Read the original LinkedIn article here: The Best of Times & Worst of Times in the Video Business
Mark Donnigan is VP Marketing for Beamr, a high-performance video encoding technology company.
The Video Business is in the Best of Times or the Worst of Times? Mark Donnigan Vice President Marketing at Beamr
Can a 4 character technology conserve us?
This is a fascinating concern due to the fact that there is a paradox emerging in the video organisation where it feels like the the best of times for lots of, but the worst of times for some.
Here we have Disney announcing that they have already accrued one billion dollars in loses, and this even prior to introducing their direct to customer company. And then we have Verizon Media revealing sweeping layoffs which represent an exit from some of the core entertainment service and technology organisations that were operating under the Oath umbrella.
And obviously there isn't a reporting period that passes where the cord cutting numbers haven't grown, which puts increasing pressure on the video side of the service provider business.
Netflix stock is on the rise once again, allowing the company to invest in material at levels that should mystify their rivals. And then we have news of PlutoTV selling for a mouth watering $340 million dollars in cash to Viacom (offer was revealed on January 22, 2019), proving that the AVOD service model can be viable and quite valuable.
5G is going to conserve all of us, right?
This is where I wish to get in touch with the massive investments being made in 5G and provide my point of view on why 5G might well break some video companies while at the same time make others.
Let's take a look at AT&T.
So in the last 4 years AT&T has included 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 staggering number was the outcome of the 2015 purchase of DirecTV.
My point is not to break down the AT&T financial obligation numbers, I'm not an expert, however rather offer a viewpoint that the monetary circumstance for AT&T going into its massive 5G investment cycle, while at the same time making known their tactical effort to develop up their video service capability through Warner Media direct to customer offerings like HBO, and DirecTV, is going to be challenged, unless they do something really different with video.
What can a service provider like AT&T do to address the economic squeeze, and the overall headwinds to the video service? Such as declining pay TV subs, and fragmenting OTT service offerings. This is the concern on numerous minds who are evaluating the future of the video company.
It is my strong belief that common high speed mobile networks powered by 5G will unleash a video tsunami of traffic on the network like we've never seen before.
This will be good news for the PlutoTV's of the world and other innovative video services like Quibi who will be able to reach more customers with a much better quality experience as a result of having the ability to utilize a faster network thanks to 5G.
It's bad news for network operators without a strategy to monetize this additional traffic load, and of course incumbents who are hoping to get by with incremental improvements to their services; such as switching from managed to unmanaged, or OTT circulation, while continuing to use aging video requirements like H. 264 to provide low resolution mobile profiles.
Video suppliers who continue to under serve their clients will rapidly be at a drawback, and ripe for disturbance, I think, from brand-new company designs such as AVOD and the latest and most effective video technologies.
The four character video technology that may conserve the video organisation.
The 4 character video standard that I believe will play an essential function in the success of the video company is HEVC, the video codec that is now deployed on two billion gadgets. The following slide discussion offers numbers concerning HEVC device penetration which are worth seeing.
There has actually been much discussed HEVC royalty concerns, something that activated advancement of an alternative codec which presumably is royalty totally free. While some in the market ended up being preoccupied with concerns around licensing and royalties, major developments have actually been made on the legal front, consisting of almost every CE gadget manufacturer consisting of HEVC playback support.
For example, HEVC Advance waived all royalties for digital circulation of content. This indicates, HEVC encoded content that is streamed will just carry a royalty for the hardware decoder and this is currently covered by the receiving gadget. Provided that you are providing bits over the wire and not via a physical system such as Blu-ray Disc, your business will not need to pay any extra royalties, at least not to HEVC Advance.
Now, if it's any convenience, the companies who have actually currently done their due diligence on the royalty concern, and are streaming HEVC content to customers today, include: Amazon, Comcast, DirecTV, Meal Network, Netflix, Sky, Sony, Vudu, Vodafone, and Orange, just among others.
What about HEVC playback support?
This is an excellent and important concern and perhaps the area of advancement around the HEVC environment that is least known or comprehended.
Starting with at home playback, if your users have acquired a TV, game console, Roku click for more info box or Apple TV in the last 3 years, you can be almost guaranteed that support for HEVC exists without any requirement for additional licensing or player upgrade.
HEVC is now resident in nearly every SoC that enters to any mid to high-end CE video gadget. Since 2015, market reports show this group of items numbers 400 million. That's 400 million gadgets that support HEVC natively. It's a great start, however what about mobile?
The data company ScientiaMobile maintains the largest dataset of network gadget access profiles by receiving data from the biggest cordless operators on the planet. This company reports that a massive 78% of all iOS smartphone requests come from gadgets that support hardware-accelerated HEVC decoding. And though iOS gadgets are predominant in the majority of industrialized markets, Android is still a very crucial device profile, and here the ScientiaMobile information is extremely encouraging with 57% of Android smartphone demands coming from gadgets that support HEVC decoding.
And given the HEVC gadget penetration and hardware support any worries about a premature move to HEVC are not necessitated. What other aspects verify the concept that HEVC will be a booster to the video service?
LiveU just recently published a report called 'State of Live' that revealed growing patterns in HEVC broadcasting, specifically worldwide of sports. And just in case you have ideas that using 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.
The report mentioned that the high HEVC usage was a direct reflection on the increasing need for professional-grade video quality, a trend that was plainly obvious at the 2018 FIFA World Cup in Russia.
So what does this mean for the industry?
The patterns we simply took a look at expose that we have an ever more requiring customer who wants material that shows off the complete capabilities of their seeing device, which suggests higher resolutions and advanced video standards like HDR. However, this exact same user is now taking in more content, which contributes to more congesting the network.
This customer consumption pattern is hitting a shift from handled services to unmanaged, or OTT distribution and creating technical stress inside incumbent service operators who are dealing with technical shifts and company design fracturing. Exceptionally, in spite of a very clear hazard to the incumbent services who are seeing video subscriber loses mounting into the numerous thousands over simply a few short quarters, some are continuing with the status quo even while new entrants are releasing services that give the consumer more for less.
This is where completion of the story will be composed 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 standard that is set to interrupt a lot of the standard operators and early OTT streaming services. Not because the consumer knows the distinction in between H. 264, VP9, or even HEVC, however because the customer is becoming aware that much better quality is possible, and as they do, they will move to the service who provides the best quality affordably.
At Beamr, we believe that the proof of our product and technology excellence need to be experienced and not just talked about. Which is why we've put together the best offer that we have actually seen in the market where you can use our codecs in combination with our VOD transcoder, 100% totally free.
HEVC is now resident in almost every SoC that goes in to any mid to high-end CE video device. These 2 numbers are where the photo of HEVC as the most sensible video standard to follow H. 264, begins to take shape. Here we have major video distributors and tech companies currently encoding and distributing content in HEVC. And given the HEVC gadget penetration and hardware support any concerns about a premature relocation to HEVC are not necessitated. What other elements validate the concept that HEVC will be a booster to the video company?
You can try Beamr's software video encoders today and get up to 100 hours of complimentary HEVC and H. 264 video transcoding monthly. CLICK HERE
Published by: Mark Donnigan