Evolution Of Hybrid TV Over The Top (Internet) TV and TV Everywhere Issue 2

ALAN QUAYLE BUSINESS AND SERVICE
DEVELOPMENT

TV D EL I V E RY
E VO LU TI O N:
H Y BR ID TV,
OV E R TH E TO P
( I N TER N E T) T V,
A N D TV E V ERY WH E R E
( M U LTI -S C R EE N TV) .
S TATU S R E PO RT AN D
PRO J E C TIO NS 2 0 1 2 -2 0 1 7

© ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT 2012

© ALAN QUAYLE BUSINE SS AND SERVICE DEVEL OPMENT 2012

CONTENTS

INTRODUCTION ....................................................................................................................... 13

EXECUTIVE SUMMARY ......................................................................................................... 16

SCOPE OF THIS REPORT .............................................................................................................. 16
DEFINING HYBRID TV, TV EVERYWHERE (MULTI-SCREEN TV) AND INTERNET (OVER THE
TOP) TV ........................................................................................................................................ 17
SIZING THE TV MARKET AND COUNTRY SPECIFIC ANALYSIS ................................................ 20
TECHNOLOGIES AND STANDARDS ............................................................................................... 24
STB MARKET IN TRANSITION TO A FOCUS ON SOFTWARE ...................................................... 26
IMPACT OF TECHNOLOGY ACROSS THE TV ECOSYSTEM ......................................................... 28
FUTURE SCENARIOS 2009 AND 2012 ........................................................................................... 29
LEARNING FROM HYBRID TV DEPLOYMENT CASE STUDIES ................................................... 31
LEARNING FROM TV EVERYWHERE DEPLOYMENT CASE STUDIES......................................... 33
LEARNING FROM THE HYBRID TV SURVEY .............................................................................. 34
LEARNING FROM TV EVERYWHERE SURVEY ............................................................................ 36
MAPPING THE OTT LANDSCAPE ................................................................................................ 37
BATTLE ACROSS THE TV LANDSCAPE ....................................................................................... 39
PERSONAL EXPERIENCE OF CUTTING THE CORD: THE LAUNCH AND INITIAL EXPERIENCES
....................................................................................................................................................... 41
LOOKING INTO THE LONG TERM ON INTERNET TV ................................................................. 41
KEY POINTS FROM THE VIEWER SURVEY ................................................................................. 44
RECOMMENDATIONS ................................................................................................................... 45
RECOMMENDATIONS FOR PAYTV PROVIDERS ............................................................................. 45
RECOMMENDATIONS FOR SUPPLIERS............................................................................................ 47
RECOMMENDATION FOR APPLICATION DEVELOPERS ................................................................... 48
RECOMMENDATIONS FOR INVESTORS ........................................................................................... 48
A FINAL NOTE .............................................................................................................................. 49

DEFINITIONS AND TV MARKET SIZES AND PROJECTIONS ...................................... 51

DEFINITIONS OF HYBRID TV, TV EVERYWHERE AND INTERNET TV ...................................... 51
SIZING THE TV MARKET.............................................................................................................. 54
COUNTRY SPECIFIC TV DELIVERY MARKET REVIEW ............................................................. 57
US MARKET REVIEW: THE MOST PROFITABLE TV MARKET IN THE WORLD .............................. 57
TURKEY: ARCHETYPE OF THE MIDDLE EAST ................................................................................ 61
BRAZIL: SELECTING ITS OWN DTT TECHNOLOGY GIVES SATELLITE AND CABLE AN EDGE ....... 63
CHINA: TOO BIG TO IGNORE BUT POLITICS DOMINATES ............................................................. 65
INDIA: CABLE STAGNATION AND SATELLITE TV GROWTH .......................................................... 67
AUSTRALIA: DTT DONE RIGHT..................................................................................................... 69
SUMMARIZING THE GEOGRAPHIC DIVERSITY ........................................................................... 70

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KEY TECHNOLOGIES AND STANDARDS .......................................................................... 72

HYBRID TV STANDARDIZATION ACTIVITIES ............................................................................. 72
HYBRID BROADCAST BROADBAND TV (HBBTV) OVERVIEW................................................... 72
MHEG-IC, GEM/MHP, AND HBBTV ........................................................................................ 74
HBBTV ORGANIZATION AND DEPLOYMENT STATUS IN 2012.................................................. 75
HBBTV SPECIFICATION OVERVIEW .......................................................................................... 76
EBIF AND TRU2WAY.................................................................................................................... 81
EBIF: CANOE IS DEAD LONG LIVE INTERACTIVE TV ................................................................... 81
TRU2WAY ...................................................................................................................................... 83
DVB-MHP (MULTIMEDIA HOME PLATFORM) AND GEM........................................................ 83
WTVML: GREAT IDEA, BUT THE WORLD PASSED IT BY ......................................................... 84
CE-HTML .................................................................................................................................... 85
APPLICATION ENVIRONMENT AND APPLICATION STORES ....................................................... 86
STB: TRANSITION TO A FOCUS ON SOFTWARE ........................................................................ 86
TABLETS AND OTHER CONNECTED DEVICES ............................................................................ 88
CONDITIONAL ACCESS SYSTEMS ................................................................................................ 88
VERIZON CASE STUDY ON INTERACTIVE SERVICES ................................................................. 91
NETFLIX AND THE ROLE OF APIS .............................................................................................. 93
STB APIS AND THE PAYTV SILO CHALLENGE FOR INTERACTIVE SERVICES ........................ 95

UNDERSTANDING THE TV ECOSYSTEM .......................................................................... 98

PRODUCERS / DISTRIBUTORS AND STUDIOS ............................................................................... 99
BROADCASTERS.......................................................................................................................... 100
CABLE NETWORKS..................................................................................................................... 101
ADVERTISERS ............................................................................................................................. 103
CANOE VENTURES ....................................................................................................................... 105
ADVERTISERS AND THE NETWORK PVR AND DISH’S HOPPER.................................................. 106
PAYTV PROVIDERS .................................................................................................................... 107
DEAL STRUCTURES .................................................................................................................... 108
IMPERFECT COMPETITION AND THE BATTLE BETWEEN NETWORKS AND PAYTV .............. 109
TELCO CHALLENGES ................................................................................................................. 110
IMPACT OF TECHNOLOGY ACROSS THE ECOSYSTEM.............................................................. 111
FUTURE SCENARIOS 2009 AND 2012 ......................................................................................... 112

HYBRID TV AND TV EVERYWHERECASE STUDIES: TELCO / SATELLITE /
CABLE / TERRESTRIAL........................................................................................................ 115

HYBRID TV DEPLOYMENT CASE STUDIES ............................................................................... 115
AT&T HOMEZONE (DISCONTINUED SERVICE) ........................................................................... 115
VERIZON FIOS ............................................................................................................................. 116
Verizon Flex View: Multi-Screen TV ......................................................................................... 118
Verizon FiOS Widgets ................................................................................................................ 119
DIRECTV AND DISH ................................................................................................................... 120
BT VISION ................................................................................................................................... 123
Unclear Addressable Market ....................................................................................................... 124

