Hybrid TV is it the future of Pay TV services?

Transcription

1 1 Hybrid TV is it the future of Pay TV services? A white paper by March 2014

2 contents INTRODUCTION Hybrid TV Broadcast and Broadband Together Broadcast TV is content limited OTT TV via broadband enables a potentially unlimited content offering TV Everywhere had driven creation of OTT infrastructures Pay TV operators bring OTT to their STBs Hybrid The Best of Both Hybrid TV is a natural evolution Hybrid TV enables advanced consumer features Hybrid Technologies can transform DTT from Free to Pay Without Hybrid, DTT is not suitable for pay services Hybrid TV introduces Premium content to DTT Hybrid TV reduces operating overhead... 3 Virtual TV operators are smarter than Smart TV Smart TV devices lack infrastructure for Pay TV operations Apps are the beginning not the end For Hybrid TV to succeed it must stay true to being TV Content Integration is the Key... 4 Hybrid Operators need a Smart Cloud The Disruptive Differentiator is in the Cloud Examples of Market Disruption Hybrid TV enables new entrants Hybrid TV benefits multiple types of organisation Virtual Operators can compete on Content Value added services TV Everywhere... 6 Becoming a Hybrid TV operator Turn-key offerings and the Virtual Operator npvr TV Everywhere Billing & CRM Choosing an Operating Partner... 7 CONCLUSION: Hybrid is the new TV standard... About Vidmind

3 3 introduction It is now over 5 years since, in 2008, Yahoo and Intel worked together to launch their first widget-powered Connected TVs, and Roku announced a Netflix enabled streaming video player. When Connected TVs and Over-The-Top (OTT) broadband set-top-boxes began to appear, many industry observers predicted the death of the Traditional Pay TV operator. They predicted that consumers would cord-cut i.e. cancel their Subscription TV service and instead turn to the unlimited resources of the Internet. Five years on, we see Pay TV operators all over the world now leading the market with OTT distribution, and the Pay TV business being as healthy as ever. This paper explores why OTT enables, rather than cannibalises, the Pay TV sector. It shows how positive change has come for the Pay TV sector by embracing so-called Hybrid TV technologies, bringing together the best of Broadcast and Broadband distribution to create compelling consumer services. The Paper continues by showing how Hybrid TV technologies now blur the boundaries between the Pay and Free TV sectors, and lower the barriers to allow new entrants to enter the market as Virtual TV Operators. The Paper concludes by looking at how both traditional Pay TV operators and new entrant Virtual Operators can efficiently implement Hybrid TV to expand their reach and their consumer offering.

4 4 1 hybrid tv broadcast and broadband together 1.1 broadcast tv is content limited Broadcast technology is efficient as a one to many mechanism for getting the most popular TV to everyone who wants it. However, due to technical and legislative issues, capacity varies between Satellite, Cable and Digital Terrestrial Television (DTT). Partly due to these capacity constraints, there are currently very few Pay TV services around the world that make use of DTT distribution. For the most part, if you are a Pay TV customer, you are on Satellite, Cable or perhaps IPTV. For Pay TV operators, the breadth and depth of the content offering is crucial to success, and the content available, traditionally, has been about channel capacity. Being able to expand channel capacity allows an operator on Cable or Satellite to grow their offering seamlessly with demand. Many operators now offer literally hundreds of channels, often with repeats and plus 1 time-shifted versions of popular channels. Once the investment is made in Satellite or Cable broadcast capacity, the incremental capacity based infrastructure cost of adding a subscriber is negligible compared to the potential revenues. IPTV operators implementing technology in their own network can also be in control of expanding their IP delivered channel line-up, however they have a harder challenge to expand, as they are at a two-fold disadvantage. Firstly, compared to Cable and Satellite, they have the highest incremental infrastructure cost per subscriber, and secondly they have the limitation of only being able to deliver TV to customers on their own IP network. In many cases, IPTV operators are now turning to Hybrid TV to avoid these limitations.

