Project Deliverable CELTIC PLUS MONALIS

MONITORING AND CONTROL OF QOE IN LARGE SCALE MEDIA DISTRIBUTION ARCHITECTURES

INITIAL MARKET SITUATION AND ACTORS IN MEDIA DISTRIBUTION M6.1

Author full name: Shai Ophir Author affiliation: Starhome Author email address: [email protected]

Identifier: Deliverable Class: Report Version: V05 Version Date: 22.6.2017 Distribution: Consortium Confidential Responsible Partner: STA Contributors: IND, NOK, OPL, NIT, IT

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Project Deliverable CELTIC PLUS MONALIS

Table of Contents DOCUMENT HISTORY 4 ABSTRACT 4 EXECUTIVE SUMMARY 5 ACRONYMS 6 REFERENCES 8 1 INTRODUCTION 9 MEDIA SERVICES 9 MEDIA ACTORS 9 BUSINESS MODELS 10 2 MEDIA SERVICES 11 2.1 VOD SERVICES 11 2.2 LIVE TV SERVICES 16 2.3 VOICE OVER IP SERVICES 17 2.4 VIDEOCONFERENCING SERVICES 18 3 MEDIA ACTORS 19 3.1 CONTENT OWNERS/PRODUCERS AND TV CHANNELS 19 3.2 INTERNET BIG PLAYERS 20 3.3 TELECOM AND CABLE OPERATORS 20 3.3.1 Motivations 20 3.3.2 Most Important Actors 21 3.4 TERMINAL MANUFACTURERS 25 3.4.1 Market Description 25 3.4.2 Motivations and Efforts to be Done by Terminal Manufacturers 30 3.4.3 Streaming Media Players 31 3.5 CDN PROVIDERS 33 3.5.1 Motivation 33 3.5.2 Most Important Actors 33 3.6 ON-LINE VIDEO PLATFORM PROVIDERS 34 3.7 MEDIA SERVICE PROVIDERS 35 3.7.1 Actors Description 35 3.7.2 Motivations 35 3.7.3 Most Important Actors 36 4 BUSINESS MODELS 38 4.1 FREE-ACCESS-BASED MODELS 38 4.2 ADVERTISEMENT-BASED MODELS 38 4.3 PAY-PER-VIEW-BASED MODELS 39 4.4 SUBSCRIPTION-BASED MODELS 39 4.5 SITUATION OF THE BUSINESS MODELS AT THE END OF THE PROJECT 40 5 MEDIA MONITORING SOLUTIONS IN LARGE-SCALE ARCHITECTURES 42 5.1 WITBE 42 5.2 EXFO 43 5.3 NETSCOUT 43 5.4 DPI (DEEP PACKET INSPECTION) TOOLS 44 6 MARKET VIEW FOR MONALIS PROJECT COUNTRIES 46 6.1 SPAIN 46 Movistar + (Yomvi) 47 Netflix 47 Wuaki (Rakuten TV) 47 beIN CONNECT 47 6.2 PORTUGAL 48 6.3 POLAND 48 6.4 ISRAEL 50

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7 CONCLUSIONS 52

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DOCUMENT HISTORY

Version Date Comments Status V01 10.5.2017 Draft version V02 28.5.2017 Second draft V05 22.6.2017 Final draft

ABSTRACT

This document presents the initial market situation and actors in media distribution services at the beginning of MONALIS project.

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EXECUTIVE SUMMARY

Media distribution refers to the delivery of video, audio and other media over the Internet. This report presents the market situation and actors in multimedia services distribution at the beginning of MONALIS project. It refers to media services, actors and business models. Four media services are described in the first chapter of the report. • Live TV services: Media live TV services are particularly provided by third parties, sidestepping network operator participation and control. • Video on Demand: VoD refers to a service that allows users to watch video content when they choose. • Video conferencing services: Media videoconferencing services are synchronous interpersonal communication services delivered over the Internet. • Voice over IP: The main functionalities of typical VoIP services include signaling, channel setup, digitalization of voice signals, encoding and transmission.

CDN is key in the delivery of media services. It is a system enabling optimization of the quality of content delivery over the Internet. This is achieved by distributing servers deeper in the network to get closer to the end-users. When end-users ask for a media content, this is delivered from an edge server close to their location rather than from a centralized distant server. The biggest telecom operators have their own CDNs. However, the most important CDN operators are independent and offer a worldwide service. Telecom and cable operators: Media services represent a promising approach for leveraging the telecom and cable operators’ know-how on network services while, on the same time, capitalizing on the content. The operators are in a strategic position to take advantage of deep integration between the provided media services and their core business, and to provide a value-adding proposition to their customers. Most important actors (Comcast, Verizon, América Móvil, Telefónica and Orange) are detailed. Terminal manufacturers are part of the market, a huge segment. By the end of 2019, the base of connected devices will diversify dramatically, with PCs comprising only 6% of the connected installed base. Smart TVs will account for 12%, smartphones for 19%, tablets for 4%. On-line video platform is a tool for managing on-line video content and providing it to end users. Typical functions of such platforms include uploading, encoding, managing, distributing and playing videos both on-demand and live with various end devices such as smartphones, tablets, PCs, TVs and STBs. Media service providers aggregate content from different content providers (rights owners). They are predominantly independent players, i.e. are not associated to TV channels or video content owners themselves. The following business models exist in the market as for now: • Advertisement-based models: In this case, media providers obtain revenue by including advertisement in the content they deliver. • Free-access-based model: Free access model is offered by companies which treat video delivery over the Internet as an additional service to improve and make more attractive some other profitable services. • Pay-per-view-based models: Pay-per-view model is replacing traditional DVD market. In this scenario the subscriber pays for each video session with high QoS. In this case the only source of revenue is what the user pays and pricing is based on used amount of content. • Subscription-based models: As the Internet started to grow and broadband connections were available to more users, a new content distribution method opened the possibilities for new companies to take advantage of this new scenario.

The document ends with a review of the monitoring tools for QoS of media, which is the main scope of the MONALIS project.

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ACRONYMS

Acronym Meaning ADSL Asymmetric Digital Subscriber Line CAGR Compound Annual Growth Rate CATV Cable Television or Community Antenna Television CDN Content Delivery Network CRM Customer Relationship Management D2C Direct to Customer DASH Dynamic Adaptive Streaming over HTTP DSL Digital Subscriber Line DTT Digital Terrestrial TV DTO Download-To-Own DVD Digital Versatile Disc DVR Digital Video Recorder EdVP Education Video Platform EVP Enterprise Video Platform HbbTV Hybrid Broadcast Broadband TV HD High Definition HDMI High Definition Multimedia Interface HDS HTTP Dynamic Streaming HEVC High Efficiency Video Coding HLS HTTP Live Streaming HTML HyperText Markup Language HTTP Hypertext Transfer Protocol IETF Internet Engineering Task Force iOS iPhone Operating System IP Internet Protocol IPTV IP TeleVision ISP Internet Service Provider IT Information Technology ITU-T International Telecommunication Union-Telecommunication LED Light Emitting Diode LLNW Limelight Networks Inc. (stock symbol) M2M Machine to Machine MPEG Moving Picture Experts Group NASDAQ National Association of Securities Dealers Automated Quotation OLED Organic Light Emitting Diode OTT Over The Top OVP Online Video Platform

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Acronym Meaning PC Personal Computer PLN Polish Zloty New PPV Pay Per View PSTN Public Switched Telephone Network PVR Personal Video Recorder QoS Quality of Service RTMP Real Time Messaging Protocol RTP Real-time Transport Protocol RTSP Real-time Streaming Protocol SD Single Definition SIP Session Initiation Protocol SMB Small and Medium Business STB Set Top Box TCP Transmission Control Protocol SVOD Subscription Video on Demand TV Television UDP User Datagram Protocol UHD Ultra High Definition UK United Kingdom US United States USA United State of America USB Universal Serial Bus USD US Dollar VoD Video on Demand VoIP Voice over IP W3C World Wide Web Consortium WiFi Wireless Fidelity WLAN Wireless Local Area Network WebRTC Web Real-Time Communication

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REFERENCES

References for all diagrams and tables are provided as URL links, in footnotes in the relevant pages 1. Current market situation and actor in media distribution, CELTIC NOTTS project, D7.1, Raoul Monnier, Thomson Video Networks 2. Source : IHS, October 2013 (http://press.ihs.com/press-release/design-supply-chain-media/installed- base-internet-connected-video-devices-exceed-globa) 3. Source : Frost & Sullivan The TV Everywhere Ecosystem and how OTT Video Redefining the Landscape (December 2013) http://fr.slideshare.net/mukulkrishna/tve-29526687 4. Source IDATE Digiworld yearbook 2014 (http://www.idate.org/en/Digiworld-store/DigiWorld-Yearbook- 2014_868.html ) 5. Source : Adobe Digital Index / Q4 2013 " The US Digital Video Benchmark " (http://www.cmo.com/content/dam/CMO_Other/ADI/OnlineVideo/video_benchmark_Q4_13.pdf ) 6. Source : Deutsche Telekom Laboratories "TV & multi-screen applications from the cloud" http://www.bitkom.org/files/documents/Friedrich_l_Telekom.pdf 7. Source : The Statistics Portal (http://www.statista.com/statistics/267095/global-market-share-of-lcd-tv- manufacturers/ ) 8. Source ; Parks Associate. See http://www.streamingmedia.com/Articles/News/Online-Video- News/Parks-Associates-Set-Top-Use-Increases-Roku-Beating-Apple-TV-91413.aspx 9. Source : The Statistics Portal (http://www.statista.com/statistics/276768/global-unit-sales-of-video- game-consoles/ ) 10. Source : IDC (http://www.idc.com/getdoc.jsp?containerId=prUS24645514 ) 11. Source : IDC (http://www.idc.com/getdoc.jsp?containerId=prUS24650614 ) 12. Netflix open connect network - http://blog.netflix.com/2012/06/announcing-netflix-open-connect- network.html 13. beINCONNECT https://beinconnect.es/ 14. CNMC2017 “CNMC Households’ Tracking Survey”,May 2017. https://data.cnmc.es/datagraph/ 15. exfo http://www.exfo.com/products/quality-service-assessment/service-assurance-platform 16. movistar ver.movistarplus.es/ 17. netflix https://www.netflix.com/ 18. netscout http://www.netscout.com/solution/service-provider/wireless-over-the-top-ott-traffic/ 19. witbe http://www.witbe.net/use-case/ott-video-services-monitoring/ 20. wuaki http://www.wuaki.tv

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1 INTRODUCTION

Media distribution refers to the delivery of video, audio and other media over the Internet. Media distribution refers to the delivery of video, audio and other media over the Internet. This report presents the market situation and actors in multimedia services distribution at the beginning of MONALIS project. It refers to media services, actors and business models. Media Services Four media services are described in the first chapter of the report. • Live TV services: Media live TV services are particularly provided by third parties, sidestepping network operator participation and control. These services generate revenue by advertisement or by customer subscription. Some of the commercially available media live TV service providers are Netflix, YouTube, WhereverTV, myTV, YCAST.TV, Sky Go, etc. • Video on Demand: VoD refers to a service that allows users to watch video content when they choose. The most popular VoD services are Netflix, Apple iTunes, YouTube and Hulu. There are also a number of regionally operating services such as BBC iPlayer in UK, and YLE Areena, Watson in Finland, etc. Catch-up TV (or replay TV, time-shifted TV) is also classified in this category. • Video conferencing services: Media videoconferencing services are synchronous interpersonal communication services delivered over the Internet. They can be a point-to-point service, like videophones, or multipoint. The videoconferencing market is traditionally dominated by a few big players like Tandberg (owned by Cisco), Polycom and Sony. With the transition to media delivery, the market is now dominated by the big IT companies including Microsoft (Lync and Skype), Adobe (Adobe Connect) and Apple (FaceTime). • Voice over IP: The main functionalities of typical VoIP services include signaling, channel setup, digitalization of voice signals, encoding and transmission. Some popular media VoIP services are Skype, Google Talk, and Apple FaceTime.

