Content Ecosystem Archive


Revamped Vendor Workflows Open New OTT Options for TV Networks

K.A. Srinivasan, co-founder, Amagi

K.A. Srinivasan, co-founder, Amagi

Amagi and Quantum Are Among Suppliers Introducing Ways to Leverage Solutions in End-to-End Asset Management

By Fred Dawson

June 17, 2016 – With the potential to tightly integrate production, post-production, playout and distribution workflows in their transitions to IP-based operations, broadcasters are finding new approaches to building audiences that could radically transform the TV landscape in the years to come.

The possibilities are well illustrated by steps vendors traditionally playing specialized roles in supporting legacy TV services have taken to create more comprehensive workflows designed to enable much more flexible and quicker use of assets to attract viewers and build new business models at global scales. In this new environment, broadcasters can capitalize on the versatility and high-speed of Internet links to dynamically orchestrate use of stored and linear assets with advanced advertising, unencumbered by the limitations imposed by traditional reliance on playout and distribution via satellite and managed terrestrial networks.

For example, San Jose-based Quantum Corp., a long-time supplier of dynamic storage solutions for the broadcast industry, has made it possible for broadcasters to seamlessly integrate all storage points into a collaborative asset management environment that also encompasses production, post-production and distribution workflows. “We have the fastest collaborative file-streaming performance in the industry with integrated intelligence that allows you to manage your assets end to end from camera through archives to delivery,” says Alex Grossman, vice president for media and entertainment at Quantum.

The goal for Quantum, like other suppliers coming from various legacy positions in the supply chain, has been to give broadcasters a first-mover advantage they haven’t had in the Internet era, Grossman says. “We’re giving broadcasters the opportunity to be the tip of the spear in delivering compelling experiences and monetization with their content directly to consumers,” he adds. “It allows them to be competitive in any environment with a speed of innovation that comes naturally to OTT players.”

Another, less well known vendor in North American broadcast circles is India-based Amagi,
As a well-established supplier to broadcasters in Europe and Asia, Amagi brings a strong pedigree to broadcasters here who are looking to maximize the potential of Internet-based playout and distribution as an alternative to legacy models, says Sanjay Kirimanjeshwar, head of global marketing at Amagi, which has opened U.S. offices in New York and Los Angeles. “We believe North America will be our single largest market,” Kirimanjeshwar says.

That’s a significant goal for a company that runs India’s largest TV ad network and has become a major provider of playout support for regional broadcasters seeking to leverage IP infrastructure to handle the tasks traditionally associated with getting content out to distribution affiliates. Amagi has won business for its Cloudport playout platform as a next-generation alternative to legacy playout systems from TV networks in 25 countries.

But Kirimanjeshwar sees even greater potential for a workflow that can extend all the Cloudport processes used for playout, including storage, security, asset management, transcoding and ad insertion, to a hybrid public/private cloud operational environment that includes support for direct distribution to consumers as well as playout at global scale. A key component in the expansion of its solution sets is what Amagi calls “Cumulus,” a Cloudport-powered platform-as-a-service (PaaS) running on Amazon Web Services’ Glacier platform.

“Through the Cumulus broadcast platform, TV networks can assign all of the heavy lifting to the cloud, in terms of content preparation, playout and monetization, while having the flexibility to choose the best delivery method based on market needs,” says K.A. Srinivasan, co-founder of Amagi. “Since the workflow already exists in the cloud, broadcasters will find it easy to create regional sub-feeds, launch new channels and expand across continents to drive new revenue.”

Creating a PaaS on a public cloud service that enables global reach for broadcaster playout and direct-to-consumer (DTC) distribution plays directly to the aspirations of North American broadcasters, Kirimanjeshwar notes. “We’ve had really good discussions with U.S. TV networks,” he says. “Just like broadcasters in Europe and Asia, they want to get their content into different regions with full monetization support.”

In this new scenario content prepared for playout or DTC using Cumulus PaaS is sent over the Internet to regional AWS facilities or private clouds running Cloudport, where additional preparations, including local ad insertions, subtitling and other region-specific elements, are executed prior to playout to regional distributors or directly to consumers. This eliminates the need to lease satellite or long-haul fiber transport to move the content around the world while leveraging the all-IP environment to seamlessly integrate the core processing with what happens at the regional level.

Transport robustness sufficient to TV standards is available with use of the software platform supplied by Zixi through a partnership with Amagi. As previously reported, Zixi overcomes issues inherent to Internet transport to deliver video at high quality without stutter, packet loss or frame-freeze regardless of network conditions.

“The Amagi cloud architecture gives you a lot of flexibility to regionalize content based on user nuances, rights variations and local ad sales while minimizing costs,” Kirimanjeshwar says. “You can spin up new services on the fly for any region or group of regions, including something temporary like a two-month sports event. If you want to go direct to consumers, you can deliver the content in any format to any screen with control over advertising.”

He cites a couple of examples of how content providers are using the platform. One is Scripps Networks, which is using Cumulus for playout and regionalized ad support of its Food Channel to Dubai-based DBS provider OSN.

Another is the recently launched Indonesian OTT movie service FLIK TV. The provider is using the playout platform to get content to distributor Telkom Indonesia, which has installed Cloudport edge servers in local facilities to handle final graphics and other functions prior to distribution in different parts of the country.

“FLIK TV is the only Indonesian movie channel available in HD, and we are looking to expand gradually across multiple countries,” says FLIK TV COO Lavesh Samtani. “Prior to the channel launch, we considered satellite delivery, but ultimately turned to the cloud for playout economics and the ability to scale on an as-needed basis,”

Utilizing AWS, “Amagi Cloudport makes it simple for us to manage video and audio assets, launch additional feeds in new regions with a short time to market, and minimize CapEx and OpEx,” Samtani continues. “At the end of the day, we’re able to quickly deliver broadcast-quality content at significantly reduced costs.”

The Cumulus workflow is an open-ended master cloud asset management system that is designed to support integration with other workflows using standard APIs, Kirimanjeshwar notes. “We have a workflow management system that allows you to choose from different third-party solutions and services and stitch them together,” he says, listing scheduling, EPG management, rights management, ad traffic and delivery, regulatory-related quality control and subtitling as applications customers typically bring into the Amagi workflow.

Production processes, too, can be stitched into the work flow. By combining instant, centralized access to stored content with the ability to produce new content for new audience niches as well as existing audiences in the same workflow, users of the Amagi platform can create the glass-to-glass environment that makes it cost effective to experiment with new business models and content components at the regional and global levels, he says,

A key selling point for Amagi is its longstanding expertise in advertising, which has enabled the company to build a cloud-based server-side solution that does away with reliance on client-side management of ad placements and prevents use of ad blockers. “Server-side is also critical to consistent performance, control over advertising and the ability to target ads,” Kirimanjeshwar says.

Rather than relying solely on traditional ad triggers to designate avails and precisely sync placement into the content flow, Amagi offers a watermarking platform as a way for broadcasters to ensure ad commitments are executed. Dubbed “Thunderstorm” and designed specifically for distribution via ABR (Adaptive Bitrate) streaming, the watermarking component in the workflow communicates with the Thunderstorm software in the ABR manifest to make sure ads are packaged into the linear content stream on a per-session basis in accord with targeted user and demographic categories.

“We’ve used watermarking to support ad insertion in India on our landline ad network for some time,” says Vijaya Sagar Vinnakota, head of ad-tech engineering at Amagi. “By moving this into the cloud for OTT as well as legacy applications, we’re giving broadcasters control over advertising that they lose when third parties move their content into OTT distribution.”


UHD Forum Sets Practical Path To Delivering HDR TV in 2016

Thierry Fautier, VP, video strategy, Harmonic, & president, Ultra HD Forum

Thierry Fautier, VP, video strategy, Harmonic, & president, Ultra HD Forum

SDR-to-HDR Conversion Processes and New Backward Compatible Transfer Function Are Included in End-to-End Distribution Guidelines

By Fred Dawson

June 13, 2016 – Significant progress toward industry-wide adoption of guidelines for dealing with the complexities of delivering HDR-enhanced video has increased the likelihood that efforts to generate stronger consumer demand for next-generation TV services are finally going to pay off.

“The standards-setting process is moving slowly and increasing entropy,” says Thierry Fautier, vice president of video strategy at Harmonic, in reference to how the dizzying array of High Dynamic Range display systems now vying for public attention has the potential to drive the kind of confusion and ultimate indifference that doomed 3D TV. “We’re moving fast in the UHD Forum, which is decreasing entropy.”

Fautier, who serves as president of the Ultra HD Forum, points to the first comprehensive set of guidelines issued by the year-old alliance as a much-needed template that will help content producers, MVPDs and OTT distributors adopt procedures aimed at making sure content is delivered as required across not only various types of HDR displays but all types of non-HDR devices as well. The guidelines address requirements for deploying UHD in 2016 and will be updated for deployments in 2017, he says.

The UHD Forum has been operating in parallel with the UHD Alliance, which over the same lifespan has been helping the industry establish basic criteria for creating HDR content. The focus on HDR within two groups branding themselves with the UHD label underscores the fact that industry efforts to deliver UHD services in the 3840 x 2160 pixel resolution designated for 4K TV have become dependent on enabling HDR as the linchpin to creating a truly differentiated next-gen TV viewing experience, which the forum acknowledges can apply to HD 1080p content as well.

The UHD Forum has broad industry support with about 50 members, including many companies involved in both groups, such as AT&T (through sign-ups by DirecTV prior to the acquisition), Sky, Dolby Laboratories, LG Electronics, Sony and Fox. UHD Alliance has many other studios and CE manufacturers on its roster while UHD Forum skews more toward MVPDs, their suppliers and OTT vendors, although there are some in these categories, including Rogers Communications, Netflix and Orange, that are alliance but not forum members.

“We are proud of this collective work synthesizing contributions from content providers, broadcasters, service providers, professional equipment manufacturers, technology solution providers, CDNs, chip-makers and device manufacturers,” Fautier says. “This would not have been possible without close collaboration with our colleagues at MPEG, DVB, DASH-IF, ATSC, SCTE, SMPTE, CableLabs, NAB and the UHD Alliance, with whom strong liaisons are being built.”

As previously reported, the UHD Alliance at the start of the year said it would issue “Ultra HD Premium” labels to identify UHD TV sets that that meet baseline requirements, such as 3840 x 2160 resolution, 10-bit coding, BT.2020 color gamut, SMPTE 2084 transfer function and at least 1000-nit peak brightness or 540-nit peak brightness in the case of OLED displays. The UHD Forum’s guidelines for distributing HDR-enhanced content accommodate a broader spectrum of possibilities with the purpose of ensuring an interoperable network infrastructure is in place to transparently deliver UHD to consumers no matter the format or network type.

The guidelines prescribe an end-to-end workflow for constructing and delivering a real-time linear service with separate sections dedicated to each step in the chain, including compression technologies, metadata carriage options, sample bitrate ranges, audio, captions/subtitles and more. For example, consideration is given to content manipulation that may occur at each point in the chain, such as ad insertion and graphic overlays.

“This type of industry support will help service providers decrease the risk and anxiety that comes with deploying a new technology,” says Craig Knudsen, vice chairman of the UHD Forum’s Communications Working Group and director of strategic initiatives for Dolby Vision Live. Writing in a recent blog, Knudsen adds, “Not knowing if their encoders, stream processors, security systems, CDN’s, ABR packager’s, QAM’s, DSLAM’s, or STB’s will all interoperate together and deliver the UHD content across the network can be a very costly exercise when it just doesn’t work during the initial deployment. The Ultra HD Forum aims to have tested and certified the most relevant ecosystems and have the knowledge base available to help the industry deploy Ultra HD the right way the first time.

Most notably, while UHD Alliance certification requires use of the SMPTE 2084 Electro-Optical Transfer Function (EOTF), also known as Perceptual Quantizer (PQ), the forum’s guidelines include directions for delivering HDR content with either PQ or what is known as HLG (Hybrid Log-Gamma), a transfer function soon to be adopted as an ITU standard. Unlike PQ, HLG works as a transfer function for both SDR (Standard Dynamic Range) and HDR content without requiring a separate metadata stream to direct HDR-capable displays’ rendering of the specified HDR luminance and color dimensions.

