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360-degree video content and technology converge for a bright future

Adam Steel, Research Analyst, TV

At this year’s IBC, 360-degree video has had a major presence, with the BBC showing 360-degree pilots of the shows Walking With Dinosaurs and The Vic and Discovery CTO John Honeycutt hinting at plans for an immersive 360-degree video experience as part of Discovery’s 2018 Winter Olympics coverage. NASA has also been active in this space, teaming up with VR video company Harmonic to release a new 360-degree experience that shows astronauts in training for space walks.

IBC 2016 has also showcased a number of technological developments and partnerships which should make the creation and rollout of 360-degree content much more seamless. Sphericam – a fully spherical 360-degree video camera which records at 4K resolution, with automatic in-camera stitching and live streaming included – is one such development. But perhaps even more significant is the partnership between NeuLion and Nokia which will deliver a professional solution utilizing the NeuLion Digital Platform and Nokia’s OZO virtual reality camera and OZO Player SDK.

Through a spherical camera complete with eight sensors and eight microphones for seamless capture of 360-degree video, NeuLion and Nokia will offer content owners and content rights holders an end-to-end jointly integrated platform. This integration will create a single stitched live video feed from OZO cameras sent directly to NeuLion MC Encoders for the live encoding of sports and entertainment events – making the transmission of 360-degree video much easier. Such developments show how 360-degree video and technology are converging, allowing for those invested in it to really push the genre on.

Related research:

The Internet of Smartphone Things: Wearables, VR, 360-Degree Cameras, Robots, and Drones, TE0004-001092 (August 2016)

Apocalypse now for brand-led advertising?

Adam Thomas, Lead Analyst, TV

As IBC 2016 moved into the second day, the future of advertising continued to be high on the agenda. Dominique Delport, president of Vivendi Content, shared some of his company’s rather apocalyptic-sounding internal research, which he said showed widespread vulnerability among the world’s top 700 brands. He said that more than 500 of these brands could simply “die because people don’t care about them,” adding that he sees this trend as a sign that “the party is over” for existing advertising models. Meanwhile, in his keynote address, Sir Martin Sorrell, CEO at global advertising group WPP, commented on a related trend. In his own words: “Our clients are not interested in WPP's brands; they are interested in the best people in those brands.”

Ovum is all too aware of video advertising's “boring brand” problem. Advances in big data, analytics, and personalization all seem to offer the potential for every video advert to become something that every viewer really wants to see. The reality, however, is that the value of advertising is only realized when viewers are forced to watch ads they don’t want to see. Meanwhile, the more exciting brands (e.g. those around movies, clothing, sports goods, and consumer technology) can rely on less and less encouragement to get people to watch video ads about their offerings.

The most forward-thinking companies will direct their efforts towards creating their own media, fostering communities via social networks. This will turn customers into fans and even “ambassadors” of their brands. The implication for digital video platforms is that their sites will feature fewer ads about existing brands which people want to see, but more ads about those about “boring” brands which people don’t want to see.

Related research:

Video advertising’s next big challenge: boring brands, ME0002-000617(October 2015)

Global TV Advertising Forecasts: 2005–21, ME0003-000689 (June 2016)

Still many barriers to overcome in Iranian media

Ismail Patel, Research Analyst, TV

In his keynote address at IBC today, entitled “The Global View,” Sir Martin Sorrell gave a positive outlook on the potential offered by Iran, describing the country as offering “the biggest geographical opportunity since Vietnam.” He has previously described the largely Persian-speaking Middle Eastern country as “one of the last great untapped opportunities for global business.”

His positive words have been backed up with action. Kantar – WPP’s data investment management arm – signed an affiliation agreement with Iran’s Rahbar Bazaar market research institute in July 2016, giving WPP a unique foothold in the market.

WPP does not yet however have a direct presence in Iran. Even though WPP, as a UK company, is not bound by US sanctions, the fact that WPP has large American operations has de facto ruled it out from having a physical presence in the country. Although over the past few months US sanctions against Iran have been lifted, it may be a few more years before Iran becomes completely open for foreign business.

These ongoing restrictions have featured prominently in Ovum’s research into the Iranian market. In a soon-to-be-published report, we find that although the removal of sanctions is positive news for Iran’s TV and media industry, there are several hurdles still to overcome before it can flourish as a pay-TV and serious revenue-generating nation. Ovum does not believe these obstacles – namely censorship, the monopoly of state broadcaster IRIB over traditional TV, a hostile attitude to foreign DTH channels, and limited scope for foreign advertisers – will be eliminated anytime soon.

Some commentators expect Iran to provide a major revenue boost to the MEA region by 2020, but Ovum remains wary of

  • Iran’s generally weak broadband infrastructure

  • the hesitance of foreign companies to invest in Iran (not least because of piracy fears)

  • the fervent desire among Iranian authorities to control the media landscape post-sanctions as it did before

  • the popularity of free platforms such as IRIB, Instagram, and Aparat, and the country’s vast grey DTH network

  • the relative lack of available Persian content.

Related research:

World TV Information Service – Forecasting Tool, PT0009-000001 (August 2016)

Hayu shows the potential for SVOD top-up services

Tony Gunnarsson, Senior Analyst, TV

At IBC this year NBCUniversal confirmed that Hayu, the studio’s reality-TV-specific SVOD service, will soon be available for offline viewing, and that it will be available through Apple TVs in 4Q16.

