Cloud DVR Prospects Gain With New Options

    Rights Discussions, New Ideas Spur Momentum

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    Cloud DVR Prospects
    The DVR market expected to grow from $6.4B USD in 2023 to $16.4B USD in 20230.

    A tipping point in the cloud DVR debate is rapidly approaching, where uncertainties about regulatory restrictions, technology, and licensing rights are about to give way to real deployments across the service provider ecosystem.

    With many technical options to choose from, service providers are growing more comfortable with the idea that, even without a major change in the U.S. personal-copy restrictions or an immediate extension of licensing rights that would overcome those restrictions, cloud DVR is a critical step in the path to all-IP operations.

    There are many technical and strategic issues yet to be resolved, but it looks like at least some major operators, in addition to Comcast, which launched cloud DVR last year, and Cablevision, which pioneered the service in the U.S. in 2011, will be ready to move ahead before the year is out, says Marty Roberts, co-CEO of thePlatform.

    “We’ll see some operators rolling out cloud DVR this fall and into the winter with it becoming a top priority for most others in 2016,” Roberts says.

    “We have every confidence the industry will get through the issues, because cloud DVR is an incredibly convenient and customer-friendly way of accessing recorded content.”

    thePlatform, with content management engagements at cable companies serving an aggregate of about 60 million U.S. households, is in a good position to know where things stand with cloud DVR.

    Cloud DVR
    Marty Roberts, co-CEO, thePlatform

    “Everybody agrees it’s a good idea, but they’re not yet agreed on how it should be done,” Roberts says.

    So far, signs are that where cloud DVR is available it’s a hit with consumers. Cablevision, with a $12.95 monthly service available in all its markets, recently expanded the number of programs that can be simultaneously recorded by users in any subscribing household to 15.

    Comcast, which introduced a limited version of cloud DVR in Boston last March, has extended an upgraded version of the service to eight markets.

    Currently only available to users of the MSO’s whole-home XG1 DVR gateway, the complementary cloud service allows users to stream to IP devices.

    Comcast says it will soon move to an all-cloud DVR version of the service in conjunction with implementation of a new cloud-oriented gateway and set-tops.

    In Europe, where many countries allow shared-copy versions of cloud DVR, the service is fairly wide spread with reports of strong consumer uptake.

    Dutch telecom KPN, for example, a year ago reported its service, launched in 2011, had over 800,000 users. Now, according to informed sources, the count has gone well beyond a million.

    Liberty Global in a recent 10-K filing with the SEC said it has rolled out cloud DVR in Poland as the opening gambit in a company-wide transition to cloud-based service.

    Alcatel-Lucent (ALU) reports its cloud DVR solution is now deployed by eight service providers in 12 countries. ALU has only named two of those customers – Swisscom and Telefonica in Spain, both of which have reported brisk uptake of the service.

    In the U.S. a combination of factors has put cloud DVR on the front burner, notwithstanding the impediments to cost-effective operations imposed by the 2006 federal court decision that allowed Cablevision to launch cloud DVR without obtaining rights to do so from programmers.

    The court, adhering to the principle that courts originally used in allowing DVR recordings as a matter of personal usage rights, said that each recording in the cloud had to be limited to the personal usage of members of a subscribing household.

    One way around the massive storage requirements imposed by this ruling is for operators and programming networks to negotiate licensing agreements that allow shared access to cloud-stored content.

    While sources report there has been some progress in such negotiations, many operators don’t want to wait for this lengthy process to play out before jumping into cloud DVR.

    “For us, cloud DVR is just a piece of what we need to do to cut our capital and operations costs without sacrificing our ability to make our services more compelling to consumers,” says one MSO strategist, speaking on background.

    “The only way to do this is to leverage the cloud and IP technology.”

    In this view, a cloud-based architecture eliminates duplicative video processing, storage and distribution silos devoted to VOD, catch-up TV and TV Everywhere while cutting CPE costs and enabling support for a personalized user experience across all devices.

    It makes sense to take advantage of the cost savings and other benefits of cloud DVR sooner than later if, in so doing, the operator is putting in place a cloud infrastructure that addresses these other needs as well.

    Vendors in growing numbers are offering cloud DVR solutions that play to this perspective.

    For example, Imagine Communications wasted no time following its recent acquisition of RGB Networks in touting that vendor’s CloudXtream platform as one that meets “the growing and complex array of video distribution requirements, including live video, video on demand, cloud DVR, dynamic ad insertion, packaging, encoding, transcoding, storage management and cloud orchestration.”

    Most of the CloudXtream modules needed to accomplish these things are still in development.

    But the company has made sure the cloud DVR component is commercially available now as “one of the first multiscreen distribution and monetization solutions derived from” CloudXtream, says Joe McGarvey, director of marketing at Imagine.

    A key to the appeal of these new solutions is their use of a hierarchical approach to storage that orchestrates use of core and edge resources in conjunction with just-in-time (JIT) packaging.

    Such solutions accommodate long-term storage, typically beyond seven days, at the core, with transfers between off-net low-cost digital tape systems and HDDs (hard disc drives) or SSDs (solid state drives) based on longer-term storage thresholds, such as 30 days for hard drive storage and beyond 30 days for off-net.

