IBC 2019: Interactive takes centre stage as VR shuffles to side lines

Every couple of years there seems to be a massive resurgence for the promise of virtual reality before it is cast to the shadows. This year, interactive content took the limelight from VR.

This is not to say VR and augmented reality wasn’t present at IBC in Amsterdam. Throughout the exhibition halls you could see plenty of headsets and software to build the immersive environment, but on the conference stage it was barely mentioned.

The main stage is the business-end of almost every conference; it a technology or company isn’t a headliner, the ‘also-ran’ category list has gotten a bit longer. This is the conundrum which VR and AR has found itself in; there are some interesting technologies and discussions going on, but the most important people are talking about something else.

AR is progressing very quickly from the pale imitation which captured the imagination through the Pokémon Go app, but the illusive business case continues to frustrate. That said, an important trend which was evident through several sessions was interactive content.

This is an area which looks genuinely exciting. Everything from ‘Bandersnatch’ on Netflix, through to personalisation of sports content (selecting a commentator or parallel content) or Celebrity Big Brother, where users can select the camera they want to view and create their own viewing experience and story to follow. This is the next stage of content, and it is immediately more realistic than some of the blue-sky thinking ideas which are scattered throughout the exhibition halls.

Of course, this should not really be that much of a surprise. The idea of interactive or supplementary content being built into platforms is just one step along from how many younger generations consume content today. It isn’t a single point of consumption, its multiple screens, complimentary experiences and a variety of simultaneous touch-points.

Research from YuMe and Nielsen suggests the trend for adults who use their smartphone or laptop while watching TV content is increasing each year. For 2018, 187.3 million US adults admitted to using multiple screens simultaneously, up 6.4% from the year before. Users want more ways to engage with content and building interactive opportunities into content platforms is certainly one way to apply this trend in the real-world.

IBC 2019: is 4K anything more than hype?

While some people are still unsure whether there is any value in downloading content in HD over SD, the 4K and 8K hype is continuing to build; but is there any point in it?

For the ‘man on the street’, technology often looks like another language. Acronyms are a speciality of the TMT industry, and each day there seems to be another buzzword to keep track of. And when you look the development of the content world, paying particular attention to 4K and 8K, you have to wonder what the point actually is.

Mike Zink, VP of Technology at Warner Bros, summed up the point pretty simply. Having just been to IFA in Berlin, Zink commented that almost every stand had an 8K TV on it. It is a product which is increasingly getting pushed onto consumers, but there is very little 8K content to actually justify the expenditure on the new technology.

Some analysts and commentators might suggest that it is a sensible decision for the consumer to purchase a product which is laden with future-proofed technology, however we think it is simply a ruse to bleed as many dollars out of already strained wallets.

And when you look at the numbers, the market penetration of 4K (we’re not even going to look at 8K right now) is steadily creeping up, but it is not as high as you would expect.

Maria Rua Aguete of IHS Markit estimates market penetration of 4K TVs across Europe is 46%. North America exceeds this percentage, though penetration drops to 42% when you look at China and further down to 19% in Japan. The consumer is being subjected to an assault of 8K messaging, though the 4K evolution is still a work in progress.

Another challenge which the industry faces is a lack of 4K content. In Europe, there is 4K content, though it is one of the few areas where the expenditure is partially justified by experience.

Without the content, is there any point in a 4K TV purchase? And if the market penetration does not increase, will the content creators be swaying into the additional expense of creating 4K content? It is a chicken and egg situation, where those who have been convinced to purchase a 4K TV are ending up in a suspect position.

Perhaps this is a reality check which some in the industry will welcome. The telcos, for instance, which be scratching their heads to figure out how they deliver the desired consumer experience. The increased consumption of video is already placing strain on the network, and 4K/8K would certainly make the creaks louder.

This is perhaps something which the content industry is missing. There is an expectation the infrastructure will be there to deliver the experience, though this might not always be the case.

The telcos are under some pretty severe pressure at the moment. Not only do they have to worry about the deployment of 5G networks, a pretty expensive job to say the least, there are demands on the home broadband side as well. If more consumers are expecting 4K content in their living room, they might end up a bit disappointed.

Trends in the connectivity world are heading the right direction, ‘fibre-first’ is a mentality which is being championed by a huge number of telcos, but are these trends moving fast enough?

If you are thinking about buying a 4K/8K TV right now, it might not be worth the extra investment. Not only is the supporting content thin on the ground, but you should also seriously consider whether you have a broadband connection which can underpin the desired experience.