Media Actors CDN is key in the delivery of media services. It is a system enabling optimization of the quality of content delivery over the Internet. This is achieved by distributing servers deeper in the network to get closer to the end-users. When end-users ask for a media content, this is delivered from an edge server close to their location rather than from a centralized distant server. The biggest telecom operators have their own CDNs. However, the most important CDN operators are independent and offer a worldwide service. Telecom and cable operators: Media services represent a promising approach for leveraging the telecom and cable operators’ know-how on network services while, on the same time, capitalizing on the content. The operators are in a strategic position to take advantage of deep integration between the provided media services and their core business, and to provide a value-adding proposition to their customers. Most important actors (Comcast, Verizon, América Móvil, Telefónica and Orange) are detailed. Terminal manufacturers are part of the market, a huge segment. By the end of 2019, the base of connected devices will diversify dramatically, with PCs comprising only 6% of the connected installed base. Smart TVs will account for 12%, smartphones for 19%, tablets for 4%. M2M connections will be the fastest-growing category, reaching 42% in 2019. The biggest markets of media terminals are then detailed in the report (Smart TVs, Smartphone & tablets, game consoles …). The relationship between devices, contents and watching times is also highlighted: Viewers are more engaged than ever with premium, long-form content across all devices, but they’re increasingly turning to mobile devices and tablets. On-line video platform is a tool for managing on-line video content and providing it to end users. Typical functions of such platforms include uploading, encoding, managing, distributing and playing videos both on-demand and live with various end devices such as smartphones, tablets, PCs, TVs and STBs. On-line video platform providers are actors who develop their on-line video platform and provide it to their customers. These customers may be content or service providers or other companies willing to provide online videos.

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Media service providers aggregate content from different content providers (rights owners). They are predominantly independent players, i.e. are not associated to TV channels or video content owners themselves. This category also excludes connectivity service providers - Talco's and cable operators. The most famous independent media service providers are global companies operating from the US: Netflix, Amazon and Hulu. However, smaller and less powerful, although sometimes also successful examples can be found in European countries represented in MONALIS project. Business Models The following business models exist in the market as for now: • Advertisement-based models: In this case, media providers obtain revenue by including advertisement in the content they deliver. Examples of this scheme are presented by Hulu and Spotify, offering ad-supported on-demand video. Both Spotify and Hulu work on a freemium business model, where free users have a limited access to the service in some aspect. • Free-access-based model: Free access model is offered by companies which treat video delivery over the Internet as an additional service to improve and make more attractive some other profitable services. For cable, telco and TV companies operating pay TV, free media offers are sometimes an extension of the main paid service. Their role is to prevent churn by increasing customer satisfaction. • Pay-per-view-based models: Pay-per-view model is replacing traditional DVD market. In this scenario the subscriber pays for each video session with high QoS. In this case the only source of revenue is what the user pays and pricing is based on used amount of content. By creating partnerships with content providers, operators usually generate income on revenue sharing model. Content providers will pay the operator for delivery of their content with high QoS to Pay- per-view users. Also customer acquisition and billing is done by the operator. • Subscription-based models: As the Internet started to grow and broadband connections were available to more users, a new content distribution method opened the possibilities for new companies to take advantage of this new scenario. As an example of this last fact, we can find Netflix; a company that moved from a subscription-based renting service, delivering physical copies of the rentals, to a completely online delivery method, offering a complete catalog and unlimited streaming of movies and series to the end-users for a monthly fee. • Evolution of the business models: This document ends with a projection of the business models in 2020. Revenues will increase for each business model. However, the market share will evolve. As confirmed by the constant revenue growth of Netflix, it is likely that the subscription-based business model will gain in popularity, becoming the largest source of revenue in 2020. Pay-per- view (Rental + Download-To-Own) should slightly decrease. It is expected that advertising market share would significantly decrease. A new business model called “hybrid model” is just appearing.

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2 MEDIA SERVICES

2.1 VoD services The VoD market has been increasing tremendously during the last few years and the growth is predicted to continue. Consumers are changing their video consumption behavior from traditional content providers to Media services. New users, increasing amount of time used per day, and increasing share of HD content are the main drivers for growing VoD market. The combination of anywhere, anytime and any-device is seen as the competitive advantage for the new services as viewers prefer to pull the content independently instead of waiting the TV to push it. The VoD market is forecasted1 to grow at a CAGR of 19.4% from $25.30 billion in 2014 to $61.40 billion in 2019. Cisco2 estimates that there will be twice as much VoD traffic in 2019 than in 2014. YouTube and Netflix are the most popular services in this category but the shares of different applications vary among the continents and the type of network. Tables 1 to 6 below present the aggregated downlink and uplink data traffic shares of top 10 peak period applications in North America, Africa and Latin America both in fixed and mobile networks in 2016 according to Sandvine3 reports.

1 http://www.marketsandmarkets.com/PressReleases/audio-video-on-demand-avod.asp 2 http://www.cisco.com/c/en/us/solutions/collateral/service-provider/ip-ngn-ip-next-generation- network/white_paper_c11-481360.pdf 3 https://www.sandvine.com/trends/global-internet-phenomena/

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Table 1: Top 10 Peak Period Applications - North America, Mobile Access

Table 2: Top 10 Peak Period Applications - North America, Fix Access

Table 3: Top 10 Peak Period Applications - Africa, Mobile Access

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Table 4: Top 10 Peak Period Applications - Africa, Fix Access

Table 5: Top 10 Peak Period Applications - Latin America, Mobile Access

Table 6: Top 10 Peak Period Applications - Latin America, Mobile Access

Considering only VoD services in the North America market segment, Amazon Video, iTunes and Hulu are amongst the top 10 applications in addition to the leading services Netflix and YouTube. However, new standalone VoD options from premium networks such as Showtime and HBO may change the situation rapidly in the near future. In Europe (as well as Asia Pacific, Africa and South America) the availability of different VoD services varies between different countries. For example, Netflix has added many new regions in Europe during 2016-7 so its share of accounted traffic will probably increase in the coming years. The current availability of Netflix is illustrated in figure 1 below.

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Figure 1: Netflix in the world4

YouTube has by far the most users of online video services. In March 2013 YouTube announced5 to have over 1 billion unique users visiting the website every month. As a subsidiary of Google, YouTube’s exact financial figures are not published. Estimations state that the revenue of YouTube was around $3 billion in 2013 and $4 billion in 2014.However, it has been argued6 that YouTube has not contributed to Google’s huge earnings (illustrated in section 6.2), as its bottom line is “roughly break-even”. Amazon Video is Amazon’s VoD subsidiary. It offers subscription based streaming service Amazon Prime and video rentals and purchases via Amazon Instant Video. Similarly to Google, Amazon does not share its video revenues but there were 40 million Prime members in January 2015, which was a 53 percent increase from 20147. On the other hand Amazon Instant Video streams nearly tripled year on year in 20148 so clearly the market share of Amazon is increasing. The current availability of Amazon Video is presented in figure 2 below.

4 4 https://techcrunch.com/2016/03/12/netflix-and-the-creation-of-global-monoculture/ 5 http://www.reuters.com/article/2013/03/21/us-youtube-users-idUSBRE92K03O20130321 6 http://www.wsj.com/articles/viewers-dont-add-up-to-profit-for-youtube-1424897967 7 http://www.fierceonlinevideo.com/story/amazons-prime-streaming-subs-drive-its-overall-sales- membership-jumps-53/2015-01-30 8 http://www.pocket-lint.com/news/128597-amazon-revenue-beats-expectations-and-prime-video- streams-tripled-yoy-during-first-quarter

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Figure 2: Amazon Video in the world9 Google Play, Microsoft’s Xbox Video and Apple iTunes offer VoD as pay-per-view-based model. These Internet big players only reveal their total revenues so the business figures for VoD services are not available.

9 https://en.wikipedia.org/wiki/Amazon_Video

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2.2 Live TV Services During the last years, the growth in the penetration of broadband connections to the Internet has opened the opportunity to deliver multimedia content to the final user in other non-traditional ways, with low cost. This rapid growth of the connections can be seen in Figure 3, where the percentage of connected houses in Europe rose from ~62% in 2009 up to ~75% in 201610.

Figure 3: Broadband penetration The new actors that took advantage of the Internet as the distribution method started to grow rapidly, reporting high revenues in short terms, principally due their offer based on streaming Video on Demand (VoD) to the user, using a subscription- or free-based (ad-supported) pricing schema. Among these new actors of the multimedia content distribution, we can find firms like Netflix (VoD-based service for movies and series), YouTube (initially, VoD-based but then expanded its offer to live content) or iTunes Store (rental-based service for movies and series).

Later, as the residential Internet connections were growing up, new actors were appearing in the market, but this time offering not only content on demand, but also live content. Actors like WWE Network or NFL are the first Media services in the US that offered live coverage of their sports events, replicating the content that was initially distributed through cable operators12. These types of services opened the door for the traditional linear TV to enter into the market of the Media.

All the data that has already been presented here support the fact that Media-based Live TV has not been widely implemented yet although the underlying technology that supports this kind of service is already

10 http://www.lek.com/our-publications/lek-insights/over-top-tv-ott-trends-series-part-one

DX.Y Confidentiality level 16 (56) Project Deliverable CELTIC PLUS MONALIS working. The Dynamic Adaptive Streaming over HTTP (DASH) protocol is the standardized11 mechanism that shows the best future to deliver SD-, HD- and even UHD-encoded12 video to the end-user.

In this sense, DASH has provided a technology that integrated the characteristics that other technologies offer13. For example, DASH combines all the characteristics that Adobe HDS (flash-based technology), HLS (Apple technology) and Smooth Streaming (Microsoft’s technology), and it expands these functionalities by providing, among others, HTML5 support, support in HbbTV, abstraction from both audio and video codecs, and definition of quality metrics. These new characteristics have lead Netflix and YouTube, two big actors of the Media media, to migrate their services into a DASH-based streaming services. From these two companies, YouTube is the only one who uses DASH as the streaming technology to deliver live events - for example, music concerts, live gaming streaming/events, etc. - over Internet. This fact can be explained by the wide support of DASH in different Web browsers, which allows a simple and fast deployment of the video service without the need of implementing a special client14.

This explosion of the DASH technology has lead the big technology providers - Microsoft, Apple and Adobe - to join the DASH Industry Forum15, in order to improve the DASH standard, which has given DASH an increasing popularity as the de-facto streaming technique for Video on Demand and Live content.

This popularity has also lead Content Delivery Network providers (like Akamai) to provide native support to DASH format16, and the development of an extension of nginx RTMP module to support MPEG-DASH for live streaming content17.

The current market situation shown in this section allows us to know that the Media-based Live TV services is a market that needs to evolve yet. Starting with the fact that most of the cable TV operators are not digital- ready yet18, most of the important technical work has been done in terms of standardization and implementation of the technologies that support online Live TV services. It is time for the content providers and cable operators to take advantage of these technologies in order to take a share of the revenues of Media services.

2.3 Voice over IP services Voice over IP (VoIP) refers to a group of technologies that allow the transmission of audio calls over Internet Protocol (IP) based technologies via IP networks such as the Internet rather than with traditional technologies via public switched telephone network (PSTN). The main functionalities of typical VoIP services include signaling, channel setup, digitalization of voice signals, encoding, packetization and transmission. Some popular Media VoIP services are listed in in the following:  Skype and Skype for Business;  Google Talk;  Apple FaceTime; https://en.wikipedia.org/wiki/Skype_for_Business - cite_note-eWeekSkypeForBusinessLaunch-13

According to TeleGeography (October 2014) VoIP subscriptions have grown since 2008 globally 18%. They estimate that in 2018 1/3 of fixed internet connections will have VoIP service. According to Point topic there were about 150 million global VoIP subscribers in 2013 with annual growth of 2 to 3%.

11 http://www.iso.org/iso/home/store/catalogue_ics/catalogue_detail_ics.htm?csnumber=65274 12 Batalla, Jordi Mongay. "Advanced multimedia service provisioning based on efficient interoperability of adaptive streaming protocol and high efficient video coding." Journal of Real-Time Image Processing (2015): 1-12. 13 https://www.bitcodin.com/blog/2015/03/mpeg-dash-vs-apple-hls-vs-microsoft-smooth-streaming-vs- adobe-hds/ 14 http://www.dash-player.com/blog/2015/02/the-status-of-mpeg-dash-today-and-why-youtube-and-netflix- use-it-in-html5/ 15 http://dashif.org/members/ 16 https://www.akamai.com/us/en/about/news/press/2014-press/akamai-native-mpeg-dash-and-hds-for- live-video-workflows.jsp 17 https://github.com/arut/nginx-rtmp-module 18 http://www.lek.com/our-publications/lek-insights/over-top-tv-ott-trends-series-part-three

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Eurobarometer uses a research question “Has any member of your household made VoIP calls?” In the beginning of 2014 36 % of internet connected households said that they had made VoIP calls. One year earlier this figure was 34% and in 2011 it was 27 %. The major portion used free of charge services.