5 5 1.2 ott tv via broadband enables a potentially unlimited content offering Broadband is capable as an any place on-demand solution. Due to its point-to-point nature, capacity is only used when someone is watching; meaning capacity allocated is proportional to usage rather than the amount of content provisioned. Since the Internet, and indeed OTT s strength is that distribution capacity is only used when someone is watching, it can provide a potentially unlimited choice of content, making it ideal for delivering unicast (one to one) Video-on-Demand services. It is also ideal for delivering live channels to small audiences. Satellite Cloud TV hybrid tv is when both broadcast and broadband content distribution technologies are integrated into a single tv viewing proposition 1.3 tv everywhere has driven creation of ott infrastructures Pay TV operators have often made additional revenues from whole home solutions, deploying second set-top boxes to the home. Sky renamed their clumsy Low Cost Second Subscription from Sky to be Sky Multiroom, and provided a second set-top box to their customers who wanted to watch their package on more than one TV. In more recent times, consumers have increasingly turned to their connected tablet computers, such as the ipad, for second screen viewing, often because they prefer their portability and form-factor to that of a second set-top box when away from the primary TV screen.

6 6 Mature Pay TV operators are serving this demand by providing second screen TV Everywhere apps authenticated against the primary Pay TV subscription. They find it worthwhile to invest in a new OTT streaming infrastructure rather than focusing on traditional Set-Top boxes in the home. While these mobile devices lack traditional Broadcast TV technologies, they excel at decoding OTT delivered content, and can deliver the quality of service that is expected for Pay TV. 1.4 pay tv operators bring ott to their stbs Pay TV operators look to enhance and strengthen their primary offering with additional content and relevant features. With an investment in OTT infrastructure for the second screens, many then integrate OTT into their primary set-top boxes, making them true Hybrid TV offerings. In the UK, a country often watched for trends in TV technology, both Sky and Virgin have - within a space of just 2 years - enabled millions of homes with Hybrid Primary Screen offerings. The launch of Virgin s OTT/Cable hybrid TiVo, and with Sky s new broadband enabled HD+ boxes, now allows OTT on-demand and catch-up services on the most popular set-top boxes in UK homes. 1.5 hybrid the best of both Hybrid TV devices, whether using Satellite, Cable or Terrestrial broadcast capacity, add additional content delivered over Broadband Internet. Hybrid TV devices have both a tuner and an Internet connection, and use both sources to access TV content. These devices make the best use of both sources, using Broadcast TV technologies for popular content and Broadband TV technologies to offer a wide choice of on-demand and linear content. So who are the winners and why? Existing Satellite operators benefit from being able to expand their premium content offering with Video on Demand (VoD), often for the first time. Also using DTT/OTT hybrids, they can expand their customer base into the traditionally free DTT sector. Using DTT/OTT Hybrids, IPTV and Cable operators can also move beyond the boundries of their own physical networks, gaining new customers geographically beyond their traditional footprint. Finally, consumers benefit from advanced features, such as multiscreen, time shifting and personalisation, typically with a more integrated overall proposition. Hybrid TV does not only enable Satellite, Cable and IPTV operators to offer premium content to

7 7 the DTT sector, it also allows new entrant Virtual Operators to do so too, combining live free to air TV channels with premium VOD. It is clear that both Broadcast and Broadband distribution have their sweet spots in terms of the efficiency of content distribution, and so combining their strengths is logical. On their own, both pure broadband and pure broadcast systems have weaknesses. So OTT is not evolving as an alternative TV distribution model, but as an enabler for all. It is a step change in the ability of operators to deliver their core value proposition the range and depth of content choice to consumers. As such, it qualifies as a new generation of TV - it enables content and features otherwise not possible. 1.6 hybrid tv is a natural evolution The emergence of Hybrid or Connected TV services actually follows a continuing trend in TV technology. As technology changes in TV is seems to follow the cycle of improvement: better pictures - more content. Hybrid TV is a Natural Evolution B&W to Color Analogue to Digital SD to High Definition Disconnected to Connectd Better Picture More Content Better Picture More Content hybrid tv is possibly the most significant change to tv since the move from analogue to digital Hybrid TV, when implemented properly, is a true 4th generation change to the core technology of TV since it continues the cycle of providing greater content choice. This explosion of content, is as significant as was last seen with the evolution from Analogue to Digital transmissions. With the birth of Digital we first saw a need for an electronic programme guide or EPG to navigate the large array of new channels available. Likewise, Hybrid TV is changing the look and feel of TV, as viewers need new paradigms to navigate the additional content available.

