The launch of a free ad-supported service by Plex TV exemplifies a trend towards AVoD for monetizing less popular content during 2020.
Extended Reality (ER), advanced advertising and quality over wireless networks are key themes for broadcasters and video service providers during 2020 as underlying technologies mature.
It will be a year of intensifying competition as the big six streamers Google, Netflix, Disney, Comcast, AT&T and Apple, confront each other more directly in an ever more crowded and fragmented online content market. Sports streaming will be a big story as the status quo will continue to be disrupted by the ongoing specter of piracy, invasion by the big tech players and threats by some major leagues to go D2C (Direct to Consumer). These themes are all linked by the competitive reality that consumers will opt for the services and sources that give them the best combination of convenience, quality and value for money.
ER, an umbrella term for Augmented Reality (AR), Virtual Reality (VR) and Mixed Reality blending the two, will be driven forward by competitive pressures among broadcasters and content producers to differentiate their services and make the viewing experience more compelling. We are talking particularly about AR, which has great potential to improve and enhance the experience in various ways for different categories of content, but has been slow to arrive because of technical and logistical difficulties.
At first AR suffered from similar challenges to the ill-fated 3D movement around 2013 with high production costs, lack of standardization within the ecosystem and absence of compelling use cases, with the appeal limited largely to niche audiences. But technological advances coupled with wider ranging potential than 3D has brought AR to the fore, with live sports and esports being two areas at the cutting edge.
In the case of live sports broadcasting, one key driver has been the emergence of the big tech players and competitive threat to established operators or broadcasters, which is forcing them to innovate just to survive. They need to convince consumers to subscribe in preference to streaming alternatives, and rights holders such as leagues to be willing to concede their content in situations where money alone is not the only determining factor. Resistance to piracy can be one persuasive factor in rights negotiations but another is the ability to provide the best experience to viewers, bearing in mind that individual sports and leagues are in competition with each other and TV has become the primary route to their often-expanding fan bases around the world. This comes at a time when Amazon in particular is overcoming earlier problems with streaming quality to exploit the medium’s inherent advantages in interactivity, while dabbling increasingly in AR.
For sports broadcasters, challenges around AR include exploitation of expanded views, blending of reality with projection and increasing fan engagement while ensuring a professional and consistent experience distinct from some user generated efforts. There are different flavors and levels of AR with the concept already proven and established in the sporting field for decision making by referees or umpires in tennis, rugby and association football among others.
Even here success has been varied with the Hawk-eye system in tennis to determine whether a ball lands in or out highly successful but the VAR (video assistant referee) in association football still being worked out because it is used in more complex borderline situations where some decisions still come down to human interpretation and can cause undesirable delays in the play.
From the broadcasting perspective the greatest interest in AR lies around increasing fan engagement and extending analysis of games by overlaying data onto action replays. There are even trials where alternative scenarios are generated from the ones that actually took place, predicting what might have happened if a certain event had not occurred earlier. Here again success will depend not just on the technology but its judicious and imaginative use by pundits and commentators. We have already seen some sports broadcasters such as ESPN, FOX and Comcast’s Sky incorporate AR in such ways and there will be further developments during the rest of 2020.
Perhaps the most profound impact of AR is being felt in esports, which has come onto the radar screen for traditional broadcasters and operators as viewing audiences grow. The phenomenal growth and financial success of esports is a result of its fast-expanding viewing audience, with greater interactivity and fan engagement than most physical sports.
One emerging trend is convergence between esports and real sports to yield hybrid activities driven by advances in AR. We have already seen how some esports games, notably motor racing, are closely related to physical counterparts, requiring similar skills in steering and judgement, to the extent that one or two players have become expert at both. The Formula 1 driver Lando Norris also competes in simulated racing and argues that in future esports could be a breeding ground for racing drivers.
Now we have a few esports games designed specifically to include physical activity as well, answering the criticism that the genre discourages young people from taking valuable exercise. Among the earliest and most popular examples so far is the HADO Augmented Sport from Japanese start-up Meleap, which is modelled on the game called dodgeball where players compete by bending and flipping to avoid being hit by the opposing team's balls. In HADO players have shields they can use to deflect virtual bullets as well as dodge them, enabled by an AR device players wear on their heads, along with a motion sensor the size of a smartphone on their wrist or forearm.
Currently this can only be played in major arenas of which there are now approaching 100 in at least 15 countries, but it could well be adapted to yield a domestic version.
