Digital TV Successes and Failures from Broadcast, Interactive, Internet and Hybrid TV in Africa (TVA) Conference

1. Digital TV Successes and
Failures
Issue 1
www.alanquayle.com/blog
© 2011 Alan Quayle Business and Service Development

2. Outline
• Telco: Verizon FiOS and Orange TV
• Over The Top: Netflix
• Traditional Broadcaster Online: BBC iPlayer
• Latest US market stats
• The Future
© 2011 Alan Quayle Business and Service Development 2

3. Mapping the Hybrid Landscape
Broadcast Network-Centric
One way Cable Hybrid Telco
DVB-T / DTT (DVB-T+IPTV)
Hybrid Cable Telco IPTV
DVB-S / DTH
(DVB-C + IPTV)
Hybrid Satellite
(DVB-S+IPTV)
DVB-T/S
+OTT Telco/Cable
+OTT
Over The Top /
Internet TV
DVB-T / DTT: Digital Terrestrial TV
DVB-C: Cable TV
Network-Agnostic DVB-S / DTH: Direct to Home (Satellite)
3
OTT: Over The Top (Internet)
© 2011 Alan Quayle Business and Service Development

4. Verizon FiOS
• Verizon FiOS is consider a HybridTV service because it uses the traditional cable TV digital multiplex for
delivering broadcast services, and MoCA (Multimedia over Cable) for interactive services such as VoD and
widgets
• Verizon chose a hybrid approach purely to avoid technology risk, the plan is to move to full IP with all services
delivered over MoCA by 2015
4 2011 Alan Quayle Business and
Service Development

5. Learning from Verizon FiOS
• FiOS TV customers are currently at 3.2M (2010), FiOS internet at 3.8M
• STB are Motorola’s series of Hybrid QAM/IP SD/HD Set-Top (with optional DVR)
• Hybrid TV is purely a technology decision to minimize risk
o They were not prepare to risk deploying a full IPTV service
o Instead used a traditional Cable TV solution
o Completely transparent to the customer, and its possible for Verizon to transition to all IP,
without changing the STBs or the customers experience
• Though next generation MoCA may be required for some homes
• Hybrid TV is an interim solution, VZ see the move to all IP by 2015
o However existing deployments are unlikely to be transitioned out, will run a heterogeneous
network for the foreseeable future
• Verizon’s solution addresses the simplicity issues
o Simplicity with one STB connection, one purchase, and one customer support number
o Interactive services are available at no charge, and premium movies can be rented at the same
price as the cable providers
• Easy for customers to understand and use
5 © 2011 Alan Quayle Business and Service Development

6. Verizon FiOS TV Subscriber Growth
Verizon has achieved remarkable growth in a saturated market. It is likely to account for
between 8-10% of the PayTV market in the US by 2015. Its HybridTV approach allows low
6 technology risk for the core service,Alan Quayle Business and
2011 while providing a future-proof growth strategy.
Service Development

7. Orange TV History Part 1
• France Telecom's IPTV service requires 5 Mbps of sustained bandwidth, which, according to the
company's data, means that around half of all broadband subscribers in France can't receive IPTV.
• Having invested in premium football and movie rights, France Telecom needed to increase the reach of its
TV services, so, in July 2008, it launched a hybrid service combining satellite and broadband delivery to
achieve 98% coverage, see below
• This provides access to broadcast channels via satellite, and to VOD via the Internet. In fact, the STB
contains direct-to-home (DTH) and DTT tuners, so if subscribers are in an area where they can't receive
satellite service, they can still get access to a more-restricted range of broadcast channels via terrestrial
TV.
7 © 2011 Alan Quayle Business and Service Development

8. Orange’s 2 Core Hybrid TV Offers
Hybrid DTT and IPTV
Hybrid Satellite
and IPTV
8 © 2011 Alan Quayle Business and Service Development