8 8 1.7 hybrid tv enables advanced consumer features As well as changing the look of TV, the flexibility of having Internet technologies integrated into TV devices, also enables a range of new and sophisticated end-user features. The use of personalisation for example, allows an operator to actually understand the needs and viewing habits of individuals, and tailor the content and proposition to fit, an idea that is impossible with pure broadcast technologies. ott enables place shifting Consumers live increasingly mobile lifestyles. Having content on demand enables viewers today to be able to start watching a show on TV at home, and then finish watching it on a second screen such as an ipad - wherever they are. Using OTT enabled second screens also allows viewers to discover content while on the move and queue it up to be watched later on the big screen. ott enables better time shifting Consumers are increasingly time poor. Having multiple devices all connected, enables viewers to take charge of their entertainment time, for example by being able to record a TV show remotely so they can watch it later on any of their TVs or devices. Sometimes they may want to manage or even view their TV recordings while away from home. connectivity enables social tv Consumers today are social. Viewers place a lot of value on being able to read reviews and see ratings from their community. They are also willing to socialise what they like and dislike. Recommendations from friends, or even simply choosing to watch the same things as their friends, become possible on connected devices. TV has traditionally been a shared experience in the home. With connected devices, true Social TV becomes possible for the first time. search and discovery Being connected transforms the content discovery experience, and enables many new ways for the right thing to watch to find the right viewer. All TV operators understand that making it easy for viewers to find the content they want to watch, significantly benefits their core value proposition.

9 9 2 hybrid technologies can transform dtt from free to pay 2.1 without hybrid, dtt is not suitable for pay services Traditionally the spectrum, and therefore the diversity of channel line-up available on DTT is controlled by governments or regulators. As such, any operator using DTT has the same core channel line-up as any other competitor, and is unable on DTT alone to change this via additional investment in the broadcast transmission network. The diversity of receivers available in a market also make it difficult to implement Conditional Access Technologies (CAS) on DTT, making it unsuitable for the transmission of premium, or subscription channels. These factors have lead to DTT being a largely Free to Air distribution technology, previously unsuitable for Pay TV operations. 2.2 hybrid tv introduces premium content to dtt The introduction of Hybrid technologies into the DTT sector enables differentiation, bringing together DTT channels and additional content from both Video on Demand and IP channels. It changes DTT into a segment of the TV market that is now capable of delivering differentiated premium content offering. Broadband only (OTT) boxes are used as secondary devices, in the same way as a traditional DVD player. DTT only boxes are not generally suitable for premium content. However, the DTT/OTT Hybrid device can bring core channels and premium content as well as catch up and NPVR services to the primary viewing screen of the home. The DTT/OTT Hybrid model makes use of OTT technologies to provide the depth, diversification and security necessary for a premium content offering, while at the same time using traditional DTT technologies to provide the must have popular channel line-up.

10 hybrid tv reduces operating overhead We can conclude that a new or existing Operator embracing OTT/DTT Hybrid TV has some significant benefits over the traditional pure Pay TV operating model; Unlike pure Satellite and Cable systems, the Infrastructure and Bandwidth needed for the core channels on Hybrid do not need to be factored into the operational costs, since this is already provided. The OTT bandwidth available for premium and on demand content can be made available to consumers nationally; independent of whom they choose as their ISP. OTT infrastructure can be shared between the Primary and Second screens, allowing the operator to enable advanced consumer features, such as place-shifting, and achieve a better return on their investment In fact, the combination of Free-to-Air TV channels and Premium OTT content delivery provides, for any TV operator, the lowest possible infrastructure costs, and the least barrier to expansion ever seen in the TV industry - while also delivering an advanced consumer experience. Crucially, it is also possible for a new TV Operator to overlay their service on top of the already provisioned infrastructures of OTT and DTT. We call such an operator a Virtual Operator since they avoid investing in a their own distribution network.

11 11 3 virtual tv operators are smarter than smart tv 3.1 smart tv devices lack infrastructure for pay tv operations Smart TV systems from the main manufacturers are viewed by some as an attempt to become a Virtual Operator in the DTT space. So it is worth understanding what obstacles have prevented them from achieving this status. Smart TV Diagram TV Channels Apps EPG localisation A virtual operator must have a way of monetising the OTT portion of the overall content offering on the TV. Smart TV systems have generally failed to integrate country specific in-app or in-store billing systems allowing them to charge for Premium content. Their global product strategy often prevents them localising their offering with a local content and an advertising eco-system. viewer experience The user experience delivered by these Smart TV tends to be less than that required for a Virtual Operator offering, because they fail to unite content discovery into a single branded interface. Instead, each app tends to have its own walled garden of content and discovery tools, which work completely independently of the main Programme Guide of the TV. These limitations really position their Smart TV offerings as a Platforms for Others rather than an integrated offering that could qualify as a Virtual Pay TV operator.

