Presentation by Iolo Jones to the LTE World Forum at Amsterdam RAI, 25th June 2015
About ten years ago, at a similar event in these halls I did a presentation on the technical challenges of delivering video over mobile networks – at the time we were working on building a transcoding farm with KPN. I think a decade on we can all accept that most of the technical problems with delivering video to mobile devices have been tackled successfully. The challenges now are around the business model.
The problem is that most quad play services have become commoditized, almost before networks have been rolled out. The one outlier is TV and video. So, can this be a panacea ?
The trouble with TV and video rights is that they are complex and that there are players in each part of the value chain who want to enter other parts of the value chain as the current flurry of mergers across the globe shows. Companies are placing very big bets in this sector, often to emulate models that have failed in the past.
And the UK is a case in point. If we look at the current situation in the UK market you can see that companies that are good at content traditionally haven’t been good at mobile and vice versa. It was a lesson learnt some time ago by Telefonica after they purchased Endemol, of course, so this is nothing new. Still, it hasn’t stopped many of these companies jumping into bed with each other. There are a few names up there worth mentioning. Tesco, the giant retailer used to be the biggest seller of physical videos on DVD in the UK, now they are totally out of the game despite having a pretty successful MVNO model. Ironically it’s TalkTalk who bought their SVOD service, Blinkbox. Lebara is an interesting entrant to the market with their announcement last week that they are going to push expatriate content to their customer base.
That’s a brave approach and I’ll return to that later, but the current business models revolve around doing nothing, providing a wrapper for existing services – basically carrying apps, aggregating content, or in rare cases, launching an original service. But even in this final category, the tendency is to emulate not innovate.
So let’s look more closely what the issues are: first of all the regulatory environment and the upkeep of net neutrality principles means that it is difficult to do any volume based carriage deals. Your only option with Netflix is to promote them and take a very small cut of their subscription fee as they suck the capacity of your LTE network dry.
Recent proposals from the EC is going to force content to be made available on a pan-European basis, which benefits pan-European operators.
There are still latency issues that preclude models such as added value services in sports arenas, which is something we’re doing some work on with a Premiership team in the UK. Still thousands of people accessing the same content at the same time in the same cell is not going to end well. Ironically, this is where peer-to-peer technology may make a comeback.
Perhaps the biggest problem, and the one I’m mainly going to address today, is that of differentiation. In the world of Me TV, how do you stop your service from being Me Too TV ?
Finally, there the $64 million dollar – and the rest – question is how you make money when it costs so much to buy content, especially premium content in a highly price sensitive marketplace.
But the trouble is, you can’t afford NOT to do anything about it. According to Ericsson, 45% of your network traffic is already video and this is going to rise to 60% by 2020.
But the good news is that there is a younger generation of viewers who consume video and TV content in a very different way and they’re watching lots and lots of video on their smartphones and tablets. And not necessarily short form video either.
So, against this confusing backdrop, how do we change things ? What do we need to do ? Well, I think that an important first step is to change the paradigm and to stop looking at video as a network service, but to look at it as a handset service. In the era of Tv everywhere (with a small e to keep the lawyers happy), the handset is the hub.
So let’s look further at what this amazing device can do. First of all it can take payment and do this in an easy and unobtrusive way. To pay for premium sports events on Sky you have to dial in and pay. It’s not so with mobile billing. I’m utterly amazed how operators haven’t jumped into this space before the likes of Apple considering they already have a billing relationship with the customer. Offering an open payment API would attract content owners.
Secondly it can act as a conditional access pass, so that you can protect the delivery of content.
Thirdly, you can aggregate services into a central view. Unfortunately I currently have twenty or so video apps I have to use to watch everything I want to watch on my mobile.
Finally, and the tech for this is still nascent, it can act as a streamer and a projector – why do you need a box or even a dongle if you can simply stream from your mobile wherever you are onto any screen by wireless comms?
So, these are the things that you’ll need to do, in my view, to enable a great video service over LTE
And then you can start looking at some innovative services. To finish off, I’ve just listed a few here.
Get rid of all those icons and offer one app that talks to these apps and makes it easy for users. Of course this is easier said than done, but there are services like Zattoo and TV Catchup that have come close to succeeding.
The trouble with building your own content services is that it’s really, really complicated and expensive. We own a company called rights tracker that tracks the rights for some of the world’s leading TV properties and this is what one, simple rights position might look like – and there could be thousands of these each difference.
So we’re working on creating a centralised rights marketplace where anyone can push their rights or acquire those rights. This is especially useful for secondary rights, things like the live coverage of sports matched that you can never see again, or slightly older rights for dramas: this is how Netflix established themselves.
There is also the possibility of engendering new business models such as reverse bidding – allowing users to outbid broadcasters for rights.
Then there is the boom in self produced content that is badly curated on places like YouTube and is currently fragmenting onto multiple platforms such as Vine and Facebook. Already services like Digg and Buzzfeed are curating and aggregating a service based on these feeds, becoming the new broadcaster networks in the process.
Finally, back to Lebara and to one of my favourite approaches to building a market. You don’t have to try and get everyone day one – Zuckerberg started with Harvard – you can start with minority interests and aggregate audiences. The costs and the content are far cheaper and viewers are more fanatical and willing to pay.
Of course, this is only the start of the story and if you’d like to discuss this any more I’d love to hear from you.