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Confused Consumer Proposition ................................................................................................. 124
Unclear Revenue ......................................................................................................................... 125
Intense Competition Across All Viewer Categories.................................................................... 125
No Apps No Ecosystem .............................................................................................................. 125
SKY ANYTIME+ .......................................................................................................................... 125
ORANGE TV................................................................................................................................. 128
CANAL+ LE CUBE ........................................................................................................................ 130
DETSCHE TELEKOM T-ENTERTAIN.............................................................................................. 132
TELECOM PORTUGAL MEO .......................................................................................................... 133
TELEFONICA O2 CZECH REPUBLIC O2TV................................................................................... 135
HANSENET ALICETV (NOW TELEFONICA O2)............................................................................ 136
TELECOM ITALIA CUBOVISION ................................................................................................... 137
JAZZTEL AND TELEFONICA ......................................................................................................... 138
COMHEM ..................................................................................................................................... 139
TELECOM NEW ZEALAND AND TIVO.......................................................................................... 140
LEARNING FROM HYBRID TV DEPLOYMENTS ......................................................................... 141
TV EVERYWHERE CASE STUDIES ............................................................................................. 142
AT&T, USA ................................................................................................................................ 143
BELGACOM, BELGIUM ................................................................................................................. 144
BELL, CANADA ............................................................................................................................ 145
BHARTI AIRTEL ........................................................................................................................... 145
CABLEVISION, USA .................................................................................................................... 146
CHARTER, USA ........................................................................................................................... 147
CHINA TELECOM, CHINA ............................................................................................................. 148
COMCAST, USA ........................................................................................................................... 149
COX COMMUNICATIONS .............................................................................................................. 150
DIRECTV, USA............................................................................................................................ 151
DISH NETWORKS, USA................................................................................................................ 152
MEDIASET, ITALY ........................................................................................................................ 153
ORANGE, FRANCE ........................................................................................................................ 153
ROGERS, CANADA ....................................................................................................................... 154
ROMTEL, ROMANIA ..................................................................................................................... 155
SFR, FRANCE ............................................................................................................................... 155
SHAW, CANADA ........................................................................................................................... 155
SK TELECOM ............................................................................................................................... 155
SKY, GERMANY ........................................................................................................................... 156
SKY NEW ZEALAND..................................................................................................................... 156
SKY, UK ...................................................................................................................................... 156
SWISSCOM ................................................................................................................................... 157
TELECOM ITALIA, ........................................................................................................................ 157
TERRATV .................................................................................................................................... 157
TIME WARNER CABLE ................................................................................................................. 157
VERIZON ...................................................................................................................................... 158
LEARNING FROM TV EVERYWHERE DEPLOYMENTS .............................................................. 159

HYBRID TV, OTT TV, AND TV EVERYWHERE SURVEYS AND BUSINESS MODELS
..................................................................................................................................................... 160

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DRIVERS FOR HYBRID TV FOR IPTV PROVIDERS ................................................................... 160
DRIVERS FOR HYBRIDTV FOR SATELLITE TV PROVIDERS .................................................... 161
BROADCASTER PARTNERSHIP? ................................................................................................. 161
BUSINESS MODEL HYRID TV: IPTV PROVIDERS .................................................................. 162
PAYTV OPERATOR HYBRID TV SURVEY ................................................................................. 162
KEY POINTS FROM PAYTV OPERATOR HYBRID TV SURVEY ................................................ 170
TV EVERYWHERE SURVEY........................................................................................................ 172
INTERVIEWEES ............................................................................................................................. 172
KEY FINDINGS ............................................................................................................................. 172
The are no longer TVE Content Rights Issues, Just Old Deals Playing Out ............................... 173
TV Everywhere is NOT a well-defined solution category .......................................................... 174
Incumbent Middleware Suppliers are Extending their Solutions into TVE ................................ 174
TVE Packages and Services ........................................................................................................ 175
Vendor Review ............................................................................................................................ 175
KEY POINTS FROM THE TVE SURVEY ...................................................................................... 177

OVER THE TOP PROVIDERS .............................................................................................. 178

OVER THE TOP TV OPTIONS .................................................................................................... 178
TRADITIONAL TV GOES ONLINE ............................................................................................... 181
COMPARING UK OTT PROVIDERS ........................................................................................... 182
BBC IPLAYER .............................................................................................................................. 182
SKY GO (REPLACED SKY PLAYER) ............................................................................................. 184
ITV PLAYER (WWW.ITV.COM/ITVPLAYER).................................................................................. 185
Platform Availability ................................................................................................................... 185
4OD (4 ON DEMAND, WWW.CHANNEL4.COM/PROGRAMMES/4OD) ............................................. 187
DEMAND FIVE.............................................................................................................................. 188
YOUVIEW (PREVIOSULY PROJECT CANVAS) .............................................................................. 189
Unclear Addressable Market ....................................................................................................... 190
Confused Customer Proposition .................................................................................................. 190
Unclear Revenue ......................................................................................................................... 190
Intense Competition Across All Customer Segments ................................................................. 190
No Apps No Ecosystem .............................................................................................................. 191
TV MANUFACTURERS ................................................................................................................ 191
SHARP .......................................................................................................................................... 192
TOSHIBA ...................................................................................................................................... 192
PANASONIC .................................................................................................................................. 194
LG................................................................................................................................................ 194
PHILIPS ELECTRONICS ................................................................................................................. 195
SAMSUNG..................................................................................................................................... 195
SONY ............................................................................................................................................ 196
INTERNET TV AND BRINGING IT BACK TO THE TV.................................................................. 196
BOXEE.......................................................................................................................................... 197
TIVO ............................................................................................................................................ 198
ROKU.......................................................................................................................................... 199
CRACKLE ..................................................................................................................................... 200

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WALMART / VUDU ....................................................................................................................... 200
APPLETV ..................................................................................................................................... 201
AMAZON INSTANT VIDEO............................................................................................................ 202
NETFLIX ....................................................................................................................................... 202
GOOGLETV.................................................................................................................................. 203
CUSTOMERS’ CRITICAL MATH ................................................................................................. 204
MAPPING THE LANDSCAPE ........................................................................................................ 205
SOCIAL NETWORKS AND TV ..................................................................................................... 206
SOCIAL TV .................................................................................................................................. 207
ONLINE TV NETWORKS............................................................................................................. 210
HULU ........................................................................................................................................... 210
ALSO RANS ................................................................................................................................. 211
CONCLUSIONS ............................................................................................................................ 211

PRACTICAL EXPERIENCES OF CUTTING THE PAYTV CORD ................................. 214

INITIALLY: A FAILURE TO LAUNCH ......................................................................................... 214
REVIEWING THE OPTIONS: SERVICES...................................................................................... 215
AMAZON ON DEMAND: NETFLIX AND HULU COMBINED (WITH FREE SHIPPING) ....................... 215
Pricing for content not included in Prime .................................................................................... 215
CRACKLE .................................................................................................................................. 217
HBO GO ...................................................................................................................................... 217
HULU: CATCH-UP TV .................................................................................................................. 218
ITUNES AND APPLE TV................................................................................................................ 218
LOVEFILM: EUROPE’S NETFLIX ................................................................................................ 218
Pricing ......................................................................................................................................... 219
NETFLIX: GOLD STATNDARD VOD ............................................................................................. 220
SONY VIDEO STORE..................................................................................................................... 221
VODDLER ..................................................................................................................................... 221
WALMART / VUDU: HIGH QUALITY RENTAL SERVICE ............................................................... 222
YOUTUBE / GOOGLE PLAY .......................................................................................................... 223
COMPARING THE OPTIONS SIDE BY SIDE .................................................................................... 224
REVIEWING THE OPTIONS: HARDWARE .................................................................................. 227
APPLE TV: STEP TOO FAR INTO THE APPLE CHASM FOR ME ....................................................... 227
BOXEE: ROLLS ROYCE SOLUTION, PERHAPS A LITTLE TOO GEEKY (AT THE MOMENT) .............. 227
CONSOLES, SONY PS3 AND XBOX: BECAUSE THEY ARE THERE .................................................. 227
GOOGLE TV: ONE TO WATCH ..................................................................................................... 227
PC: ............................................................................................................................................... 228
ROKU: SWEET CHEAP LITTLE DEVICE ......................................................................................... 228
SMART TVS ................................................................................................................................. 228
LG................................................................................................................................................ 229
Panasonic ..................................................................................................................................... 229
Samsung ...................................................................................................................................... 229
Yahoo TV .................................................................................................................................... 229
TABLETS ...................................................................................................................................... 229
Android Tablets: Some Good Some Bad .................................................................................... 229
Apple iPad: The Gold Standard................................................................................................... 230