12 apps are the beginning not the end Consumers love to have choice but they hate to choose. Apps can be a good value add when they carry a strong consumer brand (such as NetFlix and YouTube) and compliment the core content proposition by containing content that otherwise would not be available. However their utilisation for the consumer is dependent on how well the Virtual Operator is able to integrate content discovery from 3rd party apps into the core TV experience. The increasing range of OTT content being available via a Smart TV is a consumer benefit, but without a single point for content discovery (for example global search and recommendations) the proposition ceases to be an integrated offering. Consumers are still spending the majority of their time watching normal TV, or in a single App (such as Netflix or iplayer) for which they already have a subscription. Often all other content and apps lie undiscovered. So apps are often needed by Virtual Operators, but do not make a Virtual Operator. 3.3 for hybrid tv to succeed it must stay true to being tv From a consumer s point of view, TV places Entertainment First, and Interactivity Second TV consumers watch video and interact only to change what they are watching. The web, however, places Interactivity first and Entertainment second - the consumer must first find and interact with a website or app, before being able to enjoy video content. The pure Apps experience is therefore too much like the web to really benefit an Operator, and many see this as a core difference between TV and the web. This difference can be clearly seen with the entertainment power of a TV channel, which continues to broadcast, and allows a consumer to watch all day long if they wanted. In contrast, the typical web or app experience forces the consumer to interact each time to choose what comes up next, and watch only one clip at a time. The challenge for any Hybrid TV Operator therefore is to manage and make OTT Video On Demand and Premium IP channels feel more like traditional TV. This is achievable and can be done with Internet enabled features such as global play lists, auto play, and virtual channels, as well as the integration of content discovery into the EPG.

13 content integration is the key If a Hybrid TV Operator is able to fully integrate premium OTT delivered video content into a core TV experience, and bill consumers in some way, then they truly have a TV Service offering that can succeed. This consumer benefit can be seen clearly when we compare App based Content Discovery with Media Based Content Discovery. App based content discovery, is more like the web than TV. Media based content discovery is more like TV than the Web. App based content discovery vs. Media based content discovery TV TV App Store Personalised Content Lists Change Search Search Play Content

14 14 By choosing a Hybrid TV strategy in the DTT sector, Operators blur the lines between Pay and Free, holding a subscriber relationship for TV on the Primary Viewing screen of the home, and benefiting from low infrastructure costs and recurring revenues. The market is especially open to this approach in geographical areas where paid services on DTT do not yet exist. DTT Cloud TV 2nd Screen Devices 4 hybrid operators need a smart cloud Managing the user experience, billing, content discovery, personalisation and metadata necessary to provide a fully integrated Virtual Operator experience requires more than a set of Smart Devices. Each device requires a Smart Cloud to support it. Network services such as a powerful search, recommendations and personalisation capability allow the overall Hybrid DTT/OTT offering to be integrated into a full TV service. Crucial to the Virtual Operator proposition is also the ability to use the Smart Cloud to monetise subscribers and viewers.

