IBC 2018: The smart home is a myth – don’t believe the hype

The vision of the smart home is powerful for the digital economy but don’t believe the hype, right now it’s a fragmented minefield of complication and frustration.

Advertisements on consumer channels and marketing collateral at industry conferences point towards the smart home as the realization of the future. Data is the fuel of this money making machine, with the promise of a space-age, free-flowing digitally enabled environment made popular by the entertainment industry. This world of convenience excites some consumers almost as much as the companies trying to make money out of it, but there is little evidence this vision is a reality.

Yes, there is consumer acceptance. There are also clever products on the market. Companies like Amazon and Google are creating incredibly complex virtual assistants and normalizing the voice user interface also. But in reality, all we have are several products, which individually connect to our smartphones, have little interaction and offer nothing but a gimmick to make our lives a little bit simpler.

The power of the smart home is to make our environments intuitive and personalised. The central heating comes on at the right time automatically, depending on where we are in the world and the temperature outside, or the TV displays personalised content depending on who is in the room. Alarms are adapted to our schedule and smart locks authorise entry to friends and stranger alike. It is the flow of information which makes these ideas possible.

According to telco and tech analyst Paolo Pescatore, there is an opportunity for the telcos to influence this space. The router should be the centre of the smart home, and should the telcos be able to create a common platform, with open-APIs to create interoperability with all devices, the dream can be a reality. Data will start to flow around the ecosystem, personalised services will begin to emerge, taking us away from a fragmented collection of gadgets, and what we have imagined as the smart home will start to become reality.

But here is the big question; are the telcos positioning themselves to capitalise on these rewards? Or might we see history replay itself? Sluggish behaviour and a lack of transformation meant the telcos were disrupted by the shift to OTT messaging platforms, missing out a massive slice of the data economy. The telcos might not lose revenue by not taking a leadership role in the smart home, though they won’t necessarily make more. Inactivity will see them remain as the connectivity utility, only collecting the crumbs which pass down the value chain. This is the road to commoditization and classification as a common utility.

Right now the likes of Amazon and Google are staking strong claims. Through normalising the smart speaker market, the focal point of the smart home can be shifted away from the router. Both of these companies are taking steps in aligning the various different ecosystems and concentrating the relationship with the consumer. The virtual assistant is being used in the same way the telcos billing relationship with the consumer could have been.

If there is to be an economy developed around the smart home, there needs to be a focal point. Too much fragmentation and too many billing relationships will over-complicate matters and frustrate the user. Telcos are moving users towards a single billing relationship for connectivity (convergence of mobile and broadband), and this relationship could have been extended to other services. Orange is trying to do this in France, though a consolidated effort across the industry is needed to wrestle control of the flow of cash away from the internet giants.

With Alexa and the Google Assistant, the two smart speakers enthusiasts are concentrating the consumers attention on one asset in the living room. This might only be simple instructions for the moment, though with shopping experiences being developed and content platforms also being thrown into the mix, they are winning the battle. The telcos are starting to look like passengers on the road to the smart home.

Perhaps more independent influences are needed to develop this common platform and establish the telco foothold. ETSI would certainly be a good place to start, and this would seem to be a project tailor made for the influential working groups. The TM Forum is searching for more validity in a digitally transformed world, maybe this is a way in which the organization can become more relevant than it is today.

Of course, a common platform is one factor when encouraging the flow of information, but another critical one is trust and credibility. Very public scandals, such as the Cambridge Analytica saga, and the almost-daily occurrence of data breaches are not providing the consumer any confidence the data economy is secure in the first place. Perhaps the telcos have an advantage here as well.

Aside from a couple of examples, the telcos have been largely innocent when it comes to data breaches. Most victims are enterprise organizations, while the internet players are having their credibility strained as more details emerge on how personal information is being used in advertising. Creating a common platform for data interoperability should, in theory, be more secure than the fragmented ecosystem which exists today, while the telcos have a strong-brand in terms of securing customer data. They have had a billing relationship with the customer for a considerably longer-period than the internet players, and still maintain that trust today. Both of these factors could be exploited in pushing the telco case for controlling the smart home ecosystem.

Ultimately the creation of a smart home will come through insight and personalisation, and these promises can only be delivered through collaboration. Maria Ferreras of Netflix highlighted it was sharing data on consumer viewing habits with partners, which is only a small aspect of the smart home, but it does inform and help create a personalised environment. Common platforms and collaboration across the industry will create more insight and accelerate the development of the smart home.

