that’s going to go pretty well.

[With interactive] we have a bunch of ideas coming together that I think will gel. Even though some of the stuff wasn’t as huge a success as people would like – the way that we did interactive triggers using the EBIF (Enhanced TV Binary Interchange Format), which was a very crude way of doing it – there were some of those things that did amazingly well. We will be bringing that back in a big way with more modern technology capabilities.

Initially we use it inside for us being able to target to the right customers. Offering phone for $9.95 a month is a great deal unless you’re paying $39 right now. So we’d just as soon send it to people who don’t have phone, have it only show up for those as the offer.

Some of the areas where we’re having great success are with a number of partners. NBC in particular is really bringing viewership up in there. When you see what we’re doing around the Olympics and some of that, I think there are opportunities starting to emerge.

I agree it’s a little bit murky, but the tools are getting better. We’re getting lots of hardware out there that can do it. For me it’s more on the sell side now than it is on the delivery.

Honeycutt – I totally agree. We’ll figure it out as we always do. But that relationship between the agency and programmer, how does that work?

I think we as programmers have not done a very good job of expanding how we talk about our inventory. Men 18 to 49 or women are interesting [categories], but it’s not very deep. I think we need to come together and expose a better set of descriptors about our inventory as an industry, not only as an individual programmer, if we’re going to be able to move to a digital world.

Werner – One thing that’s very, very clear is that the advertising has to start pivoting and morphing, because the idea that we can just interrupt your show and show you something that’s not relevant and not interesting is going by the wayside.

If you look at the millennials with browsers, nobody’s watching ads. They’re not paying for anything either. So I’m not sure how the monetization works on that. And then with DVR people fast forward through it.

As you start to be able to put ads that are interesting and relevant to you, which I think we will be able to do more and more of – a good example is things that are hobbies to me. If there’s only a magazine without the ads, I wouldn’t pay as much for that as one with the ads. In fact that’s what I read the most in these photography magazines and the rest of it. But I think we have to get that same model over there.

Customers are not going to stick with us if we disable fast forward. At first it was good because it got to more content, but that’s not going to last.

Shannon – Those are important points. We have actually invested super aggressively in advanced advertising techniques on Roku. And it has been very, very successful. It’s a big part and one of the fastest growing parts of our revenue.

What we do is we’ve segmented our data base and we attach a lot of data. We don’t allow the data out of the company. We’re very secure and careful about how we use the data. The deal we announced a few weeks ago with Viacom is one example where we’re working with them to make the ads more relevant.

That does a lot of things. It makes the ads more interesting. It makes them more valuable to help subsidize the programming. And it also allows them to run fewer ads, which is a big benefit to the user experience. People without babies aren’t getting diaper ads.

It’s been phenomenally successful. We are very optimistic about the future of advertising. We do it in display ads, and we consider ourselves the most aggressive OTT platform in partnering with our publishers, content distributors to build their audience. A lot of types of display ad inventory – you click through video ads, install a channel, things like that with interactive capabilities. We’ve really gone full tilt on it, and it’s super popular with advertisers.

Werner – To your point, the ad load is important. One of the things we’re seeing on the IP feeds – we’re going to have all these IP feeds for the Olympics – and we get a sense in generating them they want to get some form of monetization.

The one thing we went back and forth with is we’re doing X1 experience. First they were doing a pre-roll on everyone. We said this isn’t going to work. People are going to want to go to the pole vaulting, and if they go and they get stuck into a 30- or 60-second pre-roll, and you hop over to this one and you get another 60-second and come back to pole vaulting and get another one, it’s going to kill it.

We got our message across. And so they changed it and really reduced the ad load. Doing things like frequency capping and the rest of it and relevance is just so important in my mind to keep this going.

Shannon – We’ve got to get collaborative, too. We had this sort of competitive ad sales organization in cable and our group and Discovery and all of that. One of the things we’re trying to do is actually equip the publishers with basically the same tools that we go to market with. And we sell blind, so we’re not directly competing. But if we can share these tools and find ways to target without violating people’s privacy…

Honeycutt – The exchange of that is critical. How we efficiently exchange information about viewership – obviously privacy [has to be maintained] – but how do we be more effective as a DMP (data management platform) or whatever you want to call it on what that data is and then how we sell against it.

Antonellis – It’s interesting, because you think about it in the scheme of relevancy and getting the right ad at the right time, I still believe we’re so in the nascent stages of continuing to try to refine that.

