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11 October 2018

All roads lead to OTT but with different bumps on the way

Video service providers of all sizes and legacies are being swept up in the tide of IP, cloud and OTT by business pressures on both the supply and demand sides. They are under pressure from their subscribers both to make content from third parties available on their main TV and access their primary broadcast channels on connected devices elsewhere whenever they want. They are also under supply side pressure to reduce bandwidth costs and accelerate development of new features and service enhancements.

Then there is the revenue dimension with opportunities for upselling through personalization and more pertinent recommendation, as well as addressable advertising. Finally, at least for larger operators with multinational ambitions, there is the desire to launch in new markets where again speed and cost are critical drivers of technologies that fall loosely under the banner of OTT and have the edge over traditional methods. It is after all in the online world where the DevOps method of working evolved with tools and techniques for developing, implementing and testing software in smaller chunks and shorter cycles.

For broadcasters and legacy pay TV operators there is the additional challenge of reconciling OTT with their existing infrastructures as efficiently and cost effectively as possible. Further than that they want to inject the benefits of OTT such as greater speed of development and addressability into their existing services as far as possible. That is why the European HbbTV hybrid TV format has been enjoying something of a resurgence after having been written off by some commentators as a solution to yesterday’s problems.

That is also why a growing number of service providers are opting for the Android TV Operator Tier as their hybrid solution combining broadcast with OTT, attracted by the tools available and access to the Google app store. It is true that so far the largest operators have preferred to develop their own hybrid platform, wary of giving Google a sniff of their customer data or a magnet drawing them towards other third-party app environments.

However those operators like Sweden’s Com Hem which have taken the Android Operator tier route argue that customers will access these apps anyway if they want, as they are easy enough to locate. By that argument the service provider might as well at least be the one in charge of the UI with scope for bringing subscribers back to its channels and content.

Apple TV has also emerged as an option for operators adopting an Internet first strategy, with Canal Plus in France being the largest to do so in the hope of shoring up its DTH service which has been consistently losing ground to IPTV and OTT alternatives. Such losses have also driven CanalPlus into wholesale agreements with Orange and Free for distribution of its content via their IPTV services.

Another scalp for Apple TV is Swiss Telco Salt which in March 2018 became the first European operator to launch an IPTV platform built up from the ground around the Apple box as the core component. Zurich based TV platform provider Zattoo operates the service end-to-end, including ongoing development of the platform and apps for the box. The service is currently available only to FTTH homes in Switzerland but comprises a full mix of linear channels, VoD and all the interactive features such as instant restart as well as network PVR.

Since then Apple TV has been courting other operators with its strategy looking increasingly like populating the field in preparation at last for that long-anticipated launch of a cord cutting rival to the now established OTT and SVoD providers like Netflix and Amazon. It is not clear yet whether this will include some linear components at the start, but meanwhile Apple’s suitors include BT with which it already has a close relationship over the latter’s EE mobile service. Apple appears to be targeting EE customers as an ideal younger demographic likely to be more open to its possible TV service than mainstream BT fixed broadband subscribers. There are clearly questions to be answered over the business agreement, such as whether EE customers would be offered an Apple TV free or just at a discounted rate, and it is not even certain yet whether this will happen at all. But discussions have definitely been taking place.

The question then is given the advances of Apple TV and Android Operator Tier why operators should consider building around HbbTV. One answer is that it is an independent platform but the HbbTV community has also worked hard to reinvent the technology for what some call the post OTT era, which really means the era where OTT is becoming mainstream so that it is no longer considered just as an awkward secondary distribution channel to satisfy demand for TV everywhere or seen just as a threat.

It has also benefited from mergers with other standards bodies along the way. HbbTV was conceived as a technology for introducing interactivity to broadcast services via an IP return path and was then born in 2009 from the French H4TV project and the German HTML profile project. It evolved increasingly into a platform for converging broadcast and broadband video with IPTV thrown in, gaining traction across Europe and a few countries beyond such as Malaysia, Singapore, Turkey, Saudi Arabia and New Zealand.

Even so the movement began to run out of steam until in June 2014 the HbbTV Association merged with the Open IPTV Forum, which had been ploughing a similar furrow towards hybrid services, having already collaborated with the HbbTV community over browser and media specifications for IP-connected TVs and set tops. This then prepared the ground nicely for the next merger in September 2016 with the Smart TV Alliance, which had been founded in 2012 by LG, Panasonic, Toshiba and TP Vision. This aligned HbbTV more closely with OTT and initiated development of specifications designed to exploit one to one connectivity with users, with slightly less emphasis on the hybrid element.

This has taken HbbTV into the two key and closely related areas of data analytics and addressable advertising. On the data front it now enables operators to observe viewership of programming in real time as a supplement to traditional audience panel data. This has been adopted by some broadcasters such as Germany’s ProSiebenSat.1 and RTL, to build more accurate segments for targeting and to optimize campaigns.

In fact both these broadcasters are also keen advocates of HbbTV based broadcast-IP linear addressable advertising to substitute broadcast signals with streamed ads. ProSiebenSat.1 Media has developed an addressable advertising product called SwitchIn, which uses HbbTV versions 1.0 and 1.5 to deliver static graphical ads visible for a few seconds after someone changes broadcast channels into a service owned by ProSiebenSat.1. These are served in two ways, either as overlays on the broadcast or wrapped around a content window that is therefore reduced temporarily in size.

Likewise RTL Deutschland has developed technology to substitute broadcast ads with streamed advertising replacements, so this is taking the next logical step beyond overlays or wrappers. This is enabled by the later HbbTV 2.0 specification, which equips compliant connected TV sets with the ability to switch from the broadcast channel to the IP stream for 20 seconds to show the ad. When that ad has been played the TV switches back to broadcast.

The data comes in by confirming that these addressable ads have greater reach or impact. A campaign for BMW via the ProSieben services achieved a 27% increase in net audience reach compared to standard linear ads only. ProSiebenSat was able to identify from smart TV or STB viewing data that a household had tuned into the classic linear broadcast ad and was then able to target the homes that had missed it, increasing reach. As a result advertisers can address users who may not have seen an ad and just as importantly avoid annoying those that have seen it. For ProSiebenSat.1 Media this brings higher revenues as it now charges twice the CPM (cost per thousand) for its ‘SwitchIn’ linear ad insertion solution as for the same ad at the same time via linear TV spots.

HbbTV also appeals to some operators by enabling freedom for their subscribers to choose from a variety of set tops rather than having one prescribed. Tivù, which manages Italy’s free-to-view DTH platform Tivùsat, in September 2018 claimed it was the first service provider to deploy an HbbTV Operator App (OpApp). This creates a virtual set top incorporating the operator’s own UI and applications, rather than say taking the Android route. When activated on the network, the set top automatically receives Tivù’s application, Tivùon and is customized with the Tivùsat experience. Yotta Media Labs, which specializes in HbbTV, developed the software, while South Korea set top maker Opentech has been chosen as an initial partner for the boxes.

One other aspect of HbbTV attracting interest from some operators and broadcasters is its support for dynamic content substitution, using much the same technology as the ad insertion. This is taking HbbTV into the UK where it was originally shunned, with the BBC assessing it for a personalized service where elements of broadcast channels are replaced with IP-delivered content. The BBC has been working with the country’s Freeview Play service which has also been working on content substitution for both commercial and non-commercial applications.

Clearly then those who wrote HbbTV off as a historical irrelevance in the “post OTT” era need to think again and perhaps avoid the confirmation bias that reinforced their prejudices just a year or two ago. It is now part of the mix alongside Android, Apple, RDK and others ushering in IP/broadcast convergence while upholding new business models.