Naming HLG as an option in processes chosen for enabling distribution of HDR content reflects growing consensus on the viability of HLG. But there are still doubts in some quarters that the transfer function, a joint invention of the BBC and NHK, is a suitable alternative to PQ.

For example, HLG is only compatible with SDR displays that are capable of rendering the ITU BT.2020 color gamut, which expands the color range closer to human perceptual limits, well beyond the limited color gamut set for HDTV by ITU BT.709. In contrast, the metadata delivered as an overlay signal to the basic Rec.709 signal in the PQ system also ensures backward compatibility with SDR sets limited to the color gamut set by the Rec.709 specifications.

Broadcasters are not convinced that HLG is the way to go, notes Howard Lukk, director of engineering and standards at SMPTE (the Society of Motion Picture and Television Engineers). “Broadcasters are concerned that HLG will limit their flexibility to address all the nuances in contrast, luminance and other details of display technology that are out there in the marketplace,” Lukk says.

Indeed, he adds, as a filmmaker he shares their concerns. “It scares me to think how the color corrections that need to be made depending on whether the display supports 1,000 nits, 400 nits, 4,000 nits or whatever are going to be executed without a dedicated metadata component like you have with PQ,” he says.

“If you’re a broadcaster, you need to be sure the ads you’re running are in conformance with the HDR content,” he notes. “You need to know how the content will show up at the consumer end.” When it comes to agreement on the all-important transfer function to be used in any final SMPTE HDR standard, “it will take a while to shake out,” he says.

Lukk suggests the initial benefits consumers will get from buying HDR-capable displays will be analogous to what happened when DVRs were able to convert SD to HD dimensions for HD set buyers when there was very little HD-formatted content available. Some HDR displays automatically enhance HD content with luminance and contrast levels that offer dramatic improvements over conventional HD displays.

Going farther, the UHD Forum’s guidelines include pre-distribution processes that can be applied to enhance HD content to full HDR and WCG parameters for rendering on any HDR-capable display. As a result, HD 1080p is factored into the guidelines as an UHD format in instances where the HD content is enhanced with HDR.

Harmonic, in a demonstration of HLG in action on LG OLED displays at the NAB Show in April, offered side-by-side comparisons of a set of video sequences in three versions: pure SDR, pure HDR and SDR upgraded to HDR. The latter two sequences were marginally different from each other but dramatically better than the pure SDR version.

Harmonic hasn’t commercialized these capabilities as part of its encoding platforms, Thierry says. “We need to test the concept with set-top boxes and TV sets,” he says. “We’re not sure how long that will take before we get to a decision point.”

Elemental Technologies, too, is looking at the possibilities, says Elemental CMO Keith Wymbs. “We’ve been approached by people interested in us taking a look at it,” he says. “There’s already a good amount of up-converting HD to 4K going on, so adding HDR to the process makes sense.”

The UHD Forum guidelines cover a wide range of conversion scenarios between SDR and HDR and between HDR technologies as well. Other areas covered by the guidelines include security requirements and key decoding and rendering parameters for consumer devices.


NBCU Ready to Exploit Power of IP Conversion

Brian Roberts, chairman & CEO, Comcast Corp.

Brian Roberts, chairman & CEO, Comcast Corp.

Cisco-Enabled Platform to Anchor Olympics Coverage

By Fred Dawson

June 3, 2016 – What’s shaping up as another leap forward in OTT distribution with NBCUniversal’s plans for covering the Summer Olympics is also a template for a transformation in the broadcaster’s core operations that will open the door to new business models and services from now on.

As Comcast CEO Brian Roberts put it at the recent INTX show in Boston, what NBCU, a Comcast subsidiary, has in store for the 17-day stretch of games coverage in Rio de Janeiro offers a “real look into the future of television.” That’s because, with launch of the Olympics coverage NBCU will for the first time leverage an all-IP production and distribution infrastructure it has been building for the long haul with the support of multiple vendors led by Cisco Systems, the primary contractor on the project.

“We have all sorts of elements and hardware involved in production of the Olympics extending from editing to storage to content delivery,” said Craig Lau, vice president of IT at NBC Olympics, in a recent video presentation. “Cloud and virtualization has basically given us a huge opportunity in terms of scalability – the ability to adapt quickly and exponentially, to simply scale up almost immediately without having to build out a lot of infrastructure.”

Such capabilities start with the ability to implement a unifying master workflow platform that can tie all the stages and the functionalities within each together, Lau added. “If there’s anything we focus and concentrate on during the Olympics it’s workflow simplification,” he said. “Cisco’s IP media fabric is giving us all the reliability and predictability that we had in SDI (Serial Digital Interface).”

Lau echoed the new consensus among broadcasters when it comes to leveraging an IP infrastructure that follows industry interoperability guidelines. “A huge opportunity rests in software-defined networking, software-defined applications,” he said. “It’s a multi-vendor approach that NBC Sports would like to help encourage and, working with Cisco, encourage other vendors to adapt.”

As evidenced by its role with NBCU, Cisco’s Media Datacenter initiative has positioned the vendor, traditionally focused on the network service provider and enterprise sectors, as a major player in the broadcast industry’s IP transition. Cisco is not only providing the knowhow to utilize SDN (software-defined network) virtualization technology in datacenter facilities to support development of broadcast production centers like the one NBCU’s Advanced Television Operations has built in Englewood Cliffs, N.J. It’s also leveraging cloud video processing and management solutions originally developed for MVPDs to support end-to-end broadcast operations that extend from production through to playout and direct-to-consumer distribution.

“Our expertise in IP is key,” said David Ward, Cisco’s chief architect and CTO of engineering, in an interview. “By providing support for routing, switching and storage with hypervisors in the datacenter, we’re well positioned to add specific function applications relating to video processing and end-user experience from our own or other vendors’ solutions.”

Roberts contrasted the volume of live events NBC is able to cover in Rio as a consequence of Internet streaming to the last time the scheduling of a Summer Olympics in a Western Hemisphere time zone drove live TV coverage. The 1996 Olympics in Atlanta produced 172 hours of live coverage, he noted. “This year’s Olympics we’re streaming 6,203 hours, every event live over 17 days,” he said. “There will be more live coverage on day 1 in Rio than the entire ’96 Olympics.”

Beyond the number of hours, of course, the fact that most of this coverage will be through the interactive Internet medium provides producers an opportunity to spin up immense amounts of ancillary information and video sequences complementing events as they unfold. From Comcast’s perspective this means the MSO will be able to deliver to the TV screens of subscribers connected via the X1 platform the full scope of Internet as well as TV channel coverage from nine NBC networks, including navigational assistance devoted specifically to the Olympics.

Leveraging its own all-IP service management backend, Comcast will be able to organize the various feeds of live events from the Internet and TV channels along with ancillary features coming out of the NBCU production facilities into a unique Olympics navigation space on X1 subscribers’ TV screens. “We’ll be able to provide real-time updates in the guide on what’s happening,” Roberts said.

Viewers will be able to check out details about who’s in a particular event, pick up events by sport, country and other categories, conduct full search and find every stream of competition finals in a Gold Zone. If they miss the live coverage, everything will be available on a time-shifted basis. When users tune into a live stream or into an NBC network channel offering live broadcast coverage, they will be able to start from the beginning.

All of this will be doable via voice commands for X1 subscribers who have voice-enabled remote control devices, Roberts said, noting the new remotes are now in seven million subscribing households after less than a year. “We’re registering 180 million voice commands per month,” he said. “A year ago we had zero.” As for X1 penetration, he said the MSO is now hooking up people at a rate of 40,000 per day with expectations X1 penetration of its entire pay TV subscriber base will be close to 50 percent by the time the games get underway in August.

The combination of the advanced production and distribution capabilities NBC will be able to employ in its Olympics coverage and the blending of TV and Internet content enabled through the Comcast X1 platform opens a window on what might be in store as broadcasters and MVPDs cooperate on enabling new viewing experiences. At the same time, the broadcast IP transition as enabled in this instance by Cisco points to the new opportunities broadcasters will have to create direct-to-consumer (DTC) content offerings over the Internet.

Indeed, apart from the Olympics, NBC as previously reported is already leveraging the capabilities implemented by the ATO unit in the new DTC business mounted by NBCU Digital Enterprises. Starting with Seeso, a comedy-themed package priced at $3.99 per month, Digital Enterprises plans to target special interests with a variety of new offerings that leverage its vast archive of programming with new in-house and third-part content to create multifaceted live and on-demand viewing experiences.

With datacenter virtualization, “it’s not just about eliminating old hardware and having the flexibility to upgrade or whatever,” said Cisco’s senior director of video strategy
Simone Sassoli in a ScreenPlays video interview. “It’s a level of flexibility we’ve never seen before…[It’s] not just limited to what we were seeing two years ago around transcoding, but all the rest of the publishing elements, all the platform preparation post and pre-production, playout systems and even the publishing to the end devices.”

Following open interfaces and the interoperability prescriptions of broadcast industry organizations like the Alliance for Internet Media Solutions (AIMS), Cisco is able to bring vendor partners like Imagine Communications into the SDN infrastructure to provide elements that aren’t part of its product portfolio. “We really believe in an open source, open environment where we don’t have to be the only vendor that plays in the ecosystem,” Sassoli said.


New Encoding Advances Expedite Availability of HEVC Alternatives

Guido Meardi, CEO & co-founder, V-Nova

Guido Meardi, CEO & co-founder, V-Nova

H.264 Compression Gains & Deployment of V-Nova Codec on Legacy IPTV Set-Tops Open New Options

By Fred Dawson

May 24, 2016 – Fast-moving developments in video encoding technology are adding new considerations for decision makers to weigh in determining whether HEVC represents the best path forward in the multiscreen premium TV business.

As previously reported, initiatives such as the Alliance for Open Media and Google’s VP10 project aimed at driving adoption of alternative next-generation codecs are gaining traction amid rising concern over the licensing terms and computational complexities associated with HEVC, the MPEG-derived successor to H.264. New developments, however, suggest there may be solutions closer at hand which could get video distributors where they need to go much quicker in their efforts to minimize the bandwidth impact of  services offered in 4K UHD, HDR and virtual reality formats, not to mention HD in mobile and wireline environments.

In one direction there are signs that some mainstream encoding platform vendors will soon be able to achieve improvements with H.264 that reach HEVC-like compression levels without the licensing, computational and device replacement hassles associated with HEVC. On another trajectory, there is the growing success of V-Nova in finding customers for its Perseus codec as an MPEG ecosystem-compatible means of breaking through to extremely low bitrates.

“One of the challenges for us has been people wanted to see commercial deployment of Perseus before they were willing to believe it would work as we say it does,” says V-Nova co-founder and CEO Guido Meardi. “What we’re doing with Sky in Italy shows Perseus is ready for prime time.”

Sky in Italy, so named by the U.K.’s Sky following completion of the Sky Italia and Sky Deutschland takeovers in late 2014, has been using Perseus in contribution applications with its DBS operation for some time but only recently began using the codec for distributing IPTV HD services over ADSL links. This was done in conjunction with implementation of the codec as an option on Sky’s Vibe IPTV encoding platform supplied by Thomson Video Networks, which was acquired by Harmonic last year.

“We upgraded our headend and set-top boxes with V-Nova Perseus compression to bring the average HD bitrate down from 8 Mbps to 4 Mbps,” says Massimo Bertolotti, head of innovation and engineering at Sky in Italy. “We are thrilled with the outcome of this challenging project.”

As explained by Meardi, the challenge was to make it possible to deliver HD signals over ADSL lines that could not consistently deliver an H.264-encoded HD service at acceptable quality owing to bandwidth limitations. In order to capitalize on Perseus to enable launch of HD service on the telephone lines, the operator had to be able to download the Perseus client as a software plug-in on legacy set-tops with limited CPU capacity, most of which was consumed by middleware and the decoding process used with H.264.

“When we promised we could upgrade set-tops in the field people told us enhanced middleware applications have consumed so much compute power there’s often not even one cycle of CPU left for Perseus,” Meardi says. “But we free up resources by using less processing power. Until we turned on Sky’s IPTV, people said it wouldn’t work.”

