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Blog By Guy Bisson

By Guy Bisson
Research Director, Television, IHS Screen Digest

Serendipitous investments spell a win, win for cable

The majority of UK television channels could save money on their standard-definition broadcast costs by using Over-The-Top (OTT) Unicast to fulfil their actual viewing demand rather than the most cost effective broadcast technology. That was a key finding in a recent report we produced as a follow up to our earlier analysis that showed scaling OTT delivery to platform levels was not cost effective at current cost levels.

These two findings place the cable industry in an interesting position. On the one hand cable (and other multichannel broadcast platforms of scale), can remain confident that in the near-term, OTT-only competitors will face rapidly scaling costs when trying to replicate a full-service pay TV offer (and even more so when HD is considered). On the other hand, low-consumption channels may soon be considering whether a switch to OTT distribution as primary means of reaching the end consumer is starting to make sense.

As with many things in business, threat is opportunity and opportunity, threat. The threat: longer term, OTT distribution will begin to provide an alternative to closed network multichannel for individual channels wishing to reach a mass audience. But if the threat is clear, the opportunity is three fold. Opportunity lies in the positioning of cable as a platform for distributing OTT content, both to the end consumer, but also in the business-to-business segment of the TV distribution value chain, working with channels to distribute their signal as a CDN and last mile channel.

And what makes the situation so interesting today is through the miracle of happenstance, cable finds itself in an ideal position to fulfil these roles. Happenstance because the infrastructure investments made by cable operators in fibre and DOCSIS 3.0 where not done to facilitate OTT delivery but to diversify revenue streams when the core business of television was under increasing competitive and price pressure. And just how far cable has come from its days as a distributor of television only is evidenced in the fact that as of 2012, nine of the 27 markets in the European Union derive more cable revenue from telecoms services than from television.

For channels themselves, the reality of the business is that a switch today to only OTT Unicast delivery would be commercial suicide for all but the most niche of channels. Success in the TV channel business still requires reach. And the other factors that go into the reach equation, notably consumer behaviour and service availability, are still lacking.

OTT costs today are not substitutive and will remain incremental on broadcast for the near to medium term. The burden placed by the need to meet increasing OTT demand on larger-consumption channels, which must maintain fixed broadcast costs, is thus potentially onerous.

For business, that means there will be increasing demand for a solution to these costs as OTT consumption continues to scale. The larger the channel, the bigger the problem. The future of broadcast infrastructure provision will thus rely on finding a way to bundle flat-rate OTT delivery with some form of broadcast distribution for the scheduled feed.

For cable finding a way to capitalise on that long-term future will pay dividends. With a wired network, consumer-facing ISPs and an increasingly strong stake in the distribution of multiscreen content around the home, cable is a long, long way down that path already. The rationale for major take-overs that bolster pan-European footprints like the recent proposed take-over of Virgin Media by Liberty Global, start to take on a whole new perspective beyond the usual analysis of free cash flow and business synergies when this future is considered.

*  * *

Guy Bisson will present industry ‘Facts and Figures’ on Day 2 of Cable Congress. View the latest agenda here.

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Rovi creates innovative technologies that connect people and digital entertainment. Reaching millions of consumers through popular applications, devices and websites, Rovi helps global consumer electronics manufacturers, service providers, content producers, retailers and advertisers provide a better entertainment experience at home and on the go. With unparalleled entertainment data, industry-leading media guides and storefronts, high quality video playback solutions, a multi-platform interactive ad network and more, Rovi covers the digital entertainment ecosystem with both custom and cloud-based products that bring consumers closer to the TV shows, movies, music and games they love. Learn more at www.rovicorp.com

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TiVo, the leading consumer TV product provider, offers best in class user-interface, enterprise video services and seamless delivery of broadband and broadcast content to every video screen in the home. TiVo’s intuitive experience offers consumers the ability to effortlessly aggregate, search and navigate one user interface to enjoy the best digital entertainment content available today. For pay TV operators, TiVo delivers proven financial benefits with increased ARPU, higher customer satisfaction and reduced churn. The TiVo hosted service provides a whole home solution across TV, mobile and tablet platforms, in addition to traditional set-top boxes.  Distribution partners include:  Cable One, Charter, Comcast, Com Hem, DirecTV, GCI, Grande, Mediacom, Midcontinent, Ono, RCN, Suddenlink, and Virgin.


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With more than 40 years of innovation in the IC industry, Intel brings the benefits of its established CPU architecture and its world-leading process technology to the cable industry in the form of system-level ICs for data and video gateways. High performance Intel®AtomTM processors at the heart of its cable gateway System on Chip products are delivering an exceptional user experience, with proven Intel®AtomTM processor virtualization technology set to further accelerate the way service providers can deliver and monetarise new services. Intel is proud to be a sponsor of the 2013 Cable Congress. www.intel.com

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NAGRA, the digital TV division of the Kudelski Group, provides security and multiscreen user experience solutions for the monetization of digital media. It offers content providers and DTV operators worldwide with secure, open, integrated platforms and applications over broadcast, broadband and mobile platforms, enabling compelling and personalized viewing experiences. Please visit www.nagra.com/dtv for more information and follow us on Twitter at @nagrakudelski.

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Teleste is an international technology group providing HFC and deep fibre solutions and comprehensive network planning and maintenance services for leading cable operators in Europe.

In 2012 our net sales was EUR 194 million and Teleste employed 1325 persons

The company is listed on the NASDAQ OMX Helsinki Ltd.

Visit www.teleste.com for more information.

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Farncombe is the leading independent specialist digital TV consultancy, providing world-class strategic advice, engineering and design services to clients across the digital TV and entertainment value chain. Farncombe’s experience in digital TV is unrivalled, focusing on the commercial opportunities in multi-platform, multi-screen and hybrid IP TV delivery. Founded in 1991, the company now has offices in the UK, France and Germany, and is recognised as an innovator driving the industry forward and the ‘go-to’ source for independent and authoritative strategic counsel. Farncombe’s international client roster includes amongst others: Arqiva, Broadcom, BSkyB, BT, Irdeto, Kabel BW, NAGRA, NDS, Ofcom, SABC, Top Up TV, UPC and YouView. For further information, visit www.farncombe.com.

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