mmc group iptv strategy case study jan2012

mmC GROUP Strategy Consultants – IPTV Strategy in ME_may2011

Defining a wining and successful IPTV strategy in the Middle East

Case Study mmC Group Strategy Consultants May 2011

For further informa@on please contact: Carlos Valdecantos (+34 696 940 2210; cva@group-‐mmc.com)


Strategic reflecDons on IPTV

Is there a business case for IPTV in the Middle East?

IPTV players across the value chain and key technical challenges

Agenda


Mobile Applica@on Stores

Loca@on-‐Based Services

Mobile Gaming

IPTV has been one of the telecommunica4on hypes with higher trough of revenue expecta4ons and business s4mula4on...

ExpectaDons

Technology Trigger

Time Peak of Inflated Expec-‐ta@ons

Trough of Disillusionment

Slope of Enlightenment Plateau of Pro-‐ duc@vity

Video Analy@cs

Context Delivery Architecture

LTE-‐A Smart Antennas

Bluetooth Low-‐Energy Wireless Technology

cdma2000 1xEV-‐DO Rev. B

Rich Communica@on Suite

VoIP Wireless WAN 4G Standard

Mobile Social Networks

Cloud Compu@ng NFC Payment

Mobile Adver@sing Long Term Evolu@on

WiMAX 802.16e-‐2005 IMS

Mobile Instant Messaging

Mobile Presence

IPTV Mobile IPTV Broadcas@ng

Mobile Search Switched Digital Video

FTTH Mobile E-‐mail Services

Electronic Bill Presentment and Payment for Telecom Providers

Interac@ve TV

Integra@on as a Service Loca@on-‐Aware Technology

Loca@on-‐Aware Applica@ons Mobile TV Streaming

MPLS Infrastructure

Network Sharing Femtocells Near-‐field Communica@on Unified Communica@on Next-‐Genera@on Service Delivery Pladorm Service-‐Oriented Architecture in OSS/BSS

New Genera@on Opera@ons Systems and Sofware Advanced Telecommunica@ons Compu@ng Architecture

Addressable TV Adver@sing Technologies

Revenue innova@ons

Hype cycle telecommunicaDon 2009-‐2010

Gartner’s assumpDons •  Revenues of next

years will be generated from exis@ng products

•  However, in the core business there are very limited revenue innova@ons and therefore, growth outside core business is also required

•  Technical innova@ons drive bandwidth and can help to op@mize the cost base

INTRODUCTION > CORE BELIEVES ON ANY IPTV STRATEGY

Source: Gartner


...however, IPTV is s4ll a revenue innovator promise as very few countries reach the minimum level of penetra4on to defend the case.

•  Many incumbent operators have launched IPTV or VOD services over the last five years, a @meframe that provides enough data points for analysis

•  In the European market, only Belgacom and KPN have built household penetra@on above 10% within three or four years. All others have household penetra@on of less than 10%-‐5% in several instances.

•  No European or North American incumbent is showing any signs yet of reaching the 31% penetraDon level that PCCW has in Hong Kong for its IPTV offering (Now TV).

% of households

IPTV AdopDon per % of household penetraDon

20

Share networks (passive and active) with competitors!� to generate significant Capex and Opex savings.

Exploit group synergies and outsourcing. !� Activities across IT, billing, service platforms, network monitoring, design, and optimization are all candidates for consolidation. Groups with operations in multiple markets might consider consolidation at a group level.

Embrace the lowest-cost technologies available. !� Deploying technologies in the network that minimize transmission, switching, and energy costs (e.g. alternative energy sources) can provide fast payback and ROI.

Manage customer value tightly,!� ensuring that costs to acquire and serve a customer are tightly aligned with the revenue that a specific customer generates.

There is still significant growth left in emerging markets, although the number of seats at the table is limited. For new entrants, M&A may represent the best way to gain exposure. However, generating value from the growth that remains is increasingly tough and requires strict adherence to a very low-cost operating model.

New service growth opportunities: IPTVTwo new telecom services that have attracted significant investment over the past year are IPTV and mobile data services, including smartphone applications. We look at IPTV first.