AR’s application to enhance and extrapolate on reality is not confined to sports or esports and it is starting to appear in other genres, including news and weather forecasting. IBM’s The Weather Company has been a pioneer on this front using a system called Max Reality both to enhance video of current events and incorporate previously produced footage to provide deeper explanations or enliven coverage at times when the weather is rather quiescent. This also demonstrates how long form content can be interwoven with shorter new bulletins, allowing interested viewers to branch off into more detailed explanations of events, which have proved more popular than originally anticipated.
Another blanket theme for 2020 could be summarized as all things mobile, with emphasis both on tailoring content to small screens, including adverts, and improving the playback quality. There is a strong trend towards mobile advertising, which is on track to consume 50% of all global advertising spend by the end of 2021 according to some forecasts, but there is danger of this backfiring if attention is not paid to the format. Small screens require a different type of advertising, incorporating situation and location in some cases rather than concentrating on headline brand awareness where the big screen has been so successful.
The year 2020 looks like being the one when marketers wake up fully to the need to optimize not just individual ads, but whole campaigns, to the small screen. Ads will be geared more to the small screen not just in format with resizing of visual components but also by the way consumers use their handsets, with less intrusiveness and more enticement to engage interactively. Inevitably, AR will figure here too.
Augmented Reality is stimulating convergence between esports and physical sports in games such as HADO.
Then there is the wireless dimension, playing an essential role in video quality on mobile devices. There are two fronts, 5G on the cellular side for outdoor communication and Wi-Fi 6 within the home, premise or public arena, with overlap or interactivity between the two, especially given the continuing drive towards ubiquitous communications with automatic handover.
On the 5G front it is important to remember that the benefits for video of greater capacity, higher bit rate and lower latency can only be delivered through corresponding investment in infrastructure. They do not follow magically just by upgrading to 5G standards. More fiber has to be laid out to the cell towers and generally traffic has to be pushed out and confined to the network edge as far as possible to enable lower latency and higher overall capacity.
The new 5G NR (New Radio) technology developed by the 3GPP for 5G mobile networks provides the foundation for this so-called Multi-Access Edge Computing (MEC), partly by introducing new higher frequencies under the banner of mmWave. This is a slight misnomer because in practice we will not be seeing wavelengths as low as 1 mm, which means frequencies of 300 GHz, with 60 GHz the highest envisaged at present just for unlicensed short-range communications, or 5mm waves. A key point is that while higher frequencies yield greater bandwidth, because bands are wider, this is at the expense of range as the lower wavelength signals dissipate over shorter distances. This limits the practical maximum frequency, or minimum wavelength.
Alongside higher frequencies, enhancements around MIMO to yield larger antenna constellations and new modulations schemes will improve quality and performance. Comparable improvements are coming on the WiFi front through WiFi 6, which is helping overcome past frustrations with quality and performance for video reception on mobile devices around the home and elsewhere, through enhancements such as mixing and matching different frequencies more intelligently to manage traffic and avoid dead zones or blips in reception. It also increases capacity of single WiFi networks, which can support more users, more data and higher video resolutions.
Back on the advertising front two firm trends can be identified for 2020. The first is growth in AVoD (Advertising VoD), spearheaded by major players such as NBC Universal’s (Comcast) Peacock streaming service due for launch April this year in the USA, offering a version fully or partially ad-supported. Other smaller platforms such as the USA based Plex TV already offer ad-supported free versions. This has led at least one research group, Ampere Analysis, to call 2020 the year of AVoD as free ad models build scale and roll-out internationally. “This prediction may seem optimistic given the low use of the current AVoD services in the USA, at between 3-6% of online households, but we think this is merely the quiet before the storm,” the analyst firm said.
The company reckons that as major SVoD (Subscription VoD) services are migrating towards originals and new content acquisitions, an opportunity is arising for AVoD providers to move in and monetize archived and long tail content. It noted as one example US OTT video platform Crackle, in which Sony is involved, 70% of whose content is over 10 years old. Conversely, the proportion of Netflix’s catalogue that is over five years old fell from 50 per cent in September 2015 to just 35 per cent in September 2019, and that trend looks like continuing for major SVoD services.
The other big trend on the ad front is the rise of addressable now that the technology is mature, having been bedded in by a few pioneers such as Sky with its AdSmart platform in the UK. This will lead to a spate of deployments of addressable advertising targeting viewers down to the household level on the basis of attributes such as income and buying preferences. One factor encouraging growth in addressable advertising is the rapid rise in penetration of TV that are internet-connected, either directly as in smart TVs or indirectly via third party boxes from the likes of Roku, or HDMI dongles. Connected TVs intersect both the broadcast and online domains and encourage campaigns that combine linear and online channels with solid data on the user’s consumption, both on the big screen and mobile devices.
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