The market leader in VoIP is Skype. Its position is particularly strong in gross border voice traffic. TeleGeography estimated that in 2013 gross border voice traffic was totally 547billion minutes. Skype was the major player with 214 billion minutes (39%). Skype is since 2011 owned by Microsoft. Skype announced that in February 2013 during rush hours there were about 40 million simultaneous Skype users.

Most recent VoIP trend is use of VoIP in mobile devices. 16 % of Finnish mobile phone users said that they use IP voice services like Skype with their mobile phone (spring 2015)

Among recent VoIP market trends, the adoption of IP technology by businesses is significant. This is in keeping with an earlier study by Heavy Reading, which predicts that VoIP and traditional circuit-switched lines will trade places by 2016. According to that research, in a few years’ time, VoIP will account for 66.51% of installed lines in North America while the remaining 33.49% will be old circuit-switched lines. Beyond telephony, the tendency among enterprises and SMBs is towards integrated services such as unified communications. This tendency is confirmed by the fact that in April 2015 Microsoft launched Skype for Business which includes besides VoIP also teleconferencing features 2.4 Videoconferencing Services The market for videoconferencing systems and services was for many years dominated by a small group of big players, including Tandberg, Polycom and Sony who delivered mainly hardware-based systems targeting business-to-business applications. These market segments are still in place and growing, in the order of 4-5% annually, with a number of additional players in later years including Cisco, LifeSize, Vidyo, ClearOne and Huawei. While the market for traditional video conferencing equipment and high-end business installations (sometimes referred to as Telepresence systems) is growing, the biggest growing videoconferencing sector is in the personal video conferencing arena, dominated by software-based systems and services such as Microsoft’s Lync and Skype, Adobe Connect, Apple’s FaceTime, Google Hangouts etc. The trend is clearly away from the high-end hardware based systems toward software based systems and web-based personal videoconferencing services, where the baseline video service is typically complemented with other services, such as presence, messaging and social networking. Mobile videoconferencing on smartphones and tablet devices is strongly reinforcing this trend. In terms of business models, the traditional hardware sales and software licensing models are increasingly being replaced by business models based on providing the videoconferencing service itself for free while monetizing on premium services, advertisements and add-on services. In terms of technological evolution and standardization, the trend has for a long while been away from the ITU-T centered standards (H.323) towards IETF and W3C-based based protocols, standards and technologies (SIP/RTP, WebRTC). Proprietary protocols and technologies are also increasing in importance, with interoperability between different systems being as problematic as ever.

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3 MEDIA ACTORS

Figure 4 gives an overview of these actors. Arrows show the interaction between them in two cases. The first one (red arrows) is predominant: The Media service is delivered by dedicated companies such as Netflix or Hulu. The second case (green arrows) allows traditional actors - TV channels and Telecom/cable operators - to use Media to capitalize on their assets.

Figure 4 - Overview of main Media actors 3.1 Content owners/producers and TV Channels With the emergence of Netflix and other streaming services, traditional TV channels are realizing the importance of Media viewing options. Several of the biggest content owners and TV channels have made the leap into D2C and Media. They are trying to reach totally new customers as well as those who are leaving the traditional TV space. The challenge for the TV channels is to utilize the Media business opportunity without losing their traditional audience base. In US Media market, Media revenues are about 15 % of total pay TV revenues, increasing 1-2 % a year.19Channels can utilize Media through Media extensions run by their existing pay TV platform partners, by using a third-party aggregator, or straight to the consumer. Magine20 is an example of Media content aggregator. It was launched in 2013 in Sweden, and it is currently available also in Germany and UK. Molotov is a media distribution channel created in 2015 by Canal+ and AlloCiné co-founders. Molotov has signed distribution deals with three major free TV channels in France: TF1, France Télévisions and M6. Disney, Turner and Viacom are among the international channel operators that have joined Molotov.21 Also media giants like Sony and Verizon have already launched or are attempting to launch internet-based TV services.22 Disney has good experience of Netflix partnership and 21st Century Fox’s improvement in its digital advertising business in 2015 comes mainly through Hulu23. TV channels and content owners are struggling with the right Media strategy, and Media players, e.g. Netflix, Amazon and Hulu, are having their content acquisition battles. However, TV channels and content

19 http://tbivision.com/features/2015/09/channels-switch-ott/475681/ 20 https://magine.com/en/splash 21 http://www.digitaltveurope.net/445312/channels-join-canal-founders-ott-service/ 22 http://www.thevideoink.com/news/sonys-internet-tv-service-will-like-current-tv-service/#.Vma2z_l_NHz 23 http://marketrealist.com/2015/09/21st-century-fox-going-top-hulu/

DX.Y Confidentiality level 19 (56) Project Deliverable CELTIC PLUS MONALIS owners are seen as clear Media winners. New technologies and platforms mean more buyers, and battles over content mean high prices for the content across platforms.1 24 3.2 Internet Big Players All the Internet big players have invested heavily in Media services in recent years. Due to the digital transformation of the media and communications industry, Google, Apple, Microsoft, Facebook and Amazon have all developed and/or purchased Media services to support and grow their traditional core businesses. However, the Media service portfolios of these companies differ from each other. Google offers Media video and music services via YouTube and Google Play. Apple’s Media service portfolio consists of VoD and music on iTunes, Apple Music and instant messaging on Apple devices via iMessage and VoIP/Video conferencing on Apple devices via Facetime. iTunes VoD and music generate revenues as pay-per-view-basis whereas iMessage and Facetime are free-access- based to strengthen Apple’s ecosystem. Apple Music, on the other hand, uses monthly paid subscription business model. Services revenue of Apple includes revenues from Internet Services (for example iTunes), AppleCare, Apple Pay, licensing and other services. Therefore, Media revenues cannot be directly compared. Although Apple’s services revenues have slightly increased in recent years, the share of services compared to total revenues has decreased. Microsoft’s Media offering consists mainly of media content on Xbox Video and VoIP/Video conferencing on Skype and Lync. Facebook widened its Media instant messaging portfolio by purchasing WhatsApp in 2014 for approximately $22 billion even though WhatsApp’s net loss was $138.1 million for 201325. This implicates that a huge potential for growth is seen for social media applications. A major part of Amazon’s revenue is from product business but Amazon Video has both subscription-based version (Amazon Prime) and pay-per-view Amazon Instant Video. 3.3 Telecom and Cable Operators Telecom and cable operators are remarkably different from the new pure-Media players. Due to their historical background and large investments in infrastructure, they are in a unique position to control and provide ubiquitous connectivity through radio and landline communications. They are able to define traffic management policies, tiered QoS solutions, and have access to large volumes of data from their customers, thus being able to exploit business analytics/intelligence information. In addition, their geographical distribution facilitates the deployment of cloud-based solutions and location based services. Secondly, telecom and cable operators typically have strong a proximity relation with their customers, potentiated by vast retail networks, a strong supply chain and advanced logistics. This fact, associated with modern CRM solutions and the ability to gather accurate data from their customers, such as demographic, behavioral, and usage information, enables a targeted approach for meeting customers’ demands and needs. In spite of the large potential for successfully launching new products and services, telecom and cable operators face multiple challenges, in part due to their culture and the way they are structured. A typical operator is comprised of multiple organizational silos, often with conflicting priorities, and with a strong pressure on short-term profits. These antagonistic characteristics make difficult the definition of a consistent and consensual business strategy, especially in the case of new and/or revolutionary products and services, leaving room for lean and focused companies, such as pure-Media providers, to conquer valuable market niches. 3.3.1 Motivations The commoditization of telecommunications and a fierce competition in the telecommunications industry, has led to a steady decline of revenues from voice and messaging products in the past decade.

24http://www.onlinereporter.com/2014/08/15/content-owners-win-big-in-ott-platforms/ 25 http://www.bloomberg.com/news/articles/2014-10-28/facebook-s-22-billion-whatsapp-deal-buys-10- million-in-sales

DX.Y Confidentiality level 20 (56) Project Deliverable CELTIC PLUS MONALIS

In the face of this revenue and profits decline, telecom and cable operators must diversify their products and services offerings, while focusing on protecting and monetizing their core competences in the networking area. Media services represent a promising approach for leveraging the telecom and cable operators’ know-how on network services, while on the same time capitalizing on the content (in its meaningful form), and not only on the pure data (bits). The operators are in a strategic position to take advantage of deep integration between the provided Media services and their core business, and to provide a value-adding proposition to their customers. As an example, it is possible for traditional IPTV operators to provide a media complement to their Pay-TV offerings, complete with VoD catalogues, and a single-sign-on solutions. This integration promotes products and services cross-selling, thus increasing the overall revenue and profitability when compared with isolated, stand-alone, solutions. 3.3.2 Most Important Actors Most world-class operators, if not all, are shifting towards Media offerings. An operator is deemed important if it is able to provide Media services on large scale deployments, i.e., to more than tens of millions of users. This section will provide an overview of the services offered by Comcast, Verizon, America Móvil, Telefónica and Orange, which are 5 of the key telecommunication operators. 3.3.2.1 Comcast Comcast is a USA cable operator with over 30 million subscribers. It provides triple play services encompassing TV, Internet and phone. Its Media product, Xfinity Streampix26 was commercially launched in 2012, with shows from multiple TV broadcasters such as NBC, ABC, and Lionsgate, as well as movies from Sony Pictures Entertainment, Disney and Warner Brothers, to name a few. Xfinity Streampix was designed to compete with pure-Media providers such as Netflix and Hulu, and is included in the premium Xfinity bundles, while being available at the lesser ones in the form of a 4.99$ monthly subscription. 3.3.2.2 Verizon Similarly to Comcast, Verizon is also a USA-based telecommunications operator, with over 135 million subscribers. Its strongest business line is represented by Verizon Wireless, which is focused on mobile devices and has over 100 million subscribers. Verizon also provides landline phone, TV and Internet services, mostly through its FiOS service launched in 2005. As of December 2014, Verizon TV has over 5.65 million subscribers. The focus on Media has grown in 2013, with the acquisition of upLynk (an adaptive streaming solution), and EdgeCast (a CDN provider), and more recently with the acquisition of an internet video platform, OnCue, from Intel27. Verizon does not currently have a commercial Media solution, but its dominant presence in the wireless business, the recent acquisitions, and top management statements disclosing the company’s Media plans indicate that Verizon will soon be a major Media player in the USA market. 3.3.2.3 América Móvil América Móvil is a Mexican telecommunications company operating in multiple countries, mostly in South- America, including México, Argentina, Uruguay, Chile, and Brazil under the name Claro. It reached 290 million subscribers in the fourth quarter of 201428, and a total of 21.5 million Pay-TV units. Its Media adaptive streaming video service, Clarovideo, was launched in 2012 and is available on most South-American countries. It was designed to compete with Netflix, both in features and in price which

26 http://customer.comcast.com/help-and-support/cable-tv/about-xfinity-streampix/ 27 “2013 Annual Report”, Verizon, 2013,: http://www.lightreading.com/cable-video/multi-screen- video/atandt-u-verse-goes-streaming-/d/d-id/705967 28 http://www.americamovil.com/amx/en/cm/reports/Q/4Q14.pdf

DX.Y Confidentiality level 21 (56) Project Deliverable CELTIC PLUS MONALIS varies from country to country but undercuts Netflix’s price on every market. It struck deals with major content providers, such as Disney, and CBS29. América Móvil struck an agreement on January 2014 with Rovi Corporation to improve the discovery, delivery, display and monetization of digital entertainment using cloud solutions30.

Figure 5: América Móvil in the world31 3.3.2.4 Telefónica Telefónica is a Spanish global telecommunications provider with over 313 million subscribers all over the world. Its products span Pay-TV, Internet, wireless and landline communications. Telefónica’s presence in the Media business includes a messaging system, named TU Go32 which extends a given mobile number to other devices (e.g. receive calls of a Telefonica mobile number on a PC or tablet). Telefonica’s Media TV/VoD Multiscreen solution is available in several countries with different names, such as Vivo Play in Brazil, and Movistar TV in Spain. Telefonica’s position on Media video streaming is that it improves the base Pay-TV service, by curating content, and making access to linear services more flexible33 34.

29 http://article.wn.com/view/2013/10/16/cbs_and_clarovideo_announce_multiyear_content_licensing_agre 30 http://www.rovicorp.com/company/press-releases/2014/1/6/rovi-signs-agreement-with-america-movil- to-deploy-multi-platform.html 31 http://en.wikipedia.org/wiki/America_Movil 32 http://www.digitalspy.co.uk/tech/news/a462517/o2-phone-numbers-go-multiscreen-with-tu-go-hands- on.html 33 http://videomind.ooyala.com/blog/can-ott-play-pay-tv-absolutely 34 http://www.telco2research.com/articles/EB_innovation-strategies-telefonica-vodafone-2_Summary

DX.Y Confidentiality level 22 (56) Project Deliverable CELTIC PLUS MONALIS

Figure 6: Telefónica in the world35 Telefónica Media contents are commercialized in Spain under “TV Go”, which is freely available for the almost 1 million customers of their IPTV platform (Imagenio). Most of the available services offered for IPTV are available in TV Go, such as Pay TV channels and Video on demand.

