The video landscape is changing, it has been doing so for several years now, but in the last year, in some areas in particular, the pace has really picked up.
The change in viewing habits and the move to Over-the-Top (OTT), on-demand viewing, is one of these, and is now evolving rapidly. The transition started several years ago, when Netflix, added online movie delivery to its existing DVD rental business. Now, Netflix is one of a handful of independent OTT video companies. It is also, like Amazon Prime, a major content producer, and with a budget of over US$6 billion last year; one that is spending more than many of the traditional studios.
Unsurprisingly, this investment in content by Netfilx and others, coupled with the spread of smartphones, and increasing bandwidth speeds, both on mobile devices and at home, has produced a profound shift in viewing habits. The change started several years ago, but the momentum increased dramatically in the last 12 months.
Every year, Ericsson conducts research, with 20,000 16-69 year olds in thirteen countries around the world. The results from the 2017 survey, highlight some dramatic shifts. In 2010, the traditional “couch potato” accounted for 21% of respondents and the “average TV Joe”, someone who primarily watches TV, but spends a small amount of viewing time on a mobile or other device, 19%. By 2020, Ericsson is predicting that “couch potatoes” will be reduced to 11% of all video viewers and “average Joes” to 12%. Whereas the “mobility centric,” people who mostly use a smartphone or tablet for all viewing, except broadcast, will jump from 5% to 28% in the same period. When asked about their attitudes to viewing, nearly 60% of all respondents said “I prefer on-demand over scheduled viewing.” In complete contrast, only around 25% commented: “My traditional TV service provider gives me all I need.” Loyalty, to a service, is rapidly disappearing with 41% saying that they are using different services to the ones they used five years ago. Confirming all these changes; IHS Markit released a new report: “Cross-Platform Viewing Time” at the beginning of August. This showed that across the leading five European markets (UK, France, Germany, Italy and Spain) VoD viewing increased by an average of two hours per month. This was across all platforms, but since time-shifted viewing of linear TV, declined, the increase is due to OTT viewing.
More worrying for the traditional broadcaster, are the results of two studies done in the UK. One, by Ofcom, the regulator, showed that subscriptions to streaming services have now overtaken subscriptions to regular payTV services (including cable and satellite). A separate study was carried out by Childwise, in the UK. This was an in-depth study done with 2,000 5-16 year olds. It showed that most of their viewing, is done on personal devices, and binge watching a series is a growing habit. Children are “becoming unaccustomed to waiting for content – they want it instantly.” Also, 25% have mobile virtual reality equipment at home. This correlates with the prediction from Ericsson that by 2020, one in three consumers will be virtual reality users.
So, what does this mean, and more importantly for us. How is the satellite industry responding?
Rudolphe Belmer, CEO of Eutelsat, in an interview with the French news site, Les Echos, stated: “Video is a mature, but resilient sector, the number of TV channels in the world continues to grow, thanks to emerging markets; parts of the world, where Eutelsat is strong.” He went on to say that the number of TV channels carried by Eutelsat, continues to grow by around 5% p.a. He also pointed to the growth in bandwidth needed, as a result of the transition to HD and UHD. He continued, adding: “There is no great pressure from OTT” pointing out that for every additional hour spent watching OTT, linear TV declined by only ten minutes. This may well be true, but it belies the fact, that linear TV viewing is being supported by older audiences, and OTT by younger viewers. According to the Ericsson survey, 54% of viewing by 16-19 year olds is on-demand content, compared to 21% for 60-69 year olds.
However, in spite of this apparently rather complacent attitude, Eutelsat is promoting hybrid services on its website. SmartBEAM, uses satellite to WiFi transmission, for TV viewing on portable devices in the home or hotels. In addition, newer set-top boxes combine internet and satellite to enable interactivity, including VoD. Sat.TV is a new electronic program guide (EPG) from Eutelsat that is designed to enhance program discoverability. Given that according to Ericsson, searching for something to watch, is a major issue, Eutelsat may have a winner there. In 2017 the average daily time spent searching for something to watch, was 27 minutes for linear TV and 24 minutes for VoD.
SES is also promoting a hybrid approach. MXI, a wholly owned subsidiary of SES, is a major content distributor: offering content aggregation, management, channel playout and online distribution. MX1 360 Unified Media Platform provides management and delivery of all linear and non-linear content to any broadcast, VoD or OTT platform. Cell C, a South African cellular operator, is making full use of these capabilities to deliver a combination of live and linear TV, movies, sports, betting, gaming, and other services, to a handset – in a wide variety of content packages that can be purchased via a pre-paid air-time account. Working with Vubiquity, a content provider, the service is delivered by SES and MX1.