15 the disruptive differentiator is in the cloud Using a Smart Cloud and a Hybrid DTT/OTT hybrid set-top box, together with other devices, it is clear that a Virtual TV operator has many advantages over a traditional Pay TV operator, and also over a simple Smart TV manufacturer. We have seen that the capacity based infrastructure costs of a Virtual Operator are small when compared with Cable, Satellite or IPTV operations. Integrating 3rd party content discovery in to the core TV experience using a Smart Cloud allows them to offer the consumer a TV experience as good as, or in many ways better than a premium Pay TV Service. Via the Smart Cloud the Virtual Operator can decide which monetisation and content bundling options are best for their location and consumers, and can extract subscription, transaction and advertising revenues from the consumer relationship. In the Mobile Industry, this principle is already at work. Virtual Network Operators or VNO s operate a billing and subscription mobile telephone service - with their own tariffs and bundles - using a network provided by a 3rd party. Such VNOs, even when buying network capacity wholesale, are often able to beat the main telcos at their own game, offering pricing and mobile bundles that are not possible from the main Telco. In the UK for example, Virgin Mobile operates a VNO mobile offering for their customers, and offer 15/month unlimited texts/calls AND data. This is a consumer package that simply cannot be matched by Value, by many of the main network operators. In the same way, it is now possible for a Virtual TV Operator to launch a valuable TV Service and successfully compete with traditional Pay TV operations. 4.2 examples of market disruption YouView (UK) is an advanced product, including a Smart OTT/DTT hybrid Set-top box and a Smart Cloud which was specifically developed for the UK by some broadcasters and two ISPs. In the 18 months since launch, it has been installed in over 1.5 million UK homes, and has been so successful for the ISPs that they are confidently promoting it instead of their own IPTV services. In effect they have decided to focus only on Hybrid TV offerings. In addition, having such a platform has allowed them to invest in content, the most high profile deal being the acquisition of key football sports rights by BT, a deal that traditionally has always been secured by Sky. A true generational change is happening in the TV landscape, with 4th generation TV offerings bringing consumers the very best of Broadcast and Broadband content, delivered in a single easy to use package. This pattern is expected to repeat on a global basis, as organisations make use of the efficiency of Hybrid OTT/DTT technologies with Smart Cloud to launch their own Virtual Operator offerings.

16 16 5 hybrid tv enables new entrants 5.1 hybrid tv benefits multiple types of organisation Organisations, which already have either content portfolios, or subscriber relationships, or distribution outlets, are all possible beneficiaries of this revolution in the TV sector. isps and mobile operators For example, an Internet Service Provider can see great benefits in launching such a service. They already bill for a broadband subscription and have a subscriber base. By becoming a Virtual TV operator, they defend themselves from Pay TV operators offering triple play (Voice, TV & Broadband) bundles, while benefiting from increased contract terms and increased capacity charges on their broadband. Many mobile operators also offer broadband services. ISPs or Mobile operators factoring in the double benefits of reduced churn and increased revenues, as well as the marketing benefits of having a triple play of their own, quickly conclude that becoming a Virtual DTT/OTT TV operator makes sense. retailers Retailers with distribution and sales outlets across a country have the ability to sell an OTT/DTT device to their customers. By acquiring a TV customer base, and recurring revenue streams from advertising and subscription charges, they can transform a single product sale into a recurring revenue stream, and become a Virtual TV operator. Tesco in the UK are an example of a Retailer that already sells their own-branded TVs and set-top boxes. They also have web-based propositions for loyalty, banking and media. By becoming a Virtual Operator they bring these corporate assets together while strengthening their brand and customer relationships. It is logical therefore, for companies similar to Tesco to be looking into launching Virtual TV services.

17 17 content owners Netflix and Amazon are companies that have invested heavily in content rights. By becoming a Virtual TV Operator in a particular country, they will increase per-household revenues while decreasing churn, and strengthening their consumer relationships. Possibly the only thing currently stopping them doing so is their short term strategy to fight each other and obtain a foot hold in as many International territories as possible. When International expansion plateaus they will turn to Hybrid TV technology to defend their positions in each key geographical area they operate in. While Tesco, Amazon Netflix and various ISPs all ponder the opportunities that Hybrid TV gives them; the barriers to becoming a Virtual Operator continue to fall. Other organisations we will want to enter this new market in the next 18 months to gain first mover advantage in a territory. 5.2 virtual operators can compete on content For any Pay TV service, virtual or not, the content proposition is a key to success. The sophistication and maturity of the Smart Cloud supporting the Hybrid TV device determines the breadth and variety of content that can be integrated into the service. The sophistication of Hybrid TV technology allows the Virtual Operator the greatest flexibility and efficiency of any TV Service to create a balanced content offering likely to succeed in a particular territory. A Virtual Operator, using their Smart Cloud service can literally Pick and Mix content from the following sources to create their offering.

