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Video Transformation in the New Year -- Part IIAs the year draws to a close, we have put together our predictions for 2017 in the area of video transformation. This is part II of a two-part post, and addresses several key issues facing video transformation that we weren't able to fit into part I. In part I, we addressed the following:
For the full details, see Video Transformation in the New Year -- Part I. But we also have thoughts on key issues such as OTT, virtual reality and productive video. These are discussed below:
And growth rates are slowing as markets mature. Netflix Inc. (Nasdaq: NFLX)'s domestic numbers, for example, demonstrate that they are running out of runway within the US. In Q2 2016, Netflix added 162,000 new US streaming users while in Q3 2016, it added 368,000. These are substantially lower than the previous year, where Netflix added 903,000 new users in Q2 2015 and 881,000 in Q3 2015. Fragmentation is another issue that is likely to annoy users. The most popular shows are spread across multiple OTT services, so users now need to subscribe to multiple services in order to get the shows they want. This obviously results in higher costs, which were an important cord-cutting driver in the first place. And it adds to subscriber frustration, because dealing with multiple services and finding the right content on the right app becomes a complex exercise. A recent study from PWC found that 51% of cord trimmers in the US -- those who switched to skinny bundles to cut costs -- said they are paying more for TV today than they did last year. In 2017, look for this to become more of an issue and start to affect subscriber numbers for OTT services in more mature markets, especially the US.
Despite more than $1 billion being invested in VR in 2016, and two-thirds of media executives stating it had "arrived" in a recent survey, VR is still at an early stage of development, particularly when it comes to the TV experience. (See Two-Thirds of Media Executives Accept Virtual Reality Has Arrived – Level 3 Study and Will Slow Headset Adoption Limit Virtual Reality?. As a result, we anticipate VR will be used for a growing number of special events and "stunts" on TV, i.e., individual shows or one-off events rather than regular programming. Headset penetration is also a concern. UHDTVs handily beat VR headsets as the most popular device this Christmas, but it is at an early stage in the evolution of the devices. Most headlines have focused on how headset sales have failed in the second half of the year, but manufacturers are arguing that it's so early in the development of the technology that initial forecasts were too aggressive. They claim headset sales are more or less on target per their own expectations (typically in the hundreds of thousands of units per major manufacturer), and they believe sales will continue to grow over the course of 2017.
Snapchat, for example, gets 10 billion daily video views from 150 million viewers. And like Twitter Inc. and YouTube, Snapchat is also looking for ways to partner with more traditional video content providers to offer streamed content over its platform. Most recently, it has struck deals with NBC, CNN and ESPN to create shows for the app. We would look for these platforms to change the traditional coverage of events and shows as well. Given that the preferred device for these services, and this generation, is the smartphone, we will see more short videos, optimized for small screen. They will offer more interactivity and search led experiences, and less long-form, lean-back content. But older generations won't disappear off the face of the earth, and providers who can balance product offerings across generational demands will be the ones that win the long game. — Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation |
Contentious issues that are likely to fuel lawsuits and angry blogs in the coming year.
Content producers are unhappy with the advertising approach and revenues they are getting on Facebook Watch.
OTT video usage is driving the penetration of various Internet connected devices to help view online streams on the larger TV screen.
Major Hollywood studio to trial 'virtual' movie theaters using head-mounted displays.
Network technology vendor Sandvine has found that piracy isn't only hurting network operator profits – each pirated set-top box is also using up 1TB per month in 'phantom bandwidth.'
On-the-Air Thursdays Digital Audio
ARCHIVED | December 7, 2017, 12pm EST
Orange has been one of the leading proponents of SDN and NFV. In this Telco Transformation radio show, Orange's John Isch provides some perspective on his company's NFV/SDN journey.
Special Huawei Video
Huawei Network Transformation Seminar The adoption of virtualization technology and cloud architectures by telecom network operators is now well underway but there is still a long way to go before the transition to an era of Network Functions Cloudification (NFC) is complete. |
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