Read the original LinkedIn article here: The Best of Times & Worst of Times in the Video Business
Mark Donnigan is VP Marketing at Beamr, a high-performance video encoding technology company.
Best & Worst of Times in Video Mark Donnigan Marketing Leader at Beamr
Can a four character technology conserve us?
This is an intriguing concern since there is a paradox emerging in the video service where it feels like the the best of times for many, however the worst of times for some.
Here we have Disney announcing that they have currently accrued one billion dollars in loses, and this even before releasing their direct to customer company. And then we have Verizon Media revealing sweeping layoffs which represent an exit from some of the core home entertainment service and innovation services that were operating under the Oath umbrella.
And naturally there isn't a reporting interval that passes where the cord cutting numbers have not grown, which puts increasing pressure on the video side of the service company business.
Netflix stock is on the rise again, allowing the business to invest in material at levels that must baffle their rivals. And then we have news of PlutoTV selling for a mouth watering $340 million dollars in money to Viacom (offer was announced on January 22, 2019), proving that the AVOD business design can be viable and rather valuable.
5G is going to conserve us all?
This is where I want to get in touch with the enormous investments being made in 5G and provide my perspective 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 four years AT&T has actually added 80 billion dollars of additional financial obligation leaving it with more than 160 billion dollars of short and long term financial obligation. 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 analyst, however rather provide a viewpoint that the financial scenario for AT&T going into its enormous 5G investment cycle, while at the very same time making known 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 different with video.
What can a service company like AT&T do to resolve the economic capture, and the general headwinds to the video business? Such as declining pay TV subs, and fragmenting OTT service offerings. This is the concern on many minds who are evaluating the future of the video organisation.
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 ever seen before.
This will be excellent news for the PlutoTV's of the world and other innovative video services like Quibi who will be able to reach more consumers with a much better quality experience as an outcome of having the ability to take advantage of a faster network thanks to 5G.
But, it's bad news for network operators without a plan to monetize this extra traffic load, and obviously incumbents who are intending to manage 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 customers will rapidly be at a downside, and ripe for interruption, I think, from brand-new business models such as AVOD and the newest and most effective video innovations.
The 4 character video innovation that might conserve the video service.
The four character video requirement that I believe will play a crucial function in the success of the video service is HEVC, the video codec that is now deployed on two billion devices. The following slide presentation provides numbers relating to HEVC gadget penetration which are worth seeing.
There has actually been much composed about HEVC royalty issues, something that activated advancement of an alternative codec which most likely 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, consisting of nearly every CE gadget producer including HEVC playback assistance.
HEVC Advance waived all royalties for digital circulation of material. This implies, HEVC encoded material that is streamed will just bring a royalty for the hardware decoder and this is already covered by the getting gadget. Supplied that you are delivering bits over the wire and not by means of a physical mechanism 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 already done their due diligence on the royalty concern, and are streaming HEVC content to consumers today, include: Amazon, Comcast, DirecTV, Dish Network, Netflix, Sky, Sony, Vudu, Vodafone, and Orange, simply among others.
What about HEVC playback assistance?
This is an excellent and crucial question and possibly the location of development around the HEVC environment that is least known or comprehended.
Beginning with in-home playback, if your users have acquired a TV, video game console, Roku box or Apple TELEVISION in the last 3 years, you can be nearly guaranteed that support for HEVC is present without any need for extra licensing or player upgrade.
HEVC is now resident in almost every SoC that goes in to any mid to high-end CE video device. That's 400 million gadgets that support HEVC natively.
The data business ScientiaMobile maintains the biggest dataset of network device gain access to profiles by getting data from the largest wireless operators in the world. This business reports that a massive 78% of all iOS smartphone requests originate from devices that support hardware-accelerated HEVC decoding. And though iOS devices are predominant in the majority of developed markets, Android is still a very important gadget profile, and here the ScientiaMobile data is very encouraging with 57% of Android smartphone demands coming from gadgets that support HEVC decoding.
And given the HEVC device penetration and hardware support any worries about a premature relocation to HEVC are not required. What other factors validate the concept that HEVC will be a booster to the video service?
LiveU recently published a report called 'State of Live' that revealed growing trends in HEVC broadcasting, especially worldwide of sports. And simply in case you have ideas that using HEVC is a passing pattern en route to some alternative codec, consider that in 2018, 25% of all LiveU generated traffic was streamed utilizing the HEVC video standard while the only other codec utilized was H. 264.
In truth, 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 apparent at the 2018 FIFA World Cup in Russia.
So what does this mean for the market?
The patterns we just examined expose that we have an ever more demanding customer who wants material that displays the full capabilities of their viewing gadget, which indicates higher resolutions and advanced video standards like HDR. However, this same user is now consuming more content, which contributes to additional congesting the network.
This customer usage pattern is clashing with a shift from managed services to unmanaged, or OTT circulation and creating technical stress inside incumbent service operators who are dealing with technical shifts and company design fracturing. Remarkably, in spite of a really clear risk to the incumbent services who are seeing video customer loses installing into the hundreds of thousands over just a couple of 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 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 interfere with a number of the traditional operators and early OTT streaming services. Not due to the fact that the customer understands the difference in between H. 264, VP9, and even HEVC, however due to the fact that the customer is realising that much better quality is possible, and as they do, they will Click Here to Learn More migrate to the service who delivers the best quality economically.
At Beamr, we believe that the evidence of our item and innovation excellence should be knowledgeable and not just spoken about. Which is why we have actually assembled the very best offer that we have seen in the market where you can utilize our codecs in mix 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 business already encoding and distributing content in HEVC. And given the HEVC gadget penetration and hardware support any concerns about a premature move to HEVC are not warranted. What other elements confirm the concept that HEVC will be a booster to the video business?
You can experiment with Beamr's software application video encoders today and get up to 100 hours of complimentary HEVC and H. 264 video transcoding each month. CLICK ON THIS LINK
Published by: Mark Donnigan