Meardi also notes that there will soon be another distribution application of the V-Nova codec going into commercial operation in conjunction with a broadcaster’s OTT service using transcoding support from Imagine Communications. Imagine has included Perseus as a codec option on its Zenium encoding platform workflow, as demonstrated at Imagine’s NAB Show booth in April.

Any programmer using Perseus on Zenium can reach a wide range of devices at bitrates well below levels required for a high-quality experience via MPEG compression, Meardi says. “If you can reach a device with plug-ins, you can run Perseus,” he adds.

Meanwhile, Harmonic, notwithstanding the successful integration of Perseus onto the Vibe platform, is focusing on another approach to reducing bitrates that aims to enable HEVC-level compression with H.264 processing on its software based Pure Compression Engine. “We are moving toward AVC (Advanced Video Coding, another name for H.264) bitrate reduction to HEVC encoder levels this year,” says Thierry Fautier, vice president of video strategy at Harmonic.

Harmonic, which builds its own MPEG codecs, has already achieved 25-30 percent better efficiency with H.264 on its Pure platform in comparison to output on its hardware-based Electra 9200 encoder at comparable quality within the same channels-per-rack-unit density. Fautier declines to comment on the question of whether Harmonic will commercialize the connection with Perseus beyond the Sky application in Italy.

In a recent blog, Fautier hints at how the Pure platform could achieve HEVC performance with H.264. “[I]n a cloud-based architecture, such as with our VOS virtualized media processing platform, even more compute capacity can be made available [than is the case in the direct comparison with Electra 9200], resulting in even greater compression gains,” he writes. “The ultimate result will be that ‘AVC by Harmonic’ may soon challenge HEVC as the codec of choice.”

Elemental, now an independently operating unit of Amazon Web Services, is also pushing in this direction, says Elemental CMO Keith Wymbs. “We’re working on it but don’t have anything to announce,” he says.

On the proprietary codec front, at least two suppliers have made claims for performance superior  to HEVC, but neither has followed up initial announcements with evidence of commercial traction. Canadian startup Tveon says it can stream 4K UHD at 2 mbps but has yet to release a commercial product. A year ago Saudi Arabian entertainment platform supplier Selevision, a subsidiary of Khusheim Holdings, announced its new Nukodec with similar claims but has largely been silent since then.

V-Nova has gone much farther with announcements of applications in commercial broadcast contribution applications preceding the distribution rollout with Sky in Italy. But the company faces the same uphill climb confronting all proprietary codecs in a business accustomed to reliance on standards-based solutions.

Meardi cites unique aspects of the Perseus technology which could go a long way toward overcoming those barriers now that the codec is in operation on a Tier 1 distribution network. In so doing, he goes deeper into describing the way the codec works than he has in most press encounters, making clear much of the speculation about the technical aspects has missed the mark.

For example, Meardi notes, Perseus is built completely from scratch and, in terms of the core architecture, even though it uses the Discrete Cosine Transfer process common to MPEG and many other codecs, does not rely on MPEG-related intellectual property that has entered the public domain over the past few years with expiration of patent protections. The tie-in with MPEG technology, and it’s critical to the appeal of the codec for legacy pay TV distribution such as Sky’s, has to do with the fact that the hybrid version of Perseus is optimized for encapsulation in the MPEG-2 Transport Stream container.

With this encapsulated version the Perseus decoder running on Sky’s set-tops can interpret the MPEG TS metadata compilation so that when the content is being sent over the DSL network in HD, the decoding is performed by the plug-in. In this or any other scenario where the plug-in is not used on a given device, the decoding is done using the baseline MPEG codec.

The compression ratio on the MPEG transported HD stream is only slightly lower than the ratio obtained with the pure version of Perseus, Meardi says. At a little over 2:1 versus H.264 the hybrid version will continue to improve at a rate “even higher than anybody thinks,” he adds.

The fact that Perseus at this early stage in its evolution is improving rapidly was evidenced in new test evaluations performed in April by informitv showing the bitrate for contribution-quality 4K UHD is now 200 Mbps, compared to the 300 Mbps level reported for 4K contribution in tests conducted last summer by Germany’s Institut für Rundfunktechnik. “We drove the improvements much faster than we anticipated,” Meardi says.

In distribution applications, V-Nova is claiming Perseus can support 4K UHD at 7-8 Mbps, or about one half to a third the bitrate required for transmission at similar quality over H.265.
V-Nova says it can achieve the touted bitrate reductions encoding 4K UHD at 60 frames per second in real time on two standard eight-core Intel Xeon processors, which are running on datacenter servers worldwide.

To achieve this level of compression, rather than taking the MPEG linear macro-block approach to segmenting and encoding each frame in a video sequence, Perseus supports what Meardi describes as a hierarchical technique using the massively parallel processing capabilities of today’s multi-core microprocessors. “We’ve built Perseus using processing technology that wasn’t available when MPEG encoding was designed,” he says.

Describing what happens as a video sequence conveys a particular scene from frame to frame, Meardi likens the Perseus method of building a video frame to how the human visual system works. Just as the core foveola portion of the retina brings a scene into focus as attention shifts or the scene itself changes while the broader field of vision remains unchanged, the Perseus process determines what portions of the frame need to be reconstructed in strict adherence to the original signal.

This layering in of ever more detail depending on what’s required to meet that stipulation for any given frame is simultaneously orchestrated across the microprocessor cores. “First we specify the gist of the information with very few samples, such as a face, and then we add additional information to reach the required quality level [relative to the uncompressed frame],” Meardi says. “From there we only add information that reflects changes like a turning of the head from frame to frame.”


Wall St. Analysts Confounded By Uncertainties Roiling Pay TV

Lack of Clarity on OTT Monetization Strategies Combine with FCC Actions to Sow Confusion

Chris Winfrey, EVP & CFO, Charter Communications

Chris Winfrey, EVP & CFO, Charter Communications

Upheaval in the pay TV industry has made the job of providing guidance to investors harder than ever for Wall Street analysts. There’s not only considerable disagreement over who has the upper hand, MVPDs or broadcasters. More fundamentally, there is deep concern over how FCC regulatory initiatives are going to impact the health of the industry and its ability to sort things out in an intensely competitive environment.

Just how difficult it has become to weigh any entity’s prospects was evident in a discussion involving leading investment analysts and Charter Communications CFO Chris Winfrey at the recent INTX Show in Boston. The following edited transcript of that conversation offers their take on where the bundle is going, how far the broadcasters will go in pursuing direct-to-consumer business models, what the impact of Google Fiber will be, the future role of wireless and many other issues in the context of the new regulatory environment.

Participating with Winfrey were: Jason Bazinet, managing director, Citi Research; Craig Moffett, partner and senior analyst, MoffettNathanson, LLC; Marci Ryvicker, managing director, Wells Fargo Securities, and Ben Swinburne, managing director, Morgan Stanley

Chris Winfrey, EVP & CFO, Charter Communications – I want to ask each of you to give us your broad assessment of the overall health of the industry. And, in particular, from a financial perspective, growth and protected earnings, what’s your favorite platform right now – whether that’s satellite, cable, programmer, content production, OTT – and why?

Jason Bazinet, managing director, Citi Research

Jason Bazinet, managing director, Citi Research

Jason Bazinet, managing director, Citi Research – I’m going to distinguish between favorite stock and favorite platform, just to make that clear. I don’t think it’s controversial on the Street to say that the satellite operators are in real trouble without broadband. There’s the most concern on the buy side about their growth prospects. So I think you have to put that at the very bottom.

At the very top I would probably say content owners, but it depends on what sort of content you’re talking about. I’d put at the very top anyone that owns sports content. And probably in the middle I would put the cable operators.

The way I think about the cable operators is they may not have the most robust growth prospects, but it’s very stable and largely hedged from a lot of the changes that are going on in the ecosystem. You have a great Internet business, a very robust small-medium enterprise business, a video business that probably faces some challenges but, I think, manageable in the broad scheme of things.

Craig Moffett, partner and senior analyst, MoffettNathanson, LLC

Craig Moffett, partner and senior analyst, MoffettNathanson, LLC

Craig Moffett, partner and senior analyst, MoffettNathanson, LLC – I think the cable business right now is actually in a pretty good spot with a very big caveat, and that is, as former [FCC] chairman [Michael] Powell [now president and CEO of the National Cable and Telecommunications Association] said this morning, there are some very real regulatory questions that have suddenly become much more pressing. Leaving aside the regulatory or at least marking the regulatory as a question mark for the moment, I think the cable industry is probably in the best position.

We’ve [heard] for a long time this old adage content is king and distribution is just a commodity. Historically that has always been a good sign to say, well, I’ll take the distribution, thank you very much, and it’s usually worked out pretty well. Distribution right now is in a pretty good position. On the content side of the world, it’s a little less my coverage, but I think I’d rather be a studio than a programmer at the moment.

Marci Ryvicker, managing director, Wells Fargo Securities

Marci Ryvicker, managing director, Wells Fargo Securities

Marci Ryvicker, managing director, Wells Fargo Securities – I’m a cable bull. I would choose cable over media any day.

I’m going to disagree already with Jason. I actually think sports content providers are in a very, very difficult position, because they have a multibillion-dollar, multi-year investment cycle. And as we go over the top and a la carte and skinny bundles, if they’re not included, that affiliate revenue goes down. And I don’t know how they ultimately match up the sports content. So I would put those guys towards the bottom. I think cable with the pipe is where I’d want to be, as a platform, as a stock, because no matter how you monetize your content you need your cable in your home.

Ben Swinburne, managing director, Morgan Stanley

Ben Swinburne, managing director, Morgan Stanley

Ben Swinburne, managing director, Morgan Stanley – I guess I’d add a little nuance to Jason’s point. I’m not sure he was talking about sports networks or sports IP (intellectual property), but I would go with IP and sports. You want to move as far upstream as you can in this environment. There’s an explosion in distribution platforms, and it’s hard.

If you had asked us about stocks, we wouldn’t be able to answer content players’ IP [intellectual property] because it doesn’t really exist as an assessment vehicle. But if I could snap my fingers and own the Red Sox, I would do that. I think that’s the appreciating asset with the most secure future, given the landscape today, than anything else that you’ve asked about.

Winfrey – That’s an interesting way to get into the next question I was going to ask, because if you think about it, there are really big changes in content afoot right now, whether it’s a change in the landscape for who’s buying the studio output or in some case who’s buying the studios, short-form and user-generated content, or consumers who are now conditioned to view content from different places and without advertising. A lot of balls are up in the air. So from your financial perspective, where is the content market heading and how do content players across that ecosystem evolve, and, to make it more complicated, how do they make sure they have a revenue stream that’s protected?

Swinburne – I’ll pick up on the comment I just made. If you think about distribution more broadly than we have historically, you could look at Facebook as a big distribution platform of content. Most of that content historically has been what your niece and nephew are up to, but that’s quickly evolving into live video. They have a sports piece, etc.

I think you’re going to see more and more platforms leverage content to drive their business and use it as a loss leader, and that’s going to drive margins down for the historic program aggregators. If you think about your typical cable networks who have enjoyed this beautiful bundle generating 40, 50, 60, sometimes 70 percent contribution margins, you’re now facing a world where you’re competing for audience, advertising dollars. And also you’re competing for IP and content with so many more players than you did before who have a lot more capital and often have the permission of Wall St. not to make any money for the foreseeable future.

That’s going to squeeze margins in that part of the ecosystem over the long term – we’ve already seen that start, and I think that’s going to accelerate. If you can figure out how to play that trend as a piece of IP, I think that’s a great place to be. But it’s very hard to find that space if you’re an operator. The reason the cable business is so obviously, as a consensus view, doing so well is it has that connectivity piece of the puzzle that’s very difficult to compete with without a lot of capital.

Winfrey – So you’re suggesting that having the distribution but adding some unique content even potentially as a loss leader is a way to offer something else for customers.

Swinburne – Yeah. We’ve seen that happen outside the United States already pretty dramatically in use of content in a mobile setting where mobile carriers are using content to differentiate their product. That’s going to happen here. We might all chuckle at [Verizon’s] go90, but the go90 concept of using content is to differentiate, I don’t think that’s going away. I think you’re going to see a lot of money thrown at that, successfully or unsuccessfully.

