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.
The Video Business is in the Greatest of Times or the Hardest of Times? Mark Donnigan Vice President Marketing at Beamr
Can a four character technology save us?
This is a fascinating concern due to the fact that there is a paradox emerging in the video company where it feels like the the very best of times for numerous, however the worst of times for some.
Here we have Disney revealing that they have already accrued one billion dollars in loses, and this even prior to releasing their direct to consumer organisation. And then we have Verizon Media announcing sweeping layoffs which represent an exit from some of the core entertainment service and technology companies that were operating under the Oath umbrella.
And naturally there isn't a reporting interval that goes by where the cable cutting numbers have not grown, which puts increasing pressure on the video side of the company service.
Yet, Netflix stock is on the rise again, enabling the business to buy content at levels that must baffle their competitors. 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 service design can be viable and quite valuable.
5G is going to conserve us all?
This is where I wish to get in touch with the massive investments being made in 5G and provide my viewpoint on why 5G may well break some video business while at the exact same time make others.
Let's look at AT&T.
In the last 4 years AT&T has added 80 billion dollars of additional financial obligation leaving it with more than 160 billion dollars of brief 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 debt numbers, I'm not an analyst, however rather offer a point of view that the monetary scenario for AT&T entering into its enormous 5G investment cycle, while at the very same time making understood their tactical effort 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 overall headwinds to the video service? Such as decreasing pay TV subs, and fragmenting OTT service offerings. This is the question on numerous minds who are examining the future of the video business.
It is my strong belief that ubiquitous high speed mobile networks powered by 5G will let loose a video tsunami of traffic on the network like we have actually never ever seen before.
This will be good 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 much better quality experience as an outcome of being able to take advantage of a faster network thanks to 5G.
It's bad news for network operators without a strategy to monetize this extra traffic load, and of course incumbents who are hoping to get by with incremental improvements to their services; such as switching from managed to unmanaged, or OTT circulation, while continuing to use 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 most recent and most effective video technologies.
The four character video technology that may conserve the video service.
The 4 character video standard that I think will play a crucial function in the success of the video service is HEVC, the video codec that is now deployed on two billion gadgets. The following slide discussion offers numbers concerning HEVC device penetration which deserve seeing.
There has actually been much blogged about HEVC royalty concerns, something that activated advancement of an alternative codec which most likely is royalty totally free. However, while some in the market became preoccupied with questions around licensing and royalties, significant developments have been made on the legal front, consisting of almost every CE gadget manufacturer including HEVC playback assistance.
HEVC Advance waived all royalties for digital circulation of content. This means, HEVC encoded material 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 mechanism such as Blu-ray Disc, your business will not need to pay any additional 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, consist of: Amazon, Comcast, DirecTV, Dish Network, Netflix, Sky, Sony, Vudu, Vodafone, and Orange, just among others.
What about HEVC playback support?
This is a great and essential question and maybe the area of development around the HEVC community that is least recognized or comprehended.
Beginning with at home playback, if your users have actually bought a TELEVISION, video game console, Roku box or Apple TV in the last 3 years, you can be nearly guaranteed that assistance for HEVC exists with no requirement 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 gadget. That's 400 million devices that support HEVC natively.
The information business ScientiaMobile preserves the biggest dataset of network gadget access profiles by receiving information from the largest cordless operators on the planet. This company reports that a tremendous 78% of all iOS smart device requests originate from devices that support hardware-accelerated HEVC decoding. And though iOS gadgets are primary in a lot of industrialized markets, Android is still an incredibly crucial gadget profile, and here the ScientiaMobile data is extremely encouraging with 57% of Android smartphone demands originating from gadgets that support HEVC decoding.
And given the HEVC device penetration and hardware support any concerns about a premature move to HEVC are not called for. What other factors validate the concept that HEVC will be a booster to the video service?
LiveU just recently released a report called 'State of Live' that showed growing patterns in HEVC broadcasting, particularly on the planet of sports. And just in case you have thoughts that making use of HEVC is a passing pattern on the method to some alternative codec, think about that in 2018, 25% of all LiveU created traffic was streamed using the HEVC video standard while the only other codec used was H. 264.
In fact, the report stated that the high HEVC use was a direct reflection on the increasing demand for professional-grade video quality, a pattern that was plainly obvious at the 2018 FIFA World Cup in Russia.
What does this mean for the market?
The patterns we simply took a look at reveal that we have an ever more requiring customer who desires material that flaunts the full abilities of their viewing device, which means greater resolutions and advanced video requirements like HDR. But, this very same user is now taking in more material, which adds to further congesting the network.
This customer usage pattern is hitting a shift from handled services to unmanaged, or OTT circulation and producing technical tension inside incumbent service operators who are facing technical shifts and business design fracturing. Amazingly, in spite of a really clear danger to Mark Donnigan the incumbent services who are seeing video subscriber loses installing into the numerous thousands over simply a couple of short quarters, some are continuing with the status quo even while brand-new entrants are launching services that provide the customer more for less.
This is where the end 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 interrupt a number of the conventional operators and early OTT streaming services. Not due to the fact that the customer knows the difference between H. 264, VP9, and even HEVC, however due to the fact that the customer is realising that better quality is possible, and as they do, they will migrate to the service who delivers the very best quality cost effectively.
At Beamr, we think that the evidence of our item and innovation quality need to be experienced and not just talked about. Which is why we've put together the finest deal that we have seen in the market where you can utilize our codecs in mix with our VOD transcoder, 100% for totally free.
HEVC is now resident in practically every SoC that goes in to any mid to high-end CE video device. These two numbers are where the photo of HEVC as the most logical video requirement to follow H. 264, starts to take shape. Here we have major video suppliers and tech business already encoding and dispersing content in HEVC. And offered the HEVC gadget penetration and hardware support any worries about an early relocation to HEVC are not warranted. What other aspects confirm the idea that HEVC will be a booster to the video organisation?
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Published by: Mark Donnigan