IBC 2019: Are the nuances of the content world being understood by telcos?

The traditional telco business model is being commoditised, this is not new news, but with more telcos seeking to drive value through content, do they understand the nuances of consumer behaviour?

Once again at IBC in Amsterdam, it is an OTT which is grabbing attention. This should come as little surprise considering the disruption which this fraternity is thrusting on the world of telecoms, media and technology, though here it is more than gratuitous. Cécile Frot-Coutaz, the head of YouTube’s EMEA business, outlined why these companies are leading the way; a fundamental and intrinsic understanding of today’s consumer and the consumer-driven market trends.

This is perhaps why the telcos and traditional media companies are struggling to adapt to a world dominated by millennials, generation Z and digital natives. They appreciate society is changing but have perhaps not correctly balanced the formula to fit cohesively and efficiently into the new paradigm.

This conundrum is most relevant in the content world. Telcos need to factor this complex and nuanced segment into the business model, but how, where, why and when is a tricky question. Many telcos want to do something completely new and very drastic, but the simplest ideas are often the best ones; how can connectivity be used to augment and enhance the fast-growing, fascinating, complicated and profitable content space?

From our perspective, telcos need to diversify, but the best way to do that is figure how connectivity can enhance growing businesses and segments. This might sound like an obvious statement, however the evidence is the nuances are being missed.

Take AT&T for example. This is a company which desperately wants to diversify to take advantage of the digital economy. One way in which it feels it can do this is through the acquisition of Time Warner, a $107 billion bet to own content, create a streaming platform and drive another avenue of engagement with the consumer. Sounds sensible enough, but why take such a risk when there are opportunities closer to home.

Another strategy is more evident in Europe where telcos are attempting to create partnerships with the streaming giants to embed the distribution of these services through their own platforms. See Sky’s integration of Netflix or Vodafone’s work with Amazon Prime. Again, it is a perfectly reasonable approach, but does this future-proof the business against the trends of tomorrow?

These are two approaches which will attract plaudits, but we would like to take the strategy closer to home once again.

During her presentation, Frot-Coutaz pointed to several trends which could define the content world of tomorrow, and it is a perfect opportunity for the telcos to add value.

Firstly, let’s have a look at the consumer of today and tomorrow. Millennials and Generation Z have fundamentally changed the way in which the media world operates, and content is consumed. Not only is it increasingly mobile-driven, but there are new channels emerging every single day. Technology is second-nature to these consumers, and this is shaping the world of tomorrow.

Another interesting point from Frot-Coutaz is the fragmentation of content. One of the objectives of YouTube is not only to own content channels, but to empower the increasing number of content creators who are emerging in the digital world. If the content creators make more money, so does YouTube.

Frot-Coutaz claims that the number of YouTube channels which generate more than $100,000 per annum has increased 30% from 2017 to 2018. These trends are highly likely to continue, further fragmenting the content landscape.

This is where owning content or embedding popular streaming services into platforms becomes problematic. Consumer trends suggest the variety of channels through which the user is consuming content is increasing not decreasing. Embedding Netflix into a platform is an attractive move, but it is only attractive to those who have an interest in Netflix. If connectivity solutions can be offered to consumers to simplify and enhance the consumption of content, agnostic of the platform, there is a catch-all opportunity.

Although Netflix and Amazon Prime might be the content platforms on everyone’s lips for the moment, the number of ways in which consumers engage content is gathering significant momentum. There are new challengers in the streaming world (Disney+ or Apple TV), traditional social media (Facebook or Twitter), challenger social media (Tik Tok) AVOD channels (YouTube), traditional conversational websites (Reddit), messaging platforms and who knows what else in the 5G era. What about the VR/AR platforms which could potentially emerge soon enough?

This is a nuance, not a drastic change in thinking, but it is an important one to understand. Do telcos want to be the owner of content, the distributor or the delivery model. Admittedly, the delivery model is not the sexiest in comparison, but it might hold the most value in the long-run.

Another way to think about this taking the example of Killing Eve, the BBC spy thriller. Is there more long-term value in the eyes of the consumer in owning the content, owning the distribution channel or owning the connectivity services which fuel consumption and engagement through all channels?

The best means of differentiation have always been the ones which are closest to home. If you look at the likes of Google, Microsoft and Amazon, these are future-proofed companies because they are taking their current services and creating contextual relevance. There might be examples which undermine this point, but the general claim holds strong.