35 http://en.wikipedia.org/wiki/Telef%C3%B3nica

DX.Y Confidentiality level 23 (56) Project Deliverable CELTIC PLUS MONALIS

3.3.2.5 Orange Orange is a multinational French telecommunications corporation with more than 150 million customers worldwide, providing Internet, landline and mobile telecommunication services. The company is committed to a media strategy, as can be observed by its 49% stake in Dailymotion (a French online video platform), as well as its product portfolio which includes Orange TV, a multiscreen TV / VoD Media service.

Figure 7: Orange in the world36

36 http://en.wikipedia.org/wiki/Orange_S.A

DX.Y Confidentiality level 24 (56) Project Deliverable CELTIC PLUS MONALIS

3.4 Terminal Manufacturers 3.4.1 Market Description 3.4.1.1 Overview According to Cisco37, globally, devices and connections (11.5 percent CAGR) are growing faster than both the population (1.1 percent CAGR) and Internet users (6.9 percent CAGR). As shown in Figure 8, this trend is accelerating the increase in the average number of devices per household and per Internet user.

Figure 8: Global forecast of Internet-connected Video devices Each year, various new devices in different form factors with increased capabilities and intelligence are introduced and adopted in the market. A growing number of M2M applications, such as smart meters, video surveillance, healthcare monitoring, transportation, and package or asset tracking, also are causing connection growth. By 2019, M2M connections will be 43 percent of the total devices and connections. Connected TV evolution The market of TV sets went through a period of huge growth between 2006 and 2012, during which the households were equipped with HD1080p, LED TV sets some of them been connected. The year 2012 marks the beginning of a downward phase, which should last until 2015. In 2016, on the one hand, the arrival of connected TV services with a real added value and, on the other hand, the fall in the prices of OLED and/or Ultra HD TV sets should make it possible to engage a new cycle of growth on the market. The IDATE38considers in this respect the future television sets provided with the characteristics “Smart OLED Ultra HD will constitute a commercial argument able to push the households to be reinvested in a new station.

37 Source : Cisco, the Zettabyte Era, May 2015: http://www.cisco.com/c/en/us/solutions/collateral/service- provider/visual-networking-index-vni/VNI_Hyperconnectivity_WP.pdf 38 Source IDATE Digiworld yearbook 2014 (http://www.idate.org/en/Digiworld-store/DigiWorld-Yearbook- 2014_868.html )

DX.Y Confidentiality level 25 (56) Project Deliverable CELTIC PLUS MONALIS

Thus, IDATE envisages a rise of the sales of television at world level of 3% in 2016, with a little more than 444 million units, after respective falls of 1% and 0,2% in 2014 and 2015. The North American market should be the one which will know the most important inversion of tendency. With the sale of 29,7 million television sets in 2014 and 33,2 million in the Americas, the evolution of the annual sales would pass from -5,4% in 2014 to + 8,9% in 2016. The Penetration of TV sets is presented by Figure 9 where the number of really-connected TV sets should rise from about 50 millions of units in 2013 up to 500 millions of units in 2017.

Figure 9: Worldwide TV installed based evolution https://www.nakono.com/tekcarta/market-forecasts/television-connected-tv/connected-tv-installed-base- of-consumer-stbstreaming-sticks/

DX.Y Confidentiality level 26 (56) Project Deliverable CELTIC PLUS MONALIS

3.4.1.2 The Rise of Mobile & Tablet Video Smartphones and tablets take the lion’s share in the video-connected devices distribution. It is confirmed by the steady growth of mobile and tablet video share as reported by Ooyala in Figure 10.

Figure 10: The Rise of Mobile & Tablet Video39 In 2013, people equally used their Smartphone or tablet to watch video on mobile devices. As shown in Figure 11, the tendency is now to use mainly Smartphones to watch video in mobility.

Figure 11: Share of Time Watched on Smartphones and Tablets40

39 http://www.digitaltveurope.net/316472/video-to-account-for-72-of-mobile-data-in-four-years-says-cisco/

40 http://appleinsider.com/articles/15/07/13/led-by-enterprise-sales-global-tablet-use-predicted-to- approach-800m-by-2018

DX.Y Confidentiality level 27 (56) Project Deliverable CELTIC PLUS MONALIS

3.4.1.3 Emergence of Streaming Media Players Under the name “streaming media players”, several kinds of devices can be found. MRG’s research report41 shows that worldwide unit shipments of streaming media players increased by more than 50% to reach nearly 15 million units in 2013. And while that growth is expected to flatten out over the course of the forecast period, sustained consumer demand has actually been surprising. “While many felt that these products would be quickly replaced by other consumer electronics devices capable of streaming video such as smart TVs and Internet-connected Blu-ray players, the streaming media player market continues to shrug off such challenges,” explains senior analyst Mike Paxton. “Low prices and ease of use have led to continued consumer demand with many households enjoying more than one of these devices.” Approximately 90% of all streaming media player unit shipments occur in North America. In order for the market segment to continue to growing, vendors will need to push their products into new markets such as Western Europe and select countries in Asia. In its infancy, the streaming media player market was driven by growth from Apple and Roku, but over the past year and a half Amazon and Google have made a significant impact. In addition to streaming media players, TVs, video game consoles, and Blu-ray Disc players also deliver apps to viewers’ TVs. Among these four device platforms, streaming media players are forecast to contribute the most growth and TVs the second most growth, in installed and Internet connected TV devices over the next two years. This will drive the total number devices delivering apps to TVs up to 211 million by Q1 2017.

Figure 12: Streaming Media Player Internet Household Forecast in the US42 Some of these players are “Media STBs” like Apple TV or Amazon Fire TV. They are basic devices which connect to Internet to get Media contents. Some of them are even including gaming functionalities like Amazon Fire TV. Some companies like Roku and Google are also providing simpler and cheaper devices which are either USB or HDMI sticks. 3.4.1.4 Game Consoles Netflix, LoveFilm, ESPN, BBC iPlayer and Hulu are just some of the services available through game consoles. Although a media service provider would probably not base its deployment strategy merely on a game console (mainly since this would target a very specific audience) these platforms held in 2013 a great potential since they are already connected to TV sets in so many homes across the globe. Media newcomers (i.e. that do not have an existing TV service) which eagerly try to get their foot in the door would have found a service offered via a game console cost effective and more importantly, they would have gained instant access to a large audience of early adopters which are already yearning for Media content.

41https://www.google.co.il/search?q=media+distribution+actors&source=lnms&tbm=isch&sa=X&ved=0ah UKEwiDnvLluZTUAhVDOhoKHdPpBqoQ_AUICigB&biw=1600&bih=742#tbm=isch&q=+forecast+media+ device+and+content&imgrc=4geoe447l0lSDM:

42 Source: The NPD Group/Connected Intelligence, Connected Home Forecast

DX.Y Confidentiality level 28 (56) Project Deliverable CELTIC PLUS MONALIS

Thus, game console manufacturers were making a serious play for the role of media center of the connected living room. However, this didn’t happen, and here are 3 reasons it probably never will. Reason #1: Casual gaming The explosive growth of the game console in the last decade was led by the release of Wii. It was targeted more at the casual, rather than hardcore, gamer and led to a massive expansion in the number of homes with a game console. However, while casual gaming has continued to grow it has moved from the game console to the tablet and smartphone. For many, the need to own a game console has simply vanished. And without the casual gamers, game console penetration has stagnated at around 46% of US homes, and game sales have plummeted from 630 million in 2010 to 458 million in 2014. Reason #2: Streaming Media Players Roku has been in market for nearly 8 years with a sub-$50 player, and now sports over 2000 channels of content to choose from. The Roku 3 and Amazon Fire TV also sport fast performance and excellent graphics capabilities making casual game play a delight. Chromecast dropped the price point to get Media video on TV to just $35 in the summer of 2013. Simply put, unless you really want to play high performance games on the television, there is no reason to own a game console anymore. Reason #3: Erosion of interface advantages Indeed, game consoles have some of the best interfaces in the world, but for non-gamers they are a pain. Using a game controller requires both hands, a user very often has to login, and sometimes has to pay extra to get access to all the video channels. High end features that ease the burden, like voice control, are now freely, cheaply, and reliably available in many other devices! The stagnation of the usage of game console for Media services is illustrated in Figure 13 for the BBC iPlayer service.

Figure 13: Evolution of online BBC iPlayer requests by device43

43 Source : Nscreen Media, http://www.nscreenmedia.com/3-reasons-the-game-console-as-media-center- failed/

DX.Y Confidentiality level 29 (56) Project Deliverable CELTIC PLUS MONALIS

3.4.1.5 Device and Content User’s preferred device depends on the duration of the content he is watching. This is shown in Figure 14.

Figure 14: Watching Time and Device47 3.4.2 Motivations and Efforts to be Done by Terminal Manufacturers Motivation for terminal manufacturers to enter the Media market is of course to take the opportunity of the explosion of Media services. However, they don’t have to make the same effort. PC manufacturers have nothing special to do - except to deliver best-in-class video decoding functionality - as Media services are accessed through a web browser they do not have to provide. The situation is quite the same for smartphones and tablets manufacturers: They don’t provide the apps allowing Media services on their devices. They have however an additional constraint: The power consumption must be optimized when decoding and playing the video in order to optimize the battery life. The situation is different for the manufacturers of connected TVs: They cannot provide a simple browser as PC manufacturers do because nobody would like to access Media services on their TV set as it can be done on a PC. They have to develop the applications running Media services on their terminal with a user- friendly interface which will make easy the end user’s life. This is clearly an additional effort - to be done for each new model - which can somewhat limit the Media services available on a connected TV, even if some standards like HbbTV can help. Streaming media player manufacturers are clearly focusing on Media services. Thus, all the efforts they do are dedicated to provide an easy access to as many Media services as possible at the lowest acquisition cost (down to ≈ 35 € for some of them). But wouldn’t be the Future of Media in the cloud? As one of the main limitation for connected TVs and even for some other devices such as STBs or game console is the need for the manufacturer to provide the application for each service and each model. This is the concept of “the virtualized STB”. It is promoted by

DX.Y Confidentiality level 30 (56) Project Deliverable CELTIC PLUS MONALIS

Deutsche Telekom Laboratories in the presentation “TV & multi-screen applications from the cloud44”. As explained on next figure, remote control commands are sent to a virtual STB running in the cloud and encoding a video which is H264 today but which could be H265 tomorrow in order to optimize the bandwidth. The terminal at home has just to decode and display this video: No needs for any application to run on the connected TV, Media STB or game console! ARM announced on May 2015 that it will join the virtualization race with virtual set-top box specification45. Applied Micro and Netzyn will collaborate with ARM on the new virtualized platform. They will demonstrate the concept at next NFV World Congress as an expansion of Proof of Concept (PoC) #31 (STB Virtualization in Carrier Networks) as determined and accepted by the European Telecom Standards Institute's (ETSI) NFV Industry Specification Group.

Figure 15: Concept of the virtualized STB

3.4.3 Streaming Media Players Figure 16 gives the video media device sales, in the US46. Main actors are Roku, Google, Amazon and Apple.

Figure 16: Streaming media device usage (US, 2014)

44 Source : Deutsche Telekom Laboratories “TV & multi-screen applications from the cloud” http://www.bitkom.org/files/documents/Friedrich_l_Telekom.pdf 45 See : http://www.theregister.co.uk/2015/05/06/arm_joins_the_nfv_race/ 46 Source ; Parks Associate. See https://www.parksassociates.com/blog/article/pr-aug2015-steaming- media-landscape

DX.Y Confidentiality level 31 (56) Project Deliverable CELTIC PLUS MONALIS

3.4.3.1 Smartphones Top Smartphone manufacturers are shown on Figure 17. Samsung and Apple are still dominating the market but their market share is decreasing.

Figure 17: Top five worldwide Smartphone manufacturers (share in units)47 3.4.3.2 Tablets Top 5 Tablets manufacturers are shown in Figure 18.