Many incumbent operators have launched IPTV or Video on Demand (VOD) services over the last five years, a timeframe that provides enough data points for analysis. Of the operators we examine (see Figure 2.5), only Belgacom and KPN have built household penetration above 10% within three or four years. For KPN, this was due in large part to its DTT pay-TV service, Digitenne. All others have household penetration of less than 10%, and less than 5% in several instances. So far, there is little sign of an inflection point in the penetration trend lines. No European or North American incumbent is showing any signs yet of reaching the 31% penetration level that PCCW has in Hong Kong for its IPTV offering, Now TV.

Conclusion

Figure 2.5 Percentage of households subscribing to telecom IPTV services since launch

Source: Informa, Oliver Wyman analysis.Note: Last data point on all series is 2Q09.

% ofhouseholds

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

Quarters since service launch

BT KPN (inc. DTT) Telecom Italia

FT Belgacom AT&T

Verizon DT Telia

0%

5%

10%

15%

Source: Informa; Note: Last data point on all series is H22009

Quarters since service launch

Comments

INTRODUCTION > SLOW ADOPTION OF IPTV OFFERINGS IN EU & US

So far, there is lible sign of an inflecDon point in the penetraDon trend lines


There are few out-‐performers in the telecom space where IPTV’s take-‐up reflected a substan4al contributor to growth.

•  Portugal Telecom is outperforming peers despite a late launch

•  Belgacom reached 50% penetra@on of its broadband base and has been a consistent pioneer in IPTV broadband

•  TeliaSonera and France telecom have reached significant scale

•  Swisscom is experiencing a good momentum from a slow start

•  So far Telefonica, Telecom Italia, DT, BT and KPN have seen limited success (for KPN we use IPTV only ie exclude Digitenne)

IPTV take up as a % of broadband base

Source: Company data, Morgan Stanley Research

Comments

INTRODUCTION > IPTV TAKE-‐UP > EUROPEAN BENCHMARK BACK-‐UP SLIDE


Different trends are responsible for the slow adop4on, but special remark should be done on OTT services as it means a mayor shiN in the TV business.

•  Most of TV markets are already mature, ofen with well-‐established DTT, DTH, and cable TV offerings

•  It’s a challenge for telecom operators to break into these markets and win market share

•  Gaining market share is no guarantee of high ARPU. With some excep@ons, IPTV ARPUs are generally lower than the average pay-‐TV ARPUs

Slow uptake of IPTV and reduced ARPUs

Trend RaDonale / descripDon Impact on business

INTRODUCTION > IPTV TRENDS

•  One reason IPTV ARPU is low is because few operators offer as much premium content as compe@ng pay-‐TV players

•  Operators looking to improve ARPU may face a vicious circle—they lack the scale to jus@fy the high cost of premium content, but without it they lack the compelling content proposi@on needed to build scale

•  In addi@on, in most of the emerging markets, local content is significantly more important than interna@onal content

Premium content is a vicious cycle

•  The “cuqng the cord” effect unveils as the most fundamental change that threatens operators’ efforts to generate value from IPTV & VOD services

•  A growing propor@on of video consump@on is moving to ‘over-‐the-‐ top’ services that are delivered across the open internet rather than over operators’ dedicated IPTV or VOD pladorms

Increasing “Cufng the cord” effect

1

2

3


Operators have the tools to prepare themselves against the IPTV and VoD threats, but what about a new player entering in the IPTV arena? INTRODUCTION > OPERATOR’S CHALLENGES AND TENTATIVE COUNTERMEASURES

Major challenges for telecom operators

DescripDon and comments

•  As consumers gravitate to online video, operators bear increasing network costs without a commensurate increase in revenue, due to the prevalence of flat-‐rate broadband packages

•  In some markets, operators use traffic shaping and bandwidth throwling at peak @mes to help protect customer experience and perhaps encourage heavy users to move to higher-‐priced unlimited services.

•  Increasing network costs

A

•  Redundant investment in the TV space

B •  If demand for 'over-‐the-‐top' services con@nues to accelerate, it threatens to render redundant at least some of the investment that operators have made in IPTV pladorms.

•  Open delivery further fragments the environment in which operators must fight for pay-‐TV market share

Possible Countermeasures

Pricing rebalancing – charge more to final

user

Charge content providers & aggregators

Double bet and parDcipate in OTT video directly


INTRODUCTION > CORE BELIEVES ON ANY IPTV STRATEGY

We therefore see four main ques4ons that should be addressed by telecom operator wishing to launch TV opera4ons.

