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Post written by:

Jacques Bajon

Head of the TV & Digital Content Practice

The internet protocol (IP) is becoming an increasingly central part of the distribution environment, and being used more and more at the top end of the distribution process, which makes it automatically compatible with the development of streaming solutions. This is further helped by the fact of it being a native protocol on personal, connected devices. Added to this are two complementary factors that go a long way to shaping the distribution market: the explosion in traffic generated by mobile devices, and the growing role that social media sites play in video consumption.

The need to optimise video distribution online

Faced with this exponential increase in traffic, online distribution is becoming more modular, with the parallel use of multiple content delivery networks (CDN), along with the development of building blocks for top players’ solutions (servers and peering for media groups, telco CDN). At this stage in the market’s development, only those players that generate massive volumes of traffic (Internet giants, Netflix) will enjoy significant economic gains by developing their own CDN. Moreover, P2P offloading solutions are still not widely used, while Wi-Fi can be used to design solutions for offloading mobile traffic thanks to the use of complementary networks.

The growing hybridisation of distribution configurations applies to fixed, mobile and broadcasting networks

Initially, hybrid broadcast-broadband TV solutions were developed with the idea of adding interactivity and video on demand (VoD) services to the world of broadcasting. This is still true, and their continued success can be attributed to the relative ease with which they can be deployed. We have also begun seeing the first solutions that combine LTE fixed radio with broadband or broadcast access. If IP becomes the lingua franca of video distribution, and so triggering even greater use of streaming solutions, progress will still need to be made on broadcasting networks. Cable’s transition to the Internet Protocol is underway, but the prospect of legacy terrestrial broadcasting networks following suit lies in the much more distant future – one of the main impediments being that most existing TV set-top boxes are not IP-compatible.

Telcos and cable companies will eventually need to choose between several market positions, which will in turn affect their distribution models

These choices will range from operating a passive transport network, supplying connectivity for services, to acting as an aggregator or a more vertical integration of their video services as a way to stand out from the competition. These different options imply different contractual relationships or partnerships with media companies. How heavily the emphasis is put on mobile distribution will also have a decisive impact, as will the weight given to OTT products (in-house or third-party solutions, on or off-net).

Because they have to go after customers wherever they are, media companies have become increasingly distribution network-agnostic

This shift has been heavily influenced by the work these players have done on fleshing out their OTT offerings (including live and on-demand programming). Also entering into the equation are the top Internet platforms (independent, social media) which are creating new opportunities, but can also prove a real threat. Self-distribution on Internet is one of the more drastic options, and implies a change in supply models as well as distribution costs that will be “proportionate” to the success of these new products.

Hence a more dynamic and more agnostic distribution model (fixed/mobile/OTT/managed) on the horizon

This new model means more porous borders between networks, facilitated by the use of more IP native architectures – driven by the need to target and monetise different customer profiles. At which point, optimising distribution costs will become just one of the factors to consider.

 

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