Reznik – Clearly, monetization around this is key, but also most of us are CTOs. We have a technology radar. We look at what’s in front of us.

4K is in front of us. Gigabit speed into the home is in front of us. Wireless networks pushing gigabit speeds are in front of us.

Do we think this is incremental sort of technology change, and ultimately the things that we do today will just look better, be downloaded a little bit faster? Or do we think these technologies will enable fundamentally different competitive dynamics, business models, and so to some degree it’s really a geometric change that we’re on the precipice of?

Hart – I think from a network perspective it is exponential. It’s disruptive on the one hand. But it’s opportunity for providers on the other hand. We’ve invested billions of dollars building out the best network in our footprint, and that’s going to continue.

As we look at some of the things that are here at the show around DOCSIS 3.1, full duplex DOCSIS, enabling symmetric speeds, a push to a node-plus-0 architecture, it is going to provide us an advantage to provide those next-generation applications at high speeds, high throughput, high quality of service. And then take advantage of emerging technologies whether it’s 5G for access and things along those lines.

The work we’re doing as an industry with the virtual CCAP, remote PHY, not only is driving down the economics but also is trying to put a better experience for the end user based on applications that are to be imagined and developed. I think we’re in a good position.

It’s an opportunity for us not only on residential, but commercial as well. We have a big property in Las Vegas. Things we’re doing in the arenas and hospitality bring next-generation connectivity to enable experiences at a sporting event, at a concert that are just now being imagined.

Werner – I think we very much live in an exponential world right now. It’s not just the network. The network feeds it.

Sometimes we forget how fast it has changed. Four or five years ago most people connected a wire from their cable modem to their computer. Today we don’t connect wires from hardly any of our cable modems.

It used to be people would turn their computer off when they were done. Today everything is persistently connected. And those really change a lot of things out there.

Web pages – we still call them Web pages; they’re not a Web page anymore. This is not a static page that’s coming up.

You look at browsers and how they are going into the devices; you look at how quickly software is changing, and you look at consumption out of the home. Data consumption goes up exponentially. It’s a big deal.

It wasn’t such a big deal when people were consuming kilobytes. But now we’re into gigabytes, and you’re going up 50, 60 percent per year. It all changes. And if we can’t move at those speeds, we have to go after all the tools that our competitors are.

A lot of them are cooperative. All of us on the stage including Roku and us, I think we have more in common than we have not in common. There are a lot of things that overlap. But at the same time they can’t slow down and continue to be prosperous. We can’t slow down and become yesterday’s news.

4K and HDR

Reznik – How far do you feel we are away from 4K changing the game in terms of both the customer experience and the bandwidth you’re utilizing in getting to the users?

Werner – I personally am more interested in HDR than I am in 4K. I think 4K is great; 8K will be better; 16K, 32K, more K is always better [laughter]. But at some point, 1080p up converted [to HDR] looks really, really good. HDR makes a noticeable difference.
For us we will not be a roadblock. We’ll be an enabler. You need more content to come. We are shipping an HDR set-top.

[But] that subtle fidelity thing, that’s not what I see as changing our business and radically changing a lot of things. It’s interesting, it’s good, but that’s not something I call super fundamental to change.

Honeycutt – From a content creative perspective, I think I share a lot with Tony on that.             One more thing into that recipe. Let’s back up a second. We were the first ones to launch a 24-hour HD channel 13, 14 years ago. I think you have to remember in the HD transition there were actually three or four things that occurred.

Obviously the resolution improved. We went from 4×3 to 16×9, at least in the United States. The size of the device changed. It became skinny. We hung it on the wall. And then we introduced the concept of surround sound.

There’s a recipe there. We see resolution, whether it’s 2K or improved resolution, absolutely color space, and then frame rate. We think frame rate is very important to give that experience.

So if those three things come together it will be a nice addition. Will it be as revolutionary as SD to HD? I don’t think so.

Werner – I agree. It’s not going to sell as many sets, to your point. When people bought HD sets – if HD was still a CRT and weighed three, four, five hundred pounds it wouldn’t have taken off. It came right at that same time as plasma, some of the other things to flatten.

I’m 100 percent there with you. I think people are going to buy sets because it’s going to come for free. Content will come. Some people will use as it as a competitive thing to talk about.

Honeycutt – But there is production. It isn’t easy to do this. We produce a few hundred hours now in varying conditions.