Figure 18: Top five Worldwide Tablet Manufacturers (share in units)48

47 http://pocketnow.com/2016/06/15/china-has-8-of-top-12-smartphone-manufacturers

48 Source : http://appleinsider.com/articles/17/05/04/apple-maintains-worldwide-tablet-marketshare-lead- in-q1-but-cedes-ground-to-samsung

DX.Y Confidentiality level 32 (56) Project Deliverable CELTIC PLUS MONALIS

3.5 CDN providers 3.5.1 Motivation The emergence and exponential growth of video and Media content along with the increased network bandwidth consumption have evolved the concept of CDNs. CDN is an umbrella term that covers different types of content delivery services, e.g. video streaming, software downloads, licensed/managed CDN, transparent caching, load balancing, cloud intelligence, CDN performance measurement services and front- end optimization.49 Today’s CDN market is relatively small, but according to market forecasts50 51, it is expected to grow from $3.71B in 2014 to 12.16B by 2019. Traditional CDN market is comprised of pure CDN players, transparent caching, telco CDNs and cloud providers with CDNs. However, the traditional CDN market is predicted to be replaced by hybrid CDNs that cross over into other industries, e.g. security and cloud RAN. 3.5.2 Most Important Actors Most important actors in CDN field at the moment are Akamai, Limelight, Level 3, CloudFront, Azure and EdgeCast. Akamai dominates the CDN industry with 53 % market share. Limelight, Level 3, CloudFront, Azure and EdgeCast together share approximately 25 % of the market. 3 3.5.2.1 Akamai Akamai, founded in 1998, is the global leader in CDN services. Akamai has deployed CDN with over 200,000 servers in 110 countries and within over 1400 networks. They offer services from enterprise cloud computing to HD video delivery. 52 Akamai’s total revenue in 2014 was $1.96 billion, a 24% increase over 2013 revenue of $1.578 billion. 53 3.5.2.2 Limelight Limelight Networks, founded in 2001, owns and manages a global private CDN with over 18000 servers in over 80 locations.54 Limelight’s total revenue was $162M in 2014 and $173M in 2013.55 Limelight Orchestrate is a delivery platform combining integrated cloud-based services with a private CDN and supporting fast delivery of files ranging from small images to large HD videos.56 3.5.2.3 Level 3 Level 3 communications is a multinational telecommunications and Internet service provider company. Level 3 owns a Tier 1 backbone and provides core transport, IP, voice, video, and content delivery for medium-to-large Internet carriers in North America, Latin America, Europe, and selected cities in Asia. Level3’s total revenue for 2013 was $6.313 billion and $6.376 billion for 2012.57 In 2014, the annual CDN revenue was estimated to be between $150M and $250M.58 3.5.2.4 Amazon Cloudfront Amazon Cloudfront is a CDN offered by Amazon.com’s cloud computing provider, Amazon Web Services. Cloudfront service operates from 52 edge locations on five continents.59 Total revenue of Amazon Web

49http://blog.streamingmedia.com/2014/07/cdnvendors.html 50http://www.prnewswire.co.uk/news-releases/content-delivery-networks-cdn-market-2019-forecasts-in- new-research-report-available-with-rnrmarketresearchcom-270023421.html 51https://www.bizety.com/2015/08/15/cdn-market-size-in-2015-and-2019-2/ 52https://www.akamai.com/us/en/about/facts-figures.jsp 53https://www.akamai.com/us/en/about/news/press/2015-press/akamai-reports-record-fourth-quarter- 2014-and-full-year-2014-financial-results.jsp 54https://en.wikipedia.org/wiki/Limelight_Networks 55http://www.nasdaq.com/symbol/llnw/financials 56http://img03.en25.com/Web/LLNW/%7B4bb902c5-2b35-47cf-b18c- 93148fd209bb%7D_LLNWContentDeliveryDataSheet2.pdf 57https://en.wikipedia.org/wiki/Level_3_Communications 58https://www.bizety.com/2014/10/28/big-cdn-market/ 59https://en.wikipedia.org/wiki/Amazon_CloudFront

DX.Y Confidentiality level 33 (56) Project Deliverable CELTIC PLUS MONALIS

Services was $4.6B in 2014. CloudFront’s revenue has not been reported, but it was estimated to be between $125M and $175M in 2014.60 61

3.5.2.5 Azure Microsoft Azure is a cloud computing infrastructure for developing, deploying and managing applications and services through a global network of data centers.62 In 2014 Azure generated over $1.2 billion revenue. The CDN revenue was estimated to be between $75M and $125M.10 In 2015 Microsoft and Akamai agreed to partner and provide an Azure CDN offering using the Akamai network. Akamai’s CDN capabilities are integrated into the Azure cloud platform.63 64 3.5.2.6 EdgeCast EdgeCast Networks, a CDN provider founded in 2006, generated $100M revenue in 2013. A vast majority of the annual revenue came from traditional CDN services. In December 2013, Verizon acquired EdgeCast and integrated EdgeCast’s CDN with upLynk’s video encoding technology on top of Verizon’s network.65 66 3.6 On-line Video platform providers Main Video platform providers are Brightcove, Kaltura, Ooyala and Limelight. BRIGHTCOVE INC. (NASDAQ: BCOV), is a leading global provider of powerful cloud solutions for delivering and monetizing video across connected devices. Brightcove is a pioneering force in the world of online video. The company, founded in 2004, created and defined the online video platform category and have spent more than a decade helping the largest media companies and brands in the world to tell their story. With powerful solutions for delivering and monetizing video across devices, Brightcove helps more than 5,500 customers in over 70 countries achieve success with video. KALTURA INC, Provider of the world’s first Open Source Online Video Platform, Kaltura simplifies the creation of video experiences, and provides tools that facilitate innovative and engaging experiences that create value. The Kaltura platform engages hundreds of millions of viewers by providing media companies with advanced video management, publishing, and monetization tools that increase their reach and monetization and simplify their video operations. Kaltura improves productivity and interaction among millions of employees by providing enterprises with powerful online video tools for boosting internal knowledge sharing, training, and collaboration, and for more effective marketing. A recognized leader in the Media TV (Over the Top TV), OVP (Online Video Platform), EdVP (Education Video Platform) and EVP (Enterprise Video Platform) markets, Kaltura has emerged as the fastest growing video platform, and as the one with the widest use-case and appeal. Kaltura is deployed globally in thousands of enterprises, media companies, service providers and educational institutions and engages hundreds of millions of viewers at home, in work, and at school. Financial information is not available. Ooyala, a subsidiary of Telstra Corporation Limited, delivers personalized video experiences across all screens and is a leader in online video management, publishing, analytics and monetization. Ooyala’s integrated suite of technologies and services gives content owners the power to expand audiences through deep insights that drive increased viewer engagement and revenue from video. Through its acquisition of London-based Videoplaza, Ooyala also operates one of the world’s largest premium video ad serving platforms and programmatic trading solutions, delivering ads to viewers across all devices. It is used by the most successful broadcasters and media companies in Europe and the Asia Pacific region to maximize video monetization.

60http://www.wired.com/2015/04/amazons-cloud-is-the-best-part-of-its-business-aws/ 61https://www.bizety.com/2014/04/24/cloudflare-vs-amazon-cloudfront-2014/ 62https://en.wikipedia.org/wiki/Microsoft_Azure 63http://www.forbes.com/sites/greatspeculations/2015/10/09/microsofts-azure-to-boost-cloud-revenues-in- the-coming-years/ 64https://azure.microsoft.com/en-us/blog/microsoft-and-akamai-bring-cdn-to-azure-customers/ 65https://www.verizondigitalmedia.com/about/ 66http://blog.streamingmedia.com/2013/12/heres-verizons-acquisition-edgecast-means-akamai.html

DX.Y Confidentiality level 34 (56) Project Deliverable CELTIC PLUS MONALIS

Companies using Ooyala technology include Univision, Foxtel, RTL, Canal+, Vox, Vice, NBC Universal, Telstra, ESPN, SBS Broadcasting, Telegraph Media Group, The North Face, Rolling Stone, Dell. Headquartered in Silicon Valley, Ooyala has offices in New York City, London, Singapore, Stockholm, Sydney, Tokyo and Guadalajara, Mexico. Due to the fact that Ooyala is a subsidiary of Telstra Corporation Limited, financial information is not available. Limelight Networks Inc., (NASDAQ: LLNW), a global leader in digital content delivery, empowers customers to better engage online audiences by enabling them to securely manage and globally deliver digital content, on any device. The company’s award winning Limelight Orchestrate™ platform includes an integrated suite of content delivery technology and services that helps organizations secure digital content, deliver exceptional multi-screen experiences, improve brand awareness, drive revenue, and enhance customer relationships — all while reducing costs. *We derive revenue primarily from the sale of components of the Orchestrate Platform. Our delivery services represent approximately 75% of our total revenue. We also generate revenue through the sale of professional services and other infrastructure services, such as transit and rack space services. (Limelight Annual Report 2014, page 30) 3.7 Media Service Providers 3.7.1 Actors Description Media service providers classified in this category aggregate content from different content providers (rights owners). They are predominantly independent players, i.e. are not associated to TV channels or video content owners themselves. This category also excludes connectivity service providers - Telcos and cable operators. The most famous independent Media service providers are global companies operating from the US: Netflix and Amazon. However, smaller and less powerful, although sometimes also successful examples can be found in European countries represented in MONALIS project. Independent service providers rarely offer live TV channels, focusing on on-demand movies. Live TV services in Media model are more usually offered by TV channels themselves, or by telco and cable companies as a multi-screen extension of their services. Independent Media service providers have gained important popularity thanks to user-friendly business model (usually a moderate monthly fee for unlimited access to VoD service) and vast content catalogues, gathered through negotiating content deals with numerous content owners. Being an independent provider could be an advantage in building extensive content offer not limited to creations of a single TV station or movie production company. Media service providers struggle to reach possibly vast user base and thus aim to support large number of devices and platforms: PCs, smartphones, tablets, game consoles, retail Set-Top-Boxes. Regarding technical aspects, independent Media service providers usually operate their own service platform and use 3rd party CDN services (like Akamai, Level3). As a rule, they do not own or control the underlying network, which is in the domain of telecommunication service provider. Additionally, the Media providers do not govern home network and end-device, which are owned and controlled by the network service operator or by the user himself. For that reason, independent Media service providers always struggle for delivering best Quality of Experience in spite of limited control over the network and devices. The topic of network neutrality is therefore vital for them, as it is not clear what kind of business relationship could be established (for the benefit of market as a whole) with operators of network infrastructure utilized for providing the service. 3.7.2 Motivations The Media video services market has in fact been shaped by independent service providers (like Netflix), aiming to fulfil new demands of users looking for video entertainment on any screen, anytime. Other market players, like TV channels, telco and cable operators, are now following this model. A prime motivation for independent Media service providers is of course always to bring profit. Non- monetary benefits, like reducing churn or upselling premium services, which could be of interest for other actors on the Media services market, are rather not relevant in this case. Figure 19, an excerpt from market report67, shows prevalent revenue models adopted by Media service providers: advertising-supported,

67 http://www.videoadnews.com/2012/10/31/ott-and-video-market-set-for-a-sustained-boom-say-digital-tv- research/

DX.Y Confidentiality level 35 (56) Project Deliverable CELTIC PLUS MONALIS download-to-own, rental (also called pay-per-view, or transactional), and subscription fees. The ad- supported model is most popular, but its importance is decreasing in favor of subscription, especially with expansion of Netflix which is major supporter of this model.

Figure 19: Revenue Models of Media Service Providers 74 Although some analysts have been predicting that young and tech-savvy users will abandon pay TV subscriptions in favor of Media services, this is actually not happening yet. Although there are some consumers for whom Media service is a primary video entertainment offer, it is more usually treated as a complementary service to traditional TV subscription, or free digital TV reception68. On the one hand, access to catalogues of different content providers is an advantage for Media aggregators. On the backside however they sometimes lack exclusive and top premium content, which the right owners hesitate to sell to Media players. As an answer to that, most powerful Media providers like Netflix and Amazon started producing content on their own, to be offered on exclusive basis to their customers. The series “House of Cards” by Netflix is the most famous and successful example, cited as forerunner of new video market of the future, where not only big broadcasters and movie producers are entitled to create top level content. However, a proper scale should be applied for this prediction. Even though Netflix or Amazon may afford to produce and release one or several pieces of exclusive content, it will be still just several items in the catalogue of thousands. In general, the independent Media service providers, as a market category, are now, and will be in the future, relying on negotiations with content producers and right owners to build their catalogues. 3.7.3 Most Important Actors The worldwide media TV and video market is growing rapidly. There are some forecasts saying that it may reach 51.1 billion $ in 2020, nearly doubling the 26.0 billion $ expected in 2015.69 As shown in Figure 20, the US is the biggest country market for Media services, followed by China, Japan, UK, Germany and France. Taking that into account, it is of interest to have a closer look into the US market, as it is the origin of major Internet companies, which consequently expand into the worldwide market.