9. Orange’s Triple Play Bundle Offer
9 © 2011 Alan Quayle Business and Service Development

10. Orange TV History Part 2
• Eutelsat is supplying the capacity on its satellites, while France Telecom subsidiary Globecast deals with
encoding, encryption, and channel transmission.
• Although Samsung has been chosen as a set-top box supplier, the offer was launched with lower
specification OpenTech set-top boxes (Korean supplier not Hybrid), due to several delays. However,
Thomson is now the prime STB supplier.
• Hybrid TV customers have grown to 2.75M (2010)
o See next slide, but its not accelerating, challenge of a mature market where it’s a matter of stealing customers from
competitors rather than a land-grab
• The OTT VOD service provides downloads rather than streaming, and requires a minimum bandwidth
of 500 Kbps.
o With a 2 Mbps connection, subscribers have to wait about 10 minutes for a movie to start; alternatively, they can preorder the
movie via PC, and then it's downloaded in advance.
o Clearly, this doesn't provide the same quality of experience as the full IPTV service, but it doubles the number of households that
are able to receive the VOD component of the Orange TV service.
• Orange and Canal+ (Orange’s competitor in France and Spain) signed a coop agreement so Canal+ and
CanalSat channels are available over OrangeTV
• In Spain Orange TV is only provided over DSL and DTT (not Satellite)
10 © 2011 Alan Quayle Business and Service Development

11. Orange TV Subscriber Growth
Orange TV is Europe’s most successful Telco TV service, and has been Hybrid since 2006 with
11
both HBB (DTT and© 2011 Alan Quayle Business and Service Development OTT TV services)
IPTV) and HBI (Satellite and

12. Orange TV Learning
• Control was critical to Orange for its Satellite service
o No partnership, it owns the Satellite service – can not partner with Canalsat as they are the competition
(10M subscribers)
o Enables an integrated experience and avoids commercial risks
o Only way to achieve near 100% penetration
• France has a more competitive market than the UK, where Sky dominates
o Currently there is a PayTV land grab against CanalSat and cable
o FT is focused on achieving a dominant position as without scale it can not buy the necessary content
hence IPTV will not be competitive
• Satellite investment is significant and has impacted this year’s financial results
o Dominating PayTV is one of the top 3 domestic consumer objectives
• HD can be supported over Satellite, IPTV and DTT
o Hybrid approach maximizes lifetime of their DSL investment, before fiber is required
• Hybrid TV will remain FT’s core TV strategy
o IPTV and DTT
o Satellite and IPTV
Orange TV clearly demonstrated the only way for a telco to be successful is with Hybrid TV (DTT and IPTV),
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and that HBI (Satellite and OTT TV) 2011 Alan Quayle Business a Telco enabling near 100% coverage
can also be success for and
Service Development

13. Hybrid TV Market Dynamics: Shift to TV Everywhere
and Over The Top
• In May 2011 Sky Deutschland launched its Sky Go service. Sky Go allows Sky programming to be viewed in a
second room, on the iPad, iPhone, or iPod Touch, or over the internet on a PC or laptop.
• Six years ago that BSkyB in the UK first experimented with what most cable companies call TV
Everywhere, the strategy of letting its existing users have a password to view content on multiple devices,
mostly in the home. Sky Player was only for the benefit of its multi-room customers
• Sky has taken its PC targeted service and its mobile TV cellular streaming service and merged it into one -
targeting phones and tablets - and says that from July 6th all ten million of its customers can watch Sky
TV channels and programs on PCs, laptops, mobiles and tablets at no extra charge. Each Sky home will
be entitled to register up to two devices, and view live linear channels and some of the sky on-demand
content.
• Sky plans in August to launch Sky Go as a full Over The Top service to non-Sky customers
with subscriptions priced from £15 to £40 a month.
• Telecom Italia moved from IPTV to a CuboVision STB OTT service, to a CuboVision OTT app available
directly on the TV
Traditional Broadcasters are now delivering over the top services