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Kindle Fire: Great Video Experience, Great Android App Recommendations .......................... 230
Nook: Really for Books. .............................................................................................................. 230
COMPARING THE OPTIONS ........................................................................................................ 230
AND FINALLY THE LAUNCH AND INITIAL EXPERIENCES ....................................................... 231
LOOKING INTO THE LONG TERM ON INTERNET TV ............................................................... 232

VIEWER SURVEY ................................................................................................................... 235

INTERVIEWEES ........................................................................................................................... 235
RESULTS...................................................................................................................................... 236
WHAT IS YOUR VIEW OF INTERNET TV SERVICES LIKE NETFLIX, HULU, LOVEFILM ? ............ 236
ARE YOU CONSIDERING MOVING FROM YOUR CURRENT PAYTV PROVIDER TO INTERNETTV?.. 237
WHAT IS YOUR VIEW OF YOUR CURRENT PAYTV BILL? .............................................................. 238
HAVE YOU HEARD OF TV EVERYWHERE / MULTI-SCREEN TV / TV APP (E.G. PAYTV ON YOUR
PHONE / IPAD)? ............................................................................................................................ 239
IF YOU HAVE USED TV EVERYWHERE / MULTI-SCREEN TV WHAT WAS YOUR EXPERIENCE?.... 239
WHAT DO YOU EXPECT FROM A TV EVERYWHERE / MULTI-SCREEN TV SERVICE .................... 240
WHAT IS YOUR VIEW OF YOUR PAYTV PROVIDERS ONDEMAND SERVICE? ................................ 241
KEY POINTS FROM THE VIEWER SURVEY ............................................................................... 242

RECOMMENDATIONS .......................................................................................................... 244

RECOMMENDATIONS FOR PAYTV PROVIDERS ....................................................................... 244
RECOMMENDATIONS FOR SUPPLIERS ...................................................................................... 246
RECOMMENDATION FOR APPLICATION DEVELOPERS ............................................................ 246
RECOMMENDATIONS FOR INVESTORS ...................................................................................... 247
A FINAL NOTE ............................................................................................................................ 247

APPENDIX 1. GEOGRAPHIC MARKET DATA ............................................................... 249

AUSTRALIA: DTT DONE RIGHT ................................................................................................ 249
BRAZIL ........................................................................................................................................ 252
CANADA ...................................................................................................................................... 254
CHINA.......................................................................................................................................... 256
FRANCE ....................................................................................................................................... 258
GERMANY ................................................................................................................................... 260
INDIA ........................................................................................................................................... 263
ITALY .......................................................................................................................................... 265
JAPAN .......................................................................................................................................... 267
MEXICO ...................................................................................................................................... 270
RUSSIA ........................................................................................................................................ 272
SINGAPORE ................................................................................................................................. 274
SOUTH AFRICA ........................................................................................................................... 276
SWEDEN ...................................................................................................................................... 281
TURKEY ...................................................................................................................................... 283
UNITED KINGDOM ...................................................................................................................... 285
UNITED STATES OF AMERICA ................................................................................................... 288

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APPENDIX 2: TV EVERYWHERE QUESTIONNAIRE .................................................... 293

APPENDIX 3: SUMMARY OF THE ONLINE VIDEO SERVICES .................................. 295

NORTH AMERICA ....................................................................................................................... 295
AMAZON INSTANT VIDEO ......................................................................................................... 295
APPLE TV .................................................................................................................................... 295
BLOCKBUSTER ON DEMAND ....................................................................................................... 296
BEST BUY, CINEMANOW ............................................................................................................. 296
CRACKLE ..................................................................................................................................... 297
HULU PLUS .................................................................................................................................. 297
NETFLIX ....................................................................................................................................... 298
WAL-MART VUDU ..................................................................................................................... 298
HBO GO ...................................................................................................................................... 298
REST OF THE WORLD................................................................................................................. 299
ACETRAX (BOUGHT BY SKY) ...................................................................................................... 299
BLINKBOX.................................................................................................................................... 299
FILM2HOME................................................................................................................................. 299
FILM4OD (FILMFLEX) ................................................................................................................. 299
FILMISNOW ................................................................................................................................. 300
LOVEFILM ................................................................................................................................. 300
MAXDOME ................................................................................................................................... 302
SF ANYTIME ................................................................................................................................ 302
VIDEO FUTUR (GLOWRIA) ........................................................................................................... 302
VIDEOLAND ................................................................................................................................. 302
VODDLER .................................................................................................................................. 303

APPENDIX 4: GLOSSARY OF TERMS ............................................................................... 304

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TA BLE O F FI GU RE S
Figure 1. Mapping the Hybrid TV Landscape ...............................................................................................19
Figure 2. Total TV Market Size (also includes Free Sat, Free Cable and Free Terrestrial) (Millions of
Households) source Alan Quayle Business and Service Development ..........................................................21
Figure 3. Split between Pure and Hybrid TV Subscribers (Millions of Households) source Alan Quayle
Business and Service Development ...............................................................................................................21
Figure 4. Analog Versus Digital STB Across All TV Households (Millions) source Alan Quayle Business
and Service Development ..............................................................................................................................22
Figure 5. STB Middleware Vendors and Their Key Accounts .......................................................................27
Figure 6. Rating Technology Impact on TV Ecosystem Members .................................................................29
Figure 7. Review of Future Scenarios, based on industry interviews 2009 ...................................................30
Figure 8. Review of Future Scenarios, based on industry interviews 2012 ..................................................31
Figure 9. TV Everywhere Market Structure ..................................................................................................37
Figure 10. Mapping the Internet TV on the TV Landscape ...........................................................................39
Figure 11. Battle Across the TV Landscape .................................................................................................41
Figure 12. Mapping the Hybrid TV Landscape .............................................................................................53
Figure 13. Total TV Market Size (also includes Free Sat, Free Cable and Free Terrestrial) (Millions)
source Alan Quayle Business and Service Development ...............................................................................55
Figure 14. Split between Pure and Hybrid TV Subscribers (Millions) source Alan Quayle Business and
Service Development .....................................................................................................................................55
Figure 15. Source Data for Figure 13 and Figure 14 (Millions of Households) ..........................................56
Figure 16. Analog Versus Digital STB Across All TV Households (Millions) source Alan Quayle Business
Figure 17. Source Data for Figure 16 (Millions of Households) ..................................................................56
Figure 18. Breakdown of Netflix Subscribers (source Netflix) ......................................................................59
Figure 19. USA TV Household Status and Projections (Millions of Households) source Alan Quayle
Figure 20. Data for Figure 19 (Millions of Households) ..............................................................................61
Figure 21 Turkish TV Household Status and Projections (Millions of Households) source Alan Quayle
Figure 23. Brazilian Market Status and Projection (Millions of Households) source Alan Quayle Business
Figure 25. China Market Status and Projection (Millions of households) source Alan Quayle Business and
Service Development .....................................................................................................................................66
Figure 27. India TV Household Status and Projections (Millions of Households) source Alan Quayle
Figure 29. Australian TV Households by Platform (Millions of Households) source Alan Quayle Business
Figure 31. HbbTV Overview (source HbbTV) ...............................................................................................77
Figure 32. TV Services, Broadcast Applications and Broadcast Independent Applications .........................79
Figure 33. Simplified EBIF Architecture .......................................................................................................81
Figure 34. STB Breakdown by Number Deployed .........................................................................................87
Figure 35. Content Security Table ................................................................................................................91
Figure 36. Verizon’s STB interactive Technologies ......................................................................................92
Figure 37. Verizon Architecture ....................................................................................................................92
Figure 38. Verizon Widget Bazaar and Twitter Widget (source Verizon) .....................................................93
Figure 39. Role of APIs in Netflix Business .................................................................................................94