68 http://www.broadbandtvnews.com/2014/04/23/young-viewers-are-key-segment-to-target-for-ott/ 69 http://www.hollywoodreporter.com/news/global-ott-revenue-forecast-netflix-802417

DX.Y Confidentiality level 36 (56) Project Deliverable CELTIC PLUS MONALIS

Figure 20: Media TV and Video Revenues in Main Countries70

70 http://www.videoadnews.com/2012/10/31/ott-and-video-market-set-for-a-sustained-boom-say-digital-tv- research/

DX.Y Confidentiality level 37 (56) Project Deliverable CELTIC PLUS MONALIS

4 BUSINESS MODELS

The common denominator of the approaches which are described below is centered on high quality of Experience and about solving technical challenges like Diversity Environment (multiple devices, diverse multimedia formats and Operating systems, etc.), Content Management and Delivery among other factors. 4.1 Free-access-based Models Free access model is offered by companies which treat video delivery over the Internet as an additional service to improve and make more attractive some other profitable services. For cable, telco and TV companies operating pay TV, free Media offers are sometimes an extension of the main paid service. Their role is to prevent churn by increasing customer satisfaction. They may also attract new customers (especially young and multi-room families) by fulfilling the need of accessing the service in any time and any place, not just on main TV screen. The effect is thus more marketing than monetary, but in the pay TV market, which is already saturated in most countries, or even suffering from decreasing number of customers due to digitalization of terrestrial TV, keeping old customers and getting new ones is more difficult than ever before. Some Media service providers use the free access model as a bait to upsell premium content under hybrid pricing models. Free content attracts customers, who browse the catalogues and perhaps decide to pay for premium content available in the same service. It is a fact and reality that people got used to having video content available for free on the Internet. Hybrid free- and paid- pricing models are sometimes more acceptable to customers who do not wish to tie themselves to long term contracts or even monthly subscriptions. There are some studies available71 suggesting that hybrid models are favored by service providers, as offering flexibility to satisfy users having different expectations and habitudes. Another motivation to free models is represented by some public TV broadcasters (like BBC in the UK, TVP in Poland) who are funded by public taxes and have a mission to reach possibly wide public. Therefore, they experiment with new markets and delivery models, deploying Media platforms for reaching the young and tech-savvy public with different means than traditional TV. 4.2 Advertisement-based Models In this case, Media providers obtain revenue by including advertisement in the content they deliver. An example of this scheme is presented by Hulu, offering ad-supported on-demand video. Advertisement-sponsored services are a cornerstone of today’s Internet, providing a major stream of revenue to highly successful services such as Google Search, Google Mail, Facebook and YouTube. YouTube generated 4 000 million $ in revenues from advertisement in 201472, while Facebook generated approximately 11 492 million $ in advertisement revenues alone, of a total of 12 440 million $ in revenue in 201473 In addition to these massively popular services, other comparatively less popular advertisement-supported Media streaming services such as Spotify and Hulu also rely heavily on advertisement revenues to generate positive net incomes. Both Spotify and Hulu work on a freemium business model, where free users have a limited access to the service in some aspect. In Spotify, free users (about 74% of a total of 75 million users74) have access to the complete music library albeit having to tolerate a maximum of 30 seconds of advertisements between songs, and listening to music at a reduced bitrate (maximum of 160Kbps vs 320Kbps for premium users). Hulu limits the content available to free users, and the platforms on which it can be consumed: only on a PC. On Hulu Plus - the subscription version of Hulu -, the users can access content on a large number of terminals, such as PC, Android smartphones & tablets, Wii game console, Roku, and Apple TV streaming media players. As of April 2015, there are more than 9 million Hulu Plus subscribers.

71 http://www.mppglobal.com/news/press-releases/hybrid-ott-emerges-as-top-business-model-for-tv- operators/ 72 http://www.wsj.com/articles/viewers-dont-add-up-to-profit-for-youtube-1424897967 73 http://investor.fb.com/results.cfm 74 https://press.spotify.com/au/information

DX.Y Confidentiality level 38 (56) Project Deliverable CELTIC PLUS MONALIS

Advertisement placement on Hulu is dependent on whether the user has subscription or not. Free users have to watch more advertisements than Hulu Plus users, and a recent alternative has been created that is completely free of advertisements for premium users (No Commercials plan). Although it would be desirable for Hulu to not make subscribers watch advertisements, the revenue is necessary to pay for the extended content library and the access to recently released shows. Hulu cannot afford not to display advertisements for its “plus” users75. When compared with traditional video advertisement placement, Hulu innovates in several advertisement aspects, namely allowing users to:  State if an advertisement is interesting for them or not,  Choose the ads to watch from a predefined list,  Swap the displaying ads,  Answering questions to improve advertisement targeting,  Choose to watch long ads at the beginning instead of multiple ads along the program,  Skip ads.

Innovation on advertisement placement improves both the user experience and the revenue of the service providers by letting users watch the ads they prefer, on the one hand, and using targeted advertising which is preferable to advertisers - hence more valuable - on the other hand. These two examples, Spotify and Hulu, are good indicators that there is a market for advertisement supported Media on medium scale services. 4.3 Pay-per-view-based Models Pay-per-view (PPV) services are similar to subscription-based pay television services in that customers must pay to have the broadcast decrypted for viewing, but usually only entail a one-time payment for a single or time-limited viewing. Programs offered via pay-per-view are most often movies or sporting events, but may also include other events, such as concerts and even soft-core adult programs. In this scenario the subscriber pays for each video session with high QoS. In this case the only source of revenue is what the user pays and pricing is based on used amount of content. Pay-per-view model is replacing traditional DVD market. By creating partnerships with content providers, operators usually generate income on revenue sharing model. Content providers will pay the operator for delivery of their content with high QoS to Pay-per-view users. Also, customer acquisition and billing is done by the operator. Content provider participates in marketing costs and activities. Operators can also bundle Pay-per-view content with live TV, Catch-up TV and Subscription based models and offer end customers a full service package. One example of PPV based business model is Anvia’s Watson service in Finland. High quality movies are offered to Watson subscribers as an additional service. The content is provided by a competent DVD rental company. Service is similar to DVD rental, only that content is delivered online instead of DVD discs and payment is done in connection of Watson monthly subscription fee. The PPV service has been part of Watson service but until now customers have preferred the subscription based model. The same applies to competing Media services in Finland, like Elisa Viihde, Sonera Viihde and Viasat play. Best commercial success has been ice hockey matches on PPV basis. Globally, the biggest PPV occasions have been professional boxing events. In May 2015 HBO sold 4,6 million sessions to world championship boxing event Mayweather- Pacquiao. (Idec, Keith (2015-11-10). "HBO's Taffet Still Stunned By 4.6M Buys For May-Pac". BoxingScene.) Other big PPV players in USA besides HBO are Ultimate Fighting Championship, a relative newcomer on the pay-per-view scene, and World Wrestling Entertainment Inc. 4.4 Subscription-based models As the Internet started to grow and broadband connections were available to more users, a new content distribution method opened the possibilities for new companies to take advantage of this new scenario. As an example of this last fact, we can find Netflix; a company that moved from a subscription-based renting

75 https://medium.com/@blakecrist/the-crisis-at-hulu-8fb732a4357f

DX.Y Confidentiality level 39 (56) Project Deliverable CELTIC PLUS MONALIS service, delivering physical copies of the rentals, to a completely online delivery method, offering a complete catalog and unlimited streaming of movies and series to the end-users for a monthly fee. This basic schema was then replicated by many other companies that saw in the Internet the same business opportunity as Netflix. These types of companies vary from new business actors (like Spotify, who offers the “Spotify Premium” service for a monthly fee), or even new ones offering an “upgraded” version of the service they were offering (for example Hulu, who launched the “Hulu Plus” service, offering the same content as the free version without commercials). However, this model can be implemented in different ways76: for example, following a pure-subscription business model, in which the user has to pay to access the content; or a freemium business model, in which a simple, ad-supported version of the service is offered to the user. This last type of business model is complemented with the subscription. The possibilities might include, but are not limited to: paid users will have access to better qualities of the content (for example, Netflix enables the access to 4K content only to the users paying the “Ultra HD Video” subscription); unlimited viewing of the content; or avoiding the ads that are showed to free users (Spotify offers a free subscription with ads, which are removed in for paid subscribers of the service). Another approximation that is emerging from paid-TV operators is to offer Media services as a complimentary service of their traditional content distribution mechanism. This is commonly known as TV- Everywhere (TVe), concept that was firstly introduced by ESPN in 2005 with the ESPN360 service. This complementary service allowed the users to watch sports content either live or VoD through a website player. Although innovative, this service was only available to users connected to the Internet with an ISP who had an arrangement with ESPN to deliver the content. Nowadays, many TV providers (usually subscription TV channels) have implemented TVe as a complimentary service offered for free to its customers, as it is the case of HBO - HBO Go service -, Fox - Fox Play service -, or the NFL - NFL Network service. 4.5 Situation of the business models at the end of the project Figure 21 and Figure 22 give the evolution of the split of the revenues by business model.

Global Media revenues by source

60000

50000

40000

30000 Advertising

$ million $ PPV 20000 SVoD 10000 0 2010 2014 2015 2020

Figure 21: Global Media TV & video revenues by source77

76 Gonçalves, Vânia, et al. "Power and control strategies in online video services." (2014). 77 https://www.digitaltvresearch.com/ugc/press/129.pdf

DX.Y Confidentiality level 40 (56) Project Deliverable CELTIC PLUS MONALIS

Market shares in Media

100%

80%

60% Advertising 40% PPV

20% SVoD

0% 2010 2014 2015 2020

Figure 22 - Media market shares Revenues will increase for each business model. However, the market share will evolve. As confirmed by the constant revenue growth of Netflix78, it is likely that the subscription-based business model will gain in popularity, becoming the largest source of revenue in 2020. Pay-per-view (Rental + Download-To-Own) should slightly decrease. It is expected that advertising market share would significantly decrease. A new business model called “hybrid model” is just appearing. In its last study, MPP79 found that the hybrid model could become the most popular one, with 60% of operators stating this Media model would be the best fit for their business. The hybrid Media model enables content owners to offer different price packages to its customers. Pricing packages can range from paying on a TVOD (Transactional Video on Demand) basis to signing up for a for a SVoD (Subscription Video on Demand) subscription. It can be seen as the merge of the PPV and SVoD models: Operators with a hybrid model can reach a range of customers, from those only willing to pay on a pay-per-view basis to those who want unlimited access to all content by purchasing a subscription. The hybrid model has already been adopted internationally by Amazon for its Amazon Instant Video service, as well as by Hulu for its online streaming service in the United States.

78 http://www.wikinvest.com/stock/Netflix_%28NFLX%29/Data/Revenue_Growth 79 http://advanced-television.com/2015/07/28/hybrid-ott-top-business-model-for-tv-operators/

DX.Y Confidentiality level 41 (56) Project Deliverable CELTIC PLUS MONALIS

5 MEDIA MONITORING SOLUTIONS IN LARGE-SCALE ARCHITECTURES

5.1 Witbe Witbe provides technologies to monitor the Quality of Experience (QoE) delivered to the End-Users of any interactive service (telephony, video, Web, etc.), on any device (PC, smartphone, STB, etc.) and over any type of network (fixed, mobile, OTT, etc.). The probes are called Robots, and are adapted to the specific monitoring requirements, e.g. for large-scale architectures [witbe].

Figure 23.- Witbe robots (source: Witbe) The main features for multimedia quality assurance are:

DX.Y Confidentiality level 42 (56) Project Deliverable CELTIC PLUS MONALIS

Figure 26.- Witbe functionalities for monitoring multimedia distribution on large-scale architectures (source: Witbe) Some use cases are available in the following datasheets:  http://www.witbe.net/use-case/ott-video-services-monitoring/  http://www.witbe.net/use-case/unified-communications-qoe-monitoring/  http://www.witbe.net/use-case/broadband-voice-and-tv-triple-play-monitoring/

5.2 EXFO EXFO is a provider of test and service assurance solutions for wireless and wireline network operators and network equipment manufacturers in the telecom industry. The quality assurance solutions for large-scale architectures use probes called verifiers [exfo]. Comprised of a full array of hardware appliances and leveraging standards-based in-network devices wherever possible, EXFO Verifiers offer maximum deployment flexibility and support any combination IP services with proactive and live traffic monitoring solutions for mobile 2G/3G/LTE networks, VoIP/IMS, IP video, data, VPN, Ethernet, network infrastructure and network performance testing.