Werner – And you make a lot more on 4K than you do on 2K, right [laughter]?

Honeycutt – The one I will raise is VR (virtual reality). I’ll put the commercial in. If you haven’t experienced Discovery VR, check it out. It’s pretty amazing. I think there’s a lot of interest there. I think we’re still searching for that consistent viewer experience in it. But the potential of that is interesting for certain types of  content.

Werner – I think it’s more interesting than 4K.

Shannon – We shipped a 4K product, the Roku 4, last year. It’s doing very well. We shipped a 4K TV as well with our partners TCL, which kind of puts us on the roadmap and helps give us some insight into how those products are made. And the interesting learning for me is they’re not that much more expensive to make than the regular HD products, which tells me we’re going to move a point where it will be hard to buy a TV that’s not 4K eventually.

Antonellis – We’re definitely seeing an increase. We have access to several hundred titles already. On the management and processing side, I’m a huge HDR fan. On the HDR side we’ve been prepping for both dealing with the next generation on the mastering side for pre-distribution and what those archives look like to manage those assets.

On the cost side for production, visual effects are still a little pricey, but that’s coming down. Whether it’s on the television side or on the theatrical side if you’re using a number of visual effects on the 4K front it’s a lot of data, and it adds up. On the high frame rate side I completely agree, but [there’s a question of] how that works its way back up into production.

Honeycutt – We’re advocating from a production perspective to produce in a high frame rate and then make what you want. I wouldn’t call it future proofing, but just having that asset available at 125 frames, or pick a number, and then the equivalent of a 4×3 pulldown, in old school terms, to get to that 24-frame film look. But at least the asset is available to your as far upstream as possible.

Staffing for Innovation

Reznik – Clearly, [companies] all over the globe are now talking about trying to get the innovation gene into their organizations. I’m interested, Kevin, in the journey of Cox Communications and how you see the talent agenda playing out. Is it really about re-invention or about acquisition of new? How are you thinking about getting a fit-for-purpose workforce to take you into the future?

Hart – We’ve been through a multiyear transformation within Cox technology. First things first, you have to take care of the talent that you have right in front of you.

We have a technology leadership academy. We have job rotations. We have training. We have mentoring. We have a lineup of business partners. There’s a lot of hidden talent within the organization and providing them the opportunities to step up is a big part of that.

We also have resource groups. We have a millennial resource group, a women’s resource group. We recruit in the community. I hosted a summit a few months back where we invited about 200 college students from across Atlanta to showcase all the things we’re doing to show them that we’re actually on the leading edge of a lot of technology development. That brought a lot of attention. We’ve built a strong recruiting pipeline.

Also, Cox puts a huge emphasis on culture and diversity. We provide a lot of opportunities within the organization to step up and lead and manage and take us to the new frontier.

It is competitive. You don’t necessarily think of a communications or cable company as your first stop. [But] as you can see on the floor here, we’re changing the game, the perception. We’re investing hundreds of millions, billions of dollars in technology. So it’s actually a great place to be in to build a career.

Reznik – There are a lot of incubators in Silicon Valley, and every company has some level of presence. The question for most is how do you get that back into the core part of the organization, versus having it being a satellite that operates on the periphery. Are you seeing the ability to get that into the core organization?

Hart – Absolutely. We have a new business group within our organization. We partner with Tony; we partner with CableLabs; we have presence in Silicon Valley. We’ve made acquisitions of different companies to bring in that kind of entrepreneurial spirit.

Healthcare is one of the types of investments we’ve made to leverage our network and leverage the connectivity with our customers. I think the spirit of innovation at Cox is alive and well. We have a 20-year vision of where we’re taking the company, growing other verticals, leveraging our existing assets and investing in our people in support of that.

Reznik – Tony, what is your perspective at Comcast? We all see the second building coming up, the technology tower. How do you see the transformation of Comcast going into the future?

Werner – Well, I think talent is key to all of us. All of us are out there searching for the right talent, the best talent. It’s one thing to get them in the door, which is not easy in and of itself, especially when you’re competing with Google, Facebook and these other folks who have got people right off the Stanford campus.

We are getting a lot more Stanford graduates. We’re hiring out of school now, which is good. We’re doing all the things we can.