1. Is there a business case for IPTV in the Middle East?

Which should be the value proposi@on towards the market?

Which technical solu@on fits best with each strategy?

How should a telecom operator approach to IPTV implementa@on?

2. 3. 4.

MAKE OR BREAK

TACTICAL

OPERATIONAL

OPERATIONAL


Strategic reflec@ons on IPTV



Agenda


IPTV and VoD revenues es4ma4ons in Middle-‐East and North Africa appear to be appealing, with over 500m in 2014.

Source: Telco TV forecasts 2009-‐14, Ovum

SAC/SRC (Euros) MENA Broadband VAS Revenues forecast

60.0 118.0

213.0

325.0

467.0

12.0 19.0

32.0

49.0

70.0

0.0

200.0

400.0

600.0

800.0

1,000.0

1,200.0

1,400.0

2010

2011

2012

2013

2014

Music

VoD

Gaming

IPTV

Online Advertising

VAS revenues (USD m)

IS THERE A BIZ CASE FOR IPTV?

MENA Broadband penetraDon of households in 2010

Source: ITU; World economic forum 2010

0.000

0.100

0.200

0.300

0.400

0.500

0.600

0.700

0.800

0.900

Qat

ar

UA

E

EU 1

5

Bah

rain

Om

an

Jord

an

%

84%

75% 68%

48%

22%

13%


IS THERE A BIZ CASE FOR IPTV? > LESSONS LEARNT FROM OTHER IPTV CASES

However, there are some doubts around the IPTV case (that apply to most of the ME markets) that should be considered when defining the IPTV case...

•  Satellite TV compeDDon reduces the target market

1 •  IPTV ARPUs may be lower than pay-‐TV ARPUs

2 •  Fiber investments move ROI further away the 3rd year

3 •  Premium content is key, but damn expensive

4

•  A growing propor@on of video consump@on is moving to ‘over-‐the-‐ top’ services that are delivered across the open internet rather than over operators’ dedicated IPTV or VOD (video-‐on-‐demand) pladorms

•  If this trend con@nues growing, the revenue’s share for telcos will be reduced

•  OTT players are also fragmenDng the market

5

•  Few operators offer as much premium content as compe@ng pay-‐TV players

•  Operators looking to improve ARPU may face a vicious circle—they lack the scale to jus@fy the high cost of premium content, but without it they lack the compelling content proposi@on needed to build scale

•  Significant investment is required to deliver reliable IPTV services

•  A reliable connec@vity around the home (DSL /FTTH) is s@ll a major issue (over 4MBs)

•  Delivering HD content across telco’s networks and the ability to scale up for carrying HD VoD is another issue

•  Gaining market share is no guarantee of high ARPU

•  With some excep@ons, IPTV ARPUs are generally lower than the average pay-‐TV ARPUs

•  Triple-‐play bundling strategies required to obtain revenue increase benefit per RGU

•  Most of the ME countries hold mature TV markets, with well-‐established DTH and cable TV offerings. It is a challenge to break current status-‐quo and win market share

•  Illegal satellite connec@ons account for at least 20% of the total

•  Lack of interoperability for other devices that could poten@ally deliver IPTV reduces case poten@al

Note: OTT (Over the Top)


…as most of them have a direct impact on margins and break-‐even points of profitability. IS THERE A BIZ CASE FOR IPTV? > MARGIN ANALYSIS

USD

25

50

75

6

14

25

30

0

10

20

30

40

50

60

70

80

2P Bundle IPTV pack = Subtotal Backbone access

DSL access Content Gross Margin

IPTV’s monthly margin analysis

TRIPLE PLA

Y CA

SE

•  Considering the SAC split… •  Modem cost: 30 $ •  STB cost: 200 $ •  Installa@on: 460 $ •  …

•  …the gross margin (30$) over install cost (690$) gets a breakeven point at 23 MONTHS

•  On top: •  Assume STB update

on a 5 year interval at most

•  Assume at least a 12% churn

•  Assume compe@@ve response affec@ng top-‐line revenue

Source: mmC Analysis based on real case in Europe;