Ryvicker – I think we’re just at an early stage of experimentation [with] content providers going all over the place. I think Fox was very clear on their [earnings] conference call that they want to be everywhere the consumer is, and I don’t know that they know what that means. So we’re sitting here trying to figure out what does the ecosystem look like five years from now and assign a multiple to stocks, and you really have no answers.

Winfrey – That sounds a little bit dangerous. Not to pick on one particular company, but if you have people saying I want to be everywhere in everyplace in every home, but they don’t have a view of exactly how it’s going to be monetized and how they protect their revenue streams and the advertising, where does that leave you in terms of feeling about the ability to model the revenue stream, and what are the ups and what are the downs, and how do they mitigate them?

Ryvicker – It’s a tough fight. You can see it by the stats. You can see why Fox’s stock slid. I don’t mean to pick on them, but they were very clear that they want to be everywhere, and that stock went down on a good print, because the question was, okay, you did really well this quarter, but what happens in the transition from where we are today to wherever you want to be? And that’s what we can’t answer.

Winfrey – As an operator’s translation, print means their quarterly results.

Moffett – It’s a really interesting question, because I hear from investors all the time that the cable industry is in real trouble because they have these big fat margins in video, maybe less fat than they used to be, but they still have all these margin dollars in video. Inevitably the content owners will go direct to consumers and try to keep that margin for themselves. I’ve heard that argument since it became the key controversy in the cable industry at around 2004. And I always scratch my head and say, what in the world would that look like?

Winfrey – From the consumer perspective or from the programmer’s?

Moffett – From the programmer’s perspective. Let’s say there’s $40 for argument’s sake of programming cost in the bundle, and let’s say they bring the price down to something, not all the way to $40, but they’re entirely made whole. Well, what does year two look like when they’re typically used to pushing a 10 percent price increase through to distributors on a like-for-like basis?

Are they going to push a 10 percent price increase through to consumers on a like-for-like basis? You do that for three years, and suddenly the economics look horrible. Is that the model? I’m going to create a new Netflix that raises its prices by 10 percent a year?

Winfrey – With or without advertising.

Moffett – And, by the way, at a time when the advertising is going to start to come down.

Those things look good as a sort of bumper sticker as long as you don’t poke at it. When you poke at it you realize this is really squishy. It doesn’t hold up to scrutiny very well as a premise.

As I said, I’ve been hearing that same argument since 2004 that it’s right about now that it’s coming. And maybe Hulu is the thing. They certainly have access to programming rights because of who owns it. If they decide that’s what they want to do, they can get the rights packaged together. But I’d love to see what the spread sheet looks like that says this is a good idea.

Winfrey – Meaning, this is the way you actually get dollar increases?

Moffett – Not only net dollar increase on day one, but net dollar increase in the terminal year of whatever that spread sheet looks like. It’s a hell of a challenge.

Bazinet – I don’t think it’s challenging.

Winfrey – So you’re a believer. Tell us why.

Bazinet – Let me step back just to give you some context in terms of how at least I think we got here. Everyone in this audience has a different utility that they would ascribe to their particular channels. Maybe you like ESPN; maybe you like CNN. Maybe you like podcasts. It’s all different.

What the industry has done – your industry and the content owners – is they’ve pushed all that content together into a big fat video package and essentially taken very steep demand curves and made them quite flat. If I put enough stuff in the bundle, everyone essentially has roughly the same utility for that content.

What we’re all struggling with here on this stage, and it’s the crux of the controversy that I have with Marci, is where is the value? Where does it really reside? We really don’t know today.

What I would posit is that for sports content, yes, it’s the most expensive part of the cost of goods for a cable company, but I actually think there’s a tremendous amount of headroom in terms of what consumers would pay for that piece of content.

Winfrey – When you say that, are you multiplying it by the percentage of consumers that would actually take the content? Or are you saying the retail rate would go up on those who do?

Bazinet – The retail rate goes down. The number of consumers that take it will be a subset of the total universe. But by pivoting from wholesale economics to retail economics, getting rid of equipment lease fees, getting rid of DVR lease fees, it leaves a lot of headroom.

Moffett – Adding customer service centers?

Bazinet – Adding customer service centers.

Winfrey – From a cable operator’s perspective, I actually hope you’re right. It would give us the opportunity to do what we’ve always wanted to do, which is to build genre-based bundles and packaging. But it does mean a complete breakdown of the economic model for programmers. That has to be scary.

Bazinet – So I would say on this platform question it’s impossible to stand up here and answer. Is it a content packager that’s in good shape or not? Because what we’re going to see is some of the packagers are in good shape and some aren’t.

Moffett – The question that always comes back to me is, find me another model that’s better than ESPN saying I can get $7 for every family in America who chooses not to take my product. Where else can you replicate that?

Bazinet – Well, I would just say using your $80 ARPU/$40 cost of goods, $7 from every household on a wholesale basis is $14 for half the houses. I see that as headroom.

Ryvicker – But it’s not $7, because what Disney does with ESPN, they have a whole bunch of other networks. It’s actually $11.24. And then if you have the average, the 30 million viewers on a unique basis every month with ESPN, those guys are going to have to pay $33 a month.

Winfrey – So the ecosystem is changing. It sounds like there are different views of where it’s all going to land. It’s going to be fun to watch.

In the meantime, we’ve heard the death of pay TV for many years now, that this change in landscape was going to cause a falling apart of the ecosystem. But if you take a look at 2015, there wasn’t a meaningful decline in pay TV penetration yet.

So what does it tell you despite all the things we think are happening and the consequences that could be for different players in the industry? What’s the play about the pay TV business as it stands today? And when do you think we’ll really start to fundamentally move away from that in a material way?

Bazinet – I think it’s happening. The typical buy sider would say one to two percent cord cutting is sort of the generic answer you get from those clients. I don’t disagree with that. It was about that rate on wireline voice, and it lasted for about five years. And then it accelerated to three, and it accelerated to four. I don’t see why that’s not a reasonable outlook for the business.

Swinburne – It’s definitely happening. I guess the only nuance is how we define pay TV is the biggest challenge to answering your question. Just look at the fully distributed cable networks, your VH-1s, ESPNs, CNNs. They’re losing two, three percent of their subscribers already.

If you look at the pay TV universe, it looks pretty flat. But the subscriber counts for the networks are declining much faster. And that’s a function of the shrinking bundle, shrinking of root networks. We went through a 30-year period of adding more and more channels to the legitimate scenario. [Now] we see real reduction in the number of networks that the consumer has access to.

Winfrey – Because of viability.

Swinburne – Yeah. It seems like the media companies are reaching that conclusion, that having a small number of strong networks is preferable to having 20 plus.

Winfrey – You’re jumping to something else I was going to ask. Maybe you’re saying it’s just a fait accompli. But do you see any skinny bundles out there that you think work for the mass market and that have the ability to be sticky and to gain real customer counts and market share? And attached to that, do you see the opportunity for a lower number of channels billed that sits inside of that baseline program that MVPDs can sell, meaning you have a baseline that’s smaller so that you can sell more and tack on other genres?

Swinburne – My sense is in the last 12, 24 months there’s a pretty dramatic shift in the media companies’ perspective on this topic. Years ago it was we’re absolutely not doing a deal unless you carry everybody. Now it’s how do we make this work so that I can at least keep most of my economics.

I thought of [Discovery Communications CEO] David Zaslav on the last earnings call for Discovery. He made a really interesting comment. His top six networks are X percent of his earnings – I think it was 78 percent – I’m not quoting exact numbers. But he said this specifically: we as an industry are going to have to make some compromises.

Thirty channels for $30 isn’t going to work with every network. I think that’s the reality today. That’s going to lead to more and more flexibility for the MVPDs and bundling. And I think we should give some credit to Mr. [Charlie] Ergen for pushing the puck down the ice.

The Sling TV idea was generally mocked when it was first announced. I think Disney sort of suggested, well, no one is really going to want this – you mentioned mass market – it’s niche. And maybe it is niche. I think Sling is niche.

But what Sling started is not niche, at least in my view. You asked about the mass market demand for the new bundle. It’s impossible to answer what the real utility value of video is inside the triple-play bundle – you know, $85 video ARPU. That number seems increasingly made up.

I don’t mean it in a nefarious way. Broadband is such a big part of the value the consumer sees. If you call your cable operator or telecom operator and ask for just broadband, and it’s 80 bucks and video plus data is $75, what is the value of video in that bundle?

Winfrey – What do you think the timeline is for an MVPD that has a discussion with a programmer and starts to have some flexibility to be able to pick and choose, maybe not without limits, but has the ability to put together packages the way it thinks is going to sell the best in the marketplace? And how does a programmer economically rationalize that in a way that they have a glide path for what they’re doing in terms of revenue today?

Ryvicker – It’s starting now. We only really have numbers, sort of, for Sling. Comcast is doing something. Charter is doing something. Everyone is trying to come out with smaller bundles.

I think what’s really interesting is Intel fails, and Apple is nowhere. So that just tells you something about the relationship between the incumbent provider and the programmer. I think that as long as there’s flexibility among the two parties and they’re both there for the same purpose, to make money and provide for the consumer, we’ll start to see it happen.

I think one of the reasons Sling was really successful – think about what Sling was. It was one stream, one device. So there was no threat that a family downgrades to this product. It was more for the cord-nevers, the millenials.

Winfrey – But that is changing.

Ryvicker – That is changing, which is really interesting. Even Disney, Bob Iger, said on the call, we are having conversations that are productive with the multi-stream, which you never would have thought someone like Disney would be involved in, because that may actually lead some people to downgrade.

We still think it’s part of the common experimentation. Everybody is experimenting. They seem to be experimenting together within the ecosystem, which means, at least to me, that it’s a net positive.

Winfrey – The rumor on the Street is that some of these agreements have subscriber ceilings, which is designed to protect. But is the genie now out of the bottle, and how do you put it back in from the programmer’s perspective if you have something that’s working in the marketplace? And, from a regulatory standpoint, how do you put it back in, if that’s generally what the consumers wanted because it leads to something that’s a more affordable product set? How are they able to balance those thoughts? And did they ever really intend to hold people accountable to the subscriber limits that were in theory put in place?

Swinburne – I think you answered it in your question. I’d be surprised if those agreements actually impacted what happens on the field.

You bring up the regulatory issue that you’ve eliminated consumers’ choice. That starts to taste bad for everybody involved.  It reminds me a little bit of, instead of the ceilings, the floors we always talk about for network subscriber numbers. Are you hitting your floor? Is that good?

Well, no. People actually don’t like your service; it was actually bad. And, ultimately, as negotiations rumble on over time, things reach a market equilibrium.

Ryvicker – You could have asked the same question on Netflix. They [the programmers] let the genie out of the bottle. They sell a lot of content to Netflix. Now people are watching prime TV, and we’re not getting paid as much.

Winfrey – Beautiful feed into my next question, which is how much of this content are people really paying for? One of the things that we spend a lot of time worrying about, thinking about at Charter, isn’t that you have to deal with paid competition, but the fact that in many cases we think we’re dealing with free competition, because it’s been the content that has been placed sometimes for free, sometimes at lower prices, many times unbundled, and many times without a brand and usually without advertising. And it’s also put in an environment that’s not authenticated; it’s not encrypted.

So you’re fighting in terms of selling cable subscriptions against free. And that makes it pretty challenging. At the end of the day it hurts us. But I would argue it hurts the programmers every bit as much as it hurts us.

Why do you think the security topic, the password sharing, hasn’t gotten more air time? It hasn’t really created more concern and, frankly, so far has been perceived a little bit as a joke on the side. But the reality is that those are paying dollars that are going out the door and not paying.

Moffett – My own theory, and it’s sort of dispiriting, is that we’re responsible and that the pressure on media companies – and, look , I get to say this because I don’t cover the media companies, so it’s easy for me to say – but the pressure on media companies to meet the expectations of their shareholders to say that we are at the avant garde of selling our content, that we are actually participating in the ecosystem and capturing advertising, that we are competitive with Google and Facebook in the ad community and what have you, creates this tremendous pressure where it’s just not acceptable to say, you know what, some of this is a dumb idea and that actually protecting the existing ecosystem is a better model.