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Figure 40. STB Middleware Vendors and Their Key Accounts .....................................................................96
Figure 41. TV Ecosystem ...............................................................................................................................99
Figure 42. Measured Ad Spending in the US Q1 2012 compared to Q1 2011 (source Kantar Media) ......102
Figure 43. TV Ad Spending in US (source Nielsen) ....................................................................................103
Figure 44. Advertising Value Chain ............................................................................................................104
Figure 45. Trend in PayTV Subscription and Advertising Revenues ..........................................................105
Figure 46. Global Growth in PayTV (Millions of Households) source Alan Quayle Business and Service
Development ................................................................................................................................................108
Figure 47. Examples of Deal Structures in the Value Chain .......................................................................109
Figure 48. Rating Technology Impact on TV Ecosystem Members .............................................................112
Figure 49. Review of Future Scenarios, based on industry interviews 2009 ...............................................113
Figure 50. Review of Future Scenarios, based on industry interviews 2012 ..............................................114
Figure 51. Verizon FiOS Architecture and Migration Plan (source Verizon) ............................................117
Figure 52. Verizon FiOS Customer Numbers (source Verizon) ..................................................................118
Figure 53. Verizon MY FIOS App (source Verizon) ....................................................................................119
Figure 54. FiOS TV Widgets (source Verizon) ............................................................................................120
Figure 55. DirecTV Hybrid Set Top Box (source Verizon) .........................................................................121
Figure 56. DISH Hopper (source Dish Networks) ......................................................................................122
Figure 57. DISH DVR and SlingMedia (source Dish Networks) ................................................................123
Figure 58. Sky Anytime+ (source Sky) ........................................................................................................126
Figure 59. Sky Go Pricing (source Sky) ......................................................................................................127
Figure 60. Sky Go Experience (source Sky) ...............................................................................................127
Figure 61. How OrangeTV Delivers on Service Ubiquity (source Orange)...............................................128
Figure 62. Simplifying the Purchase decision – Regardless the customer will get OrangeTV (source
Orange) .......................................................................................................................................................129
Figure 63. Orange TV Subscribers (source France Telecom) ....................................................................130
Figure 64. CanalSat Proposition (source CanalSat) ..................................................................................131
Figure 65. O2TV Hybrid STB ADB-3800TW (source Telefonica) .............................................................136
Figure 66. CuboVision WebTV Solution Topology (source Cisco) ............................................................138
Figure 67. Belgacom’s TV Partout iPad Screen Shot (source Belgacom) ..................................................145
Figure 68. CableVision’s TV To Go (source CableVision) .........................................................................147
Figure 69. Xfinity Streampix (source Comcast) ..........................................................................................150
Figure 70. DirecTV Anywhere (source DirecTV) ........................................................................................151
Figure 71. DISH Remote Access Rating on Google Play (source Google Play) .........................................153
Figure 72. SKT Hoppin Experience (source SKT) ......................................................................................155
Figure 74. Sky Go Experience (source Sky) ...............................................................................................157
Figure 75. Verizon MY FIOS App (source Verizon) ....................................................................................158
Figure 76. Geographic Distribution of Respondents for 2012 Survey Source Alan Quayle Business and
Service Development (Number of Respondents in brackets) .......................................................................163
Figure 77. What are your drivers for Hybrid TV (2012 Survey)? Source Alan Quayle Business and Service
Development ................................................................................................................................................165
Figure 78. What are your drivers for Hybrid TV (2009 Survey)? Source Alan Quayle Business and Service
Development ................................................................................................................................................165
Figure 79. What are the Barriers to hybrid TV (2009)? Source Alan Quayle Business and Service
Development ................................................................................................................................................167
Figure 80. What are the Barriers to hybrid TV (2012)? Source Alan Quayle Business and Service
Development ................................................................................................................................................168
Figure 81. Applicability of Hybrid TV (2009 and 2012) Source Alan Quayle Business and Service
Development ................................................................................................................................................169
Figure 82. Hybrid STB Vendor Comparison Source Alan Quayle Business and Service Development ......170
Figure 83. TV Everywhere Interviews by Companies Interviewed ..............................................................172
Figure 84. TV Everywhere Market Structure Source Alan Quayle Business and Service Development .....173
Figure 85. Scope of TV Everywhere Offers .................................................................................................174

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Figure 86. Example of how Existing Systems are Extended into TVE .........................................................175
Figure 87. Vendor Perception Rating Source Alan Quayle Business and Service Development ................176
Figure 88. Vendor Perception Rating and General Comments Source Alan Quayle Business and Service
Development ................................................................................................................................................176
Figure 89. Plurality of OTT Options (Diagram is from 2009 to Highlight how Quickly Brands have
Changed in Dominance) ..............................................................................................................................179
Figure 90. Trends in the Evolution of TV ....................................................................................................179
Figure 91. TV Landscape ............................................................................................................................181
Figure 92. BBC iPlayer Requests January through April 2012 (source BBC) ...........................................182
Figure 93. BBC iPlayer Demographics January thru April 2012 (source BBC) ........................................183
Figure 94. iPlayer Requests by Device Type (source BBC) .......................................................................183
Figure 95. BBC iPlayer – use for TV by time of day, April 2012 (source BBC) ........................................184
Figure 97. Sky Go Experience ....................................................................................................................185
Figure 98. Major Internet Services on TVs (source CNET) .......................................................................191
Figure 99. Sharp SmartCentral UI (source Sharp) ....................................................................................192
Figure 100. Toshiba’s Places Platform User Interface ...............................................................................193
Figure 101. Panasonic Veira Connect (2012) UK Version (source Panasonic) .......................................194
Figure 102. LG Smart Hub Experience (UK Version) ................................................................................195
Figure 103 Online Video Content Properties Ranked by Unique Video Viewers May 2012 (source
comScore) ....................................................................................................................................................196
Figure 104. Mapping the Internet TV on the TV Landscape Source Alan Quayle Business and Service
Development ................................................................................................................................................206
Figure 105. TNO Field Trial (Source TNO) ................................................................................................207
Figure 106. TNO Results (source TNO) ......................................................................................................208
Figure 107. Commercial Opportunities Enabled by Social TV (Source TNO)............................................208
Figure 108. Battle Across the TV Landscape .............................................................................................213
Figure 109. Amazon Prime Eligible TV Shows (1801 Results, 475 HD and 1326 SD) ...............................216
Figure 110. Amazon Prime Instant Video Movies (3347 items) ..................................................................216
Figure 111. Amazon Video Content, 62,000 Instant Videos, and surprisingly 300k VHS tapes! ................217
Figure 112. Netflix Just For Kids Web Interface (source Netflix) ...............................................................221
Figure 113. YouTube’s Renaissance in part from its Channel Investment (source ComScore) ..................223
Figure 114. Google Play Review (Source Google Play) .............................................................................224
Figure 115. Comparison of Over The Top TV Services..............................................................................225
Figure 116. Example OTT MLB.TV Offer (source MLB.tv) .......................................................................226
Figure 117. MLB.TV Usage by Platform 2011 and 2012 ............................................................................226
Figure 118. Google TV Remote (source LG) ...............................................................................................229
Figure 119. Comparing Internet TV Service Coverage for Some of the Devices (Source The Verge) .......230
Figure 120. Comparison Table of Internet TV Devices and Service Coverage (source The Verge) ...........231
Figure 121. Geographic Distribution of Interviewees source Alan Quayle Business and Service
Development ................................................................................................................................................235
Figure 122. Household Status on Interviewees ...........................................................................................236
Figure 123. What is your view of internet TV services like Netflix, Hulu, LOVEFiLM? ............................237
Figure 124. Are you considering moving from your current payTV provider to Internet TV? ..................238
Figure 125. What is your view of your current payTV bill? source Alan Quayle Business and Service
Development ................................................................................................................................................238
Figure 126. Have you heard of TV Everywhere / Multi-Screen TV (e.g. payTV on your phone / iPad)?
Source Alan Quayle Business and Service Development ............................................................................239
Figure 127. If you have used TV Everywhere / Multi-Screen TV what was your experience? Source Alan
Quayle Business and Service Development .................................................................................................240
Figure 128. What do you expect from a TV Everywhere / Multi-Screen TV service ..................................240
Figure 129. What is your view of your PayTV provider’s on-demand service? (Used Internet TV) source
Alan Quayle Business and Service Development ........................................................................................241