Some might argue the justification for the smart home is not there, that the fortunes are by no means guaranteed. There might well be an element of uncertainty right now, but Amazon and Google have proven to be incredibly accurate fortune tellers over the last decade. These two heavyweights fighting for control of the living room should be evidence enough there is money to be made.

The question is whether the telcos are ready to commit the R&D funds to capitalise on this opportunity. A common platform, which will allow all smart devices to communicate with each other and the consumer, is critical for the emergence of the smart home.

Many of the telcos argue they want to avoid the dreaded utility tag, but they aren’t being very ambitious trying to avoid it.

IBC 2018: New content, new markets, new partners – the Netflix growth plan

Netflix is one of the largest technology companies on the planet, but there is still mountains of room for growth over the next few years.

Speaking at IBC 2018 in Amsterdam, Maria Ferreras, VP of EMEA Business Development at Netflix pointed towards some quite remarkable figures. In the 11 years since Netflix starting its streaming business the platform has amassed 130 million subscribers. While this is of course an astronomical figure, some might have assumed it would be higher. With profits of $2.8 billion over the last twelve months, the opportunity for growth is still buoyant.

The question which remains is how to do this. Netflix has been incredibly successful in securing subscriptions through its own marketing strategies, though partnerships with telcos and broadcasting businesses are top of the agenda for Ferreras.

“What is critical for us is making sure Netflix is available,” said Ferreras. “It’s all about making access easier.”

The idea behind these partnerships is creating opportunity. The partner organizations might not only have a better relationship with potential customers, but they also address some key challenges in terms of billing and experience.

On the billing side of things, Ferreras asks the industry not to use Western standards when assessing new territories. For example, in Saudi Arabia not only is credit card penetration low, a number of the domestic brands are not accepted by eCommerce sites. Partnering with the telcos offering consumers in this market an opportunity to pay through their own billing platforms. There are numerous other countries around the world where this could be the case, meaning partnerships with telcos offer an opportunity to engage new customers who were not accessible to the business before.

Looking at the experience, this is about accessibility once again, but a different twist. Here we are talking about the content aggregation model, taking away the complication of accessing content through multiple windows in the fragmented content ecosystem. With the Netflix app installed on set-top boxes, content platforms or smart TVs, the frustration of exiting applications before entering new ones is removed. With both billing and navigation, it’s all about simplifying the experience.

Such partnerships tie into another column in the growth plan; entry into new markets. While some territories have been experiencing the Netflix bonanza for more than a decade, there are still markets where the brand is a newbie or even non-existent. This is the simple aspect of the plan, launch in new regions, though the complication comes with the experience.

Some areas are mobile orientated, some have poor connectivity and some have lower-end devices. In each of these circumstances, the Netflix proposition needs to be adapted to standardize the experience over every device. This standardization also extends to the different partnerships as well. There is no such thing as differentiation here, the Netflix platform will be the same wherever you go.

The final pillar is localisation. Ferreras said Netflix will continue to aggressively expand its content portfolio, not only moving into new genres, but also creating content which is targeting specific countries or regions. This is where Netflix needs to improve in some regions, as the depth of content in the right language or genres lacks. It is a work in progress, though local co-production initiatives with partners will help accelerate this process,

One area Ferreras highlighted the business will not be heading is live sports. The objective of Netflix is to innovate through creating experiences which other platforms cannot. In sport, Netflix is increasing its portfolio with sports documentaries and interviews, though this is content to support the sports story. When delivering live sports to the consumer, not only does this not fit with the on-demand ethos of Netflix, but it cannot do anything different from traditional broadcasters. As a genre, live sports does not fit the bill.

Netflix might be an internet heavyweight, but the opportunity to grow is still quite surprising.

We’re patient enough to make money from video – MediaKind

With major players scarpering away from video as quickly as possible, MediaKind is confident there is money to be made, you just have to be patient enough.

Nokia was the latest to put the venture into video behind it, while Cisco exited in recent months and Ericsson’s divestment in video creating the very subject of this story. With so many industry heavyweights fleeing the scene after investments were massacred, the claim there is money to be made might be something of a surprising one.

At IBC 2018 in Amsterdam, MediaKind executives were gracious enough to lay down their own markers. Firstly, the business is not reliant on the legacy technologies, its creating new services as we speak. And secondly, there is money to be made in video, you just have to be patient enough to realise it.

MediaKind was created through some swift Ericsson moonwalking. After making the decision to exit the video segment, Ericsson split its portfolio and managed to secure buyers for 51% of the assets which would eventually be named MediaKind. The rest of the Ericsson video business was rebranded to Red Bee Media, and is still proving to be a drain on the Ericsson profit margin.