You’d be laughed out of the corner office if you said that even if it was the right answer. And so it’s very difficult if you’re managing one of these businesses to try to be steadfast in saying, until we find something better, we’re going to stick with our existing distribution model. It doesn’t fly.

Winfrey – All four of you speak to media companies all the time, some more than others. How often does the topic of security and encryption come up in those conversations?

Swinburne – Never.

Winfrey – Marci?

Ryvicker – I can’t remember one.

Winfrey – Craig?

Moffett – I don’t talk to the media companies as much, but it’s very rare that it comes up in those discussions. It does to some extent, but not frequently.

Bazinet – Certainly not in earnings calls. But it does come up with them when you meet with them one on one. The general response is, we’re just in the experimental phase; we’re just marketing.

Winfrey – We’re getting free eyeballs. We’ll put the genie back in the bottle later.

Let’s talk a little bit about competition for cable – back to cable a little bit out of the ecosystem around programmers. There is competition coming for cable whether it’s in the form of Google Fiber or whether it’s in the form of wireless.

For many years we’ve been debating what is the key objective for Google Fiber. Are they multiple objectives? Are they fallback objectives? Or is it really just an experiment? Where do you think Google Fiber is now in terms of the broader rollout?

Bazinet – We struggle with this question. The only thing I can tell you is we sort of rank ordered 30,000 municipalities by population density. We used whatever Google is charging in some of their markets as a proxy. We asked a simple question. What penetration would Google need if they’re willing to have breakeven economics, zero NPV (net present value)?

And [the calculation] said they could pass half the United States, where it was neither so urban where FiOS is already there and you wouldn’t get 50 percent penetration, so it would be a three-player market, nor was it so rural that you’d have to have a penetration more than 50 percent to get zero NPV. Intriguingly, in all the real markets, they mapped against that 50 percent of the country where they could earn zero NPV.

So it at least suggested anecdotally that Google isn’t throwing darts at a map to decide where they’re going to go. There is some logic behind it. But what their overall motivation is, I have no idea.

Moffett – It’s pretty obvious now. Remember the bakeoff that led to Kansas City started in 2010. We’re now seven years into this, and they are far behind where a typical overbuilder would be.

So it’s pretty clear looking backward over seven years, if their ambition were how many homes can you pass and how many subscribers can you get, this ain’t that. So it’s something else.

That doesn’t mean it can’t change later. But if you look at what they’re doing – in Kansas City there was largely feeder plant that existed that was built by the electric utility, and they’re building their own drop. In Provo they bought a network for a dollar and they’re going to market it. In Huntsville, Ala. they’re actually going to have the municipality build the network and then they’re going to sell it. In Atlanta they’re only doing apartment buildings. In San Francisco they’re having Zayo [Group] build some facilities out to public housing, and then they’re going to resell that.

So it seems to me this is more a let’s see how many different constructs we can find with municipalities in order to showcase as many possible models as we can in the hope that other people will come along and say, okay, I’m going to do the Huntsville model or I’m going to do the [Atlanta] model. They just want as many different flowers blooming as possible, but they don’t want to have to plant them all.

Bazinet – There’s an irony to me about the FCC getting very concerned about broadband prices rising. If I was sitting in DC, I’d be begging you guys to raise prices so it would attract capital to be the next overbuild.

Winfrey – So far Google has been able to go into different towns and get a reverse auction bidding process to get the most favorable terms that really don’t apply towards a typical cable company or overbuilder. So people are very willing to accept Google coming in and building not only where they want to build but only where they have a pre-determined successful penetration by getting consumers to opt in first before fiber ever gets built. And that’s worked well so far.

But if they didn’t get it to scale, do you think that type of approach to the marketplace that only goes after the more attractive places really can hold up? Or do you think they get pushed from a regulatory standpoint into more types of typical franchise buildouts where they have to do it all?

Ryvicker – I went to Kansas City. That’s the only way you can really see Google Fiber, because they don’t really talk to people. The product is amazing, and I was really nervous, because I came out of there saying, my gosh, what’s going to happen to cable? And then I realized that the rollout is taking forever.

I think their ultimate goal is every time they announce a market everybody else’s speeds increase. So I think that’s helps their search. When I went they were very clear to explain to us that we will not build in a municipality that doesn’t want us and that doesn’t allow us the flexibility. So our scale will be capped naturally by those who don’t want us. And [if there’s] any threat of a regulatory issue in any specific state or municipality, they go away.

Moffett – It’s a lot easier to see this happening in traditional red states than blue states for that exact reason. It’s easier logically for a Texas, for example, in Austin to say we will allow digital red lining than it is for a Massachusetts.

Massachusetts is an interesting example. Verizon just announced they’re building fiber in Boston. One of the really interesting parts of that build, by the way, is they’re not building FiOS in Boston, they’re building fiber in Boston.

This is a small but important distinction, because they’re actually cost justifying it with some of the feeder plant for wireless as opposed to video on its own. But in the press release announcing the fiber build, the first two places they’re building it are in West Roxbury and Dorchester.

Winfrey – Underprivileged areas?

Moffett – Yes. It’s still the old model, if you’re going to do this in Massachusetts. That’s not the Google model.

Winfrey – I’m going to use this as a good entry point into 5G. From a cable perspective is 5G friend, foe, unknown? Could it bring business to us? Could it be a new business? Or is it something that could replace cable altogether from a connectivity standpoint?

Swinburne – If I could quickly answer on Google, with our covering it, Google very importantly for us on the investment side split themselves in two in January. One of their companies is called “Other Bets” and actually reports capex on a standalone basis. They have told us and told everybody publicly that the primary capex item is Google Fiber. You can all track at home every quarter the dollars [spent]. So instead of us guessing on their motivations, we’re going to have a real track record.

Winfrey – Dollars per passing, where they’re building?

Swinburne – No dollars in capex.

On 5G I think the answer is both. It could be an opportunity. It’s also a threat.

We don’t have time to get into the regulatory side of this, but to me the most interesting development around 5G recently has been the FCC’s BDS (Business Data Services) initiative. To have Verizon publicly support rate regulation of the wireline business is something that’s kind of mind twisting.

They’re doing that, I think, and Chairman [Tom] Wheeler seems to be very much supporting it, to make sure Verizon has enough backhaul capacity to make 5G work for them when 5G is ready for prime time. If that regulatory path is the path, that seems more of an investment concern, as we like to say in this business, for the cable industry than an opportunity.

Moffett – The chairman is in a tough spot, because obviously he wants to see infrastructure built for 5G. But as the BDS proposal stands today, and there could still be a lot of changes before the final report and order, but as it stands today it’s hard to see the economic motivation for [a cable operator] saying, I’m going to build a lot of that.

Swinburne – If you put the conspiracy theories aside and just think about wireless versus wireline, every G that I can remember being introduced to was supposed to beat wireline. And by the time the consumer growth reaches the point of deployment, we’re back to where we are today.

Moffett – The old adage is a wireless network is 90 percent wired and 10 percent wireless. Well, if you’re going to shrink the radii of the network down to 300 feet, which is what they’re talking about, you’ve effectively built a wired network. And then the question is, we’re right back to the Google Fiber conversation. What are the economics of building a wired network?

Winfrey – If all that’s true, why not cable?

Moffett – Right. We thought about convergence in the past as, do customers want to get their wireless and wireline service from the same operator. But the right question is, ten years from now, is there a distinction between wireless and wireline networks? Even today, nobody connects to their wireline network with wires. You connect to your wireline network wirelessly. So all you’re really talking about is what’s the last connection and what is the OTA (over-the-air) interface. Is it Wi-Fi; is it 5G; is it 4G? And the answer is, who cares? Topologically they’re the same network.

Winfrey – I agree. Let’s move on to regulatory.

The press is full of assertions that the current FCC is highly anti-cable with a slew of different initiatives, and all of them look less interesting from a cable perspective, according to the press. I’m curious to see what your assertions are. You’ve seen a number of different regulatory cycles. What’s the viewpoint here as to whether it really is anti-cable, or is it something else?

Bazinet – When I first started covering cable stocks, it was sort of the good old days when the expert agencies were largely neutral. Maybe they would deviate from the mean a little bit to the left or a little bit to the right. I think we’re living in a world now for better or worse that is so hyper politicized that the expert agencies, whether it’s the FCC or EPA, are going to careen far left, far right as the executive branch changes, which is tragic.

It makes it very uncomfortable for equity analysts, because you don’t have a constant sort of policy coming out of DC. You have these zigs and zags. I would say, yes, it’s anti-cable. But I think it’s probably broader than that. It’s anti-business.

Ryvicker – Or at least anti market forces. This is a government and an FCC that wants desperately to regulate everything. They’re not just anti cable, they’re anti broadcast. They’re anti telco. They’re just anti.

Winfrey – For the transcript, that was not the moderator. But thank you for your candid input.

Bazinet – The only thing they seem to be pro, and, again, 15 years ago when I started with the NAB, it was quite powerful in DC, and now it’s really the Silicon Valley mix that has all the power in Washington. I was in a meeting with a client, and he jokingly said, does Skynet really need any help out there in the marketplace, referring to Google. And that’s the way I think Wall St. sort of looks at it.

Everyone knows Google has huge cash flows. The Street’s willing to accept no profits. They have a great business model on the advertising.

Winfrey – Essentiall a monopoly in search.

Bazinet – Yeah, exactly. To say they need help; it’s mind boggling.

Swinburne – Without taking a political view if at all possible to answer this question, you know Kevin Martin days were some hand-wringing days. I think we all thought they were pretty aggressive. The cable card stuff seemed kind of scary and out there.

I think there’s no question this FCC wants to bring more competition to cable. Whether that’s anti cable or not, I’ll let people decide that. But it’s tough right now between set-tops, special access, blocking mergers, Title II reclassifying broadband. It’s been a tough string for the industry.

Winfrey – Let me turn this back on cable for a little bit of perspective on ourselves. Is there something to think that we have done over the past five to ten years of the cable industry that we could have done better?

It’s very easy to sit back and say, wait a second, we as a cable industry, just the cable operators, we employ hundreds and hundreds of thousands of employees, and we grow employees every year. We invest billions of dollars into network infrastructure, and essentially built the broadband Internet in the U.S.

So it’s very easy to sit back and pat yourself on the back and say, we brought the competition. But obviously we didn’t do something well, or else we wouldn’t be sitting in this position. So what do you think cable could have done differently to avoid some of this taking place and be put in the position where it has the ability to continue to innovate, invest and earn a rate of return?

Ryvicker – I don’t think it’s what you did. I think it’s the fear of what you will do as a monopoly.

Winfrey – Given what we just talked about with wireless, Google Fiber, with U-verse, satellite still competing very much in video, do you think we’re a monopoly?

Ryvicker – This ecosystem has thrived with new competitors, with disruption, with consumer choice. And I feel like the FCC wants to make everything happen faster without realizing there is a lot of investment that has to be made for all this content to come out and all the content to be distributed. And if the cable companies and programmers can’t invest, we don’t get any of it.

Swinburne – I’d introduce both a big compliment to the industry and also maybe a little accusation. I don’t know if this quote is totally accurate, but I think the chairman and the founder of MCI was asked what is his goal for his company, and he said, I hope someday to be broken up by the government.

To some extent the success of the industry, particularly around broadband – we report it every quarter, 100 percent of market share growth is going to the industry – can lead to some unwanted attention. That’s part of it.

On the negative side, there’s always been this undercurrent of consumers complaining to congressmen and senators about their cable bills. I think every one of you, if you haven’t read it, should read the [FCC general counsel Jon] Sallet speech that was made public last summer about why the FCC blocked Comcast-Time Warner Cable and why they approved AT&T-DirecTV.

It’s very clear there that when we all talked about broadband market share it was really about video. They really wanted to help the OTT players enter the market, bring competition to video.

One of the reasons [AT&T-DirecTV] was in the public interest was because of cost synergies on programming costs. It was an amazing sort of conclusion. They thought it would make U-verse a more viable platform. So I think high video prices, and high is a relative term, but that undercurrent of being frustrated with pricing in video may have led into this real push to support OTT.

Moffett – Which, by the way, was the rationale for the ’92 Cable Act. In essence, the FCC has been trying to get at this issue since ’92 without much success.

Even the birth of satellite was originally designed in some ways to help restrain rising end user video prices. It backfired and created more negotiating leverage and ultimately higher prices rather than lower.