At Google, the team diversified their business through the acquisition of Android. This evolution took Google from the PC screen and onto mobile, but it is an extension of the advertising business model in a different context. The same could be said about YouTube. A video platform is drastically different from a search engine, but the underlying business model is the same; identifying the needs of the consumer and serving relevant commercial content.

The telcos are looking to do the same thing, but perhaps there needs to be more of a focus on a proactive evolution of the business rather than reactive. The telcos are playing catch-up on the consumption of video through mobile and a shift to OTT distribution, but the current approach is perhaps too narrowly focused. Focusing on the core business of connectivity delivery is more of a catch-all approach, factoring in future trends and the increasingly fragmented digital society.

This is a very easy statement to make, the complications will be on creating products which encapsulate these trends and offer an opportunity for telcos to grow ARPU. We are sitting very comfortable in the commentary box here as opposed to in the trenches with the product development teams, but the nuances of content are there to be taken advantage of.

IBC 2019: Linear TV isn’t dead just yet

This might sound like a very bold and short-sighted statement, but thanks to the development of IP-based standards, traditional broadcasters might just be able to survive in the digital economy.

This is of course not a statement which suggests business is as usual, there are major restructures and realignments which need to occur to future-proof the business, but linear TV and traditional broadcasters can survive in the cut-throat world of tomorrow.

The change which is being forced onto the world is HbbTV and ATSC 3.0, two new standards for the traditional broadcasters to get behind which offer the opportunity to create the experiences consumers desire and the business model which advertisers demand.

HbbTV, Hybrid Broadcast Broadband TV, and ATSC 3.0 are both standards which aim to take the broadcasting industry into the digital world. Although these standards are not necessarily harmonised, the IP approach effectively forces manufacturers and broadcasters into an era of on-demand content, interactive experiences and hyper-targeted advertising.

Over the last few years, many in the TMT world have been quick to write the obituaries for linear programming, but this is not an area which should be written off so abruptly. There is still a niche for the idea of linear TV, and if executed competently, there will be an audience of Generation Z sitting on the sofa next to the Baby Boomers.

Oliver Botti of the Fincons Group, pointed to two areas where linear TV currently, and will continue to, thrive. Firstly, live sports, and secondly, reality TV programming such as Celebrity Big Brother. With both of these standards, new content, experiences and advertising business models can be enabled to ensure continued relevance.

For sports, additional content can be offered to the consumer alongside the action to offer the viewer more control of their experience. This is something which is becoming increasingly common in the OTT world, though it is yet to genuinely penetrate traditional broadcasting in any meaningful way. The second example Botti highlighted is a very interesting one.

The concept of Celebrity Big Brother is not new to most. Dozens of cameras in a closed environment, following around the lives of prima donnas where at least one will probably make some sort of racist gaff at some point. However, with the new standards, Botti highlighted users can choose which camera is live on their own TV, creating a personalised content experience.

It does sound very creepy, but this is the sort of thing which is likely to appeal to some audiences…

Both of these examples are live content. For some, this experience can not be replicated in an on-demand environment, driving the continued relevance for linear TV. It is a niche, but one which will drive the relevance of traditional broadcasters and the relevance of linear programming for years to come.

Vincent Grivet, Chairman of the HbbTV Association, also highlighted the standards also allow for personalised advertising. This is just as, or perhaps more, important to the survival of traditional broadcasters as without the advertising dollars these businesses will not survive. Advertisers know what they want nowadays mainly because Silicon Valley can offer it. If hyper-targeted advertising is not an option, advertisers will not part with their valuable budgets.

What is worth noting, is that both of these standards rely on the TV manufacturers creating products which allow for success to continue. This is where an issue might arise; currently there is no global harmonisation.

HbbTV has been adopted in Europe, while ATSC 3.0 has been championed in the US and South Korea. China is doing what China does and going down its own separate path, creating a notable amount of fragmentation. This might be a challenge.

Richard Friedel, Executive VP of Technology & Broadcast Strategy of 21st Century Fox, told us that as an engineer he would like to see more harmonisation, but as a pragmatist, he doesn’t see it happening any time soon. All the standards are IP-based, therefore there will be a natural alignment as the industry evolves over the next couple of years, but this does not necessarily mean genuine harmonisation.

This presents a complication for the industry, but let’s not forget that this is a positive step in the right direction. Linear TV might not be attracting the headlines, but if you listen to the right people, it is certainly not dead.