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Figure 130. What is your view of your PayTV providers on-demand service? (Not used Internet TV) source
Alan Quayle Business and Service Development ........................................................................................242
Figure 131. Australian TV Households by Platform (Millions of Households) source Alan Quayle Business
and Service Development ............................................................................................................................250
Figure 132. Data for Figure 131 (Millions of Households) ........................................................................251
Figure 133. Brazilian Market Status and Projection (Millions of Households) source Alan Quayle Business
Figure 135. Canadian TV Household Status and Projection (Millions of Households) source Alan Quayle
Business and Service Development .............................................................................................................255
Figure 136. Data for Figure 135 (Millions of Households) .......................................................................255
Figure 137. China Market Status and Projection (Millions of Households) source Alan Quayle Business
Figure 138. Data for Figure 137 .................................................................................................................257
Figure 139. France TV Household Status and Projection (Millions of Households) source Alan Quayle
Figure 141. German TV Households Status and Projections (Millions of Households) source Alan Quayle
Figure 143. India TV Household Status and Projections (Millions of Households) source Alan Quayle
Figure 145. Italy TV Household Status and Projections (Millions of Households) source Alan Quayle
Figure 147. Japan TV Households Status and Projections (Millions of Households) source Alan Quayle
Figure 149. Mexico TV Household Status and Projections (Millions of Households) source Alan Quayle
Figure 151. Russian TV Household Status and Projections (Millions of Households) source Alan Quayle
Figure 153. Singapore TV Household Status and Projections (Thousands of Households) source Alan
Figure 154. Data for Figure 153 (Thousands of Households) ....................................................................275
Figure 155. Republic of South Africa TV Households (millions) source Alan Quayle Business and Service
Development ................................................................................................................................................280
Figure 157. Swedish TV Households Status and Projections (Thousands of Households) source Alan
Figure 158. Data for Figure 157 (Thousands of Households) ....................................................................282
Figure 159 Turkish TV Household Status and Projections source Alan Quayle Business and Service
Development ................................................................................................................................................284
Figure 161. UK TV Household Market Status and Projections (Millions of Households) source Alan
Figure 163. Breakdown of Netflix Subscribers (source Netflix) ..................................................................289
Figure 164. USA TV Household Status and Projections (Millions of Households) source Alan Quayle

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I N T ROD U C T I ON

The TV industry is going through a period of change more significant than the conversion from
analog to digital, as significant as the creation of the industry itself when on 2 November 1936 the
BBC began transmitting the world's first public regular broadcast TV service from the Victorian
Alexandra Palace in north London. In the conversion from analog to digital customers generally
perceived little change in the core TV service or service providers, perhaps a few more channels and
the availability of additional services like internet access, fixed voice, video on demand, and
eventually High Definition TV and 3DTV. It’s important to view the current change from the
perspective of the decades long cycle taken for analog to digital conversion.

From a technology perspective the current change is stimulated by the convergence of the
internet that can now support adequate quality video services lessening the barrier to entry of a
national TV distribution infrastructure and consumer electronics making video consumption
pervasive and on the customers’ terms; it is impacting the whole of the TV ecosystem.

Viewers have new consumption options and new video service providers, e.g. a library of tens of
thousands of movies and shows available over the internet for only $8 per month with no
advertising. Viewers can watch their payTV service and recorded shows anywhere they take their
laptops, tablets and smartphones (they are all computing devices just of different sizes) as long as
they have an internet connection. Content owners have created their own internet-based catch-up
TV / VoD (Video on Demand) services, e.g. Hulu, HBO Go and BBC iPlayer. PayTV providers
have rushed out partially formed TV Everywhere (multi-screen TV) offers. And hybrid TV has
rapidly become pervasive since the last version of this report was written in 2009 / 2010, e.g. most
satellite TV providers in developed markets have adopted hybrid TV to support on-demand and
interactive services.

The later changes of content providers’ support of new TV delivery models and proven
consumer demand and acceptance of those new TV delivery models are critical to why the current
changes are more significant than the move from analog to digital. The whole of the TV ecosystem
is changing, not one component of the ecosystem. This will in time enable Google, Apple, Netflix,
Amazon, Facebook to become payTV competitors, not directly at first, rather capping expansion of
payTV revenues, but in time competing more directly as viewer habits evolve.

We are only at the start of the beginning of the change that the internet and consumer
electronics convergence will have on the TV industry; it will be a multi-decade-long change, just like
the conversion from analog to digital that is still ongoing. Only in 2012 did the number of digital TV
households exceed the analog TV households in the world. This report takes a global view, analyzing
what is happening outside North America as much as what is happening in North America. As an
independent consultant I have the fortune of not having a pay-master with an agenda to set; whether
that is to sell a product, maintain a service provider’s stock price, or keep a group of major clients
overpaying for projects. I consult with payTV providers, internet companies, and technology
suppliers around the world. I live in the North American market and will share my direct objective
experiences from being a consumer of bleeding-edge TV services as well as consulting around the
world on TV projects.

This report is purposefully broad in scope to provide a reference text in the evolution of TV
delivery. OTT (Internet) TV cannot be viewed as a silo, it must be considered in the wider evolution
of the industry, and today OTT TV is generally consumed as a complement to traditional payTV
services, not as a substitute, this makes internet TV a latent threat.

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I have included the feedback provided by the over 17,000 readers of the old report written in
2009/2010, and thank you all for the excellent feedback and guidance in creating this report. The
overall structure of the report is divided into 4 sections: providing an understanding of the market;
learning from real-world case studies and surveys of payTV providers’ views and plans;
understanding what the end customer (viewer) is thinking; and then bringing it all together into a
view on the future of TV delivery evolution and recommendations.

