Pay TV in Asia – Where is the puck going?

By Aunindo Ghosh

Fifty countries, 4.5 billion people, and a multitude of cultures and economies.

Asia Pacific is indeed as varied as it is vast. And that variation includes the way people watch TV.

But if there is one thread that binds everyone in this region, it has to be the explosive growth of Mobility.

According to Cisco VNI estimates, mobile data traffic in Asia Pacific will grow nine-fold between 2015 and 2020, a CAGR of 54%.

What will drive this explosive growth of Mobile data traffic? Video, video, and more video! In fact, by 2020, as much as 81% of mobile traffic in Asia Pacific will come from Video.

Not surprisingly, this is consistent with a consumer behavior trend that will ultimately see 70% of all millennials consuming TV Online. It’s hardly surprising then, that as the youngest market in the world—Asia Pacific will latch on to TV over IP and Mobile, fundamentally changing PayTV market dynamics in the region.

This begs the obvious question…What challenges & opportunities does this bring?

In most Asia Pacific markets, premium content is still distributed over broadcast networks. As a result, content providers are rushing to deliver content directly to consumers via OTT. The last few years alone have seen services like Hotstar, Sony Liv, Hooq. Netflix & Amazon Prime launch and flourish into a real force. People with access to IP, mostly via mobile, are not ready to accept a bundle of 200 channels—many of which they never watch—as the only viable option for TV entertainment.

With few notable exceptions, People no longer watch channels. They watch shows & events. As a result, content acquisition costs are rising, while legacy networks are becoming difficult and costly to maintain.

The result? Operating margins go into a continuous downward spiral.

Does this mean it’s the end of road for premium video? Is it no longer the cash-cow for service providers that it once was?

Having witnessed the leapfrog that this continent pulled off to embrace mobile revolution via 3G & 4G, I wouldn’t give up at all.

In fact, I would suggest to the contrary. That this region can in fact show the world that IP Video can actually be delivered at the scale and robustness that this populous market demands.

But don’t take my word for it. Look at the facts on the ground.

Take Reliance Jio in India for example. With Cisco as a key technology partner, Reliance Jio gained a record-breaking 100 million new subscribers in the first 170 days.

It’s not about just surviving. It’s about winning in style & scale!

So what could be the winning formula for tomorrow? Here are a few pointers.

Focus on delivering quality at scale

Broadcast delivery (satellite & cable) offers quality & reliability, while IP delivery offers flexibility, interactivity & multi-device reach. To bring premium video to IP, you need to achieve, or even surpass, the quality and reliability achieved over broadcast. It requires making intelligent decisions and optimizations across the entire delivery chain; from encoders at video processing levels, to the network and finally, in the client, where an appropriate request for content streams can lower costs and improve video quality.

Focus on unique service experience

Not every service provider can own content. Syndication & partnership is the way to go. Having a Netflix, Amazon Prime, Hulu, or a local language OTT service optimized on your network is a win-win for everyone. Adding to it sticky services like Cloud DVR, not only encourages consumers to build their personalized library, it also ensures that they will stream assets again and again, like long tail content using your video optimized IP network. There are sceptics who question whether or not Cloud DVR is relevant for the Asia Pacific market.

But as a region, Asia Pacific never really reached the critical mass with physical DVR, due to high device cost and subsidization. With IP coming in, there is an opportunity to leap-frog into multi-screen Cloud DVR. Today’s consumer is familiar with the concept of personalized cloud storage. If the pricing and the experience are right, consumers wouldn’t need much persuasion in order to replicate this model for the Pay TV world.

Focus on security

Whether it’s a mass-scale cyber-attack like the recent WannaCry, a targeted attack like the Sony hack, or the millions of illegal streams that bleed owners’ content rights during every major sporting events, its abundantly clear that unless content & service security is watertight, the illegal hackers will always win. Your network is as vulnerable as your weakest link. And with content going over IP, it’s time for Pay TV operators to look beyond Smartcards and integrate cyber-security, Digital Rights Management and Streaming Piracy Prevention into one fail-proof system. All investment in video quality and ARPU-enhancing features & services will come to nothing, unless revenue is protected.

Reduce investment in infrastructure & operations

After content, the biggest driver of costs (and drag on margins) has been client hardware, followed closely by costly and often underutilized investments in video back-end. With born-in-cloud virtualized head-end on one side, and democratization of client middleware through platforms like Android TV, and native CE devices, now is the best time to leave the headend and the client to ecosystem partners and put the focus back on network & service.

How can Cisco Help?

Our video technologies now touch well over 350 million devices, across 80+ deployments, in collaboration with 20+ technology partners to bring together the world’s most advanced TV platform, the Infinite Video Platform. With our pedigree of encoding, networking, securing, analyzing, and delivering rich and compelling video, we are enabling an IP-led transformation of the video industry by bringing in specific technologies & innovations such as:

• An end-to-end cloud-based As-a-Service platform that can reduce per-subscriber monthly expenditure of video delivery by 15%
• Innovations to dramatically improve video quality on IP networks using advanced streaming technology as part of Cisco’s Virtualized Video Processing portfolio
• Innovations in cloud DVR technology that can reduce cloud storage costs up to 50%
• A robust eco-system driven offering on Android clients through Google TV to reduce your client cost, and accelerate innovation
• Multi-DRM, Cyber Security & and Streaming Piracy prevention to help you protect your revenue as part of Cisco security for video portfolio
• An Agile & DevOps based Cloud platform that enables you to launch/test/revoke end-user features in minutes.

At the beginning of May, we hosted a hackathon. We invited more than 100 geeks from around the world to develop innovative features on our platform, based on real problem-statements & use-case challenges thrown at them by our customer community. They came up with 22 brand new ideas, and implemented them, all within 24 Hours.

Yes, we are innovating on our platform by the day, being bold enough to skate to where the puck is going.

Sounds too good to be true? Take a look at the Infinite Video Platform, and see how we can turn your opportunities into reality.