14. Using its open API
Netflix is embedded in
100s of devices at little
or no cost to Netflix.
Achieving the N-Screen
Vision
UNIFIED LIST/TITLE RESPONSE
WITH PARTIAL RESPONSE BUILT IN
AUTO-
RENTAL
SEARCH SIMILARS TITLE COMPLET QUEUE
HISTORY ETC…
LIST LIST LIST E LIST
LIST
LIST
TITLE INFORMATION
TITLE RECOMMEND
TITLE DETAILS RATING
STATE ATION

15. APIs enable Netflix to manage device fragmentation, and has
created a positive feedback cycle transforming how people
consume video across N-Screens
Extend
Customer
Reach
Customer
Insight API Sell More
Great
Experience

16. API Usage and Business Model
• 10B requests in Nov 2010
• Latest figure now at 28B, >20k requests per second
• There is no ‘standardized’ agreement, from free to a one-off fee for
sign-up ($24)
o The platform providers motivation is simply around delivering customer
value on their platform, e.g. Apple’s core motivation on its App Store
• Increasingly Netflix is going direct onto platforms using Webkit
(keep all its money)

21. Nielsen Data for the US 2009
In 2009 viewing
video on the
internet represents
a small % of
peoples time
compared to TV
viewing (3 hours
versus 153 hours).
Nearly half the TV
viewers have watch
video in the
21
internet. © 2011 Alan Quayle Business and Service Development

22. Nielsen Data for the US in 2011
Top Online Video Brands by Time per Viewer (January 2011, U.S.) / 250K Unique Viewer
Video Brand Time per Viewer (hh:mm) MOM % Change in Time
Netflix 11:08 22.9%
Tudou.com 6:30 17.4%
Hulu 5:35 13.9%
Megavideo 3:39 15.6%
StageVU 2:52 -65.9%
Justin.tv 2:33 55.5%
YouTube 2:23 -3.0%
Veoh 2:16 99.7%
Nickelodeon Family & Parents 2:06 11.5%
Cwtv.com 1:44 -38.3%
Source: The Nielsen Company
Read as: During January 2011, the average U.S. video viewers spent 11 hours, 8 minutes watching
video content on Netflix
In just 2 years the time spent watching online video has nearly
22 quadrupled – at this rate by 2016 Business and
2011 Alan Quayle online could reach broadcast
Service Development

23. Nielsen Data for the US in 2011
Top Online Video Brands by Unique Viewers (January 2011, U.S.)
Video Brand Unique Viewers (000) MOM % Change in Viewers
YouTube 112,764 -0.8%
Facebook 32,328 2.0%
VEVO 32,230 N/A
Yahoo! 25,511 2.5%
MSN/WindowsLive/Bing 17,285 26.1%
Hulu 11,924 -4.9%
The CollegeHumor Network 10,020 -2.4%
AOL Media Network 9,236 -4.5%
Fox Interactive Media 7,597 1.6%
Netflix 7,394 15.6%
Source: The Nielsen Company
Read as: During January 2011, 112.8 million unique U.S. viewers watched video content on YouTube
using PC/Mac/laptops/tablets/mobile from home and work locations
From a transactional perspective YouTube is still in the lead, but
23 continues to struggle with profitability
2011 Alan Quayle Business and
Service Development

24. The Future
• The two most successful IPTV deployments (Orange and Verizon) are Hybrid TV, representing
6M subscribers as of the H2 2010. Exceptional growth achieved in mature PayTV markets
• OTT TV is proving highly successful >28M Netflix customers and >24B requests per month,
141M BBC iPlayer requests in April, 11 hours per week of Netflix viewing in the US
• Content owners remain the puppet masters in this emerging ecosystem, their objective is a
direct customer relationship to maximize $$$$
The market has clearly demonstrated Hybrid TV is the only solution for operators to be
successful in TV services – but its slow linear growth… and
24 2011 Alan Quayle Business
Service Development
While OTT is doubling every year