18 18 free channels To provide any form of competitive TV offering in a territory, it is common to include the most popular free-to-air TV channels. This is achieved via the DTT tuner capabilities of a smart set-top-box, and managed by the Smart Cloud. Uniquely for a Hybrid TV solution, the reception and provisioning of these channels can be done using the freely available infrastructure of DTT. The Smart Cloud can be used to differentiate the user experience when viewing these channels with a data-enhanced EPG and/or network based recording capability. premium channels Premium channels are normally provisioned on Hybrid TV solutions via IP. This simplifies the STB architecture by not needing Conditional Access systems, and allows the same subscription systems in the cloud to manage access to the IP channels and Video on Demand services. Streaming costs of the channels is normally offset by the subscription charges for the premium content they carry. 3rd party vod applications The ability to include applications for VoD from selected 3rd party providers is the key to being able to expand the content offering for the Virtual Operator. Typically these applications are authored for standards such as Android or HTML5/HbbTV. The Virtual Operator s set-top box should be specified to be standards based so as not to limit their ability to add these 3rd Party Applications. Applications such as YouTube have a brand value and identity, as well as a content offering which means they do not need to have their content indexed as part of the core TV s content discovery mechanisms. However the Smart Cloud should be able to ingest metadata, or federate search queries to the 3rd party, to integrate content discovery of TV content into the main proposition. Apps such as BBC iplayer and Netflix often make content metadata available for this purpose and the Smart TV Cloud must be able to index this content and deep link into the app if required to play the media selected by the subscriber. Typically these applications are available from 3rd parties seeking wider TV distribution, and sometimes come without an associated content charge, which benefits the Virtual Operator if they do not want to invest in their own content library. Virtual Operators can also often enter into a white label deal with VoD providers who are set up for B2B relationships.

19 19 1st party vod offerings In some territories, or if the Virtual Operator already has invested in a content library, the Smart Cloud should be able to manage the operator s own content via a Content Management System, that includes ingestion, provisioning, encryption, CDN and storage facilities. Via the Smart Cloud all content, (1st party or selected 3rd party) should be seamlessly integrated into the consumer s content discovery experience. 1st Party VoD services carry the ability to further differentiate the Virtual Operator from competition, and can carry higher revenue earning potential than 3rd party services, especially as the subscriber numbers grow. The ability to Mix and Match 1st and 3rd party content into the offering is another key advantage for the Virtual Operator, allowing them to manage expenditure on content to match their revenues and growth, and obtain early profitability. Typically the Operator can choose (based on sector competition and their business proposition) to offer the latest releases as Transactional VoD offering, library content as a subscription VoD services, or older content as an Ad funded on-demand. A sophisticated Smart Cloud solution will allow a mixture of all 3 commercial models. 5.3 value added services By carefully choosing the technology available for the Virtual Operator s set-top box it is possible to integrate a range of Value Added services. For example these devices can be used as SIP clients allowing IP telephony services to be deployed in the home, or be able to play Android Games and Home media as part of the offering.

20 tv everywhere As we have seen earlier, many traditional Pay TV operators have embraced SmartPhone and Tablet technology to provide viable second screen viewing of the service and therefore a multiroom solution, which can often be a chargeable feature. The Virtual DTT/OTT operator is ideally placed to offer these services, due to the infrastructure already provisioned for OTT media delivery to the set-top box. The Operator should ensure that the Smart TV cloud is fully capable of supporting such multidevice distribution, and should provide client applications for all popular devices in the territory. In many cases, in home, the mobile devices can also be used as an IP remote control to the settop boxes, allowing the sophistication of content discovery being made on the 2nd screen and content consumption still occurring on the main TV. The second screen is a great platform for Social TV services and content discovery. 6 becoming a hybrid tv operator In this paper we have seen that the technical and commercial advantages of becoming a Virtual TV Operator are compelling. We have also seen that the barriers to entry are falling, and it is possible for new organisations to enter the TV industry using these new developments. Now is the time to take a step-by step look at how to do it. 6.1 turn-key offerings and the virtual operator Integrating components from multiple vendors into a complete solution is a large technical challenge. Ideally, a new virtual operator, or an existing operator wanting to expand using DTT/OTT Hybrid TV technology, would look for a Turn-Key solution with all the components pre-integrated from a single vendor. Even more compelling would be if this integrated solution can be offered as a cloud based solution using a SaaS model.