Figure 24.- EXFO ecosystem for multimedia quality monitoring (source: EXFO).

5.3 Netscout Netscout is a provider of business assurance for service provider, enterprise and government networks. Their product nGeniusONE Service Assurance [netscout] platform provide detailed IP-level insights of the control and user plane, end-to-end visibility and assurance into the subscriber, network, and service domains. With the optional nGenius Subscriber Intelligence application, you can gain even greater insight into subscriber sessions and understanding into both device and application performance including OTT traffic like video, messaging, and music. The information from proves is feeded by InfiniStream appliance adapted to different network interface, as shown in the following figure, as part of the Adaptive Service Intelligence (ASI).

DX.Y Confidentiality level 43 (56) Project Deliverable CELTIC PLUS MONALIS

Figure 25. The nGeniusONE platform and InfiniStream Appliances

5.4 DPI (Deep Packet Inspection) tools The advances in mobile telecommunication technologies and the advent of various connected devices have increased the mobile network traffic. The ISPs and the mobile carriers spend their network management budgets to reduce the delay of network packets during congestion time. Therefore, the mobile carriers adopt network intelligence technology such as DPI for efficiently distributing and managing the mobile traffic that constantly occurs in the mobile network under limited spectrum resource environment. In 2015, the rapid growth of mobile networks has been mostly driven by the demand for more reliable and faster access to the internet, the proliferation in the number and complexity of mobile applications as well as the proliferation of smartphones, tablets, and other internet-connected devices.

DPI has been used for varied purposes, including priority delivery for different user services such as voice and video, spam identification, and virus detection. However, the use of DPI has drawn negative feedback for its anti-competitive uses, such as monitoring of data packets, that could breach the principle of net neutrality. Net neutrality is the independent movement of data packets irrespective of the content, destination or source. Apart from its usage in traffic management in next-generation IP networking, DPI can be used for the detection of more potential threats and issues such as eavesdropping and censorship.

The global mobile DPI market is classified into stand-alone DPI and integrated DPI on the basis of product. Stand-alone DPI products can be connected to the server directly without any configuration, whereas integrated DPI products need to be synchronized that can be used as an access point on the server. The stand-alone products segment has a higher market share than integrated DPI products due to its cost effectiveness, which reduces the overall capital expenditure. Video optimization, caching, traffic steering, and fair use are some of the main features of stand-alone DPI products, and it is likely to maintain its speedy growth over the forecast period. Stand-alone DPI is a popular type of DPI among ISPs, government, enterprises, and educational institutions that helps implement a common policy control throughout the network.

DX.Y Confidentiality level 44 (56) Project Deliverable CELTIC PLUS MONALIS

Integrated DPI is gaining popularity as it functions as a single platform that combines DPI function with companion applications to simplify network operations, thereby enabling operators to gain more control over network resources. These beneficial attributes are contributing to the robust growth in demand for integrated DPI solutions worldwide. Factors such as higher overall costs and contribution to network complexity associated with stand-alone DPI are paving the way for integrated DPI solutions.

DX.Y Confidentiality level 45 (56) Project Deliverable CELTIC PLUS MONALIS

6 MARKET VIEW FOR MONALIS PROJECT COUNTRIES

6.1 Spain

In 2016, four out of ten Spaniards viewed audiovisual content on the Internet at least once a week, and half of them watched re-broadcasting of television programs. As for the most widely used television platforms, Atresplayer continues in first place (46%), followed by RTVE.es (39%) and MiTele (37%).

2016 50,0% 45,0% 40,0% 35,0% 30,0% 25,0% 20,0% 15,0% 10,0% 5,0% 0,0% Rtve.es Atresplayer / Mitele Movistar+ @ beIN Other ones Flooxer Yomvi CONNECT / TotalChannel

Figure 26. Platforms used to view on-demand television programs online in 2016 (percentage of Spaniards) On the other hand, in terms of payment services to view online audiovisual content, the Movistar platform, Yomvi (or Movistar + in devices), remains the most used by households (7.6%). However, the behavior of Netflix has almost doubled in half a year and is used by 3.4% of households with Internet access, that is, about 540,000 households in Spain. Third is Wuaki, which has practically not changed in the last six months.

9,0% 8,0% 7,0% 6,0% 5,0% 4,0% 3,0% 2,0% 1,0% 0,0% Wuaki Netflix Movistar+ @ beIN Filmin Other ones Yomvi CONNECT / TotalChannel II-2016 IV-2016

DX.Y Confidentiality level 46 (56) Project Deliverable CELTIC PLUS MONALIS

Figure 27. Use of payment platforms to view online audiovisual content (percentage of households in Spain) Those figures are extracted from the Spanish “CNMC Households’ Tracking Survey Statistics” [CNMC2017]. The survey is the result of retrieving information directly from a representative sample of households and individuals residing in Spain. It is a longitudinal survey aimed at individuals aged 10 or over, residing in family homes throughout Spain. Its aim is to gather information about the availability of services and equipments, consumption and spending patterns and also about habits and perceptions of residential consumers. Movistar + (Yomvi) Movistar + [movistar] in devices is the service of Telefónica that allows to see certain channels of Movistar + and to make use of its service VOD in devices other than the decoder. It is available on Android, iOS, Windows, MacOS, Smart TV, PS3, PS4 and Xbox 360 devices. Previously, the service has operated under the Yomvi brand until August 9, 2016. Netflix Netflix [netflix], the US platform for streaming movies and series, has doubled its users in half a year and is already used by 3.4% of households with Internet access, or about 540,000 homes in Spain, according to [CNMC2017]. Netflix is also available from Vodafone TV platform. Wuaki (Rakuten TV) Wuaki.tv [wuaki] is a video-on-demand (VOD) streaming service, offering movies and TV series for subscription (only in Spain) rental and purchase. Wuaki.tv’s extensive catalogue includes content from major Hollywood studios including Warner Bros., Disney, Sony Pictures Entertainment and Twentieth Century Fox Home Entertainment, and local distributors and independent labels, giving consumers access to new releases, blockbusters, classic movies, local independent movies and TV series on the device of their choosing. Wuaki.tv’s content can be streamed to Internet-connected PCs, laptops, Chromecast, gaming consoles, tablets, iPhones and Smart TVs. The company is headquartered in Barcelona and currently operates in Spain, UK, France, Germany, Italy, Ireland, Austria, Netherlands, Belgium, Switzerland and Luxembourg and is following an aggressive EU roll out plan. In June 2012 - Rakuten, the world’s third largest e-commerce company, acquired Wuaki.tv. Today Wuaki.tv has over 3,5 million registered users, and thier commercial name will be turned into Rakuten TV during 2017. beIN CONNECT BeIN Sports [beINCONNECT] is a Spanish pay-TV channel, a subsidiary of the catin group beIN Sports and 50% owned by Mediapro, dedicated to the broadcasting of sporting events. It broadcasts through Spain's three main pay-TV platforms: Movistar +, Vodafone TV and Orange TV, in addition to the regional telecable of Asturias. The channel can be viewed through "beIN Sports Connect", the official OTT platform of «beIN Sports España», and "Total Channel", the official OTT platform of "Mediapro", available on computers and mobile devices. This began its broadcasts on July 22, 2015. Since October 20, 2015, "beIN Sports Spain" is also available through youtube, after paying subscription. It allows to see all the parties that the chain emits, including Multichampions and Multi Europa League In the following picture, we can see the evolution of the main paytv services in the Spanish Market, where we can see a clear marked leader in Movistar, the brand of the Telefonica main telecommunications company, that absorbed the DTS market by one acquisition in 2015. Telefonica is now launching new video services like circular buffer for live channels during 30 days and is planning to launch shared copy services.

DX.Y Confidentiality level 47 (56) Project Deliverable CELTIC PLUS MONALIS

DX.Y Confidentiality level 48 (56) Project Deliverable CELTIC PLUS MONALIS

6.2 Portugal

Insights on multimedia distribution services and zoom in Portuguese market In Portugal, the penetration rate of media distribution services stood at 90 subscribers per 100 classic households in 2016 (+3.6 percentage points than in 2015). The number of subscribers was approximately 3.67 million in the end of 2016, up 145,000 from the previous year (2015). This growth rate (4.1%) was identical to the average of the last five years. The number of subscribers to the cable TV signal distribution service remained unchanged compared to 2015. Cable TV remains the most preferred access (36.7%), and ~ 79.7% of the subscribers had access to more than 80 channels. At the beginning of 2016 the percentage of Internet users making voice or video calls over the Internet in Portugal was 39%. Considering not only Internet users but the entire population, OTT service penetration in Portugal was 28%. OTT Service Groups The following OTT services are noted as the most commonly used in each group: . VoIP - Skype, Facebook Messenger and WhatsApp. . Instant Messaging - Facebook Messenger, Skype and WhatsApp. . Audio-visual services - YouTube, Spotify and Vimeo. . Social networks - Facebook, Instagram and LinkedIn. . File sharing and storage - Dropbox, Google Drive and OneDrive. . Search engines - Google, OLX and Wikipedia. Overall, growth in these services, over a one-year period and measured in terms of the number of minutes spent on these services, is estimated to be around 8%, broken down between the different OTT services as shown in Figure 29.

Figure 29. Overall growth of OTT Services in one year

DX.Y Confidentiality level 49 (56) Project Deliverable CELTIC PLUS MONALIS

Videostreaming on demand In Portugal, the majority of accesses for consuming videostreaming on demand is using mobile applications. Netflix, FoxPlay and NPlay services, which offer the consumer a collection of movies and series for a monthly fee, emerged in Portugal in the second quarter of 2015. According to Marktest’s Telecommunications Barometer, in the 3Q 2016, 2% of individuals aged 10 or older subscribed to Netflix at the time of the survey. Service penetration for the other services was under 1%. Three out of four Netflix users accessed this service using an application (app) on the tablet/mobile phone, and 31% used the pay TV provider’s box. Anyway, Netflix appears to be the service that is most desired and its availability is generating the most interest in Portugal, as can be seen in Figure 30.

Figure 30. Knowledge of and subscription to Netflix, FoxPlay and Nplay videostreaming on demand services

Main national competitors and content distributors NOS launched a new set-top box which includes 4k support, 1080 UI resolution, cloud based recordings, fast channel zapping, TV profiles/prefills with personalized recommendations and seamless experienced across screens, including also a remote with voice control and RF support. Vodafone recently launched a new 4k set-top box, similar to MEO’s, which evolves support to cloud based services (Ericson Media First). Through the TV Box product which is a handy OTT set-top box available only for Vodafone TV consumers, allowing them to take advantages from the Vodafone TV experience. MEO is pioneer in offering its customers the first Ultra HD 4K Fiber Set-Top Box. MEO is highly popular in Portugal with more than 10 million streaming sessions each month, and is available on the two main pay- TV services, MEO GO (pure OTT), and MEO (IPTV). MEO GO is PT’s OTT pay-TV solution, supporting approximately 60 live channels, on-demand streaming and Automatic Recordings (AR) (7-days catchup

DX.Y Confidentiality level 50 (56) Project Deliverable CELTIC PLUS MONALIS

TV). It is available on the most popular devices/platforms, such as Android, iOS, Windows Phone, PC & Mac (Web/Silverlight-based), Windows 8, connected TVs (Samsung & LG), and Playstation (3 & 4); MEO’s IPTV product is based on Microsoft’s Mediaroom IPTV platform and has over 1M frequent users.

Industry trends User interfaces: look and feel is the bet nowadays, making living room experience more visually pleasing and less claustrophobic. Hardware:SCB (Simplicity, Context and Branding) concept, removes noise and unnecessary features smaller set-top-boxes, cleaner remote controls in harmony with the environments and interoperable with other devices, offering branding differentiation in a consistent ecosystem. Cloud Content:industry is moving to Cloud storage solutions, due to the convenience, efficiency and cost- savings which it provides the possibility to extend from different business models, creating unique and innovative solutions. Internet of things: extends the possibility to stay connects to people, pets, cars, control lights and electronics from anywhere, connecting to a wide variety of devices from a variety of smart home devices within a IoT ecosystem with multi-screen devices support. Voice: there is no easier way to interact with something across the room that using voice. Voice command is becoming an important asset in the industry and Telco’s alongside with this trend by introducing new remotes and companion devices. Business models: Operators are integrating and launching their own OTT services by offering bundles that include basic TV channels, with internet and some streaming services, avoiding cord cutting and giving some consumers what they really want through direct-to-consumer opportunities. Consumers and new experiences: The rise of streaming platforms and on-demand content enable content binge watching, thus customers are no longer bounded by time to their entertainment choices. Millennial and younger segments care deeply about creating, curation, connection within a sense community. Consumers are looking for new experiences, tailored to their interests, and smartphones are the new companion.

