The last year has been almost as turbulent in video services as in global politics, with no sign of any slowdown in the ongoing transformation towards cloud-based IP video services. One consolation is that if anything, the future has clarified over 2016, allowing video service providers to better anticipate where they are headed and the issues that they will need to address. In that sense, my outlook for the year ahead is not so different from a year ago, but as we at Verimatrix refined our priorities for the next several months we noticed that they are aligned according to five key challenges, or as we like to call them, the 5Cs.
Convergence, consolidation, co-option, commoditization and cloudification - these words collectively sum up the current focus for many service providers around the world. All five Cs are dictated directly or indirectly by the changing technical and business landscape, and they each have their own implications for content security.
Convergence is happening for just about all operators and is about incorporating online services fully within the core package and possibly even offering the platform to content owners for direct distribution to generate additional revenue from the investment. Comcast has done this though its new unit Comcast Technology Solutions, which just this month launched a direct-to-consumer platform for content providers supporting multiple target clients. This convergence trend has reached a tipping point for some operators. For example, one of our Scandinavian customers recently reported that half of subscriber video consumption has now shifted from broadcast to unicast, driven by network DVR consumption.
Convergence leads on naturally to the second C – consolidation – bringing together services or operators that previously existed in different silos, often not in direct competition. A striking example of consolidation occurred in the Netherlands when Vodafone and cable group Liberty Global completed their 50/50 joint venture at the end of 2016. The newly formed VodafoneZiggo Group Holding created a fixed/mobile operation with over €4 billion annual revenue and 15 million revenue generating units. The knock-on here is consolidation among the industry’s vendors, who must match scale with global customers.
Last year, consolidation occurred at Verimatrix when we launched Verspective Operator Analytics in response to the growing overlap between revenue security and analytics. By extending beyond our traditional realm of anti-piracy, we uncovered a new way to generate greater business value for our customers.
Closely related to consolidation lies our third C of co-option, involving integration between components rather than companies, and the adoption of internet technologies by established Pay TV operators. This has been exemplified by Amazon in opening both its Fire TV interface and Alexa voice control functionality to third parties, leading to a number of deals touted earlier this month at CES. For example, TV and display manufacturers Seiki, Westinghouse Electronics and Element Electronics announced a new line of 4K/UHD Smart TVs branded as the Amazon Fire TV Edition. These models offer streaming and over-the-air content, incorporating the Amazon Fire TV experience along with a voice remote based on Amazon Alexa. We are also seeing co-opting at the pay TV service level through incorporation of OTT packages, with operators such as Comcast, Charter and Liberty Global allowing subscribers to watch Netflix just like regular channels, included in their program guides.
All of these trends are associated with growing commoditization – our fourth C – at both hardware and software levels, enabling simpler integration between services and components. RDK (Reference Design Kit) has been playing a key role, expanding from its base in cable TV as a standardized software layer between services or applications and the underlying SoCs in set tops, gateways or hybrid devices. Similar and competing initiatives are building momentum as well. At the same time, we are seeing apps spanning Apple TV, Roku boxes, Fire TV and other devices outside the legacy pay TV realm, all working to accelerate deployment of next generation video products and services.
These client software components, as well as infrastructure functions such as encoding and indeed content security, are in turn running increasingly on commercial off-the-shelf (COTS) hardware rather than dedicated appliances, reducing costs and simplifying deployment. The shift away from proprietary and dedicated hardware opens the path to virtualization and cloud delivery.
The last C is cloudification, which underlies all the other trends by “hollowing out” the video head end and removing critical functions to the cloud where they can be fully integrated and managed as part of a coherent unified infrastructure. We see the cloud reinforcing content security through multilayer defensible platforms, which we are deploying with individual customers as well as in our Verspective Intelligence Center that provides surveillance and early warning for the industry as a whole.
During 2017, we anticipate further consolidation at the service and content levels which will call for ever more flexible administration of rights across multiple sources and providers. This will require an increasingly federated approach to rights management, which will enable content owners to enforce rules across their whole ecosystem, from distributors through to end users. The idea will be to encrypt just once and then allocate the decryption keys as required across the distribution chain. Simpler, more efficient workflows are the driver; security and fine-grained control of rights management are a side benefit.
Although it may seem like these 5Cs are driving the future course of the industry, we like to think of them as enabling new opportunities for growth. At Verimatrix, it is our mission to provide technology that is agile enough to support service providers as they power new transitions. Our VCAS solution was first introduced for IPTV in 2004 but its multi-layered approach is more relevant now than ever, especially as the industry calls for fully integrated cross platform solutions, because it presents multiple fronts, each of which can identify intrusions and evoke relevant responses. Also increasingly crucial is our MultiRights framework, which offers a variety of content security and rights management regimes – essential for those following the trend of offering multiple services within a single package.
And because Verimatrix has been in the business of securing connected devices for many years, we are optimally positioned to adjust our existing technology to emerging threats in IoT. As the momentum continues to build, manufacturers and consumers alike will inevitably run up against privacy and security issues, so it is only natural for us to expand our footprint in this arena.
Stay tuned for more announcements coming in 2017.