Read the original LinkedIn article here: The Best of Times & Worst of Times in the Video Business
Mark Donnigan is Vice President of Marketing for Beamr, a high-performance video encoding innovation company.
The Video Business is in the Best of Times or the Worst of Times? Mark Donnigan Vice President Marketing at Beamr
Can a 4 character innovation save us?
This is a fascinating question because there is a paradox emerging in the video business where it seems like the the finest of times for many, however the worst of times for some.
Here we have Disney announcing that they have actually currently accrued one billion dollars in loses, and this even prior to releasing their direct to customer company. And then we have Verizon Media revealing sweeping layoffs which represent an exit from a few of the core home entertainment service and technology services that were operating under the Oath umbrella.
And of course there isn't a reporting interval that passes where the cable cutting numbers haven't grown, which puts increasing pressure on the video side of the company service.
Yet, Netflix stock is on the increase again, permitting the business to invest in content at levels that need to bewilder their rivals. And then we have news of PlutoTV selling for a mouth watering $340 million dollars in money to Viacom (deal was revealed on January 22, 2019), proving that the AVOD organisation model can be feasible and quite important.
5G is going to conserve us all?
This is where I wish to get in touch with the massive financial investments being made in 5G and provide my viewpoint on why 5G may 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 included 80 billion dollars of additional debt leaving it with more than 160 billion dollars of brief 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 debt numbers, I'm not an expert, but rather supply 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 tactical 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 address the economic capture, and the total headwinds to the video business? Such as declining pay TV subs, and fragmenting OTT service offerings. This is the concern on lots of minds who are examining the future of the video service.
It is my strong belief that common high speed mobile networks powered by 5G will unleash a video tsunami of traffic on the network like we have actually never seen before.
This will be good 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 a result of being able to utilize a much faster network thanks to 5G.
It's bad news for network operators without a plan 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 handled to unmanaged, or OTT distribution, while continuing to use aging video requirements like H. 264 to provide low resolution mobile profiles.
Video distributors who continue to under serve their consumers will rapidly be at a downside, and ripe for disturbance, I believe, from new service designs such as AVOD and the newest and most effective video technologies.
The four character video innovation that may conserve the video service.
The four character video standard that I believe will play an essential role in the success of the video organisation is HEVC, the video codec that is now released on two billion gadgets. The following slide presentation offers numbers regarding HEVC gadget penetration which are worth seeing.
There has actually been much blogged about HEVC royalty issues, something that triggered advancement of an alternative codec which presumably is royalty totally free. While some in the market became preoccupied with questions around licensing and royalties, significant developments have actually been made on the legal front, including almost every CE gadget manufacturer including HEVC playback assistance.
HEVC Advance waived all royalties for digital circulation of content. This indicates, HEVC encoded content that is streamed will only carry a royalty for the hardware decoder and this is currently covered by the receiving device. Provided that you are delivering bits over the wire and not via a physical system such as Blu-ray Disc, your business will not have to pay any additional royalties, a minimum of not to HEVC Advance.
Now, if it's any comfort, the business who have currently done their due diligence on the royalty concern, and are streaming HEVC material to consumers today, include: 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 crucial concern and possibly the area of development around the HEVC ecosystem that is least recognized or comprehended.
Starting with in-home playback, if your users have actually purchased a TELEVISION, game console, Roku box or Apple TV in the last 3 years, you can be almost ensured that assistance for HEVC exists without any requirement for extra licensing or player upgrade.
HEVC is now resident in nearly every SoC that enters to any mid to high-end CE video gadget. In reality, since 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 business ScientiaMobile keeps the biggest dataset of network gadget gain access to profiles by getting data from the largest wireless operators on the planet. This business reports that a massive 78% of all iOS smartphone demands come from devices that support hardware-accelerated HEVC decoding. And though iOS gadgets are predominant in a lot of industrialized markets, Android is still an incredibly crucial device profile, and here the ScientiaMobile information is extremely motivating with 57% of Android smartphone requests coming from devices that support HEVC decoding.
And provided the HEVC gadget penetration and hardware support any worries about an early move to HEVC are not warranted. What other elements validate the concept that HEVC will be a booster to the video company?
LiveU just recently published a report called 'State of Live' that revealed growing trends in HEVC broadcasting, specifically worldwide of sports. And simply in case you have thoughts that the use of HEVC is a passing pattern en route to some alternative codec, consider that in 2018, 25% of all LiveU produced traffic was streamed utilizing the HEVC video standard while the only other codec utilized was H. 264.
In truth, the report mentioned that the high HEVC usage was a direct reflection on the increasing need for professional-grade video quality, a pattern that was clearly obvious 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 requiring consumer who desires content that reveals off the full abilities of their viewing gadget, which indicates greater resolutions and advanced video standards like HDR. But, this same user is now taking in more content, which adds to further crowding the network.
This customer consumption pattern is hitting a shift from managed services to unmanaged, or OTT circulation and producing technical stress inside incumbent service operators who are facing technical shifts and business design fracturing. Exceptionally, in spite of a very clear risk to the incumbent services who are seeing video subscriber loses mounting into the numerous thousands over simply a couple of brief quarters, some are continuing with the status quo even while new entrants are introducing services that provide the customer more for less.
This is where completion of the story will be written for some as the very best of times, and for others as the worst of times.
HEVC is more than an innovation enabler. It's a video standard that is set to interfere with numerous of the traditional operators and early OTT streaming Learn about services. Not due to the fact that the customer understands the difference in between H. 264, VP9, or even HEVC, but due to the fact that the customer is ending up being mindful that better quality is possible, and as they do, they will move to the service who delivers the finest quality economically.
At Beamr, we think that the evidence of our item and innovation excellence need to be knowledgeable and not simply discussed. Which is why we've assembled the finest offer that we have seen in the industry where you can use our codecs in combination 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 rational video standard to follow H. 264, begins to take shape. Here we have major video suppliers and tech business currently encoding and dispersing material in HEVC. And provided the HEVC device penetration and hardware support any worries about an early move to HEVC are not required. What other factors validate the idea that HEVC will be a booster to the video organisation?
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Published by: Mark Donnigan