21 21 Once the technical challenges are overcome, or possibly out-sourced, the new operator is free to focus on their content proposition, their marketing and launch strategy, customer acquisition and ultimately growth. In evaluating or integrating solutions, the operator should look for the following key components: smart set-top box Having a Smart STB as part of the offering is crucial to gaining engagement time with the consumer on the Main TV in the home. Pay TV operators have long realised that the value they can deliver to the viewer, and their perceived value by the consumer is almost in direct proportion to the engagement time in the home. Having a multi-functional STB is crucial to this strategy, and so is the choice of the technology used by it. Android is often considered the system of choice for advanced Hybrid TV devices, because of its maturity and apps portfolio. However to compete as a true TV product, a custom device must be sought, to add proper TV middleware to Android and re-skin the system with a consumer interface familiar to TV customers. Many new operators realise the need to be able to embrace applications and content from 3rd parties, and specify that their systems are compatible with both Android Apps and TV apps based on the latest TV browser technology. Some set-top boxes now use gyro enabled remote controls that allow apps designed for a touch interface to work properly on the TV. Some key STB features: Tuners. The tuners are essential to getting the benefits of DTT into the offering and engaging the consumer for the core TV proposition with low infrastructure costs. The Tuner type should be selected based on the standards of the territory, and to receive HD broadcasts that are compatible with the latest DVB/T2 standards. Apps Execution. The Apps environment(s) supported by the STB must be managed by the Smart Cloud, which enables the Virtual Operator to choose which 3rd party VoD propositions and Value Added Services to integrate into their offering. The apps execution environments may be extended to match the requirements of key targeted 3rd party content available in the Territory.

22 22 Home Media and USB Storage. In many territories it is common for viewers to want to access their own media from either network or USB attached storage devices. Most devices allow this by default, and in the future may be able to incorporate home media discovery into the main content discovery tools of the service. User Interface. The STB User Interface should be inherently multi-lingual and content integrated. It can be customised or re-styled as part of a project, but the key functionality of Live TV, integrated Content Discovery and VoD from the Smart Cloud should be at the heart of the viewing experience. smart cloud your service delivery platform Essential to the operations and deployment of a Virtual TV Operator is the choice of the Smart Cloud. The cloud-based functionality forms the heart of your service and it s flexibility and it s capabilities will be your toolbox for the service. Some key features to look for are: Content Management System. The Service Delivery Platform and back office systems, allow you to ingest and manage your own content assets, and integrate with CDN, DRM and play out facilities. Without this, the Virtual Operator will never be able to properly manage 1st party VoD services. Search and Recommendations. The system should manage all metadata from both 1st and 3rd party content when available. It should also drive enhanced TV listings and an Electronic Programme Guide (EPG). Using this data and consumer behaviour and profiles, it will be able to manage multiple forms of content discovery, including global search, Social TV and personalised recommendations. Live Channel Management. Fundamental to the proposition is the ability to enhance DTT channels with additional features and data, as well as integrate new premium IP channels. Ideally the system should allow 3rd party linear TV channels to be mixed seamlessly with broadcast DTT channels. Apps Management. In order to provision 3rd party apps and deep link to content from the discovery tools, the Smart Cloud should manage the apps available for the platform. These apps can be installed on the end user s device, or if they are browser based apps, be launched from different parts of the content discovery experience. Personalisation. The set-top box is a typically shared device, while second screens tend to be more personal. Personalisation is needed in order to provide a seamless experience across all devices, and to manage age restricted content discovery. User profiles enable advanced features such as pause and resume across devices, watch lists and viewing history.

23 23 Social TV. Particularly interesting in today s society, and bringing benefits in your service awareness and growth, is to enable a range of Social TV features. Using the Social activities of others enables additional content discovery and content ranking capabilities for all viewers. Typically different Social functions are implemented on the different screens, with content ranking being primary on the TV and sharing and discovery being key features on the second screens. 6.2 npvr In order to provide a low cost set-top box and still be able to enhance the Live TV experience with recording capability, network PVR can be implemented as part of the Smart Cloud. Having a network PVR infrastructure also allows you as a Virtual Operator to offer, with the suitable agreements, specific commercial features to DTT broadcasters, such as Catch-Up services when they are not provisioned via broadcaster apps. 6.3 tv everywhere Consumers enjoy a wide range of 3rd party mobile devices. These include ios (Apple s ipad and IPhone) and Android Touch (Smartphones). The system should have support for these out of the box and also be fully deployable to Personal Computers via a web based entertainment portal to be integrated into your site. The Smart Cloud solution can also enable live channels to be enjoyed on the second screen, where rights issues allow. 6.4 billing & crm Often forgotten is the need to integrate with leading billing and customer service solutions. The solution should allow the operator to provide a fully functional web or call centre based support infrastructure, to handle everything from technical support, to content queries and commercial transactions. Often territory or operator specific, the Smart Cloud s subscription and entitlements systems can also be integrated with a customer s own billing and CRM functions should this be required, and if they exist.

