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Business white paper

The future of TVunderstand what


customers want, delight them, and win
A brave new horizon
Business white paper Page 2

In recent years, aggressive over-the-top (OTT) players have changed the way consumers
watch content, forced incumbents to reorganize their strategy, and accelerated the overall
transformation path of the industry. After an initial transition period characterized by a high
level of experimentation, the TV business has entered a new phase of innovation that sets the
ground for the next growth wave.

Market incumbents are either scared of history repeating itself, with the proliferation of screens
that enabled Napster and Amazon to disrupt music, publishing and retailing industries, or they
may decide to see todays digital TV market as a huge opportunity and react accordingly.

The recent increase of time spent on mobile screens equipped with fast connectivity such as
mobile phones and tablets has triggered a wider trend that will ultimately expand the range of
todays reachable audiences. This is being done by bringing content to new places that have
not been served before. Connected screens available in connected cars, self-driving cars freeing
up the driver, connected airplanes, and virtual reality videos are just a few examples of new
reach. The explosion of actionable data that content consumption generates will add another
layer of value to those who can secure the attention of viewers.

Get the sweet spot in the value chain


While in the past the TV value chain was dramatically polarized toward two extremescontent
production and viewer interface. A market is emerging where content producers are looking for
new distribution channels to deliver content to viewers. Whats more, content distributors are
also looking for exclusive content to differentiate them from an almost commoditized market,
making mergers, acquisitions, and partnerships a natural reaction.

Today, the collection and interpretation of vast quantities of data can make connections with
many different customer tastes and profiles. This can turn the content production process into
something closer to a scientific method that optimizes the return on investment. The winning
player will deliver the best-suited program to viewers based on what they want, or may like, with
the best price and experience.

Owning the user interface means being the player that drives the viewers wallet to enable
content-based transactions or recurrent subscriptions seamlessly. Additionally, collecting and
interpreting a vast amount of data will, in turn, boost the monetization and value creation
process through targeted marketing, cross-selling, up-selling, and churn reduction.
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For players stuck in the middle of the value chain who only transport content over the air via fixed
and mobile networks, the future will look more similar to that of electricity utilities that can count
only on one-digit earnings before interest, taxes, depreciation, and amortization (EBITDA) figures.

Tackle headwinds, free up resources, and win


Communication service providers (CSPs) and broadcasters that are seeking a sustainable
position in this market are facing challengessome are generic, others are specific to selected
geographies. In all cases, players will need to identify them in a timely manner if their goal is to
survive in tomorrows market.

The pressure to produce and prepare content only once before it is delivered in a multitude
of formats over managed and unmanaged networks to different devices and locations is the
operational excellence challenge for digital service providers (DSPs). The digitalization of
content production will force players to automate processes, to eliminate redundant activities,
and move to virtualized infrastructure, with the goal to reduce costs.

According to Ciscos data traffic report, by 2021 78 percent of global Internet traffic will be
video and mobile video traffic on cellular networks is already skyrocketing at a compound
annual growth rate (CAGR) of 54 percent between 2016 and 2021.1 Delivering increasing
volumes of content with the highest quality, managing consumption peaks in resources while
keeping cash outflows under control is the major challenge for the content distributor.

Viewers all over the globe served by OTTs, have been exposed to a superior user experience,
from a user interface that is designed for perfection to content that matches viewers tastes. This
has raised expectations in terms of user experience for incumbents that need to optimize digital
touchpoint interactions with techniques in use by startups and digital players such as A/B testing.

Incumbents must quickly tackle these challenges and define business imperatives to overcome
them. Developing capabilities such as data analysis, content production, and distribution
optimization to generate the highest return on investment will free up resources to invest in
marketing and content.