General TV Offer As at the end of 2016, there were 16 providers authorized to provide the Subscription Television Signal Distribution Service (STV). Of these, 12 providers were operational - two more than in 2015. Thus, at the end of 2016, Grupo NOS continued to be the main operator of the STV signal distribution service with a share of around 43.5 percent of subscribers. In addition to Grupo NOS, there were three operators with significant shares: MEO(38.9 percent), Vodafone (12.8 percent) and Nowo (4.7 percent). Vodafone was the provider which gained the largest number of subscribers in 2016 in net terms (+99 thousand) and was the only service provider to increase its share of subscribers (+2.3 percentage points). Figure 31 shows the subscription market share.

DX.Y Confidentiality level 51 (56) Project Deliverable CELTIC PLUS MONALIS

Figure 31 - Provider shares of subscription TV Subscribers

(Source: ANACOM, Study on content and application services (OTT), https://www.anacom.pt/render.jsp?contentId=1381342) (Source: ANACOM, Report on over-the-top services, https://www.anacom.pt/render.jsp?contentId=1407990)

6.3 Poland With the absence of global players (Netflix is not available, although expected to come soon), local services dominate the market. Among pure-OTT players, we can mention:  VOD.pl from Onet80  Independent (not associated with content provider) service offered by major Internet portal Onet. A selection of VoD movies is available for free (ad-supported model). In addition, there are some paid options available: subscription packages (AXN Now, Fimbox live extra, Filmbox live start, Pakiet “Barwy Szcześcia”, pakiet “Klan”) for 9,90-19,90 PLN (~2,5-5 EUR) and a selection of rental movies for 9,90-11,00 PLN (2,5-3 EUR).  The number of available movies is estimated to around 1000. The size of this VoD catalogue, considered as one of largest in Poland, shows that the local players fundamentally lag behind global actors like Netflix, whose catalogue size is order of magnitude more numerous.  VOD.pl is available on PC browser, iPhone, iPad and Samsung SmartTV.  Iplex81  An independent provider offering movies for free (ad-supported) and paid subscriptions, Iplex Zero is sold for 19,90 PLN/year (~5 EUR) and Iplex Plus, with extended premium catalogue, is priced 8,90 PLN per month (~2 EUR).  Iplex is available on PC browser and SmartTV (Samsung, Panasonic, Toshiba).  Kinoplex o VOD service offered by media group Agora S.A. o Around 1000 VOD movies o Some movies are free, some paid, under transactional or subscription model (mix)  Cineman82

80 http://vod.pl/ 81 http://www.iplex.pl/ 82 http://www.cineman.pl/

DX.Y Confidentiality level 52 (56) Project Deliverable CELTIC PLUS MONALIS

 Independent provider offering a selection of around 1000 paid premium VOD contents. The user may rent a single movie or purchase a packages of 20 movies (several packages are available from 19,90 to 39,90 PLN).  Cineman is available on PC browser and Samsung SmartTV.  Strefa VOD83  Another independent OTT service, with around 600 movies in a paid rental catalogue.  Strefa VOD is available on PC browser, Android, iOS, Windows 8, Samsung SmartTV.  As worth mentioning, Strefa VOD has recently launched a special service for the latest line of Samsung SmartTV sets with 4K resolution support. On the day of release, 12 movies were available in 4K format, encoded in HEVC and prepared for delivery over the Internet in adaptive streaming mode. The service has been launched in partnership with Samsung and has been announced as a pioneering for UHD technology in Europe [12].  WP.TV  Provided by major Internet Portal owner  Selection of short videos, many specially produced, grouped in 11 thematic channels  Ad-supported business model

Figure 29 shows how the polish market is shared by main OTT video players. The results (number of users) of YouTube and other UGC services are shown for comparison, as they are a main source of video content. Type Service Number of OTT services in Poland: number of users in a users in month[mln] month [mln] 14 OTT UGC YouTube 13,8 12 Wrzuta.pl 2,3 10 ToSieWytnie.pl 2 8

OTT from 6

content owners IPLA 1,8 4

TVNPlayer.pl 0,8 2

vod.tvp.pl 0,3 0

Pure-OTT VOD.pl 3,6

IPLA

Iplex

WP.TV

VOD.pl

Kinoplex YouTube

WP.TV 3,2 Cineman

Wrzuta.pl vod.tvp.pl

Kinoplex 0,1 TVNPlayer.pl ToSieWytnie.pl Iplex 0,1 OTT UGC OTT from content Pure-OTT owners Cineman 0,1 Figure 28. - Main players on OTT video market in Poland Overall value of Polish paid OTT market is estimated still on a very low level (7mln $ in 2013), expected to be rapidly growing in a yearly rate of around 50%84. Among the main drivers we can mention: rapidly increasing Internet broadband penetration rate, growth of smartphone penetration, growth of SmartTV market. There are however some important challenges for service providers:  Difficulty to build large content catalogues (large investments needed),  Competition from illegal sources (it is estimated that around 70% of Internet users access video materials in grey-zone link sharing sites or through illegal streaming)85,  Profitability (only 20% of users declare that they are willing to pay for content on-line).

Transactional, subscription, and ad-supported payment models are all present in polish OTT services. The proportion of them is however different than globally, in favor of advertisement model. This is in fact understandable concerning that most of users are not willing to pay for content.  Ad-supported model - 89% of market value in Poland,  Transactional - 7% of market value,  Subscription - 4% of market value.

83 http://www.strefavod.pl/ 84 http://pulsinnowacji.pb.pl/3718794,56360,polske-czeka-boom-na-video-w-internecie 85 http://www.hbrp.pl/fboan/upload/Perspektywy_rozwojowe_online.pdf

DX.Y Confidentiality level 53 (56) Project Deliverable CELTIC PLUS MONALIS

Summarizing, the OTT TV/video market in Poland is still in the infancy phase. Local players struggle to build their offer. The growth is very fast, but starting from low values. The market is expecting soon arrival of global players (Netflix, paid YouTube), which will be on one hand a challenge for local players, but also may boost the overall growth of the market, through the effect of educating the consumers and creating increased need for on-line watching of premium content.

6.4 Israel Online video is constantly increasing its share of overall worldwide IP traffic, driven by independent OTT video sites and IPTV video on demand (VOD). Users are rapidly getting used to consuming VOD services via different platforms. TV providers' VOD services and pure online video providers such as Netflix and Hulu offer users a wide selection of movies and TV shows to watch whenever and wherever they wish, sometimes regardless of geographical location. These developments require solutions that deal with the infrastructure and the delivery and management of the content. Several Israeli companies answer these challenges from different perspectives. Giraffic developed a fully distributed video acceleration cloud that enables online video providers to crowdsource significant amounts of traffic delivery to users worldwide, regardless of content popularity or global location. Use of the solution improves end users' streaming performance and mitigates some dedicated bandwidth requirements from online video publishers' servers or content delivery networks (CDNs), thus cutting down the costs and operational expenses of Giraffic's customers. QWilt tackles the online video tsunami by offering network operators a transparent caching solution that increases network capacity and improves subscriber quality of experience. The company claims it can reduce video bandwidth by up to 80% while at the same time providing consumption trends and monetizing video delivery. Flash Networks provides mobile Internet optimization and monetization solutions that enable operators to 88 boost network speed, optimize video and Web traffic, and generate OTT revenues from mobile Internet offerings. Sitting at the core of the network, Flash Networks' Harmony Mobile Internet Services Gateway accelerates long-term evolution (LTE) networks and reduces Web and video traffic data while providing operators with traffic analytics and user insights. Contextrem enables service providers to deploy and deliver cloud-based IP services, specifically video and multi-play telecommunications. By doing so, a user's request for VOD content can be routed to the best server available to support and meet quality-of-service (QoS) terms. On the management side, the emergence of OTT TV solutions has paved the way for new players to step into the world of content delivery without having to use a dedicated network. As such, OTT TV has the potential to disrupt the video delivery value chain as it brings in a variety of new players (such as content aggregators) into the broadcasting game. In order to create and maintain such a service, potential operators are turning to OTT TV vendors such as Israel-based Tvinci, Latto, Applicaster, VidMind, and Comigo. Tvinci developed a cross-platform solution that enables premium content consumption on TVs, desktops, tablets, and smartphones. The company targets newcomers through its turnkey solution that includes all necessary components, or through a modular solution that can integrate with systems already in place. Tvinci is mainly focused on providing a personalized, social TV experience, which is currently generating a surge of interest in OTT TV solutions. In May 2014, the company was sold to Kaltura for several tens of millions of dollars. Latto offers a modular back-end platform that enables customers to distribute, manage, and monetize content across a wide variety of devices from a single repository. This control of distributed content from a single cloud-based dashboard is cost effective and allows for relatively quick time-to-market strategies. Applicaster, a company that provides white-label broadcast solutions for cross-screen TV experiences, is another player in this field. The company's solutions include live and ondemand TV, second-screen, synchronized, and social TV experiences, as well as engaging apps that function in all connectivity environments and support several business models. VidMind also offers a white-label solution that enables service providers, from telcos to broadcasters and retailers, to launch fully featured OTT and over-the air (OTA) TV services. In September, the company introduced its Android-based set-top box that will be distributed by TVZor in Russia. Similarly, Comigo provides an advanced smart TV platform that enhances the TV experience by extending viewing across all types of handheld devices, allowing for personalization and interactive socializations. In a recent related deal, Israel-based Imagine Communications, a provider of media software and video infrastructure solutions, was acquired by broadcast equipment provider Harris Broadcast. Following the deal, Harris Broadcast will turn Imagine into its local R&D center. 89 Other companies are dealing in augmenting the TV experience, tackling the proliferation of available video content, and offering personalization features. Jinni offers a semantic discovery engine that enables users

DX.Y Confidentiality level 54 (56) Project Deliverable CELTIC PLUS MONALIS to find movies and TV shows based on their personal tastes. The company utilizes a team of cinema professionals and computer scientists to develop an entirely new taxonomy, titled Entertainment Genome, which serves as the basis for entertainment discovery. Combining TV and console games, Playcast delivers off-the-shelf games as a digital TV service to existing cable, IPTV, and hybrid satellite platforms. Playcast's solution is installed at operator head-ends, and streams the audio-visual content as standard MPEG video over the existing video networks to existing set-top-boxes. The company has already signed deals with Bouygues Telecom, CJ Hellovision, Portugal Telecom, and several others. Other companies handle different aspects of the broadcast market. Gilat develops satellite and hybrid networking products that are optimized for broadband communications via satellite. This empowers Gilat to deliver voice, broadband data, and video services across different environments including enterprises, rural networks, cellular backhauls, and government network applications. Orbit deals with mobile satellite communication systems, tracking systems, and audio communication systems. The company provides audio communication solutions for a wide range of maritime and airborne platforms. Starling and Raysat deal with satellite access and broadcast services as well.

DX.Y Confidentiality level 55 (56) Project Deliverable CELTIC PLUS MONALIS

7 CONCLUSIONS

This report gives an overview of the market situation and actors in Media multimedia services distribution at the end of MONALIS project. In the first part of the document, four Media services are described: Video on Demand, Live TV services Voice over IP and Video conferencing services. Then, Media actors are presented with their motivation to enter the Media market. This motivation depends on the actors. Some of them like Telcos or cable operators want to diversify their products and services offerings while focusing on protecting and monetizing their core competences in the networking area. Others, typically media players’ manufacturers or Media service providers, are newcomers and are fully dedicating their efforts to the Media market at the opposite of some other actors - PCs, smartphones and tablets manufacturers - who don’t do something very special for Media but just take the benefit of the Media market growth. CDN providers are in between, taking also benefit of the success of Media video services but with some significant investment to host the increasing video content and to deliver it with the best Quality of Experience. In the last part of the report, business models are tackled with the presentation of four models: Free-access- based model, advertisement-based model, pay-per-view-based model and subscription-based model. The subscription-based model seams the most promising. A merge between pay-per-view-based model and subscription-based model is also appearing. It is called the “hybrid model” which is already adopted by Amazon and Hulu. Finally, the media distribution services status is reviewed in the countries participating in the project: Spain, Poland, Portugal and Israel. OTT players, either global or local, are penetrating the households in all countries. Many vendors and startups are proposing solution to this rapidly growing market challenges.

DX.Y Confidentiality level 56 (56)