24 choosing an operating partner Becoming a Virtual Operator is attractive for many organisations, but the project work and operational overheads needed to behave like a TV Operator are often beyond the human resources or technical capabilities of organisations not already geared up for it. Therefore, the selection of an operating partner is perhaps the most important choice in becoming a Virtual TV Operator. Some partner organisations, such as ourselves, offer a Software as a Service solution allowing you to focus on the proposition rather than operations, further reducing the barriers for newentrants into the TV Business. By choosing the correct partner you can outsource most of the heavy lifting required to put the proposition together, and gain access to constant upgrades and new features.

25 25 conclusion: hybrid is the new tv standard Hybrid TV is TV delivered using the integrated capabilities of both broadcast and broadband distribution technologies. It requires a supporting smart cloud, and enables an explosion of additional content for the consumer. Hybrid TV is changing the core viewing experience of TV, which must change to enable the easy discovery of this additional content. This fundamental change is analogous to the way the viewing experience of TV changed with the move from Analogue to Digital transmissions. Hybrid TV benefits rather than cannibalises the whole Pay TV sector, as it provides a mechanism for operators to expand their content offering and their subscriber base. At the same time OTT technology is used to power a TV Everywhere offering for these operators, further differentiating their offering. Hybrid TV allows Pay TV operators, whether previously they had an on-demand capability or not, to expand their content offering and strengthen their consumer proposition. For Satellite Operators especially, it allows them to compete with traditional two way IPTV and Cable offerings, and offer on-demand services to their main set-top boxes. For IPTV and Cable operators it allows expansion beyond the footprint of their physical networks. hybrid tv has levelled the playing field, and enables new entrants to deliver pay services using dtt The biggest winner from Hybrid TV however is DTT, as Hybrid TV changes DTT into a sector that can support premium Pay TV services. It can blur the boundaries between Pay and Free. Hybrid TV lowers an operator s overall infrastructure costs and therefore gives new entrant Virtual Operators the opportunity to launch a TV service quickly and with the lowest ever barriers to entry. Becoming a Virtual Operator is becoming straight forward, as the Smart Cloud, Smart Device and pre-integrated components for a Service Delivery Platform are becoming available in the market on a white label, SaaS basis. Hybrid TV is the future of all TV. It is not simply an extra feature, but an explosion of content available to consumers and a step-change to capabilities and viewing experience of TV, which qualifies as a generational change for the industry. Hybrid TV can help you become a TV Operator and increase customer loyalty and revenues.

26 26 about vidmind Vidmind s turn-key service delivery platform, and suite of multi-screen devices, has been designed from the ground up to take advantage of these changes in the Industry. It provides virtual operators a cloud-based platform for delivering Pay TV and VOD. Whether you are an existing Pay TV operator, or a new entrant, you can benefit by partnering with Vidmind. Vidmind s Hybrid DTT/OTT cloud platform, Android STB and end user applications are available as a white label solution, which can be branded and customized to the specific needs of the virtual operators. For more information please visit about the author Ian Valentine has been at the centre of the convergence between broadcast and online content since In 2000, his company developed the first microbrowser for the Sky Digital platform, enabling TV Sites developed using Internet technologies to be deployed on millions of Sky set-top boxes. The company was fully acquired by Sky in Ian then worked for Sky to re-vamp Sky s loss making interactive TV services, launching betting and shopping services that were integrated with and contextual to linear TV channels. The these so called red-button services transformed Sky s Interactive offering from loss making in 2001 to being profitable by Since his time in R&D and Operations at Sky, he has been active in many Connected TV projects, including OTT Content Marketplaces, and he recently managed a 2 year project to develop and implement a Virtual Operator solution in Russia, which is now in field trials. Ian is based in London UK, and runs Connected Media Systems Ltd, an independent consultancy specialising in Broadcast and Broadband convergence.