I guess I feel a little differently in that it seems to me the FCC is now playing a little bit of catch-up and regulating what they can. You went down the path of Title II, and once you went down the path of Title II – whether that was advised or ill advised is a separate discussion – but once you went down that path, the ’96 Act pretty clearly says, here’s the role of the Federal Trade Commission, and they’re not involved anymore.

And now I have a void to fill, and I have to go in and fill the void for privacy, for example. So I rush to fill the void for privacy that I created by the reclassification, and, by  the way, I don’t have jurisdiction over Google. So regardless of what I’d like to do with Google if I had my druthers, it’s not really my bailiwick.

And so a lot of this has followed from, if you’re going to move one piece of this incredibly complex mosaic, you’ve got a lot of other things that you have to do. And inevitably each of them has their own unintended consequences. And that’s, I think, in some ways the vortex the FCC finds itself in now, which is they’ve moved around a few pieces and it set a whole lot of things in motion. They’re reacting to their own agenda.

Winfrey – Let’s talk a couple of specific items that are on the agenda. Title II. Anybody have any insight, want to take a stab at whether it gets overturned or not?

Moffett – I think the consensus seems to be, leaving aside the procedural issues of whether or not the notice issues were sufficient, but on the merit, wired broadband Title II reclassification will be allowed to stand. Wireless will be tossed out. And interconnection is a tossup.

That seems to be kind of the way most people read it. And then the procedural issues are an overlay on top of that, which people think is interesting to insiders but probably less critical.

Swinburne – I think the consensus also believes there will be an appeal to the Supreme Court, which only has eight judges, in which case the lower court stands.

Winfrey – On the set-top NPRM that Chairman Wheeler has launched, do you  think it’s needed? Does it get done? What’s it mean for MVPDs and perhaps more importantly, what’s it mean for programmers and the ability to protect their content, and the edge providers who would like to intercede on the copyrighted content and advertising?

Swinburne – That order is a tough read. It makes your head spin. I try to boil it down in my simple brain to create sort of the Android or iOS ecosystem run by the FCC and some standards body that doesn’t exist yet in sort of a cable ecosystem where the vendor community has always been relatively small and lacking in leverage. I understand the hopes and dreams of that order, but the implication of what they’re trying to do seems virtually impossible.

Moffett – The hard part to me is, when the White House has intervened and said, it’s a great idea, it’s really hard for the Democratic commissioners to say, no, it’s not. On the other hand, there are an awful lot of traditional Democrat fund-raising constituencies, not least the entertainment and creative communities, which are really important in the upcoming Congressional elections, who are not pleased.

And politically that’s something that I’ve never seen the FCC have to grapple with, something this politicized where this many Democrats are coming out against it and yet the White House has come out for it. If you’re a Nancy Pelosi in California and there are a lot of unhappy Californians in the entertainment industry, I don’t know how you juggle all that stuff. It’s not easy.

Winfrey – All this activity that’s going on, it certainly feels that cable is being intentionally disadvantaged. So whether it’s neutrality and privacy on the last mile versus the edge providers or its traffic management versus wireless, I think Marci hit her own opinion straight on the head and said, yes, it is intentional and it’s being done by design. Do you feel that’s the case?

Ryvicker – I feel it’s the case. Netflix can throttle and cable can’t.

Moffett – Where does the FCC have jurisdiction? The FCC doesn’t have jurisdiction over Netflix. The FCC regulates what it can.

Winfrey – Understood, but does that create an unfair playing field?

Moffett – Sure. Life’s not fair.

Winfrey – Your message to us is tough luck. Find another way.

Moffett – Yeah. It is what it is.

I do think what the FCC is grappling with, as Marci put it, the economics of success in distribution networks are challenging from a regulatory perspective. The pendulum started swinging decisively toward deregulation in 1984 in this country.

When you deregulate telecommunications networks of whatever kind, it tends to create this explosion of innovation and investment. But as you do it, the microeconomics start to swing the pendulum back.

Unfortunately, these are businesses that have really draconian economics. There are winners and there are losers. There’s not a bunch of people in the middle.

My suspicion is what the FCC is looking at is, longer term, it’s pretty easy to see that cable is the winner. And, by the way, not just the winner in broadband, but go back to the conversation we were having about wireline. Where is the economic value created in wireless eventually? Wires. Who owns the wires? The cable industry.

And so they’re already looking forward to the day that cable has effectively won the battle for the U.S. network. And if you ask anybody with really long tenure at the FCC, and by tenure I mean going back prior to the Big Bang in 1984, they would say that ultimately that has to be a regulated business. And so there’s at least one line of thinking that, if you say what the FCC is doing, it’s already doing the hard work of putting the stakes in the ground for the ultimate regulation of what will end up being a single network.

Winfrey – It will be interesting to see how that plays into the ability and desire to invest.

Swinburne – I also think the FCC has an awareness of the role of content cost on the consumer price point, but they don’t regulate the bundling of networks by media companies. So they’re aware, but they’re not actually doing anything about it yet.

I wouldn’t be shocked over the next five years to see the FCC move in that direction somehow, whether it’s through merger reviews or something else. I think there’s a clearer understanding around retransmission fees and the rising tide of sports networks, etc. That area will be one to watch going forward.



Broadcasters in IP Transition See Impacts on All They Do

Approaches to News Gathering, Sports Coverage and Storytelling to Change Dramatically

The 2016 NAB Show brought to light the extent of the broadcast industry’s commitment to the IP transition with an outpouring of technology and strategic announcements. Here we provide a look at how key players are making use of what has already been implemented through integration of production workflows onto the IP platform and what they anticipate will unfold in the years ahead.

Participants in the discussion, a panel session led by Jim Louderback, the founder of Revision 3, now owned by Discovery Communications, and a venture partner with video technology supplier Wochit, included:

  •  Andrew Cross, president and CTO, NewTek Inc.,
  •  Steve Hellmuth, EVP, media operations & technology, NBA Entertainment;
  •  Tom Sahara, VP, operations and technology, Turner Sports;
  • Marc Scarpa, founder and executive producer/director, Simplynew.

The following is an edited transcript of the session as recorded by the NAB.

Jim Louderback – Tom, when you define IP, what does IP video production mean?

Jim Louderback, venture partner, Wochit

Jim Louderback, venture partner, Wochit

Tom Sahara – Many of the manufacturers when they talk about IP, there are two specific thoughts around IP. One is moving from a coax and HDSDI infrastructure into an Ethernet-based infrastructure using off-the-shelf computer-grade switches. The other is moving from dedicated, purpose-built hardware into cloud-based and generic hardware with software adding the functionality. Those are two IP terms that are often used interchangeably, but they’re actually two very different applications.

Tom Sahara, VP, operations & technology, Turner Sports

Tom Sahara, VP, operations & technology, Turner Sports

Louderback – Steve, how is IP video different from what came before it?

Steve Hellmuth – For use of IP video at the NBA, it’s video that’s available everywhere all the time. We can configure, reconfigure and make feeds present across an IP switch. It vastly reduces the need for wiring and increases the availability.

Steve Hellmuth, EVP, media operations & technology, NBA Entertainment

Steve Hellmuth, EVP, media operations & technology, NBA Entertainment

Louderback – Andrew, how do you build something today using IP infrastructure that’s different from the studio you may have built yesterday with more proprietary technologies?

Andrew Cross – IP is very interesting. When you think about something fundamentally different, we build custom installations for typical video wiring now. This room technically is wired for IP video today. Every home, every room in North America is wired for IP video.

We’re used to a world where, when you build broadcast facilities, you have to wire them appropriately, and they’re wired for SDI. The magical thing about IP is it’s everywhere. That’s what’s exciting about it. Anywhere is a studio, and you can do video over IP in any building, in any place.

Andrew Cross, president & CTO, NewTek, Inc.

Andrew Cross, president & CTO, NewTek, Inc.

That changes everything. That changes the people who can do video. It changes the way you do video. It’s really a game changer. The industry needs to realize, we’ve been doing TV one way for 40 years, and it just changed.

Louderback – Traditionally when you ran Ethernet over twisted-pair, it was 10 megabits-per-second. And then we got 100 megabits, which seemed like an amazing amount. Now it’s up to gigabit Ethernet, even 10 gig. You say any room is this way. But Wi-Fi hasn’t got to a gigabit. You need a gigabit don’t you, at least?

Cross –You need to be in the gigabit range. One of the ironies is that when I said the exciting thing here is that every room in North America is wired for IP video, they’re wired for one gig to do video.

You want to revolutionize the world. You want to go out and change the way people are producing videos. You’ve got to work in one gig, because that’s what everything is wired for. Unlike other technologies like cell phones, it doesn’t change every year. People don’t rewire buildings every year. Wireless is adopting quickly. And luckily that’s something that doesn’t require the capital cost of rewiring a building. You can put in wireless, and we’re getting toward one gig.

Louderback – The other thing that people tend to attach when they check IP, they layer in this cloud thing on top of it. I want to define the cloud as well, so we’ll all know what we’re talking about. Marc, how does the cloud interact with this IP video world, and how do you define what the cloud is? And is this also a game changer?

Marc Scarpa, founder & executive producer/director, Simplynew

Marc Scarpa, founder & executive producer/director, Simplynew

Marc Scarpa – The cloud is where all your personal data resides – on a global scale. That’s kind of a scary concept. Cloud by a technical definition is a cluster of servers that are dispersed across the network or across the Internet all across the world. So you’re no longer just uploading your data to one server and having it stored there. It’s going up; it’s being deconstructed. It’s being share; it’s being spread to a variety of different facilities on the planet.

When you start talking about cloud-based virtual broadcast studios and IP camera work flows, now, as Andrew said, you can literally have every office facility in the world wired and ready to go for broadcast. Those feeds can then be fed into a cloud-based virtual broadcast studio environment where you can do live switching from your laptop, sending that out to as many destination points as you want – traditional broadcast as well as streaming broadcast.

Louderback – So every room is now wired for IP, wired for video with Ethernet. But my connections from this room to the cloud are not gigabit, unless you have gigabit in your office or home, which is not likely. How does it all come together? Is it really a distributed infrastructure where I can have a camera sitting in St. Louis, I can have a production facility in Topeka and I can have my director in Columbus?

Scarpa – Yes, that’s the power of the cloud. It allows you to have different sources coming from different places and having different teams and different workers on those teams in a dispersed environment.

Hellmuth – For me the cloud I have is for the Replay Center at the NBA. I have it locally. I don’t have it up there.

Louderback – Describe the Replay Center.

Hellmuth – It’s a dozen video signals coming back from every venue over a 10-gig network.

Louderback – So you have a 10-gig connection from every arena in the U.S. to the center.

Hellmuth – In Secaucus. Then we run a dream catcher with 46 nodes, 92 Intel CPUs, and it’s a completely virtual environment, which means that at every work station every game is immediately available.

The reason that’s very important is that when you do sports replay, we first look at the dozen angles we have. And we start to find the truth, find the answer, but the [production] truck very often continues to spit out additional angles.

If anything ever goes wrong in any sport related to replay, it’s always because they didn’t see that last replay that maybe had the answer. The ability with IP means that everything is available everywhere at every work station instantaneously. And that’s enormously important.

Louderback – Tom, at Turner, you have feeds coming in and all this. How does this impact and change what you’re doing? What have you been able to build there?

Sahara – The premier events have so many cameras, it’s really hard to get the kind of connectivity you need to get 40 cameras from a venue event to a studio.

Louderback – By premier event you mean something like the Final Four?

Sahara – Yes. But we have other parts of the Final Four. We have social media, and we just did a virtual reality event from the Final Four. And that was through the cloud.

We got the signal from the camera, converting it to a format we could send through the Internet to the cloud, and users could go to their account, sign in and get it. So we had this massive distribution channel at almost no cost, very little cost.

Louderback – Andrew, you work with a lot of different customers. Is it just cost savings? Or are there real structural differences enabled here, things you just couldn’t do before that you can do now?

Cross – I think it’s a bit of all those things. There are some cost savings. But we’re getting into a world where almost anybody can be a broadcaster. That’s important.

An analogy I would give is you can plot the number of hours of video that’s being produced [every year]. Now plot the NAB attendance. It doesn’t match.