1
 isco Visual Networking Index: Global
C
Mobile Data Traffic Forecast Update,
20162021 White Paper, February 2017
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Priority business imperatives


While each customer is developing their individual strategy, there is a common need to have
clear business imperatives and evolve technology, organizational process, and skills. We believe
that incumbents should rapidly adopt the following strategic initiatives:

Digital content broker

DevOps Best
adoption recommendations

Everything Real-time data


as a service and analytics

Virtual Innovative user


infrastructure experience
Figure 1. Business imperatives for the future of TV

1. Digital content brokerExplore the option to become a digital content broker, who
aggregates content from multiple OTT content providers and this is the ultimate fight
against a proprietary user interface. Digital content aggregation models allow users to
navigate quickly and seamlessly, accessing the content they want to watch without leaving
their current environment. Today, DSPs are increasingly gathering the content of larger OTT
players as well as smaller regional players into their offering. Though, not easy to monetize
from big players such as Netflix, integrating smaller players will increase revenues (shared
revenue models), provide a better customer experience, and unlock additional data.
2. Best recommendationsThe content that is produced or aggregated should be enriched
with metadata that in turn can be correlated with user preferences to provide customized
content recommendations, a tailored electronic program guide (EPG), or advertising that is
targeted to single viewers. Dynamic advert insertion will be initially limited to fill out advertising
spaces in pre-roll or during specific timeslots while the content is consumed but can potentially
be expanded into more innovative product placement techniques. Brands will gradually be
able to introduce their messages and products inside specific movie scenes, with a call to
action that is triggered by a second screen, all connected with specific actors or scenes.
3. Real-time data and analyticsData collected through probes and counters placed
along the whole value chain, from TV core infrastructure to routers, set top boxes, or user
application will allow real-time monitoring of service availability and quality of experience. The
evolution toward a predictive cause analysis based on pattern recognition will enable new
actionable insights that will trigger new processes. This data will not only become actionable
for monitoring the operations of a service but will also provide insights to improve network
planning to avoid future network outages in a structured way. A reduction in image buffering
and freezing will increase airtime per user, which in turn will increase customer satisfaction
and reduce churn.
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4. Innovative user experienceToday, consumers have a wide array of content to choose from,
available at any time, in any mix, through many delivery options and devices. Using brands,
content curation, and usability to differentiate from a mass market in which all players seem to
offer something similar is key. CSPs can learn from OTTs and offer top-class user interfaces,
which ensure their journey has the highest user experience to differentiate their pay TV
offerings beyond content. Second-screen applications, innovative user interfaces, and features
such as speech recognition, gesture-based control, and facial recognition are examples.
5. Virtual infrastructureDSPs will have to consolidate legacy systems into virtualized
environments in order to get network flexibility, as well as to deliver higher volumes of
content and ultimately speed up time-to-market. By adopting network functions virtualization
(NFV) and software-defined network (SDN), a quicker service and software deployment will
be possible (from months to days). A virtual infrastructure allocates resources for unexpected
changes in demand and enables resource sharing with benefits in terms of time to market
and operational excellence.
6. Everything as a serviceDSPs should collaborate with technology vendors and sell
infrastructure as a service (IaaS), platform as a service (PaaS), and software as a service (SaaS)
to broadcasters that may get significant benefits from a player that can integrate connectivity
with media functions such as playout, storage, transcoding, channels as a service, and other use
cases. The role of DSPs can expand to a player that manages the content production process
for multiple broadcasters with highest efficiency by leveraging economies of scale. Cloud
solutions with embedded connectivity will enable broadcasters to integrate and move content
from multiple locations and actors. This will allow CSPs to tap into new revenue streams while
broadcasters will benefit from faster time to market and more efficient operations.
7. DevOps adoptiona flexible and agile organization is required when steering in a new
direction. In order to empower people to reduce overhead and siloes, a DSP needs to
undergo a significant change in business and organization. Having IT and operations working
in separated business units and teams, often with different profit and loss results in divergent
goals slowing down software development. The shift toward a DevOps approach enables
short software development cycles and sets the basis for a competitive advantage over other
players who still operate in waterfall.
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Figure 2. HPE DVS value proposition

HPE Digital Video Solutions


Undertaking business imperatives requires a transformation that covers the technology aspects
as well as people and processes. A trusted advisor with an extensive set of success stories such as
Hewlett Packard Enterprise helps in accelerating transformation to the new model of operations.