ILLUSTRATIVE – REAL CASE

1 2 5 3 4 RISKS


•  Limited content catalogue and QoS

•  Most affordable op@on; Internet accessible

•  Cost ineffec@ve – break even point afer years

•  Serious compe@tor to DTH technologies

•  Strict minimum speed requirements

•  Improves the economics of IPTV (reducing cost)

Telecom operators should assess the three different IPTV models to reduce investment profitability risks whilst providing an appealing TV experience to the final customer. IS THERE A BIZ CASE FOR IPTV? > IPTV OPTIONS

Internet TV (OTT) HYBRID DTH / IPTV PURE IPTV

•  Combina@on of both Linear Broadcast and Video on Demand Approach

•  Connec@vity via Operator’s Closed Broadband Network Standard

•  Pay-‐TV distribu@on model

•  Revenue model is a combina@on of Subscrip@on based, Pay-‐per-‐view and Adver@sing

•  Broadcasters, content providers, adver@sers or disintermediators have a revenue sharing arrangement with the Telco

Mod

el DescripDo

n

•  Hybrid model combines broadcas@ng of linear TV through DTT / DVB-‐S and Video on Demand services through DSL

•  Bandwidth requirements for DSL, (aka network costs) can be reduced since linear TV won’t require broadband bandwidth capacity

•  Revenue model as a combina@on of Subscrip@on based and Pay-‐per-‐view

•  A pure Video On Demand Approach: Primarily portal based as extensions to broadcaster’s linear digital channels

•  Connec@vity via Internet only –Leveraging exis@ng content from digital channels funded through a combina@on of revenue sources including Adver@sing, Pay-‐per-‐view, Subscrip@on based and Download to own

•  User generated and syndicated content from OTTs players’ portals and service delivery pladorms

Risks &

Be

nefits


Depending on the scenario selected, the investments required will be different. The current tendency is to define 4ght cost control mechanisms to avoid CapEx burn... IS THERE A BIZ CASE FOR IPTV? > THE IPTV CAPEX ISSUE

332.59 130.18

82.8 53.45

65.98 0.18

0 100 200 300 400

Accumulated CAPEX CPEs Sales Channels BroadcasDng Network

TV Plasorm SGA

USD (in Million)

Sample Hybrid IPTV CAPEX case study 1)

115.8

11.2 2.4 0.7

New HW Replenished HW Installa@on teams HH installa@on

79.00

3.80

Sales Channels Comm & Adv

49.37

3.44 0.41 0.23

HW Installa@on services Monitoring tools Network monitoring

41.75

13.46

10.11 0.66

Core pladorm Advanced features OSS/BSS integra@on TV Plat Opera@ons

0.18

SGA 10 years Accum

ulated

Cap

Ex Breakdo

wn

Source: (1) mmC Analysis based on real case in Africa; Notes: CPEs: Customer Premises Equipments;

AssumpUons: A) 3 Offers up to 40 channels; B) Countrywide penetraUon of overall PayTV in 10 years: 23%; C) Operator’s IPTV M.S in 10 years: 33%

ILLUSTRATIVE

CapEx Annual

average of 31 M USD


…op4mizing OpEx spending (accep4ng that most of the opera4ng cost might come from the content side and this will be hard to op4mize)… IS THERE A BIZ CASE FOR IPTV? > THE IPTV CAPEX ISSUE

172.8

63.83

62.8 23.33

26.48 6.36

0

50

100

150

200

Accumulated OPEX Content TV Plasorm Network CPEs SGA

USD (in Million)

Sample Hybrid IPTV OPEX case study 1)

32.55 31.28

Variable costs Fixed costs

36.42

7.54

6.91

11.93

Core pladorm Advanced features OSS/BSS integra@on TV Plat Opera@ons

20.07

2.57 0.47 0.23

HW Broadcast net Maintenance Sites Network monitoring

15.00 11.21

STB Licensing STB Repair

10 years Accum

ulated

OpE

x Breakd

own

Source: (1) mmC Analysis based on real case in Africa; Notes: CPEs: Customer Premises Equipments;

ILLUSTRATIVE

6.36

SGA

OpEx Annual

average of 16,3 M USD

AssumpUons: A) 3 Offers up to 40 channels; B) Countrywide penetraUon of overall PayTV in 10 years: 23%; C) Operator’s IPTV M.S in 10 years: 33%


..while defining a segmented and pricing-‐innova4ve approach to gain market share, increase ARPU levels an reduce abandonment. IS THERE A BIZ CASE FOR IPTV? > IPTV SEGMENTATION & PRICING

IPTV SegmentaDon outputs IPTV Pricing outputs

ILLUSTRATIVE OUTPUTS


A special remark should be put on OTT strategy. Telcos have the opportunity to be reference players while extending the tradi4onal IPTV model towards innova4on. IS THERE A BIZ CASE FOR IPTV? > OVER THE TOP

•  Can we leverage on our premium rights (esp. sport) to drive up triple play through OTT?

