[Via Satellite 03-08-2016] Evolving media habits such as streaming, Over-the-Top (OTT) and bandwidth demand are driving change in the way satellite bandwidth is used and consumed. While a recent study conducted by Ericsson found that 60 percent of millennials are still consuming linear TV, the popularity of live content such as sports and events sustain much of that demand. Alternative avenues of consumption, such as Subscription Video-on-demand (S-VOD) and the growing popularity of mobile viewing, are ready to take center stage.
Here, we take a look at the 10 trends impacting satellite bandwidth today, laid out by Jimmy Schaeffler, chairman and CSO of The Carmel Group, during Monday’s “Satellite’s Response to Evolving Media Habits: Streaming, OTT and Bandwidth Demand” at the SATELLITE 2016 Conference & Exhibition.
1. Migration to Mobile
As smartphones, tablets and wearable technologies rise in popularity, the demands for mobile applications are growing and will continue to evolve. “Smartphones are still in their earliest stage,” said Schaeffler. “The demand for iPhones, iPads, smart watches, etc., is really going to begin increasing the need for better distribution of bandwidth.”
2. Migration to Streaming Broadband OTT
According to a study conducted by Ericcson and Consumer Labs regarding viewer TV and media habits, in 2014 as many consumers say they watch streamed on-demand video and TV at least once a week, as those who watch scheduled linear TV. These changing habits are linked to the proliferation of connected TV screens, where consumers can easily and conveniently access on-demand content, according to the report. And that proliferation isn’t likely to slow.
“The pay TV and broadcasting of 10 years ago is no longer,” said Schaeffler. “Like so many traditional companies, the cable and satellite operators — maybe with the exception of Dish Network — looked at OTT and decided they weren’t worried about it, their businesses were strong no matter what. I don’t think companies are saying it quite with that confidence anymore.”
OTT and satellite have the likelihood of working together, however.
“There is definitely a move toward streaming video and OTT. But what we need to keep in mind here is … we do believe linear and OTT are going to go hand in hand. We think that by 2020 linear television is going to be 50 percent of viewing and offline video will be the other 50 percent,” says Lisa Hobbs, vice president of commercial portfolio strategy of compression at Ericsson. “Yes [OTT] is growing, but in many places in the world the best way to get linear content out to consumers is still going to be satellite.”
3. Data Analytics
The collection and analysis of data surrounding consumer and audience habits and desires is already coming through in how content is produced and provided to viewers. Schaeffler points to Netflix’s “House of Cards” series, in which the company turned away from traditional aspects of fielding and releasing the show and instead made use of data it had collected regarding what the consumer wanted to see and how Netflix’s audience of OTT viewers would prefer to watch it. With that data, the company built and released the highly successful series.
“Netflix didn’t spend millions of dollars on a pilot, testing the series on audiences. Instead they collected data on their audience and introduced it to them. That was the early beginnings of data-driven content. Now, more and more series are going to be created and watched based on data from the consumers as well as, importantly, advertising and cultivating targeted ads,” says Schaeffler.
4. The Internet of Things
The Internet of Things (IOT) is set to connect everything and everyone to the Internet through sensors and devices such as smart watches. As the network of objects grows and seeks to collect and exchange data, satellite will most certainly have a role in enabling that conversation.
As cars, airplanes, and inanimate objects everywhere begin to link up to the Internet, the need for satellite capacity will grow alongside it. “Everything is connected all the time — even your refrigerator, even your oven, your car. Interconnection will grow and grow, and it will drive that need for more bandwidth,” says Schaeffler.
6. New Content Stakeholders
Companies such as Netflix and Amazon are entering the picture and are changing the ways that media content is produced and distributed — and this is likely to accelerate in years to come. “People are realizing that vertical distribution is not just owning the distribution pipe but also owning some of the key content that goes into the pipe is critically important,” Schaeffler notes.
7. Enhanced Bandwidth Consumption
With devices rapidly proliferating across the globe, the demand for bandwidth will rise as everybody’s device throughout their lifetimes, is going to take whatever bandwidth they require now and increase it, incrementally, as new platforms and higher definition content begins to, naturally, take hold.
8. More and Smarter Devices
As each consumer stocks up with more than one device, the devices themselves will become more powerful. We will see “more and more computer, power and storage in one small unit,” according to Schaeffler, growing the need for bandwidth capacity in coming years.
9. Advanced Digital Media
Virtual reality and augmented reality will also grow demand for device proliferation and bandwidth. Schaeffler sees video games as the perfect landscape for these two new advanced digital media platforms to evolve and take off with consumers. “When you start having to interconnect those bits and you add a whole new layer to 4K or Ultra High Definition in the form of virtual reality or augmented reality, you see more and more bits; more and more need for cellular, landline and satellite,” he says.
10. Distribution Migrations
New technologies are coming into the market to challenge the status quo when it comes to how consumers can access content. “It’s all morphing, it’s all changing. Just in the U.S. the market for cable is being challenged by alternative broadband access providers,” says Schaeffler.
Takeaway: The Pie Grows:
While Schaeffler notes that the satellite industry will feel the impact of these new technologies and trends, he also admitted that these new trends are likely to bolster companies all across the satellite value chain, alongside newcomers, in the long run.
“You see a new technology and the instinct is to think it will take over,” said Schaeffler. “But the really important thing to remember in this industry is the pie grows. Average Revenue per User (ARPU) changes, sat changes, and revenues change and pretty soon everybody is making a lot more, but they are spreading the wealth,” says Schaeffler.