My full-time job is keeping it a place they want to work. Part of it is, these folks who come in want to start working right away. They want to start developing product. And so we’re trying to keep Comcast feeling like a whole bunch of real small companies where you have your own pieces you work on that contributes up to a larger piece is what we work on.
Even though the cloud is a bit of cliché, that platform helps us so much, because now teams will come in and they own five, six, seven, eight services. They own them end to end, and they can do what they need within the services provided they don’t impact anybody consuming the services.

They give themselves different team names. We have like 50 different team names – Vader, Viper, all these different things. But then they feel like they’re part of a micro-culture.

You have to be able to bring them in. You have to pay them right. You’ve got to do all that stuff. That’s kind of easy. But if they’re not actually producing something and coming in and writing code fairly quickly, they’re leaving you.

This is another area where open source does come in. Open source is great to leverage against. These folks take great pride: I contributed this to open source, I contributed to the OpenStack community, I contributed that. We do everything we can to rebrand, to make them feel like they’re doing something different, and then whatever we have to do to retain them.

Reznik ­– Steve, you were born digital with a good DNA. You didn’t have to be re-invented or reprogrammed. But I also imagine a lot of your employees have a lot of opportunities. Retention, motivation, where do they go next are probably a lot of the issues you deal with. I’m interested in your perspective.

Shannon – I second a lot of what Tony said about talent. We’re headquartered in Silicon Valley. We are approaching [a staff of] 500 people, and the vast majority really are engineers. They are the core of the business.

Hiring the best, really the elite talent is the day-to-day battle at Roku. What we do, as our key metric, we have to win with the reviews in the marketplace. We don’t have the big ad budgets of Apple or Amazon or Google. The way we sell is by winning reviews.

You go look at Cnet, you go look at Amazon, or Best Buy reviews or whatever; we have to win those reviews. We focus on those. We look at that consumer feedback. We really work hard on data infrastructure to make sure we have a bunch of KPIs underneath those reviews that we drive towards. It’s a very analytical, data-driven environment, and, of course, engineers understand that.

The set-up process is paramount, because that’s when people write the reviews, right after the set-up process. We have to nail that. What are the biggest problems of set-up? Wi-Fi.    Our Wi-Fi team is unbelievable. It’s that secret sauce that a lot of consumer electronics folks don’t pay attention to. We have to get Wi-Fi absolutely perfect. It’s all this data driven combined with finding the talent, and at the end of the day, to make sure we have the best product.

Reznik – I think it’s great as you characterize it as selling to them. We’re thinking of them as customers. We’re understanding their buying preferences, and we’re creating experiences for our employees that attract them to us.

It’s a very different way than a lot of us entered the workforce where we were the ones selling to employers. Now it’s the other way around.

Thank you all for the dialog. Now let’s open it up to the audience for some questions.

The Cable Mobile Question

Audience question – You’ve talked a lot about the in-home experience. Can you talk about what you’re doing outside, the mobile experience? Do you see that growing, stagnant?

Werner – First of all, there’s no one size fits all. I think people when they’re in the home with a big screen want to watch it on the best screen available. But with the mobile experience, both in the home and out of the home, tablets have enabled a whole new viewing experience. So we’re doing everything we can.

A lot of what we’re doing for the Olympics will also be available on the tablet. You’ll be able to access these live extra streams. All our metadata enrichment we’re doing where you can search by medalist, you can search by country and all that, will also pull over to it.

We do a lot of mobile viewing right now. We have about seven and half million uniques monthly on our apps going across Web and mobile. I think we’re at about 110, give or take, linear channels that are available out of the home on that device and tons of on demand and the ability to download. The TV’s not going anywhere, but this other is growing, and in aggregate you have to check the boxes in all of them.

Hart – Tony touched on a lot of key pieces. You have the infrastructure, the device enablement, the content. From an infrastructure standpoint, building out through our commercial services, we have the MSO consortium around all the metro access points across the various footprints.

The connectivity, the infrastructure, some of the things we’re doing around small cell, back haul within the commercial space, is another key part of the component. Device enablement, providing rights to the content and [providing] the information and applications our customers want are kind of the three-step approach we’re taking.

Antonellis – I would think everyone is paying attention to the things we see happening internationally. We distribute today to 117 countries in 80 languages. When you go to different places with different topologies where certainly wireless is the first order of business, there are some interesting learnings to watch how mobile-first types of services are occurring. That certainly has influenced how we try to accommodate and service a whole set of seamless experiences.