This either means that people are getting paid less and less to do the video or we have to make it easier. Every projection shows there’s going to be more and more video online. It’s becoming more and more dispersed. So we’re going to make it easy.

I think a lot of this is about making it more accessible to people. Things like the iPhone cameras – I mean there are hundreds of cameras in this room. This makes everybody able to produce video at some level. And every camera in this room is interconnected with every other camera.

Scarpa – And to that point, we have cameras here that are shooting the event. They look great. They’re HD. But the reality is everyone in this room with their cameras, if you had enough Wi-Fi data connectivity, could be shooting the show. It could go into a cloud-based virtual switching type unit, like a in the back room as a sub-switch that sends it to the NewTek system.

Louderback – But you’ve got a big “if” there – if we had enough Wi-Fi connectivity.

Scarpa – Well, that’s not so hard. You look at arenas.

Louderback – How do you make it so that everybody sitting at a basketball game can broadcast from their phone cameras?

Hellmuth – It’s certainly possible. In fact, look at the Sacramento Kings, who have put in a remarkable Wi-Fi and data system. They’ll be opening up their new building in September. They worked very closely with Qualcomm on it.

The throughput there is going to be amazing. But as you think about IP and arenas, you think about availability. To the point Andrew was making, behind the scenes an iPhone can capture the team’s arrival, can capture the players getting ready in the locker room. The fans can contribute video. You can literally just connect everybody.

And all the replays and all the other material can be easily shipped across the network. It would be just be an incredible connective tissue across the entire arena that really hasn’t existed before in a world of HDSDI.

Louderback – So we have all these devices hooked up via standard Ethernet IP infrastructure – cameras, storage, switchers, graphics. Are there latency issues here? How far apart can these things actually be? What kind of bandwidth do you need? Sounds like it can go wireless.

Cross – First, it’s not necessarily about latency. It’s about synchronizing these devices. It doesn’t matter what the latency is within reason as long as they’re willing to sync with each other.

There are going to be some challenges. What’s most important, it’s not necessarily that everybody in this audience is contributing to the show, but that a small number of people with their phones are good enough to contribute. Once you’ve limited your domain down to one you can manage, you can deal with those problems. It becomes massively cheaper.

A few years from now these phones are going to become remarkably good. The cell phone industry and the people making cell phones are going to get there. They’re putting billions of dollars in, trillions of dollars in, and we get the halo effect of that.

That’s really what this IP revolution is about. We’re seeing the halo effect of a bunch of bigger industries impacting ours.

Louderback – I get that this IP world makes all the sense. We definitely want to get there. But what about those of you have built facilities? You already have an SDI infrastructure. There’s Aspen and AIMS and SMPTE 2022 and all these different formats. Is it all going to be here in two years? What if you have one path and the company goes out of business? Isn’t it a big risk?

Cross – The move to IP is very different. In some way we’ve standardized something. We’re all on the same cable with the same kind of packets. You named three formats. Every one of those three formats can go down the same wire at the same time. When you think about the Internet, what made it great is that a lot of people can do a lot of things. You can use the right technology for the right purpose.

That is one of the things we can do in IP. We’ve standardized the cable. We’ve standardized the way everything communicates. That’s huge. The protocols coming together can be different ones. They probably serve different purposes. But we’re all on the same cable. We’re talking the same language, which has never been done before.

If you wire it to one format, you can run another one. You can run it in parallel and use the right thing for the right purpose.

Louderback – You’re putting down real money to buy real stuff. Do you buy that?

Hellmuth – Absolutely. You come out of a sports venue and you go into an HDSDI. Then we ride at JPEG2000 at 250, 285 megabits in IP, and then we convert it back to HDSDI to get to yet another IP environment, the dream catcher environment. That’s a lot of money. That’s a ton of conversions that probably shouldn’t happen.  We can simplify and make this stuff cheaper.

Sahara – We produce content, and content has to be consumed.  People are moving away from their traditional television viewing habits. And what are they viewing on? They’re viewing on devices that are connected via IP. So it’s also commercial value to us that we have to be able to deliver our content to our viewers wherever they are.

Louderback – And if it starts in IP, it’s that much easier to get it to that end users.

Sahara – Exactly.

Louderback – Let’s talk about workflow and how this new world impacts workflow and production. Marc, talk a little bit about the things you were able to change from a workflow perspective using this technology.

Scarpa – Very simple answer. No cables. Cabling takes a massive amount of time. Time is money. Coming in with a TriCaster system, a couple of laptops and a 46-inch plasma display and having your cameras rigged up with light, sound and so on, you’re ready to go.

From a cost perspective, it doesn’t necessarily mean you’re getting rid of camera people or that you’re getting rid of technical managers or getting rid of TVs. In fact, since 1996, when we’ve done IP broadcasting we’ve always had an IP person on our shows. We were probably the first ones to do that.

Engineers and IP professionals will become more and more integrated into the broadcast workflow environment. So, if anything, we’re adding some jobs but saving time and being able to be a lot more flexible in terms of the types of capture and experience we can provide to the end viewer.

Hellmuth – I think what it has enabled us to do at the NBA is to design much simpler interfaces. Our referees look at the screen – in fact, there are no replay operators in the NBA. The referees and the replay managers operate it themselves. They look at a screen with a dozen PIPs on it. They hit the camera they want to look at. They get control of it. They use the finger to zoom. It’s a very intuitive interface.

We designed another facility next door where we deliver programs around the world, all our live games, and we condition the feeds. When the game stops we cut the mascots, the dancers, the plate twirlers. That interface is a master control switch. Touch, select, do a transition, a wipe. So we deliver completely conditioned feeds to our partners around the world.

Louderback – Tom, what has changed with the workflow at Turner, and what do you think will change?

Sahara – A lot has changed. The biggest impact IP has had is on the speed and the efficiency.

Louderback – Speed of what?

Sahara – The speed of capturing content and then publishing it. In the past we had to record it. Once we recorded it, someone had to look at it and edit it, put it back together, and then to play out. And now we can do many of those tasks simultaneously.

As the feed is coming in, we can look at it and edit it. Once they clip it they can send it to publish and it’s being encoded into whatever formats to fit the various devices people have in their pocket. It’s distributed on the Internet, and you get a notification on your phone: the latest highlights are published.

We would not be able to do that in traditional broadcast hardware. It was only because of IP being an enabler that we’re able to do this.

Louderback – Andrew, how will the workflow change even more?

Cross – Right now we’re in this process where have a way to move video around on networks with packet-based infrastructure, and that’s great. I think the effect it’s going to have is going to be more profound than what you guys have been talking about.

Think about the equipment itself. Think about a graphics system. The graphics system was defined by how many SDI outputs it has. In an IP world, there are no SDI connectors. Why not publish all the graphics you have available?

Now the person who is putting them into the show decides which graphics they want. We just changed the whole approach to graphics. Now apply that to everything else. All of our equipment is defined around things that we’ve had, and now it’s all going to change.

Louderback – Doesn’t that get confusing, though?

Cross – No, it’s liberating. The person who is producing the show now has the palette. We were forcing the palette, the toolset that’s available down to the cable. And it had to be the right thing on that cable.

That’s going to change. They can have access to all the media. They can pull from more pieces. And that’s going to change not just the workflow, but it’s going to change the equipment that’s used on the workflow.

Scarpa – And, fundamentally, the way the stories are told, especially in something like the news environment. The news industry is based on a specific principle: who gets the story first. If you have cameras on the ground, if you have an eye in the sky, you have a truck on the scene, you get the story first. That’s your exclusive.  It could have monumental monetary value for that news organization.

Well, if everyone on the planet, a billion phone users, can suddenly be broadcasting live news events into a cloud type environment, and news organizations can pull that down live in real time and have that go out via traditional broadcast, it will revolutionize the way we consume media.

With other industries, especially sports, it will be more of a hybrid. You won’t shoot the NBA with cell phones, but behind the scenes and those types of areas you could do that. In rock concerts it could be 100 percent fan participation where you go to a rock concert and the fans are shooting the show and the fans at home are contributing content and become part of the show.

It’s a new language, a new storytelling, and this technology helps us to get there.

Louderback – Let’s talk a little bit about field production. Tom, you probably have a line item budget that involves a lot of trucks. Does the concept of a truck go away? How does this impact that field production aspect?

Sahara – The truck won’t go away just because of the number of cameras that are needed. But for the small shows that have much looser production requirements, this is an enabler for doing things you would not have dreamed of even five years ago.

Louderback – Like what? Give me an example.

Sahara – In the case of journalism, I can send someone out or someone is walking down the street and sees something happening. Now they get Periscope, they start streaming from the phone. I can get that feed, if I subscribe and know this person, and use it in my program. Those are the types of capabilities that IP really opens up.

We also have this thing in television production called home productions where the cameras are out at the venue, but the director and producer are in the comfort of their own studio. It could be just a few miles or hundreds of miles away.

Hellmuth – The Boston Red Sox did their minor league games using cell phones, because they have a rabid fan base who wants to know what every minor leaguer is up to. They use the TriCaster to do the switched IP video.

Louderback – What about award shows, concerts, the sort of stuff I know you’ve done a lot of work on, Marc? How does this change the field production?

Scarpa – Anyone who’s produced a red carpet event knows how incredibly challenging it is to get real estate on that red carpet if you’re a news organization. Now you can show up with a mobile phone or a mobile camera using uPak or some other technology that will make sure you have a good solid data connection.

But take it to the next step. The really interesting part of all this is, if you’re a celebrity on the red carpet, you can decide to shoot your own first-person perspective experience of what it’s like to go to an award show. If I’m a George Clooney, for example, I can do a real time documentary of a day in the life of me being me, and people will watch that.

The way you can do that will be the next-generation Google Glass, for example, or using a cell phone rig. We will start to see more and more of these lifecasting types of projects.

If I have five or ten of those celebrities all doing it, now I have something to switch from, and I can create a program from that, and I can switch that program in the cloud and broadcast against any platform. I can pull in Periscope feeds, Facebook Live feeds, YouTube Live feeds, you name it. I have first-person, second-person perspective, and it creates a whole new experience from a consumer level of how I perceive an award show red carpet.

Louderback – Let’s talk about people for a minute. New infrastructure, digital transition, people end up without jobs. Jobs change. Are people going to get disrupted, and are there new skills people need in this new digital world?

Sahara – Yes. It will disrupt. But it also is opportunity. And that’s what we have to focus on. IP allows us to do things and create products that we could never dream of in the past.

That’s one of the reasons all the large content companies are moving out of their traditional infrastructures and moving to IP. It allows us the freedom and the opportunity to explore things that in the past were cost prohibitive, because we would have to build these large tests. You weren’t sure that something was going to pay off or not.

Now I can use a charge card, spin up some service in Amazon and  test it. It’s amazing what IP and the cloud allow. So initially, yes, there are job losses and retraining that needs to be done. But in the future there is tremendous opportunity for new ideas and new skills, especially if you’re working in software and creative, to come up with ideas of content and program and how to put stories together. At the end of the day that’s what we’re all here for, to tell stories.

Scarpa – For me it’s the democratization of media where anyone can have access to tools to tell their unique stories in a multi-camera live broadcasting environment. That was unheard of ten years ago. You needed to go to school, to know specialty items all across the board.

Do I think that’s going to terminate jobs? No, I don’t think so. I think a talented camera operator is still a talented camera operator regardless of the camera they’re using. A talented director is a talented director, regardless of what screen or monitor you’re looking at.

If anything, it’s a good thing. As I said, you’ll have more IP professionals that will join our world. Certainly the engineers need to learn IP protocols. They can’t just stay in the cable world any more. They can’t stay in a strictly hardware universe. They have to understand both. And that is really the key.

Hellmuth – Up until only recent the television producer was the only one who handled the content, determined what you watched on your television.  Now we have another set of producers who are managing the live streaming, the NBA League Pass and other platforms and the integration of statistics.

And then there are the social media producers. We literally have social media producers sitting on top of every shape, on top of Facebook, on top of Instagram, on top of Snapchat, who understand the mediums both domestically and globally.

While I’m managing the enterprise network and facing the world with media and television distribution, the very important aspect of facing the public is being handled by a whole different set of people who didn’t exist six or seven years ago.