With Ericsson trying to hide its horrible wander towards video, Nokia selling its smaller venture to Canadian private equity group Volaris and Cisco selling its Service Provider Video Software Solutions (SPVSS) business in May, it would be a safe bet to assume the money is not there to be made. However, according MediaKind CEO Angel Ruiz as long as you are patient, success is possible.

The issue right now is the market is overcrowded. There are too many suppliers fighting over a small number of customers, a similar position the telco industry found itself in in years gone. Consolidation is a trend which will almost certainly develop over the coming months and years, just as it did in the telco space, and those remaining on the other side will have a strong brand and a buoyant marketplace. Ericsson rode the wave of consolidation in the telco space, surviving to become one of the world’s most influential vendors today, and MediaKind will aim to replicate this journey in video.

Whether the same outcome can be realised remains to be seen. More established players in the market are making moves, though consumer videos trends suggest investment in technology will only increase. For the likes of Ericsson, Nokia and Cisco, this diversification strategy seems to be a step too far. These are companies which can realise profits from consumer video trends, but divestments suggest it will be done closer to core competencies; networking products and infrastructure.

The theory is sound, now all Ruiz and his cronies need to figure out is how to combat the offerings from new-boys on the market such as AWS.

IBC 2018: Let’s get figital

We’re not 100% sure how to spell it, or whether it is actually a thing yet, but appealing to the fidgety younger consumer could be the key to cracking the content market

For many telcos, convergence is a business model which offers a shining light of profitability in the cut-throat digital economy. While connectivity providers should be viewed as the bedrock of the digital economy, capturing revenues has been an increasingly difficult task. The Silicon Valley internet giants have been securing the lions share, only allowing crumbs to fall down the value chain, relegating the telcos to the dreaded role of connectivity utility, though convergence offers a glimmer of hope.

Convergence allows to telcos to offer value. Whereas mobile and broadband offerings and the experience are purely defined by being able to connect to the internet in a timely, efficient and secure manner, content takes the telcos away from a commodity offering. Though a massive question still remains; how can the telcos penetrate this ecosystem in a profitable manner?

We do not believe owning content is a particularly sensible way to go about it. AT&T’s acquisition of Time Warner might have been one of the biggest stories over the last 18 months, but running a creative content business is completely different from the scientific and risk-adverse connectivity game. BT has already shown billions can be wasted for little reward, so where is the opportunity?

The aggregator business model is one which has proved successful in recent months, offering customers a single platform and billing service, but for the telco which can think a bit more creatively, the fidgety consumer offering opportunities.

Speaking at IBC 2018 in Amsterdam, Endemol Shine’s Chief Creative Officer Peter Salmon pointed towards the restless nature of younger demographics as one of the biggest complications for the content industry. These digitally native audiences are used to consuming media on multiple devices simultaneously, seeking content through a much broader range of channels than traditional industry can keep pace with.

For example, Love Island was one of the companies more successful titles in recent months, not only due to a refresh in the content, but because the target audience was engaged through Snapchat. This is a platform which is becoming incredibly popular with younger demographics, and while there longevity questions surrounding usage as the user gets older remaining, it allowed the company to provide a multi-platform experience for the user. Mobile is driving a substantial amount of content consumption nowadays, but to truly capitalise on the opportunity, new means of engagement have to be considered.

“Companies need to go where the consumer goes,” said Salmon.

Linear TV is one channel, on-demand is another, social media platforms are an excellent one as are apps to bring everything together. The industry is struggling to engage this audience, as well as adapt the relationship with the user to make it relevant for today’s trends. While this is a complication for the traditional industry, it offers an opportunity for the telcos to add value; the insight through mobile usage is already there.

Short-form content is another trend worth keeping an eye-on. These videos, typically 8-10 minutes long, are a new way to engage audiences. They have failed in the past, but with the current domination of mobile platforms and the penetration of social media, new opportunities have arisen. Salmon believes this format is set for a boom in its own right, but as a supporting player for traditional content through the alternative channels, its critical. This presents yet another complication for delivering content to the consumer.

The telcos are organizations which know how to manage these complicated relationships with customers, in theory, as they have been dealing with the multi-platform universe, which is becoming so prominent in content nowadays, for years. Connectivity is also crucially important in everything to do with content moving forward. Mobile is king in the digital economy, and telcos know all about delivering these experiences to the consumer, not necessarily owning the content. Multi-platform, mobile driven engagement is an area the telcos know about.

The “war for attention”, as Salmon describes it, is creating a huge headache for the content industry, though it does present the telcos an opportunity to gain entry to this much-desired aspect of the digital economy. Wherever there is disruption and complications, the door is open for new players.