•  Should we rely on UGC and play the adver@sing bawle?

•  How do we benefit of an OTT models to avoid being bypassed in delivering content that clogs up our broadband network?

Over The Top model

Linear Non-‐Linear

Content

Broadcaster Broadcaster

Final Customer

MulD-‐channel plasorm

Own channel

Portal aggrega-‐

tor

Service aggrega-‐

tor

Video search

•  How we op@mize the fiber investment required to support the IPTV service?, is there an alterna@ve op@on?

•  Can we partner with specialized providers to drive innova@ve video services? Is there an easy way to mone@ze them?

How can an OTT model can benefit current operator’s IPTV strategy?

•  What’s the video consump@on demand of my base that can be delivered trough OTT services?

Notes: UGC: User Generated Content


In our opinion, there’s a business case for IPTV in the Middle East. Operators should successfully aaend the different challenges that separate success from failure… IS THERE A BIZ CASE FOR IPTV? > IPTV CHALLENGES & KEY DRIVERS

BUSINESS MODEL

•  Managing IPTV as a new service and the absence of business experiences at scale

•  Addressing the right size of the required investments (e.g.. Content and technology)

•  Using the IPTV as an ARPU and CLTV (life @me value) enhancer

CONTENT & MEDIA MGT

•  Seqng up a dedicated team for content selec@on and program schedule management

•  Developing exper@se in content nego@a@on, cross-‐selling, promo@onal offer mgt and defining the content refreshment policies

•  Ensuring quality assurance and compliance process for content providers

SERVICE CONTROL

•  Suppor@ng new services such as network PVR, VOD Distribu@on scheme

•  Limi@ng access to certain services in case of network and service infrastructure overload (e.g.. Video servers)

•  QoS Management and service control architecture to handle load peaks and service mixes

E2E SERVICE ASSURANCE

•  Strong need for architecture’s real @me troubleshoo@ng and monitoring (end to end)

•  Proac@ve status analysis, automated trouble management and recovery process if required

•  Proac@ve management of new areas such as video quality management and condi@onal access management

CUSTOMER CARE & BILLING

•  Integra@ng the IP TV billing processes with the exis@ng billing processes

•  Building awrac@ve commercial offer by bundling TV services with Voice and Data

•  Design new billing processes and build interfaces with external payment GWs

•  Customer self modify subscrip@on

PRODUCT TECHNOLOGY CHOICES

•  Use of off-‐the -‐self products to be integrated in Telco’s infrastructure or define architecture and standards and ask suppliers to adapt their solu@ons to this scenario

•  Cost effec@ve STBs with high video quality, GUI and interac@ve services

•  Ability to offer high scalable @tle search for on-‐demand movies and content


…and learning from others’ success experiences and lessons learnt. IS THERE A BIZ CASE FOR IPTV? > SUCCESS FACTORS IN IPTV

1

The Right Content

2

PosiDve User Experience

3

High Quality of Service

4

Tight operaDonal and cost control

5

InteracDvity

Success Factors in an

IPTV Strategy

•  Provide improved ICC for immediate viewing

•  Facilitate an easy STB installa@on •  Provide easy payments for pay-‐per-‐view services

•  Automa@c system requirement checks and sofware updates

•  Require @ght cost control as compe@@on for IP TV customers is fierce between Telecom service providers, broadcasters and Media companies

•  Extendable content environment

•  Rely on it as a major differen@ator compared to tradi@onal broadcast TV where there is no back channel

•  Accelerate convergence on three applica@on screens (PC, Mobile and TV)

