Get the original LinkedIn article here: The Best of Times & Worst of Times in the Video Business
Mark Donnigan is Vice President of Marketing for Beamr, a high-performance video encoding innovation company.
Are we in the good times or the bad times in the video business? Mark Donnigan VP Marketing at Beamr
Can a 4 character technology save us?
This is a fascinating question since there is a paradox emerging in the video service where it seems like the the best of times for numerous, but the worst of times for some.
Here we have Disney announcing that they have actually already accumulated one billion dollars in loses, and this even before introducing their direct to customer business. And after that we have Verizon Media announcing sweeping layoffs which represent an exit from a few of the core home entertainment service and innovation services that were running under the Oath umbrella.
And of course there isn't a reporting interval that goes by where the cable cutting numbers haven't grown, which puts increasing pressure on the video side of the service supplier service.
Netflix stock is on the rise again, allowing the business to invest in content at levels that should baffle their competitors. And then we have news of PlutoTV selling for a mouth watering $340 million dollars in money to Viacom (deal was announced on January 22, 2019), showing that the AVOD business model can be practical and quite important.
5G is going to save us all?
This is where I wish to link with the massive investments being made in 5G and supply my perspective on why 5G might well break some video business while at the very same time make others.
Let's take a look at AT&T.
So in the last 4 years AT&T has actually added 80 billion dollars of additional financial obligation leaving it with more than 160 billion dollars of short and long term debt. Now, 50 billion of this shocking number was the result of the 2015 purchase of DirecTV.
My point is not to break down the AT&T debt numbers, I'm not an analyst, however rather supply a viewpoint that the monetary circumstance for AT&T entering into its enormous 5G investment cycle, while at the same time making understood their strategic effort to develop their video service capability through Warner Media direct to customer offerings like HBO, and DirecTV, is going to be challenged, unless they do something extremely different with video.
So what can a provider like AT&T do to deal with the financial capture, and the overall headwinds to the video business? Such as declining pay TV subs, and fragmenting OTT service offerings. This is the concern on numerous minds who are examining the future of the video organisation.
It is my strong belief that ubiquitous high speed mobile networks powered by 5G will unleash a video tsunami of traffic on the network like we've never seen prior to.
This will be excellent news for the PlutoTV's of the world and other ingenious video services like Quibi who will have the ability to reach more consumers with a better quality experience as a result of being able to take advantage of a quicker network thanks to 5G.
It's bad news for network operators without a plan to monetize this extra traffic load, and of course incumbents who are hoping to get by with incremental enhancements to their services; such as switching from handled to unmanaged, or OTT distribution, while continuing to utilize aging video standards like H. 264 to deliver low resolution mobile profiles.
Video suppliers who continue to under serve their clients will quickly be at a drawback, and ripe for interruption, I believe, from new business models such as AVOD and the newest and most efficient video technologies.
The four character video innovation that may save the video business.
The 4 character video standard that I believe will play a key function in the success of the video business is HEVC, the video codec that is now deployed on 2 billion devices. The following slide presentation provides numbers regarding HEVC device penetration which deserve seeing.
There has actually been much composed about HEVC royalty issues, something that set off development of an alternative codec which probably is royalty complimentary. Nevertheless, while some in the market became preoccupied with questions around licensing and royalties, significant developments have been made on the legal front, consisting of almost every CE gadget producer including HEVC playback support.
For example, HEVC Advance waived all royalties for digital circulation of material. This indicates, HEVC encoded material that is streamed will only bring a royalty for the hardware decoder and this is currently covered by the getting gadget. Offered that you are providing bits over the wire and not via a physical system such as Blu-ray Disc, your company will not need to pay any extra royalties, a minimum of not to HEVC Advance.
Now, if it's any convenience, the business who have currently done their due diligence on the royalty concern, and are streaming HEVC content to customers today, consist of: Amazon, Comcast, DirecTV, Meal Network, Netflix, Sky, Sony, Vudu, Vodafone, and Orange, just among others.
What about HEVC playback support?
This is an extremely great and important concern and perhaps the area of development around the HEVC community that is least known or understood.
Starting with at home playback, if your users have actually acquired a TELEVISION, game console, Roku box or Apple TV in the last 3 years, you can be almost ensured that assistance for HEVC exists with no need for extra licensing or gamer upgrade.
HEVC is now resident in almost every SoC that goes in to any mid to high-end CE video device. That's 400 million devices that support HEVC natively.
The information company ScientiaMobile preserves the biggest dataset of network device gain access to profiles by receiving information from the biggest cordless operators worldwide. This company reports that a massive 78% of all iOS smart device demands come from gadgets that support hardware-accelerated HEVC decoding. And though iOS devices are primary in the majority of developed markets, Android is still an extremely essential gadget profile, and here the ScientiaMobile information is very encouraging with 57% of Android smartphone requests originating from gadgets that support HEVC decoding.
These two numbers are where the photo of HEVC as the most logical video requirement to follow H. 264, starts to take shape. Here we have significant video distributors and tech business currently encoding and dispersing content in HEVC. And provided the HEVC gadget penetration and hardware support any fret about a premature move to HEVC are not warranted. However, what other elements confirm the concept that HEVC will be a booster to the video service?
LiveU recently released a report called 'State of Live' that showed growing patterns in HEVC broadcasting, especially worldwide of sports. And just in case you have ideas that making use of HEVC is a passing trend en route to some alternative codec, consider that in 2018, 25% of all LiveU created traffic was streamed using the HEVC video requirement while the only other codec utilized was H. 264.
In reality, the report specified that the high HEVC usage was a direct reflection on the increasing demand for professional-grade video quality, a pattern that was clearly obvious at the 2018 FIFA World Cup in Russia.
So what does this mean for the market?
The patterns we simply analyzed expose that we have an ever more requiring consumer who wants content that flaunts the complete capabilities of their viewing gadget, which means greater resolutions and advanced video requirements like HDR. This same user is now taking in more content, which contributes to additional congesting the network.
This customer consumption pattern is colliding with a shift from handled services to unmanaged, or OTT circulation and developing technical stress inside incumbent service operators who are facing technical shifts and company model fracturing. Surprisingly, in spite of a very clear risk to the incumbent services who are seeing video subscriber loses mounting into the hundreds of thousands over just a few short quarters, some are continuing with the status quo even while new entrants are launching services that give the customer more for less.
This is where the end of the story will be written for some as the very best of times, and for others as the worst of times.
HEVC is more than a technology enabler. It's a video requirement that is set to interfere with much of the conventional operators and early OTT streaming services. Not due to the fact that the consumer understands the distinction between H. 264, VP9, or even HEVC, but due to the fact that the customer is realising that better quality is possible, and as they do, they will move to the service who delivers the very best quality cost effectively.
At Beamr, we believe that the proof of our item and innovation excellence must be skilled and not simply spoken about. Which is why we've created the very best offer that we have seen in the industry where you can use our codecs in combination with our VOD transcoder, 100% totally free.
HEVC is now resident in practically every SoC that goes in to any The Best of Times & Worst of Times in the Video Business mid to high-end CE video gadget. These 2 numbers are where the picture of HEVC as the most logical video standard to follow H. 264, begins to take shape. Here we have significant video distributors and tech business currently encoding and distributing content in HEVC. And given the HEVC device penetration and hardware support any concerns about a premature move to HEVC are not required. What other elements validate the idea that HEVC will be a booster to the video business?
You can try out Beamr's software video encoders today and get up to 100 hours of complimentary HEVC and H. 264 video transcoding monthly. CLICK HERE
Author: Mark Donnigan