IBC and TM Forum play match-maker for telco and media ecosystem

With convergence becoming an unavoidable buzzword throughout the telco industry, the telco and media ecosystems will have to learn to become playmates.

IBC and TM Forum are stepping in to make sure sparks fly. Like Mobile World Forum for the telco industry, IBC is the annual meeting place for those on the technical side of media. It might seem an odd proposition to have a conference organiser taking the lead in setting the tone, though such is the breadth and depth of the industry these annual meetings hold significant influence over the activities and conversations which will dominate the year.

This latest announcement from the pair builds on a partnership announced earlier this year, and puts five new ‘Catalyst’ projects onto the agenda. Each Catalyst team will build a working proof-of-concept solution to a specific industry challenge and the successful projects will be showcased at IBC2019 and Digital Transformation World 2019, the TM Forum’s own annual bonanza.

“IBC is pleased to be able to help facilitate the convergence that we are seeing throughout the industry,” said Michael Crimp, CEO at IBC. “With our unique position within the media community, and now our collaboration with the TM Forum, we are now fully equipped to facilitate long-term solutions to the most vexing problems facing the telecoms and media industries today.”

“Media is an increasingly important sector for our global membership as the boundaries between telecoms and media continue to blur,” said Nik Willetts, CEO of the TM Forum. “The digital age is changing the landscape for creation, distribution and consumption of media, and we believe that through industry collaboration we can drive a new wave of innovation and growth. We’re delighted to collaborate with IBC, and to extend the Catalyst model to explore the convergence of telecoms and broadcasting.”

Examples of the projects include:

  • Using 5G powered drones for enhancing the viewing experience during live sporting events
  • Utilising blockchain to support the media supply chain in ways such as royalty tracking and collection
  • Tackling piracy and the unlawful use of unlicensed streaming boxes
  • Developing an open API to securely and anonymously monitor advertising performance in digital media

With the world becoming increasingly mobile, and customer experience for the telcos being increasingly defined by the ability to access the right content at the right time, getting these two ecosystems on the same page will become more and more important. Let’s hope IBC and the TM Forum prove to be effective match-makers.

IBC 2018 – TMT industry must focus on innovation to reignite growth in core services

Telecoms.com periodically invites expert third parties to share their views on the industry’s most pressing issues. In this piece Gavin Mann, Global Broadcast Lead for Accenture, offers a preview of the key topics that will define IBC 2018.

As big tech companies move into content creation and distribution, media and entertainment businesses face an unprecedented array of challenges from new competition to the growing purchasing power of the digital native generation.

Established players must safeguard their core business to maintain and nurture the steady reliable cash flow that comes from their legacy and established customer bases, while forging a path to unlock new revenue streams through innovation. As technology continually evolves, there is no finish line and service providers must get used to continual change.

At IBC, disruption in the industry will be the main topic driving conversations at the show. Accenture believes that there are several ways the industry can embrace technology to unlock new innovation and equip businesses for future success, which will be major points of focus at the RAI. Here are more details about each:

Advanced TV Advertising – Making it easier for advertising buyers

Audiences continue to become more fragmented around a growing number of video offerings and the media industry is having a tough time keeping up with measuring viewership and charging for it. While media companies typically try to sell their own ad inventory with proprietary methods, coming together with a single methodology for tracking content and creating niche data sets in a manner similar to what is being done in the online space, may prove crucial to the industry’s future.

Consortiums like Open AP in North America allow advertisers to use a standard group of data sets to define valuable segments of consumers, which could be anything from expectant mums to first-time house buyers. Each company within the Open AP consortium continues to sell its own commercial time and space, but the wider technology offering means advertisers will be able to access specific segments at greater scale.

We expect many execs will be meeting counterparts at IBC to discuss starting or expanding similar data co-operatives in Europe and around the world.

Creating a culture of innovation

Television Understands Innovation: From revolutions in display (black & white to colour, screen formats), to step changes in choice with the entry of non-terrestrial media (satellite and cable), through to the relative explosion of variety as countries transition from analogue to digital, television providers have always combined technology, insight and opportunity to stay ahead. This drive for creative transformation has been a constant, even though in many countries broadcasters and platform operators alike have followed a well-trodden path – from single, national institutions at the birth of the industry to today’s modern competitors. The recent, rapid growth of platform players offering IP-based video consumption has created a new urgency for innovation, driven both by investor perceptions – and reality on the ground.

Investors have bought into the huge future valuations of platform players, who have created scaled global footprints based on new technologies, value chains and business models. Investors remember the slow-to-adapt industries, or those simply on point when the first digital shots were fired. For video to avoid the fates of so many music and newspaper companies, investors expect a strong digital narrative which sets out steps to survive and thrive in this new context.  investors expect established video businesses to articulate clear strategies. They want to see real, sustained innovation along this journey, differentiation and energetic competitiveness.

