Get the original LinkedIn article here: The Best of Times & Worst of Times in the Video Business
Mark Donnigan is Vice President of Marketing at Beamr, a high-performance video encoding technology company.
The Video Business is in the Best of Times or the Worst of Times? Mark Donnigan VP Marketing at Beamr
Can a 4 character technology conserve us?
This is an interesting question since there is a paradox emerging in the video company where it seems like the the best of times for lots of, but the worst of times for some.
Here we have Disney revealing that they have actually already accrued one billion dollars in loses, and this even prior to launching their direct to consumer organisation. And then we have Verizon Media announcing sweeping layoffs which represent an exit from a few of the core 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 cord cutting numbers haven't grown, which puts increasing pressure on the video side of the service supplier company.
Netflix stock is on the rise once again, permitting the company to invest in material at levels that need to baffle their rivals. And then we have news of PlutoTV selling for a mouth watering $340 million dollars in cash to Viacom (deal was announced on January 22, 2019), showing that the AVOD organisation design can be practical and quite valuable.
5G is going to conserve all of us, right?
This is where I want to get in touch with the enormous investments being made in 5G and provide my viewpoint on why 5G may well break some video companies while at the very same time make others.
Let's look at AT&T.
So in the last 4 years AT&T has actually included 80 billion dollars of additional debt leaving it with more than 160 billion dollars of short and long term financial obligation. 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 financial obligation numbers, I'm not an analyst, but rather offer a viewpoint that the monetary circumstance for AT&T entering into its massive 5G financial investment cycle, while at the same time making understood their strategic initiative to develop their video service capacity through Warner Media direct to customer offerings like HBO, and DirecTV, is going to be challenged, unless they do something really various with video.
What can a service company like AT&T do to resolve the economic squeeze, and the general headwinds to the video service? Such as decreasing pay TELEVISION subs, and fragmenting OTT service offerings. This is the question on lots of minds who are evaluating the future of the video business.
It is my strong belief that common high speed mobile networks powered by 5G will let loose a video tsunami of traffic on the network like we've never seen before.
This will be great 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 much faster network thanks to 5G.
But, it's bad news for network operators without a plan to monetize this additional traffic load, and obviously incumbents who are intending to manage with incremental enhancements to their services; such as changing from handled to unmanaged, or OTT circulation, while continuing to utilize aging video standards like H. 264 to deliver low resolution mobile profiles.
Video distributors who continue to under serve their customers will quickly be at a disadvantage, and ripe for disruption, I believe, from new business designs such as AVOD and the latest and most effective video technologies.
The four character video innovation that might conserve the video organisation.
The 4 character video requirement that I believe will play an essential role in the success of the video business is HEVC, the video codec that is now deployed on 2 billion gadgets. The following slide presentation offers numbers concerning HEVC device penetration which are worth seeing.
There has been much blogged about HEVC royalty issues, something that set off development of an alternative codec which presumably is royalty free. While some in the market became preoccupied with concerns around licensing and royalties, major developments have actually been made on the legal front, including nearly every CE gadget producer including HEVC playback assistance.
HEVC Advance waived all royalties for digital circulation of content. This suggests, HEVC encoded content that is streamed will only bring a royalty for the hardware decoder and this is already covered by the getting device. Offered that you are delivering bits over the wire and not through a physical system such as Blu-ray Disc, your company will not need to pay any additional royalties, a minimum of not to HEVC Advance.
Now, if it's any comfort, the business who have already done their due diligence on the royalty question, and are streaming HEVC material 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 crucial question and possibly the location of development around the HEVC community that is least recognized or understood.
Beginning with in-home playback, if your users have actually purchased a TELEVISION, video game console, Roku box or Apple TV in the last 3 years, you can be almost ensured that support for HEVC is present with no need for extra licensing or player upgrade.
HEVC is now resident in nearly every SoC that goes in to any mid to high-end CE video device. Because 2015, industry reports show this group of products numbers 400 million. That's 400 million gadgets that support HEVC natively. It's a terrific start, but what about mobile?
The information company ScientiaMobile keeps the largest dataset of network gadget gain access to profiles by receiving data from the biggest cordless operators on the planet. This company reports that a tremendous 78% of all iOS mobile phone requests come from gadgets that support hardware-accelerated HEVC decoding. And though iOS gadgets are primary in a lot of developed markets, Android is still an incredibly important device profile, and here the ScientiaMobile data is extremely encouraging with 57% of Android smart device demands originating from gadgets that support HEVC decoding.
These two 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 suppliers and tech business currently encoding and dispersing content in HEVC. And provided the HEVC gadget penetration and hardware support any stress over a premature transfer to HEVC are not warranted. What Mark Donnigan other aspects validate the idea that HEVC will be a booster to the video service?
LiveU recently released a report called 'State of Live' that revealed growing patterns in HEVC broadcasting, particularly worldwide of sports. And simply in case you have ideas that making use of HEVC is a passing pattern on the way to some alternative codec, think about that in 2018, 25% of all LiveU produced traffic was streamed using the HEVC video standard while the only other codec used was H. 264.
The report stated that the high HEVC use 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 trends we simply analyzed reveal that we have an ever more demanding consumer who desires material that reveals off the full abilities of their seeing device, which suggests higher resolutions and more sophisticated video requirements like HDR. But, this exact same user is now taking in more material, which adds to additional crowding the network.
This customer usage pattern is clashing with a shift from handled services to unmanaged, or OTT distribution and developing technical stress inside incumbent service operators who are facing technical shifts and organisation model fracturing. Exceptionally, in spite of a really clear threat to the incumbent services who are seeing video subscriber loses mounting into the hundreds of thousands over simply a few brief quarters, some are continuing with the status quo even while brand-new entrants are introducing services that give the consumer more for less.
This is where completion of the story will be composed for some as the finest of times, and for others as the worst of times.
HEVC is more than an innovation enabler. It's a video requirement that is set to disrupt many of the traditional operators and early OTT streaming services. Not since the customer knows the distinction in between H. 264, VP9, or perhaps HEVC, but since the customer is realising that much better quality is possible, and as they do, they will migrate to the service who delivers the best quality economically.
At Beamr, we think that the proof of our item and technology quality should be experienced and not simply discussed. Which is why we have actually assembled the best offer that we have seen in the industry where you can use our codecs in combination with our VOD transcoder, 100% for complimentary.
HEVC is now resident in practically 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 rational video requirement to follow H. 264, begins to take shape. Here we have major video suppliers and tech companies currently encoding and distributing material in HEVC. And given the HEVC gadget penetration and hardware support any concerns about an early relocation to HEVC are not necessitated. What other aspects validate the concept that HEVC will be a booster to the video service?
You can experiment with Beamr's software video encoders today and get up to 100 hours of free HEVC and H. 264 video transcoding monthly. CLICK ON THIS LINK
Author: Mark Donnigan