•  Opportunity for personalized Ad selec@on

•  Look for the right content rights to make a differen@a@on

•  Look for the right commercial trade-‐offs between content and services

•  Providing specialism and local content customized to targeted groups

•  Releasing content in a compe@@ve @me windows

•  Quality of Service in IP networks to deliver constant quality in transmission

•  Trade off MPEG4 compression with video defini@on

•  Video Call Admission control Notes: ICC: Instant Channel Change


Strategic reflec@ons on IPTV



Agenda


With the aim of understanding who is who in the IPTV compe44ve landscape, we should first separate all players & roles involved across the value chain…

Equipment and Technology

Network & Service Provisioning

Video consumpDon

Equipment & Hardware systems

Sovware systems and service plasorms

Customer AggregaDon & OTT Players

Content Provider

•  Content recep@on

•  Signal condi@oning

•  Video Headend •  Decoder

+Streamer •  VoD/nVoD

Servers •  Switches •  DSLAM •  IP-‐STB •  xDSL Modem

•  IPTV middleware •  Digital rights

management (DRM) wrapping

•  Content Related sw (encoding and packaging)

•  Billing •  Service

monitoring and network probes

•  CAS,IP-‐Scrambler •  QoS & Monitoring •  Managed services

•  Mul@cast / Unicast over DSL and Fiber technology networks

•  Content sourcing •  Procures HW &

SW •  Branding &

packaging •  Installa@on •  Service

provisioning •  Billing •  Customer

Support

•  Content rights •  Content

pordolio •  Digitaliza@on

and content produc@on

•  Catalogue management

•  Content Aggrega@on

•  Content distribu@on network

•  Content sourcing •  Technology

deployment •  Uses Telcos

network for service provisioning

•  Branding & packaging

•  Installa@on

•  Buys Set top Box •  Buys IPTV

package •  Pulls content and

adver@sement

IPTV COMPETITIVE LANDSCAPE IN ME > KEY PLAYERS ACROSS THE VALUE CHAIN

Subscribes

Subscribes Subcontracts

Revenue share Players

Roles

Simplified IPTV Value Chain

Content management & delivery

Direct deliver Deliver

Network distribuDon & BroadcasDng


IPTV STBs IPTV access Encoders and CAS

IPTV COMPETITIVE LANDSCAPE IN ME > KEY BRANDS PER ROLE

Players

Samples

Detailed players split per role

IPTV Streamer & Middleware

VoD providers

IPTV Service plasorms OTT Content provider

NOT EXHAUSTIVE

Note: Within the last 5 years: Tandberg TV was bought by Ericsson; Tandberg STB and Barco were bought by Cisco; Myrio was bought by NSN; Securemedia, Broadbus were bought by Motorola STB: Set-‐top Box; CAS: CondiUonal Access Systems; VoD: Video-‐on-‐Demand

Exis4ng mul4ple op4ons in the region, it’s key to iden4fy which of these players fit best with the operator’s technical and business requirements.


(Bahrain) (2)

While there’s no one single top-‐notch configura4on, most of the ME telecom operators have opted for a big player combina4on as a way to get implementa4on secured.

Access

Video Headend

VoD

Set Top Box

SDP and DRM

Middleware

Source: (1) 2010 MRG, Inc. Note: (2) Launched in 2011

Top world vendors per category 1)

IPTV COMPETITIVE LANDSCAPE IN ME > TOP PLAYERS & MENA IPTV OPERATORS

Operators & IPTV Partners selecDon

eLife TV (UAE) (2)

Mozaic TV (Qatar)

EAMS (Egyp@an Advanced

Mul@media Systems) (2)

MT TV(Morocco)

Du TV+ (UAE)

•  Most telcos are op@ng for hybrid IPTV/DTH technical solu@ons

•  The advantages/disadvantages of any of these op@ons really boils down to two significant factors, the RFP and vendor selec@on process and the System Integrator (SI) alloca@on

•  Big names deliver end-‐to-‐end solu@ons as “turn-‐key” contractors, engaging specialist-‐SIs and providing all managed services required

Lessons learnt

NOT EXHAUSTIVE


Which Service Model?

IPTV COMPETITIVE LANDSCAPE IN ME > IPTV TECH STRATEGY

There are 3 key technical implica4ons that directly affect the IPTV technical features and requirements required to deploy an outstanding video experience.

Major technical requirement

DescripDon and comments

•  A video file is huge in comparison with almost any other type of informa@on carried over a network and consumes a significant bandwidth of it.