Intelsat, meanwhile has launched IntelsatOne Prism, a multi-media networking platform and managed services, that enables media organizations to easily upgrade a legacy satellite network to a satellite-terrestrial converged IP network for legacy and multi-screen video.
Arabsat, is also getting into IP, having announced earlier this year, that it will be setting up an uplink platform at TwoFour54. Two Four54, is a community of content creators and over 470 media companies located in Abu Dhabi. This agreement, will allow TwoFour54 tenants to distribute content directly from the free zone. Arabsat is also planning on introducing a High Dynamic Range (HDR) platform there. This will be the first in the Middle East. It is also testing the Hybrid broadcast-broadband TV (HbbTV) patform there. HbbTV is a European initiative for providing both broadcast and broadband/web content on a flat-panel screen in the living room. This platform is also supported by Eutelsat and SES, amongst others.
Another change, but one that is moving more slowly, is the transition from Standard Definition (SD) to High Definition (HD). This is an on-going one. And one that is really not moving that quickly. We hear so much about HD and Ultra-High Definition (UHD) (often referred to as 4K) in this industry, that it is easy to assume, that SD is now part of history. Not so, at all. A quick trawl through the Astra website, shows that its satellites are carrying 1,865 SD channels, and only 820 HD channels. Oh, and a mere 22 UHD channels of which six are SES/Astra demonstration and promotion channels. Overall, SES carries over 5,000 SD channels and over 2,600 HD channels and 38 UHD channels. Claudia Vaccarone, Head of Global Market Research, Eutelsat, speaking at MIPTV earlier this year, said that worldwide just 27% of the 11,700 channels broadcast, are HD channels, and 125 are UHD.
This is good news and bad news for the satellite industry. Good news, because it is likely that many of the channels that are still being broadcast in SD only, will at some point transition to transmitting in HD as well. Although, bearing in mind that HD has been around since 2003, and it’s only reached 27% penetration, this could take many years yet. Bad news, because many of the channels that are carried in both SD and HD will ultimately transition to HD only. However, that change is likely to be many years in the future; particularly in the less developed regions of the world.
As for 4K, is it going to go the way of 3D, or will it continue to grow, albeit slowly? Behind the scenes, the leading technologists are working hard at developing and promoting standards for both UHD, high dynamic range (HDR) and 8K. High dynamic range adds tremendous color wider range of colors, higher contrast and brighter images to the picture. 4K describes the quantity of pixels, HDR describes the quality of the the pixels. 8K is the follow-on to 4K providing even greater granularity and clarity.
Given that 15 years after its launch, HD is only at 27%, I would say it’s too soon to write UHD off, particularly in view of the number of 4K TV sets out there now. However, we are still waiting for more program makers to feel it’s worth the extra expense of making and transmitting a 4K show. As, was the way with HD, sports is leading way with 4K-UHD. Four years ago, UHD was being discussed and there were a few demonstrations – mainly at trade shows. This year, several broadcasters including: Canal+, Sky Deutschland and Oi, delivered the (football – in case you missed it) World Cup, in 4K. The Israeli Public Broadcasting Corporation, went even further and transmitted the matches in HDR.
According to Thomas Wrede, VP New Technology & Standards Media Platforms, SES Video, this , progress, over the last four years has been due to team spirit: “as industry partners have worked together on various trials and demo channels, …., pushed to sort out the standards, the many elements of the Ultra HD ecosystem have fallen into place, from camera to living-room.”
Team spirit, is what it will take to keep satellite at the forefront in the changing video landscape. In this our competition is not each other, but changing consumer habits and the ever-improving terrestrial infrastructure.
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Elisabeth Tweedie is Associate Editor of Satellite Markets and Research. She has over 20 years experience at the cutting edge of new commmunications entertainment technologies. She is the founder and President of Definitive Direction (www.definitivedirection.com), a consultancy that focuses on researching and evaluating the long-term potential for new ventures, initiating their development, and identifying and developing appropriate alliances. During her 10 years at Hughes Electronics, she worked on every acquisition and new business that the company considered during her time there. She can be reached at etweedie@definitivedirection.com.