Hayu is one of several high-profile services of its kind that have launched in the last year to cater for niche audiences. During his presentation, Hendrik McDermott, NBCU’s SVP for branded on-demand, said that Hayu’s target audience is skewed towards 18–54-year-old females, as evidenced by its marketing tagline: “The price of a Hayu subscription is the same price as a nail varnish.” However, according to McDermott, “More men signed up than we thought they would.”

Hayu is currently only available in the UK, Ireland, and Australia, but Ovum’s research shows that it has so far reached a total of 100,000 subscribers. As a niche player, Hayu is likely to remain a small SVOD service – particularly in comparison to the big players such as Netflix, Amazon, and Sky’s Now TV, which all have subscriber numbers in the millions. Ovum expects Hayu to have up to 200,000 subscribers across its three markets in five years’ time, putting it at the lower end of SVOD services in terms of the number of subscribers.

But for NBCU, Hayu – along with NBC’s other genre-specific SVOD service, Seeso, which focuses on comedy content – is clearly more about testing the market for genre-specific SVOD services and learning more about OTT TV consumption. Earlier this summer, NBCU said that it was going ahead with the launch of a NBC-branded US SVOD service, although it did not specify a launch date.

In the short-to-medium term, Ovum expects more genre-specific SVOD services to be launched across the world, catering to the top-up-viewing needs of a growing base of consumers who already subscribe to Netflix and/or other big generalist SVOD services, but also need something extra to cater for their specific viewing tastes.

Related research:

OTT Video Innovation Tracker: Providers, March 2016, ME0003-000657 (March 2016)

Multiple companies showcase 4K UHD set-top-box designs

Holly Reid, Research Analyst, TV

Sagemcom, Sigma, MaxLinear, and MStar are among the latest companies to develop designs for more efficient next-generation set-top boxes (STBs), featuring HEVC encoding and support for 4K UHD and HDR content. Sagemcom’s newest range of STBs, unveiled at today’s IBC event, is based on Broadcom’s quad-core 14,000 DMIPS BCM7268 and BCM7271 SoCs, while Sigma’s reference design for the world’s first self-installed 4K UHD and HDR-compatible STB is a wall-mounted device aimed at reducing the cost of a multiroom video service installation.

MaxLinear and MStar have also produced a reference design for a 4K UHD STB aimed at satellite pay-TV operators. The STB supports HDR content and combines MaxLinear’s MxL5x2C multichannel satellite receiver with MStar’s K7 ARM-based quad-core GPU featuring a built-in 4K SoC. With three to eight tuners, the device can provide up to eight simultaneous recordings along with ultrafast channel changes and multiple live streams.

Announcements such as these are becoming increasingly common as STB manufacturers cater to pay-TV operators looking to launch 4K TV services. Ovum’s research in this area has found that in the first half of 2016 seven major pay-TV operators, including Canal+, Vodafone Spain, and SK Broadband, were preparing to launch or extend their 4K TV services, while Infomir and SmartLabs launched their own UHD-compatible STBs. Furthermore, Ovum’s TV Devices Forecast shows that the 4K UHD STB installed base is expected to reach over 145 million devices by 2020.

Related research:

TV Technology Announcements Tracker: 2Q16, TE0004-001102 (August 2016)

TV Devices Forecast: Set-Top Box Sales and Installed Base, 2015–20, TE0004-001066 (February 2016)

TiVo’s survey highlights the implications of “show dumping”

Jonathan Doran, Principal Analyst, TV

The results of a new survey carried out by TiVo, and announced at IBC 2016, have brought the problem of “show dumping” – that is, viewers abandoning content as it becomes increasingly difficult or costly for them to access – to prominence. The survey identifies the issue as a major emerging challenge to content providers and pay-TV operators, as they face an uphill struggle to maintain audience engagement. Almost two in five viewers worldwide are estimated to have discontinued viewing shows, most of which form part of a premium pay-TV package or standalone paid OTT service.

Show dumping is essentially another term associated with cord-shaving and/or cord-cutting, and TiVo’s survey points to the reasons why such activity is on the increase. If consumers are really spending an average of four hours daily (five and a half in the US) watching TV or streaming video, and a further 19 minutes searching for content, there is a glut of content available via a growing range of access points with not enough ways to navigate it.

It’s no wonder therefore that nearly one-fifth of global respondents (one-third in the US) are looking to downgrade or cancel at least some of their paid video entertainment services. There simply aren’t enough hours in the day to watch everything of interest, and premium content has become overpriced. What we are seeing is the inevitable fragmentation of consumption as the spectrum of available video services, devices, and business models continues to expand. Meanwhile, viewers are growing increasingly frustrated with the challenges of discovery and navigation as the plethora of choices becomes harder to manage.

Service providers and device software specialists should recognize that while content is still important, it is no longer the sole point of differentiation. Seamless integration of disparate services, content sources, and UIs – as well as universal discovery and navigation – are becoming crucial components to ensure continued engagement and loyalty from consumers.

Related research:

2016 Trends to Watch: TV and Video, ME0003-000639 (January 2016)

On the Radar: GrayMeta simplifies the content search and discovery workflow, IT0006-000297 (September 2016)

Appendix

Authors

Holly Reid, Research Analyst, TV

holly.reid@ovum.com

Adam Steel, Research Analyst, TV

adam.steel@ovum.com

Adam Thomas, Lead Analyst, TV

adam.thomas@ovum.com

Jonathan Doran, Principal Analyst, TV

jonathan.doran@ovum.com

Tony Gunnarsson, Senior Analyst, TV

tony.gunnarsson@ovum.com

Ismail Patel, Research Analyst, TV

ismail.patel@ovum.com

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