•  Video is bandwidth hungry

•  Video is highly intolerant of varia@ons in delay and packet loss, and is corrupted by small varia@ons of them, destroying the viewing experience.

•  Streaming video requires RT network performance

•  If any por@on of a video play goes badly, complaints and demands for refunds will result. Any failure in a video connec@on is almost certain to create nega@ve customer reac@on

•  Video is a conDnuous “always on” experience

Dependence

Which Delivery Model?

Which Management and Support Model?

Note: RT = Real Time; BB = Broadband

Technical implicaDon

A

B

C

…depending on the nature of the content, the format of the video, and the appliance(s) under which the video will be delivered

…depending on the characteris@cs of the customer access network and the metro connec@on network

…depending on the way in which video will be ordered, supported and billed


IPTV COMPETITIVE LANDSCAPE IN ME > IPTV SERVICE OFFERING ILLUSTRATIVE

At a customer perspec4ve, the video-‐user-‐experience should be a set of different func4onal services towards personalized TV. Commercial requirements will determine the IPTV service footprint desired.

Desired Feature

Most valuable feature

Willingness to pay for

Churn rate AVERAGE LEVEL (combining 4 factors)

1 Prime@me Any@me

2 3 4 5 6 7 8 9 10

Prime@me Any@me Prime@me Any@me Prime@me Any@me

Catch-‐up / Start over prime@me



Caller ID on TV Caller ID on TV Caller ID on TV

Caller ID on TV


Mul@-‐room DVR Mul@-‐room DVR Mul@-‐room DVR Mul@-‐room DVR

External Hard Drive for DVR

Channel Video Thumbnails


Remote Monitoring using TV

Single-‐player games Remote Monitoring using TV

Remote Monitoring using TV


DVR Place-‐Shifing News & Informa@on Widgets

News & Informa@on Widgets DVR Place-‐Shifing

Digital Media Place-‐Shifing Single-‐player games DVR Place-‐Shifing Digital Media Place-‐

Shifing

Channel Video Thumbnails DVR Place-‐Shifing Single-‐player games News & Informa@on

Widgets

PC-‐to-‐STB Interac@on External Hard Drive for DVR

External Hard Drive for DVR Single-‐player games

Prime@me Any@me


Mul@-‐room DVR

Caller ID on TV


PC-‐to-‐STB interac@on

Single-‐player games

News & Informa@on Widgets

DVR Place-‐Shifing

External Hard Drive for DVR

Note: TV 2.0: The Consumer PerspecUve. Park Associates Research (Percentage of U.S. adult home broadband users raUng feature as 5-‐7, n=2,720, +2%)


IPTV COMPETITIVE LANDSCAPE IN ME > SERVICE MODEL REQUIREMENTS NOT EXHAUSTIVE

At a technical perspec4ve, IPTV has explicit requirements to ensure a successful video experience…

TV & Video Broadcast

IPTV service models

VoD

“Store for Play” (Video download)

Network-‐side requirements (bit rate BW)

Content-‐side requirements

Service plasorm-‐side requirements

•  SD TV (704x480) (4:3 & 16:9) •  SD TV (640x480) (4:3) •  HD TV (1280x720) (16:9) •  HD TV (1920x1080) (16:9) •  3D TV (1280x1080) (16:9) •  MPEG format: 30 -‐ 60 FPS

•  Minimum network guarantee •  MPEG-‐2: 3.5 Mbps SDTV; 16-‐19 Mbps HDTV

•  MPEG-‐4: 1.5 -‐2 Mbps SDTV; 6-‐8 Mbps HDTV

•  Caching support •  Video distribu@on to

customer gateways •  Network Load Balancing •  VoD buffering support •  Non-‐stop delivery support

•  Storage support: •  HD 720p = 4 Gb per 1h file

•  HD 1080p = 8 Gb per 1h file

•  PVR support

•  Minimum network guarantee •  MPEG-‐2: 3.5 Mbps SDTV; 16-‐19 Mbps HDTV

•  MPEG-‐4: 1.5 -‐2 Mbps SDTV; 6-‐8 Mbps HDTV

•  SD Resolu@on: 480p •  HD resolu@on: 720p •  Full HD resolu@on: 1080p •  3D resolu@on: 1080p •  H.264, AVC or VC-‐1

compression codecs

•  Streaming and Buffering support: •  addi@onal 1-‐2 Mbps SDTV

•  addi@onal 3-‐5 Mbps HDTV)

•  Network capacity management support

•  Network conges@on avoidance

•  E2E QoS management

•  SD Resolu@on: 480p •  HD resolu@on: 720p •  Full HD resolu@on: 1080p •  3D resolu@on: 1080p •  H.264, AVC or VC-‐1

compression codecs

Note: Size and Bandwidth figures depend on different variables (including bit rate, compression codec, etc.). EsUmaUons for illustraUve purposes only.