The chapters are summarized here:

 Understanding the TV Market: overall size, technologies, standards, and how the ecosystem
works.

o Definitions and TV Market sizing. Defining hybrid TV, TV everywhere (multi-
screen TV) and Internet (Over The Top) TV. Providing the latest TV market data
and projections from 2008 to 2017 across all TV platforms, i.e. terrestrial, satellite,
cable, IPTV (DSL/fiber) and OTT. The market analysis is broken down to 17
specific countries, some of which are reviewed in the main body of the report as
they exemplify particular regions or are simply interesting in their own right, while
others are included in Appendix 1.

o Key Technologies and Standards. Understanding the status of interactive services
and Hybrid TV standardization, the role APIs (Application Program Interfaces) play
for OTT TV providers, the role of conditional access systems in the multi-screen
environment, and the challenge standards are causing in the traditional payTV
industry in adequately reacting to the OTT threat.

o Understanding the TV Ecosystem. Frank review across the producers, content
owners, TV networks, payTV networks and advertisers. The TV ecosystem is
complex and well-established; this is the dominant limiting factor on change.
However, change will happen as the viewers are increasingly empowered by
technology, but we change habits slowly as changing payTV provider is a household
not individual decision.

 Case Studies and Market Surveys

o Hybrid TV, TV Everywhere, and OTT TV Case Studies. Reviewing the experiences
of 16 Hybrid TV deployments including Orange TV, Verizon FiOS, BT Vision,
JazzTel, and Telecom Italia CuboVision; and 25 TV Everywhere case studies
including Bharti Airtel, China Telecom, DISH Networks, and TerraTV.

o Results from 3 global surveys on Hybrid TV, OTT TV, TV Everywhere, and the
future of the TV ecosystem. Sharing insights on business models, service plans,
requirements, differences based on geographic region and operator type, and
deployment experiences.

o Detailed review of 44 Over the Top TV providers and enablers.

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 What the Viewers Think

o My practical experiences in cutting the payTV cord, and personal review of OTT
services.

o Viewer Survey. What customers are really thinking in North America and Western
Europe about what is happening to their TV service?

 The Future of TV Delivery and recommendations.

This report brings together work performed on TV everywhere, hybrid TV, OTT TV, and
service innovation in the payTV space through over 900 operator, regulator, viewer and supplier
interviews and online questionnaires, gathering information on deployment experiences, market
requirements, competitive landscape, and technology trends. In particular the market sizing data is
based on actual regulator, operator and supplier figures / projections; not conjecture from out of
market analysts.

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E X E C U T I V E S U M M A RY

The current changes the TV industry is undergoing are more significant than the conversion
from analog to digital, as significant as the creation of the industry. From a technology perspective
the current change is stimulated by the convergence of the internet that can now support adequate
quality video services lessening the entry barrier created by a national TV distribution network, and
consumer electronics that has made video consumption pervasive and empowered the viewers; this
change is impacting the whole of the TV ecosystem.

Viewers have new TV consumption options and new service providers, e.g. a library of tens of
thousands of movies and shows available over the internet for only $8 per month with no advertising
from Netflix. Viewers can watch their payTV service and recorded shows anywhere they take their
laptops, tablets and smartphones. Content owners have created their own internet-based catch-up
TV / VoD (Video on Demand) services, e.g. Hulu, HBO Go and BBC iPlayer. PayTV providers
have rushed out partially formed TV Everywhere (multi-screen TV) offers. Hybrid TV has rapidly
become pervasive since the last version of this report was written in 2009 / 2010.

However, we are only at the start of the beginning of the change that the convergence of the
internet and consumer electronics will have on the TV industry; it will be a multi-decade-long
change, just like the conversion from analog to digital that is still ongoing. The changes in content
provider support of new delivery models and proven consumer demand / acceptance of those new
delivery models are critical to why the current change is more significant than the move from analog
to digital; the whole TV ecosystem is changing, not just one component.

This report takes a global view, analyzing what is happening outside North America as much as
what is happening in North America. As an independent consultant I have the fortune of not having
a pay-master with an agenda to set; whether that is to sell a product, maintain a service provider’s
stock price, or keep a group of major clients overpaying for projects. I consult with payTV
providers, internet companies, and technology suppliers around the world. I live in the North
American market and share my direct objective experiences from being a consumer of bleeding-edge
TV services as well as consulting around the world on TV projects.

SCOPE OF THIS REPORT

The overall structure of the report is divided into 4 sections: providing an understanding of the
TV market’s recent history, current status and projections from 2008 to 2017; learning from real-
world case studies and surveys; understanding what the viewer is thinking; and then bringing it all
together into a view on the future of TV delivery and specific recommendations throughout the
report.

The global TV market analysis examines the breakdown of households’ primary viewing
platforms: Terrestrial, Cable, Satellite, IPTV (IP Television), and OTT (Over The Top); across analog
and digital; and hybrid and non-hybrid TV. The global analysis is then broken down into 17 country
specific analyses providing a summary of TV households’ primary viewing platform trends from
2008 to 2017 for interesting markets around the world. The 17 markets reviewed include: Australia,
Brazil, Canada, China, France, Germany, India, Italy, Japan, Mexico, Russia, Singapore, South Africa,
Sweden, Turkey, United Kingdom and the USA.

Hybrid TV case studies (16 in total) including: AT&T HomeZone (discontinued service),
Verizon FiOS, DirecTV, DISH Networks, BT Vision, Sky UK, Orange TV, Canal+ Le Cube,

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Deustche Telekom T-Entertain, Telecom Portugal Meo, Telefonica O2 Czech Republic O2TV,
Hansenet Alice TV (now Telefonica O2), Telecom Italia CuboVision, JazzTel and Telefonica (Spain),
Comhem, and Telecom New Zealand and TiVo.

TV everywhere case studies (25 in total) including: AT&T, Belgacom, Bell Canada, Bharti Airtel,
Cablevision, Charter, China Telecom, Comcast, Cox Communications, DirecTV, DISH Networks,
Mediaset, Orange, Rogers, Romtel, SFR, Shaw, SK Telecom, Sky Germany, Sky New Zealand, Sky
UK, Swisscom, Telecom Italia, TerraTV, and Time Warner Cable.

OTT market analysis (44 in total) across: 4OD, Amazon Instant Video, Apple TV, BBC iPlayer,
Blockbuster on Demand, Best Buy CinemaNow, Consoles (PS3 and xbox), Crackle, Demand Five,
Google TV, Hulu Plus, ITV Player, Netflix, Wal-Mart Vudu, HBO Go, Acetrax (bought by Sky),
Blinkbox, Film2home, Film4OD, Filmisnow, LOVEFiLM, Maxdome, Roku, Smart TVs (LG,
Panasonic, Philips, Samsung, Sharp, Sony, Toshiba), Sky Go, Sony Video Store on PS3, SF Anytime,
Tablets (iPad, Android, Kindle Fire, Nook) Video Futur (Glowria), Videoland, Voddler, Yahoo TV,
and YouView.

Four surveys across the TV Ecosystem:

 Hybrid TV survey: January to May 2012 a survey of 75 hybrid TV operators was undertaken
across IPTV (DSL), Satellite, Cable / FTTH (Fiber To The Home) and Broadcast. The
results of this survey are compared to that of a 2009 survey shown in the previous version of
this report. The 2009 survey was conducted in September and October 2009 across 82
hybrid TV operators, generally IPTV (DSL) operators.

 TV Everywhere Survey: A survey was conducted between April and June 2012 of PayTV
providers around the world on their TV Everywhere plans. Interviewees included 75
operators and 11 content providers / studios, with a total of 97 people interviewed (multiple
representatives from some operators). They were all responsible for TV Everywhere
services, and generally VP level or above. Most either know me, or were introduced through
a friend so most conversations were frank and open.

 Future of TV Survey: Global survey across 81 members of the TV ecosystem during the
summer of 2012, June-August. This is also compared to a similar survey undertaken in 2009.

 Viewer Survey: 241 payTV viewers in North America and Western Europe, across a range of
geo-demographic profiles. Viewers were interviewed over the phone, or completed an
online survey during May 2012, with follow-up questions in June 2012.