    They use HDD/SSD storage at the edge for shorter duration catch-up and trick-play applications. With the addition of JIT packaging, they also minimize bandwidth consumption across the backbone network by minimizing the number of file formats that have to be transferred from the core, and they put personalized applications in play closer to end users.

    There’s also a possibility that such systems could be used to reduce the costs of the personal-copy cloud DVR model, as touted by ALU.

    According to Roland Mestric, director of multimedia solutions marketing at ALU, the idea is to use low-cost off-net core storage capacity for personal storage of each recorded program while enabling shared usage at the cache level.

    “We calculate this approach cuts 75 percent of the storage costs you’d otherwise incur with cloud DVR under the personal-copy rules,” Mestric says.

    But will this fly legally? No one knows for sure, though many operators are drawn to the possibility.

    Indeed, notwithstanding an outpouring of technology solutions and the growing momentum toward cloud DVR, there still are too many unanswered questions to define a solution that will resonate with at least a large share of the U.S. operating community.

    This is why thePlatform has not gone the next step beyond the mpx Replay solution it introduced last year to offer a complete cloud DVR solution, Roberts says.

    “I talk to vendors who say they have it all figured out, and I say, really?” Roberts comments. “Our conversations with operators on this subject are going really well.

    It’s absolutely a direction thePlatform will go in, but I wouldn’t say we have an absolute solution today.”

    Not that it will take the company a long time to add cloud DVR to its portfolio of modular extensions of mpx, the video publishing platform at the core of everything the platform does.

    As Roberts notes, mpx Replay, a solution designed primarily for TV networks and other content suppliers, represents a big step in the direction of cloud DVR.

    The Replay service facilitates broadcasters’ conversion of linear channels for catch-up TV across all types of devices and optimizes their ability to publish and syndicate programming that’s compliant with the extension of ad viewing metrics to three- and seven-day windows under Nielsen’s C3 and C7 policies.

    In so doing, the service provides support for instant on-demand asset creation for publishing and distribution.

    Using Elemental’s Delta JIT packaging system, mpx Replay adapts catch-up and ad files to network and device parameters on the fly for distribution in multiple adaptive bitrate formats as well as legacy MPEG-TS transport mode. Replay also provides:

    • Automated metadata to support richer search and discovery,
    • The ability to quickly update recording start and end times in the event of program overruns or other changes,
    • Pre-set availability of windows,
    • Ad policy enforcement,
    • Increased monetization options.

    Obviously, all of these functions could be applied to a cloud DVR solution as well. But there are some questions Roberts wants to answer before moving ahead.

    For example, what if the operator were to automatically record every program it delivers to pay TV subscribers for placement in low-cost off-net storage for a given length of time?

    In such a scenario, users would simply bookmark already-recorded shows with a limit of, say, six bookmarks at any one time.

    Rather than providing hundreds of gigabytes of storage capacity for each cloud DVR user, the operator would only need to provide personal-copy capacity on instantly accessible hard-drive storage for up to six programs per user.

    Users would be able to go back to the archive to bookmark additional programming as the window of availability for each bookmark expires or as the user chooses to delete a bookmark in advance of the expiration.

    “Is it okay for operators to store every piece of content?” Roberts asks. “Maybe. It would make for a very convenient technology solution.”

    But it would require deciding that personal use limitations will be based on the maximum hours of programming allowed rather than gigabytes of storage capacity.

    “There’s a new way of thinking with the evolution of the conversation away from the device-centric model to a more cloud-centric model with cheap storage and bookmarking techniques that make it easy to tag content,” Roberts says.

    This would lead to a revenue model based on selling people more hours of programming rather than gigabytes. “Looking at things this way you can come up with some very friendly user experiences,” he says.

    The good news is there is broad consensus across the operator and programmer sectors that rights need to be adjusted to allow cloud DVR to flourish without adherence to the personal-copy rule.

    One big reason for this is programmers’ desire to capitalize on dynamic advertising and the extended measurements of C3 and C7 with viewing of recorded programming.

    Citing the functionalities built into mpx Replay, Roberts says, “The cool thing about this technology is we know where the chapter breaks are and can integrate and keep Nielsen credits for C3 and C7 grading.

    These solutions work well in the context of today’s business model.”

    At the same time, he adds, cloud DVR “opens up new ad avail opportunities for use of dynamic advertising. Introducing more inventory for advertising is absolutely a driver” behind programmers’ enthusiasm for cloud DVR.

    But while everyone wants the rights to be cloud-DVR friendly, there are two schools of thought about what the basic rights template should be.

    Broadcast and cable networks want the licensing for cloud DVR to fall under the terms used in VOD licensing agreements, which include formulas for revenue sharing.

    Distributors, on the other hand, want the rules to be modeled on the personal use DVR and in-home TV Everywhere paradigms, where there’s no revenue-sharing model.

    “It feels like the early days of TV Everywhere where everyone was figuring out the rules with content owners and operators looking at things differently,” Roberts says.

    “There’s no common template yet that at least 80 percent of programming rights would follow.”

    The key for thePlatform’s cloud DVR solution is being sure “there’s a good repeatable pattern for us to build the technology against,” he says.

    “So we have to sort through this, but I think we’re well set up with Replay to jump on this opportunity.”

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