IPTV COMPETITIVE LANDSCAPE IN ME > IPTV SERVICE DELIVERY MODELS

…understanding that there are significant differences, as well as some common points between the various technology service delivery op4ons…


IPTV COMPETITIVE LANDSCAPE IN ME > MANAGEMENT & SUPPORT MODEL ILLUSTRATIVE

…and that transi4oning IPTV into a mass-‐market service will undoubtedly require a refined and robust solu4on. In other words, there may be no second chance.

Requirements Management & Support Challenges

RaDonale

•  "Always On" User ExpectaDons, Flawless Quality

•  Capacity Planning, Cost Control, Right-‐Sizing

•  CongesDon Avoidance, Service Assurance

1

2

3

•  Non-‐stop service delivery / opera@on

•  End-‐to-‐end service and policy control

•  Differen@ated and determinis@c QoS

•  Uninterrupted viewing 24x7

•  Effec@ve SLA enforcement

•  Video has stringent SLA needs

•  Op@mized video content inser@on (flexibility to insert video content at centralized and decentralized loca@ons)

•  Op@mized broadcast TV delivery (distributed mul@cast, IGMP snooping)

•  Minimize VOD transport cost; regional content, ad inser@on; scale higher VOD concurrency

•  Minimize BTV transport cost; maximize channel bouquet

•  Accurate intelligence on resources

•  Video quality measurement/monitoring

•  BTV/mul@cast video admission control

•  VOD/unicast video admission control

•  Detect and prevent conten@on

•  Verify perceptual QoE for users

•  Limit BTV channel overbooking

•  Limit VOD session overbooking


IPTV COMPETITIVE LANDSCAPE IN ME > SIMPLIFIED IPTV SYSTEM ARCHITECTURE ILLUSTRATIVE

It’s therefore mandatory to define in detail what technical scenarios are required to succeed in the selec4on of the technology op4ons available with a long-‐term vision.

•  STRATEGY DEFINITION

i •  REQUIRE-‐MENTS DEFINITION

ii •  TECHNICAL SOLUTION DEFINITION

iii •  ARCHITEC-‐TURE DEFINITION

iv

STRATEGY DEFINED REQUIREMENTS DEFINED TECHNICAL SOLUTION DEFINED

ARCHITETURE DEFINED

•  Strategic alterna@ves

•  Strategic TV service models alterna@ves

•  Technical scenarios defini@on

•  Business case

•  Business requirements

•  Commercial requirements

•  Technical requirements

•  Opera@on requirements

•  Vendor map screening

•  Vendors evalua@on against requirements

•  Vendors selec@on •  Economic impact

•  Logical architecture design

•  Physical architecture design

•  O&M processes defini@on

Middleware))

IPTV)Applica1on)server) Subscriber)database)

En1tlement)System)) Electronic)Prog)Guide)

Session)Manager)Head)End)control)

Content)delivery)plaAorm)Asset)management)

Set)top)box)

EPG)Client)

Condi1onal)Access)Client)

Broadcast)Applica1on)

VoD)Applica1on)

VoD)Decryp1on)

Video)Decoder)

CA)System)

QoE)Monitor)

Encryp1on))Resource)Manager)

VOD)Server)

VoD)Resource)manager)

Video)Pump)

VOD)Data

Linear)Content

LIVE)TV

Encoding)and)Compressing)

Scrambler)

Derives in Derives

in Derives in


mmC Group Strategy Consultants Joaquin Turina 2, 1st floor 28224 Pozuelo de Alarcón, Madrid Spain Phone: +34 91 129 8100 Fax: +34 91 714 1888 Web: www.group-mmc.com Blog: www.consultantvalueadded.com

mmc group iptv strategy case study jan2012

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