Established players can, and need to, apply the full force of digital innovation across their entire business, decoupling decision making and operational processes from legacy ways of working. They’ll realise benefits in almost every domain of a traditional video business:

  • Driving revenue growth
  • Finding cost efficiencies
  • Unlocking trapped value to be deployed more profitably

Driving innovation from within lays the strongest possible foundations for the competitive positioning of any video business. It seeks to create a lean, agile culture of rapid innovation and experimentation, which is alive to the major decision points and options in a company’s future.

Changing the innovation culture is a complete journey of transformation that rethinks the operating model, the value tree, skills and core KPIs. Investments to drive growth in the core business must also be capable of underpinning emerging digital ones.

Companies without an innovation story, who don’t change their culture to be able to innovate, will see shareholders lose confidence that they can deliver future value. Established players need to move decisively to apply the full force of digital innovation across their entire business, decoupling decision making and operational processes from legacy ways of working, therefore removing silos from the operating model and workforce.

Will Voice Assistants disintermediate established brands?

The smart home continues to mature significantly as the digital giants, telcos, cable operators, retailers use Voice Assistants as a license to experiment and bring to market new hardware and services. The emergence of voice as an interface, powered by Artificial Intelligence, has seen Voice Assistants impact on marketing grow exponentially as experiences become curated and personalized.

Increasingly, algorithms are performing the role of gatekeeper between consumers and brands, and they are indifferent to the branding efforts that influence buying decisions people make for themselves. This poses a potential problem for brands looking to connect with consumers.  Think what happens when you ask a voice assistant to order some AAA batteries, and what that means for the valuable established brands which still have “prominence” on the supermarket shelf.

Media and Entertainment companies must quickly get a grip on these new algorithm gatekeepers and learn to navigate and engage with them. Many should consider creating collaborative or complementary services on an existing platform to find new ways to prompt their brand and purchases. All will need to consider carefully where a product or service can be designed to make it past the gatekeeper, and how to earn customer loyalty once it does.

Why the media industry should embrace blockchain

As media companies grapple with disruptive market conditions and increasingly demanding customers, blockchain can redefine how they can engage with their customers, partners and broader ecosystems. The first of these industry trends is strategic co-opetition, driven by consumers’ insatiable appetite for content. These ecosystems offer digital trust models ideal for securing rights, remediating financial transactions, sharing the right data, and optimizing the value chain.

One blockchain opportunity in media is to secure data. Media and platform companies have nothing if they cannot protect data and grant access only to those who need it. Blockchain technology is poised to be a game-changer in data security. It creates an auditable trail of an asset whether it is a device, access rights or content. No one owns this history, which creates a new level of visibility and transparency.

Blockchain can reduce piracy by enabling digital rights management—a boon for regulating copyright infringement. It can also make content provenance more transparent by validating authors and granting them access to distribution channels as trusted sources. Imagine the value of this in a world where “fake news” is part of the cultural and political lexicon. And as companies provide customers with their personal data to meet regulatory requirements, blockchain can capture and store a tamper-evident, secure and up-to-date history of personal usage data for better data portability. With so many use cases, blockchain promises to be an unprecedented data security breakthrough for this and many other industries.

Artificial Intelligence Adoption in Media & Entertainment

There is no doubt that AI will be a hot topic at this year’s show. We are moving beyond the phase of everyone talking about it to businesses actually using it to drive business benefits. Yet although it’s gathering pace rapidly, AI is still a new technology and many media companies are still grappling with what is possible and how they can leverage it to deliver true value.

There are many use cases in the industry that we’ll be hearing about spanning from basic automation of back office processes, to automating compliance checks, automated creation/optimization of programming schedules, or even using AI to ingest and interpret complicated royalties’ contracts to assess payments required.

One story we’ll be hearing about at IBC is the topic of content curation. We all know just how important content has become – Disney starting its own streaming service is just one example of media businesses putting content at the heart of their strategies. Together with the right content, any company looking to generate serious growth simply must provide a good customer experience. Artificial intelligence could be part of the answer to next generation content curation. It allows businesses to tailor what they send to individual customers, which would be impossible to do manually because of the sheer volume of content and customers.

 

Gavin Mann AccentureGavin Mann is the Global Broadcast Lead for Accenture. Digital transformation has been at the heart of his work for the last 20 years. Gavin has worked across multiple industries including broadcast, music, movies, gaming and publishing.