DEFINING HYBRID TV, TV EVERYWHERE (MULTI-SCREEN TV) AND
INTERNET (OVER THE TOP) TV

Hybrid TV is not new; it’s been within the industry’s lexicon for many years. Back in 2004
hybrid TV was shown in many presentations as part of the payTV industry’s set top box (STB)
roadmap. The transition should not be a surprise, however, for many executives the shift to hybrid
TV has been a quiet revolution. Especially given two of the telco industry’s most successful TV
deployments, Verizon FiOS (4.5M customers in Q2 2012) and Orange TV (4.7M customers in Q2
2012), are both hybrid TV, more specifically Hybrid Broadcast Broadband (HBB) TV. Currently
Hybrid TV STBs account for about 13% of all TV households in 2012, and are expected to reach
36% by all TV households 2017.

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Hybrid TV is the delivery of a TV service through both broadcast and IP, for example many
European telcos payTV services use both the free to air digital terrestrial TV (DTT) for broadcast
services complemented by a network-centric IPTV services over a managed IP network (e.g. BT
Vision) or a network-agnostic service over the internet / unmanaged IP network (e.g. Telecom
Italia’s CuboVision.)

BT Vision and Telecom Italia’s CuboVision demonstrate the two main categories of hybrid TV:

 HBB TV (Hybrid Broadcast Broadband) is defined by the presence of a hybrid STB that
is part IPTV, using a managed IP network; and part broadcast, receiving the broadcast
digital content from a non-IP service like Digital Terrestrial, Digital Cable, or Digital
Satellite.

 HBI TV (Hybrid Broadcast Internet) is defined by the presence of a hybrid STB that is
part IPTV, using the internet (unmanaged IP network); and part broadcast, receiving the
broadcast digital content from a non-IP service like Digital Terrestrial, Digital Cable, or
Digital Satellite. This is also referred to as Telco OTT (Over The Top) TV.

Related TV delivery categories include:

 Telco TV or pure IPTV is defined by a STB that only receives and displays video over a
‘managed IP’ network, also called network-centric TV. AT&T U-verse is an example of
such a pure IPTV deployment.

 Internet TV or Over-The-Top (OTT) TV only uses the Internet to transport video over
an unmanaged IP access network connection. Examples include Netflix, Hulu Plus and
Amazon Instant Video on a Roku device; it is also termed network-agnostic TV.

With the basic HBB and HBI definitions explained, let’s now go a little deeper, Figure 1 shows
the hybrid TV landscape, it sits at the intersections between Broadcast TV, Network-Centric TV and
Network-Agnostic TV:

 Broadcast is the traditional delivery mechanisms of Satellite, Cable and Terrestrial
(over the air);

 Network centric is Telco IPTV; and

 Network agnostic is OTT or Internet TV.

At the intersections of these delivery mechanisms resides hybrid TV.

At the intersection of Broadcast and Network Centric (termed HBB, Hybrid Broadcast
Broadband) lies:

 Hybrid Telco is the combination of Digital Terrestrial TV and IPTV, e.g. BT Vision;

 Hybrid Cable is the combination of Cable TV and IPTV, e.g. Verizon FiOS; and

 Hybrid Satellite is the combination of Satellite and IPTV, e.g. Orange TV.

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At the intersection between Broadcast and Network-Agnostic is the HBI TV category:
Terrestrial / Satellite + OTT. Examples include Canal+ Le Cube, and TI’s CuboVision. The final
intersection is between network-centric and network-agnostic, which though technically feasible is
not yet a focus of any business model.

Figure 1. Mapping the Hybrid TV Landscape

Broadcast Network-Centric

One way Cable Hybrid Telco
Terrestrial TV (Terrestrial + IPTV)
Telco IPTV
Hybrid Cable
Satellite TV
(Cable + IPTV)
Hybrid Satellite
(Satellite + IPTV)

Terrestrial /
Satellite + Telco / Cable
OTT + OTT

Over The Top (OTT) TV
(Internet TV)

Network-Agnostic

A focus of many payTV operators since the previous version of this report was written is TV
Everywhere, enabling a subscriber to receive their service on a PC, tablet, smartphone, or games
console, in addition to the STB connected to a TV. To devices other than the STB, the service is
generally delivered over unmanaged IP, examples of such services include Sky Go and DISH TV
Everywhere. A broadcast TV provider delivering a video service to the customer’s PC over the
internet is not considered hybrid TV. The hybrid TV definition focuses upon the STB, the core
payTV service customers buy and view on their TVs in the home via a STB, not ancillary services
such as TV Everywhere.

The difference between TV Everywhere and Internet TV is not a technology difference, rather a
business model difference. For TV Everywhere, a payTV provider is supplying a traditional
broadcast payTV service via a STB to a TV and offers those existing subscribers a TV Everywhere
service to receive generally a subset of their subscribed TV service via other devices like PCs, tablets,
smartphones and games consoles, generally through an application or client downloaded to the
device. The payTV provider can also offer a pure internet TV service to customers that do not

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subscribe to its broadcast payTV service, like Sky Go, and will charge those subscribers for just the
internet TV service. Then there are the purely internet based providers like Netflix / Hulu /
Amazon Instant Video that offer their service only over the internet, and do not operate a national
broadcast TV network, their service is termed Internet TV or Over The Top TV.

The term TV Everywhere has been a cause of frustration for customers as device coverage,
channel availability, and physical restrictions, e.g. only available in the home, have resulted in the
term TV Everywhere to be considered a joke. The term multi-screen TV is also used to avoid
creating customer expectations that cannot be met, or simply offering the payTV provider’s Apps for
devices, and not attaching a particular name to the service, as it can cover EPG (Electronic Program
Guide), DVR (Digital Video Recorder) controls, account management as well as a streaming TV
service. Though as we will see in the case studies, providers like DISH Networks are delivering a full
TV Everywhere service to their customers.

SIZING THE TV MARKET AND COUNTRY SPECIFIC ANALYSIS

The Telco TV (IPTV) market, though growing, remains less than 8% of the total TV market by
number of households through to 2017, as shown in Figure 2, data based on Alan Quayle Business
and Service Development estimates from a bottom-up build from each country to the global figures.
However, as cable, terrestrial and satellite providers are increasingly going hybrid, as predicted in the
earlier version of this report, a hybrid TV solution opens up a far broader market opportunity, see
Figure 3. There are about 110M hybrid TV households today (2012), growing to 530M sub by 2017.

The TV market is predicted to reach 1.57B households in 2017, compared to telco IPTV of
110M subs in 2017. The addressable market for hybrid TV is potentially vast, we estimate 530M
subscribers in 2017. My point here is simply to highlight that the hybrid TV market is much bigger
than just Telco TV, and we’ve seen it become a core component of most payTV strategies in the past
3 years. However, as we’ll discuss in this report, TV delivery evolution is moving fast, and TV
Everywhere / Internet TV have become equally as important to payTV providers.

We must also not forget that there is an important trend underlying the move to Hybrid TV,
which is the migration from analog to digital TV. Western markets take for granted that globally it
was in 2012 we finally had more digital TV than analog TV households, shown in Figure 4. As
mentioned in the Introduction section the analog to digital transition has been a multi-decade long
change, it is still ongoing, and we similarly cannot expect the change stimulated by the convergence
of internet and consumer electronics to impact the well-established TV ecosystem any faster,
critically people’s habits change slowly especially when is it a household (group) decision, hence
existing infrastructure and ecosystems are resistant to disruptive change.