HPE Digital Video Services (DVS) enable DSPs, cable, and media companies to optimize their
media services value chain and align with their operations strategy, from content production to
content distribution and customer experience. With HPEs unique expertise in media industry
and virtualization, TV players can accelerate their transformation to media cloud solutions. They
can also create new revenue from the best user experience, gain operational efficiency, leverage
elasticity through virtual functionalities, adapt their processes to new TV consumption models, and
reduce IT infrastructure costs. The following solutions are at the core of the HPEDVS portfolio:

Content management: Optimize content production and aggregation through a multidepartment


digital asset management (DAM) platform, workflow orchestrator, and resource manager in an
agnostic-infrastructure environment. Define workflows inside and across groups, departments,
and organizations. Based on open technology standards, third-party products wrapped as web
services can be natively integrated to automate typical media processes, such as transcoding and
file migration between storage tiers and silos. Other tools are available to administer securely as
well as monitor systems, services, users, and control access to applications and repositories.

Content distribution: Minimize downtime and launch new channels in seconds while monitoring
video quality through a single interface. The virtual headend solution automatically instantiates
virtual machines to cover the functionalities to manage TV channels, such as transcoding,
multiplexing, or quality check. It supports disaster recovery and can quickly and automatically
failover channels in a virtual environment. This solution can host virtual headend environments in
the cloud and sell channels as a service to broadcasters or corporations.

Content experience: Enhance the viewing experience through a dedicated solution for multiscreen
video delivery that can manage multiple EPG formats adding normalization and enrichment
functionalities, easing the management of recordings on OTT platforms and IPTV settop-box.
Control and monitor the video quality and viewers through a solution that collects data along the
value chain to detect and visualize outages, service disruptions, and resolve issues faster.
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Modular and Global system


open solutions integrator

To simplify upgrade To offer the best


and replacement end-to-end solutions

Transformation guidance
To accelerate your outcomes from digital transformation

Figure 3. Why HPE?

Why HPE?
Modular and open solutionsHewlett Packard Enterprise provides E2E modular solutions,
from strategy to operations and support along the full technology stack (from hardware to
software). The HPE portfolio for video solutions is based on a modular approach, running
on open computing platforms, and non-proprietary systems that simplify the upgrade and
replacement of existing components. Modular supply chains allow flexible and interchangeable
relationships among suppliers and partners.

Global system integratorHewlett Packard Enterprise has a global system integration


footprint, long-standing strategic relationships with leading software vendors to offer the best
end-to-end solutions from industry leaders, tested and proven to work together to deliver the
results you need.

Transformation guidanceChanges in technology offer their full benefits if they are triggered by
a clear strategic road map that has impact on processes and people. Hewlett Packard Enterprise
has a long experience in large transformation projects and it has proven assets, methodologies,
and accelerators to speed up the transformation while minimizing the risks of failure.
Business white paper

About the authors


Max Ferdinand Baldelli
Max F. Baldelli is a strategy consultant with extensive CME industry experience, helping clients
in managing new strategic initiatives and digital transformation projects. In his career, Max
supported top players operating in the communications and media industry in evaluating
opportunities and executing business strategies. His core focus and experience are in linking
user needs with technology solutions.

Alberto Curcio
Alberto Curcio is a business-oriented professional with a technical and communications
background. Alberto has a special interest in the innovations of telecommunication business
with heterogeneous worldwide experience. His core focus is digital media industry and
experiences are in the analysis and design of business processes, business management
consulting, IT strategy development, and conceptual design.

Sebastian Richter
Sebastian Richter is a business consultant with deep insights into the telecommunications
industry, trends and technology such as Internet of Things, Network Functions Virtualization
and Digital Video. Sebastian holds a bachelors degree in Business Information Systems (B.Sc.)
and supports top players from Europe and United States.

Learn more at
hpe.com/csp/media

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Copyright 2017 Hewlett Packard Enterprise Development LP. The information contained herein is subject to change
without notice. The only warranties for Hewlett Packard Enterprise products and services are set forth in the express warranty
statements accompanying such products and services. Nothing herein should be construed as constituting an additional warranty.
HewlettPackardEnterprise shall not be liable for technical or editorial errors or omissions contained herein.
a00006142ENW, April 2017