2016 a tipping point by IABM

0 H2 12 H1 13

H2 13

H1 14

H2 14

Neutral Respondents

H1 15

H1 16 0%

H2 15

Confidence Ratio

2016 – A Tipping Point?

Production and service growth (CAGR), 2009-2012 and 2012-2015 Stan Moote IABM CTO

6.0% 5.0%

0.0% -1.0%

2016 will go down as the year when in-facility IP interoperability became a reality – thanks in no small part to organizations such as AIMS, AMWA, AES, VSF, EBU and SMPTE (congratulations to SMPTE on its 100-year anniversary this year!). The trouble is that our industry is

When purchasing broadcast and media technology products, do you prefer to evaluate multiple suppliers to create a “best-of-breed solution or to solution or to purchase a complete solution from an end-to end solution provider? IBC 2016

100% 90% 80% 70% 60% 50% 40% 30% 20% 10%

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od Pr

IB 16

Sis

s ter

B NA 16 20

B 15 20

B 14 20

B NA 13 20

-3.0%

Unsurprisingly then, they also rate interoperability as being highly important – in fact, behind only saving/making money, cost of ownership and support in their purchasing priorities. IP is seen as a key enabler to all these priorities, and there has been a hold up in agreeing common standards that many cite as a major reason for hold-backs in end-user technology investment.

Here’s a dichotomy for you: according to IABM data from its most recent Industry Trends survey (July 2016), confidence Products Services among suppliers is low. Yet confidence among the end-user community – reported in our pre-IBC 2016 End-User Survey – has never been stronger; our forthcoming End User Index shows why: North American media companies increased revenues by 11% and profits by 31% over the last year, for example. All this in the face of rapidly changing viewing habits, the rise and rise of OTT, new technology and interoperability challenges, questions over UHD and the continuing rise of VR/AR; all against a background of political upheaval – an interesting year indeed!

-2.0%

1.0%

We know from IABM surveys this year that the majority of end-users prefer systems put together using ‘best of breed’ products from a number of suppliers rather than a complete system from a single source.

2.0%

IP – interoperability roadblocks removed

It’s been some year, 2016. When we look back at it in a few years’ time it’s very possible that we’ll see it as a real tipping point in the history of our industry.

3.0%

4.0%

2009-2012 2012-2015

Don’t know To evaluate multiple suppliers and create a “best-of-breed” solution To purchase a complete system from an end-to-end solution provider that provides most or all the products we need

H2 12

2016 – A Tipping Point? moving so fast nowadays that we can no longer wait for standards to be researched, established and ratified – so coming to an agreement up-front is now the only way forward. Seeing so many manufacturers’ systems working together successfully in the IABM and AIMS sponsored Interoperability Zone at IBC 2016 sent a clear signal to the whole industry that the will and the way is there, and endusers can now start to transition to IP infrastructures confident that will they will not be going up a proprietary blind alley.

Industry collaborative groups gain IABM endorsement With the large number of various industry groups, many IABM members have been unsure which groups to support and get behind. Collaborative groups can be an excellent way of moving things forward quickly and efficiently. However, if they are not properly constituted, these groups can sometimes lead us down blind alleys or serve the commercial interests of just a few. This year IABM started a collaborative group endorsement program which vets groups to assure they meet strict criteria to assist members in deciding with groups to be involved with, and to help promote endorsed groups to the supply and end-user community. Three groups were successfully endorsed this year: AIMS, The MOS Group and VSF (Video Services Forum), and SMPTE was also awarded honorary ICG endorsement.

Collaborative development What’s also interesting about AIMS is that it not only has vendors but also end-users as members. This reflects the major shift in the traditional vendor/end-user relationship that is happening in our industry, and it really accelerated in 2016. Going fast are the days when a vendor rocks up with a shiny new product and the end-user says “That’s just what I want. How much to buy it please?” More and more, vendors and end-users are working collaboratively; in 2016 for larger projects, proof of concept trials started to become the norm, which by their nature require a leap of faith by both parties. The end-user must buy into the vendor’s development roadmap, and the vendor must put in the investment to make it happen on a collaborative basis.

The continuing move from Capex to Opex Alongside this change in the relationship between vendors and end-users is the continuing change from Capex to Opex for the latter – which is having a major

impact on the former. IABM has been reporting a fall in revenues for most of the media technology equipment suppliers. The new software-based environment has changed industry economics away from up-front investment, which has reduced revenues in the shorter term. Innovation cycles today have to be much shorter, which means no one company can do it – so collaboration is paramount.

Is this the year that traditional broadcasting died? In short – no. Linear TV is far from dead, albeit numbers are declining due in part to PVRs and on-demand viewing. What we are beginning to see is a move away from traditional cable and satellite models toward viewers taking advantage of hybrid approaches, mixing and matching OTT services with traditional linear TV viewing. Broadcasting no longer means just Over the Air; OTT is now a solid delivery mechanism in many parts of the world with more to come. Viewership data from the 2016 Summer Olympic Games showed linear television viewing falling, with audiences – particularly younger viewers – flocking to digital platforms; NBC reported more than a billion minutes of live streaming had been clocked up by the fifth day of the Games, by which time it had already overtaken the entire amount of streaming for the London Games just four years before. Traditional broadcasters aren’t taking the OTT invasion lying down. For example, Sky has a declared strategy of investing in emerging technology companies and early this year took a stake

in programmatic marketing analytics, data management and media activation software company, DataXu. In October, the proposed acquisition of Time Warner by AT&T for $85bn was announced; traditional end-users are taking the new media threat to their businesses very seriously.

and how to embrace the possibilities of VR while leading your viewers through a storyline is a real creative challenge. The result may well be a different approach to drama; visionaries will pick up this new medium and find new ways of telling great stories with it.

More pixels or better pixels?

Looking forward

The profusion of 4K/UHD sets on display at your local electrical store would lead you to believe that UHD has become a mainstream delivery format. This is clearly not the case except in specific markets such as Japan and South Korea. Why so? UHD sets cost no more today relatively speaking than HD sets did a few years ago, but the infrastructure required to deliver UHD to consumers en masse would require a major investment from broadcasters, and the evidence is that most consumers are to date unwilling to pay a premium for UHD. While the idea of more pixels is attractive, it’s better pixels that will sell – and by better pixels, we mean of course HDR.

So – what does the future look like beyond the tipping point? New technologies, new business models, new players – and traditional broadcasters holding their corner. Avid’s Louis Hernandez summed it up nicely at IABM’s State of the Industry conference at IBC this year: “There has been a 50% increase in content consumption per capita in the last 10 years. If we can figure out how to create and deliver it better and more efficiently, this industry is a great place to be.”

Earlier this year the UHD Alliance delivered a spec and branding for Ultra HD Premium televisions so consumers know they are getting more than just extra pixels. It’s the bits and nits that ultimately make UHD compelling for consumers; the massively enhanced viewing experience delivered by HDR will break the impasse – but we will have to wait some years for most broadcasters to deliver it.

Virtual Reality reality check Alongside widespread take-up in gaming and simulation, VR has already started to find traction in sports event coverage, and it was undoubtedly a hot topic at both NAB and IBC this year. How successfully VR can be applied as a storytelling medium though, is something we’re going to have to wait a little longer to find out. Sport, after all, is not a story – it’s an event with multiple points of interest at any one time. As we stand today, though, because it is not realtime, VR is not yet a replacement for traditional live broadcasting, but a complementary stream that offers extra viewer engagement. The bottom line is that sports rights holders still need to work out how to make money with VR. In contrast to sports, a drama most definitely is a story,

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