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Figure 2. Total TV Market Size (also includes Free Sat, Free Cable and Free Terrestrial) (Millions of
Households) source Alan Quayle Business and Service Development

Figure 3. Split between Pure and Hybrid TV Subscribers (Millions of Households)
source Alan Quayle Business and Service Development

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Figure 4. Analog Versus Digital STB Across All TV Households (Millions)
source Alan Quayle Business and Service Development

At the request of many readers of the previous version of this report I have in Appendix 1
provided analysis of some of the markets that make up these aggregate figures shown in the global
market analysis, based on my experience in those markets. The aim is to provide a deeper dive into
the regional numbers and understand the different trajectories of TV delivery evolution. The 17
markets reviewed in Appendix 1 include: Australia, Brazil, Canada, China, France, Germany, India,
Italy, Japan, Mexico, Russia, Singapore, South Africa, Sweden, Turkey, United Kingdom and the
USA. These countries are shown as they presented good regional case studies and I have completed
projects focused on those countries so have gathered detailed and verified market data.

The data was collected from interviews with the main TV providers in those markets, gathering
their opinions on the trends impacting their market and their subscriber projections. As you would
imagine, aggregating the household projections across all service providers in a country often results
in more households than exist in that country. So regulator and supplier interviews were essential to
normalize the numbers both for 2011/2012 as well as the projections through to 2017.

OTT remains a secondary viewing option through the period of the projections to 2017, though
as a secondary viewing option it will become dominant, exceeding FTA (Free To Air) in many
markets, reaching perhaps 67% of payTV households in the US, and likely 50% of Western
European households by 2017. Other markets will vary principally on penetration and capacity of
broadband in that country.

The markets discussed in Appendix 1 vary significantly; the US model will not be adopted
wholesale, rather adapted to specific country situations. For example payTV domination is not the
end state for many countries, and internet TV will take over one decade to make an entrance into
some markets as a primary viewing option.

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The UK often seen as a close follower to the US market is taking a different course to the USA.
The broadcasters are not combining forces into a “Hulu-like” entity, rather delivering their content
direct across multiple platforms. FTA (Free To Air) will remain as equally adopted as payTV from
Satellite and Cable in the UK market, through Netflix and Amazon (LOVEFiLM) will likely emulate
their US success in the UK and cap on-demand and other interactive TV service revenues for the
payTV providers.

China will remain Chinese TV, a relatively closed market to many suppliers and service
providers, though increasingly a key market for content owners (the studios) to sell their “approved”
content through Chinese online stores and Apple iTunes which has done well in navigating the
hurdles of operating in China, unlike say Google.

In many markets the conversion from analog to digital FTA has prompted customers to move to
payTV as we’ve seen in Brazil, Turkey and India. Viewers needed to do something because of the
transition, so they evaluated their options and generally selected the broader offer of payTV, and in
many emerging markets the dominant choice is Satellite TV, hence the dominance of HBI in the
hybrid TV projections shown in Figure 3.

Analog TV will remain with us in 2017; the TV world will not be completely digitized. The lack
of broadband infrastructure in many emerging markets will also limit the adoption of hybrid TV and
OTT TV. As stated in the introduction, the impact of the convergence of internet and consumer
electronics on TV will be a multi-decade transition, the US model will not be simply copied around
the world as was generally the case with the internet.

TV is highly regulated which makes it highly political. And as is often the case in such political
situations, delays in regulations often have the reverse impact of the regulation’s intention as nature
abhors a vacuum, so delays or self-focused technology choices that result in higher STB costs mean
FTA adoption is falling in the transition to digital as seen in most markets around the world, or in
some cases failing to take off with the growing prosperity of a nation. However, there are exceptions
such as Australia which have managed the transition to digital terrestrial TV well.

Cable, IPTV, Satellite will remain with us, though will see significant shifts in some markets, for
example the growth of advertising supported satellite TV in emerging markets. Simplicity and ease
of use are critical; a payTV bundle makes it easy. OTT TV in emulating the existing TV
consumption experience is not simple, nor easy; OTT TV requires viewers to adopt a different
consumption model. The growth of DVRs in STBs (70% penetration for Sky UK subscribers) is
educating customers that they can watch what they want when they want, which is the first step
toward a self-selected consumption model, think of it as a stepping stone towards OTT TV. But
such changes in TV viewing habits are slow, both for individuals, households and the overall market.

Given the diversity of TV markets around the world, it’s difficult to provide an adequate overall
summary. However, for suppliers and content owners alike this diversity makes their strategies more
complex and critically dependent on local market factors. The biggest mistake to make is to assume
that because a product or content in one market works well, it will work in other markets equally as
well. The countries studied in this report provide a solid framework upon which a global plan can be
built.

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TECHNOLOGIES AND STANDARDS

Hybrid Broadcast Broadband TV (HbbTV) is both an industry standard and promotional
initiative for hybrid digital TV to harmonize the broadcast, IPTV, and broadband delivery of
entertainment to the end consumer through connected TVs (Smart TVs) and set-top boxes. The
HbbTV consortium, regrouping digital broadcasting and Internet industry companies, is establishing
a standard for the delivery of broadcast TV and broadband TV to the home, through a single user
interface, creating an open platform as an alternative to proprietary technologies. Products and
services using the HbbTV standard can operate over different broadcasting technologies, such as
satellite, cable, or terrestrial networks.

The HbbTV specification is based on existing standards and web technologies including OIPF
(Open IPTV Forum), CEA, DVB and W3C. The standard provides the features and functionality
required to deliver feature rich broadcast and internet services. Utilizing standard Internet technology
it enables rapid application development. It defines minimum requirements simplifying the
implementation in devices and leaving room for differentiation, this limits the investment required by
CE manufacturers to build compliant devices. Over the past 2 years HbbTV has caught the interest
of most markets. So even though MHP (Multimedia Home Platform) has a greater number of STBs
deployed with over 10 million, the momentum appears to be favoring HbbTV.

The overlapping standards and the variety of legacy interactive systems deployed (e.g. EBIF
(Enhanced TV Binary Interchange Forum), Tru2way, LUA, Mediaroom, etc.) create a significant
problem that yet more standards will not address. In my work with developers of 2nd screen
experiences, that is iOS/Android apps that complement shows during airing, when the show is being
time-shift viewed and even without the show being played. All three states require different
experiences to be presented on the 2nd screen. Developers consider the TV widgets on offer by
some payTV providers to look like something from the stone-age compared to iOS /Android
experience. Developers today are web-centric and consider customers to similarly expect interactive
services to look and feel like web services.

On the business model behind interactive services, the assumption is there is already a business
model in place the, APIs to enable STB-based interactive services are simply a channel to
complement an existing business model. Pay TV providers need to find ways of enabling richer more
personalized and fulfilling customer viewing experiences through their platform, enabling such
capabilities is important for customer retention of the hours viewers use their service every day.

Focusing on North America, we have a mess across STBs covering industry-specific capabilities
such as EBIF, Tru2way, LUA, Mediaroom, and now HBB/CE-HTML. To break through the
impasse to create an interactive service ecosystem the payTV industry needs to consider:

 Abstracting all the industry noise away from the content industry so they can use webkit
(which they understand) to create content and experiences for the TV. That is adequate
tools.

 Abstract all the content standards and random requirements specified by individual
payTV providers to make is simple for developers. That is, use industry-wide APIs.

 Abstract all the business model barriers, it’s about keeping the payTV network relevant
to customers and the content industry, rather than letting Apple and Google dominate
when their ecosystems are extended into the TV.

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Evolution Of Hybrid TV Over The Top (Internet) TV and TV Everywhere Issue 2

Evolution Of Hybrid TV Over The Top (Internet) TV and TV Everywhere Issue 2

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