Honeycutt – I think that’s a great point. We see it. Our footprint is worldwide. We see consumption habits changing in Southeast Asia. Africa will be the first highly connected by 5G. Several countries in Africa will be there quickly.

I think we’ve learned that how to tell stories is different than on big screens for some things. It’s not a completely start again, but there’s a pace and framing on mobile that sometimes is a little bit different. So we shouldn’t discount that screen size, although the message comes across. How you tell that in a compelling way does have some differences in the process.

Shannon – I think the length is obviously an important point. Mobile is obviously important. But this group up here is mostly distributing long-form programming.

I think what you see out there is sort of the revenge of the TV. Mobile has always been connected, PCs have been connected, all of these things by definition, so [there’s been] a lot of growth there initially. But now TVs are becoming connected, and it is roaring back to be the predominant streaming platform and will pass mobile soon.

I was looking at a Freewheel report, which, granted, ad avails was what it was talking about, but it’s a proxy for viewing generally. The television streaming platforms are growing more than twice as fast as mobile. I think mobile is around sixty-something. Television OTT-connected platforms, at around 170 percent growth, have already passed tablets and will soon pass mobile and eventually PC.

So when you look at roadmaps for developing streaming infrastructure, a lot of times we’ve seen mobile get prioritized only to find that the connected TV platforms quickly will pass them, especially for distributors of long-form programming.

One Year from Now

Reznik – As cable operators coming out of a business that’s been constrained by your topography and technology footprint at a time when the OTT game is being played out against 14 billion eyeballs on a global basis, how do you balance those two dimensions of being very much focused on the core footprint that you do serve versus really thinking about a digital opportunity, which is boundless?

Werner – First of all, I agree wholeheartedly, the TV in the home is still the primary consumption device. People turn it on, leave it on. They consume more and consume higher bitrate on it.

But people don’t want to be constrained to never leave the house. They want to take content with them. We see a lot even with cloud DVR where we’ll see that the TV gets paused at 10:15 presumably in the living room, and then about ten minutes later we’ll see that movie or that show pick up on the tablet in some other room in the house. People want flexibility.

I look at tablet viewing, second screen and even out of the home as accretive, not necessarily that it’s displacing some other viewing. It isn’t that people are quitting watching TV because they have a tablet. It’s that now they can fill gaps with it, they can catch things when they’re on the road. I think in hotel rooms there’s a lot more tablet viewing then there used to be, and things of that nature. So I look at it as upside for everybody.

Reznik – We’ll do one last closing question – a quick response from each of you. We’re sitting here next year, same place, same venue. We look back on the year that has passed. What’s going to be the biggest disruption we’ll see in the next 12 months?

Antonellis – I think we’re going to continue to see the current play on that skinny, mid-skinny, fat bundle diversity of content strategies. I think there will be a lot more branded direct-to-consumer offers out in the market, coupled with the advances that are being made on the distribution side.

Hart – The biggest disruption won’t necessarily be technology. We have a wealth of technology, but it’s going to be about how we change the game with customer experience, the in-home experience, the mobile experience. Leveraging our networks, our products, our services, our content in a way that we service our customers going forward to try to meet them where they’re at, where they’re going – that’s going to be what’s innovative around what we’re doing.

Honeycutt – I don’t go with disruption, but I think I’ll say that clearly in the next year we’ll move a significant portion of our infrastructure out of our own physical data centers into a cloud virtualized environment. We have a goal that in 24 months we want 80 percent of our business applications fully in the cloud. We’re six months into that journey.

Shannon – We’re really excited about the Xfinity app coming to Roku. Those kinds of packages and some of the skinny bundles, too. Charter has a super compelling skinny bundle on the platform. We’re real excited to get those engagements going and to enable us a non-traditional streaming style in partnership with pay TV operators around this country.

Werner – I tend to agree. If I could have one wish for next year, it’s that this panel is not on the last day [laughter].

But short of that, I think what everybody says I’m in agreement with. I don’t think there’s going to be a lot of technological ah-ha, the world has changed. I think we’re going to see a lot of steady evolution.

I think we’re going to see everyone on this panel take advantage of all the technologies more and more. And I think you’re going to see more unique partnerships and relationships start to emerge. Even though on some fronts you compete with everybody, on other fronts we all have the same motivation to see great content, happy customers and the best way of monetizing so that the people that are in the value chain actually get returns on their investments.

Reznik – That’s a great way to wrap it up. Thank you.

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