Sahara – Social media producers. Three years ago we had three. Now we have 12.

Louderback – What amazing wild thing three or five years from now that we can’t imagine now will we see?

Cross – We’re not going to recognize the world of production. Think about the Internet. Before the Internet you couldn’t imagine what the Internet was going to do. Before Facebook there was no analog version of Facebook. Before Google there was no analog version of Google. We’re in the analog now, and we’re about to go to the IP world. There are going to be those guys who come up with those Facebook ideas, those Google ideas and bring them to our industry, and that is exciting. We’re going to see things get disrupted.

Scarpa – If time tells us anything, people want to have a more visceral experience with regard to their storytelling experience. They want to be more immersed into the stories. We’ve obviously all seen the second coming of VR, the first coming of AR, 4K, 8K, so on and so forth. But it comes down to storytelling and how you experience those stories. If we have a truly IP cloud-based environment, you can look at it a little bit farther from an entertainment perspective, from a Second Life perspective where you can co-habit in these new universes that have been created. Ultimately, I guess, we’ll be in the Matrix.

Sahara – Everyone will have their version of The Truman Show.

Hellmuth – We’re going to continue to surround the court with cameras and also really create a virtual environment, which will allow you to take your own position within the court.

Louderback – I want to thank you guys. It’s been great.


Sony Video Services Group Finds Way to Cut Cloud Processing Fees

David Trescot, CEO, Hybrik

David Trescot, CEO, Hybrik

Startup Hybrik Breaks New Ground with Low-Cost Business Model

April 21, 2016 – Sony DADC New Media Solutions Inc., a provider of digital supply chain solutions to movie studios, broadcasters and other entities, has found a way to drastically reduce cloud-based video processing costs for customers faced with managing soaring volumes of live and on-demand content.

The company has tapped a startup, Hybrik, Inc., to provide cloud-based media processing with accelerated transcoding and automated quality control across thousands of machines, says James O’Toole, director of content media engineering at Sony DADC NMS. “Migrating Sony’s media processing to the cloud is a core strategic initiative,” O’Toole says.

“Hybrik allows us to accelerate this transition by giving us superb transcoding and quality control at massive scale and with simplified management,” O’Toole adds. “By leveraging Hybrik we can deliver unparalleled performance, reliability and throughput for our global customers.”

Hybrik’s executive team isn’t new to the encoding game, having been instrumental in creating and bringing the Rhozet software-based encoding platform to market prior to its acquisition by Harmonic. For the past 18 months the company has been in stealth mode developing a workflow and business model which Hybrik CEO David Trescot describes as tailor made for companies like Sony that are counting on cloud resources from Amazon Web Services to drive their business.

“We wrote Rhozet Carbon, so we were well acquainted with enabling software-based video processing on commodity hardware,” says Trescot, who was CEO of Rhozet, Inc. “People came to us and wanted to know if they could run our old system in the cloud under their control.”

The result is a service which, rather than charging users by the gigabyte or by the time the vendor’s platforms is used to process content, operates on a fixed fee basis depending on how many servers the customer wants to have available through the AWS Elastic Cloud Computing model to process their content. By reserving access to massive quantities of AWS servers on the spot market, Hybrik can make them available on an as-needed basis to its customers, thereby spreading the costs of the hardware across multiple users.

The upshot is Hybrik customers pay a fraction of the costs for using its platform compared to what they would incur if they were paying the usual prices for cloud-based video processing, Trescot says. “With everything running on machines that cost 2 cents per hour we can complete 2,000 jobs sitting on a 400-machine farm that costs $8 an hour,” he explains.

Customers pay $5,000 per month to Hybrik for managing the processing service in a 100-server environment or $10,000 per month for running the service on a 1,000-server farm. This compares to prices in the neighborhood of $2,000 per month per machine in scenarios where users run a vendor’s processing system on machines specifically dedicated to that account, Trescot notes.

“We’re allowing Sony to achieve high cost savings while delivering better support for video processing to their customers,” he says. “They can stream transcoded content at massive scales directly out of the AWS S3 (Single Scalable Storage) infrastructure.”

The trick in all this is to be able to deliver a video processing service that can handle massive scaling while matching the quality of performance customers might get from a service that utilizes servers dedicated exclusively to customer needs. Hybrik says it is providing a world-class transcoding and quality control engine that handles the most complex problems on a workflow that can manage millions of files and petabytes of media at extremely rapid throughput across thousands of machines.

The credibility of the company’s claims starts with the fact that its transcoding and quality-control engine was developed by CTO Ove Bjelke-Holtermann, the founder of Rhozet and author of the Carbon Coder transcoding tool. “I wanted to use my experience in large-scale transcoding systems to architect a cloud-based service that could deliver unmatched throughput,” Bjelke-Holtermann says. “There is a need in the market for a service that can cost-effectively scale to the enterprise level.”

With Sony’s engagement providing farther validation, there’s a chance Hybrik’s entry into the cloud service market could be a game changer. Given the scale of processing looming in the direct-to-consumer OTT market, demand for better cost parameters is sure to intensify.


China Becomes Proving Ground For Studios’ Anti-Piracy Policies

Paul Ragland, VP, sales, Irdeto

Paul Ragland, VP, sales, Irdeto

By Fred Dawson

April 22, 2016 – A new front in the war on premium video piracy has opened in China where rampant theft presents an especially strong test case for the measures content suppliers hope will be adopted worldwide to enable new business models to flourish.

So far, specifications issued by MovieLabs last year on behalf of the motion picture industry to better protect high-value content have yet to be implemented with any consistency in most parts of the world. But in China it’s understood that mounting demand for network access to the latest movies and TV shows can only be met if licensors are assured a safer environment for distribution of their assets.

It’s not just individual distributors who are responding to the content owners’ protection requirements, which call for rigorous DRM frameworks along with use of forensic watermarking backed by coordinated approaches to tracking and shutting down pirates. The Chinese government, too, has taken an active role in moving the market forward with a mandate calling for implementation of TVOS 2.0, a next-generation TV operating system that includes what is known as China DRM.

The rules apply to smart TVs and set-tops and may even be used to prevent streaming of high-value content to other types of devices, according to Hunan Daily. And the mandate may soon be expanded to include watermarking as well, notes Paul Ragland, vice president of sales for Irdeto.

“China hasn’t mandated watermarking yet, but they’re working on making that part of the law,” Ragland says. “We’re supplying the data we collect from our operations there to all parties involved in enforcement, and we’ve worked with Chinese officials in sting operations against pirates.”

Irdeto recently announced its Hollywood-validated DRM platform had become the first such system to be certified as compliant with China DRM. With the combination of the Irdeto Rights DRM and TraceMark watermarking platforms “we are providing studios and content providers with greater confidence to enter the Chinese market and helping operators manage technology costs while maintaining a world-class level of security,” says Marco Xie, country manager for China at Irdeto.

Irdeto is also working with e-commerce giant Alibaba Group to identify and remove ads for illegal devices designed to circumvent subscription requirements. Preventing the supply of these pirate devices, which receive content via Internet servers in jurisdictions where it is difficult to enforce intellectual property rights, has proven to be an effective deterrent to the pirates and ensures that the rights holders get paid for the content they own, says Rory O’Connor, vice president of services at Irdeto.

“We thank Alibaba for leading the way and supporting anti-piracy measures in China,” O’Connor comments. He says, cooperating under terms of a memorandum of understanding reached in 2013, has played a pre-emptive role in assisting with the removal of over 5,000 ads marketing pirate devices from 71 manufacturers and suppliers who were impacting the businesses of Irdeto’s pay TV operator customers.

While Irdeto is the first to claim validated compliance with both China DRM and Hollywood standards for its DRM platform, the company is not alone in bringing support for next-generation content protection, including watermarking, to China. Notably, Intertrust Technologies earlier this year added session-based video watermarking to its Marlin-based ExpressPlay DRM service in support of early-window TV and movie on-demand services to be offered through an exclusive licensing agreement between 20th Century Fox and iQiyi, the largest combined Internet and mobile video service provider in China.

“Session-based watermarking is critically important, particularly in a large market such as China,” says Hanno Basse, CTO of 20th Century Fox. “ExpressPlay’s offering allows us to aggressively pursue new distribution opportunities that consumers want, such as early-window movie releases that are much closer to theatrical release dates, while appropriately managing the piracy risk that comes with them.”

Government-mandated DRMs and watermarking may not be a template that can be followed in more democratic countries, but the current state of limited cooperation on the MovieLabs specifications seems bound to give way to more concerted efforts as demand for 4K UHD and earlier pay TV and OTT release windows intensifies. It makes little sense to foreclose availability of high-value content through legitimate outlets when consumers have access to such content through a proliferating ecosystem of illegal streaming services.

Irdeto, which is monitoring global piracy through a sophisticated surveillance operation run out of its headquarters in The Netherlands, says the number of pirate streaming sites reached 850 worldwide in mid-March, marking a 45 percent increase over the count six months earlier. “We’re seeing brilliantly marketed sites drawing ads and generating $100-$200 per user in annual subscription fees,” Ragland says.

Indeed, notes Shelli Bernard, research analyst at ABI, it’s harder than ever to control piracy in an environment where “consumers may no longer be able to readily differentiate the legality of their downloaded content.” While governments have become more pro-active in enforcing anti-piracy laws, she adds, there needs to be more engagement by content owners and distributors in “relying on piracy prevention technologies to continuously monitor for, and gather evidence of, uploaded pirated content.”

However, as Ragland notes that’s far easier said than done, especially in a transition period when there’s still a scarcity of 4K UHD content and the cost burdens on distributors leave them inclined to ignore the MovieLabs specs, at least for now. “Not many people are enforcing 4K protection requirements, because 4K is not a big reality yet,” he says. “But when 4K takes off operators are going to push back. They’re going to ask content providers either to renegotiate licensing deals to take the costs into account or pay a share of those costs.”

Irdeto has taken pains to minimize the costs of per-session watermarking in both the legacy pay TV and OTT domains. When it comes to streaming high-value content, TraceMark, like Civolution’s NexGuard and other watermarking technologies, is designed to inject the invisible digital identifiers in each stream from the origin server. In addition, Irdeto reduces the amount of processing required by marking only two segments of any given piece of stored content and then re-arranging the digital sequences in those segments to create a unique identifier with each session.

But the bigger challenge, and cost burden, comes with managing the piracy detection and enforcement process. Pirated content must be monitored for watermarks that will identify the point at which the content was recorded off a big TV screen for illegal commercial use. Complicating matters, identifying and reading watermarks requires use of tools specific to each watermarking system supplier. And then the information about the perpetrator must be placed in the hands of someone who can take enforcement action against the offending site and the original perpetrator.

All this requires cooperation across the distribution ecosystem. “Whatever processes are established there needs to be adherence to the process on the part of all the major operators,” Ragland notes.

While Irdeto has teams of analysts to assist in identifying the sources of stolen content, there needs to be better understanding of what action can be taken before effective counter measures can be employed. “What are your legal rights to shut somebody off who’s been identified as the source?” Ragland asks. “Can you just cut off a subscriber without taking legal action to prove guilt? How do you stop an illicit site operation?”

Even where there is strong support from the law, government enforcement agencies and operators, meting out punishment can be a long drawn-out process, as evidenced by a recent anti-piracy operation in Holland. In December, following extensive collaboration between the police, the Public Prosecution Service, Dutch TV providers and Irdeto to track, investigate and raid a group of individuals offering pirate TV card-sharing subscriptions on auction websites, two defendants were found guilty and sentenced to 100 hours of community service, two months of conditional imprisonment and two years’ probation. This was four years after Irdeto and local Dutch TV providers triggered the investigation with identification of the offending parties.

Developments in China should provide useful insights into how effective the new content protection measures can be when government, content owners and distributors work in tandem on a nationwide basis to impede pirates. Subscription streaming services, after a slow start, are now taking off across China, with everyone on notice that they will have to follow the rules set for DRM in the TVOS 2.0 standard and, likely, rules for watermarking as they are adopted in the months ahead.

It won’t be hard to gauge the impact of the anti-piracy initiative. If content from U.S. studios and TV producers is flowing into these services a year from now, it will be a pretty good sign that the pirates are on the run.

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