Strategic Transformation Cloud-Pipe-Device: Integration for success Cloud-Pipe-Device Integration for success As content distributors, MSOs are facing challenges such as new competitors, scarce bandwidth, and changing distribution models. They need a new approach to retain their market dominance. By Zhang Feilong & Fan Cunzhi A s repor ted by the London-based Financial Times, traditional payTV subscription rates in the U.S. are dropping as tech-savvy consumers increasingly choose to watch alternatives such as over-the-top (OTT) content. Chief among these rival providers is Netflix. The number of Netflix subscribers is soaring. In July 2011, Netflix’s global subscriber numbers reached 25.60 million, including 1.96 million new additions, while it recorded a revenue of USD828.5 million for the second financial quarter. Netflix has overtaken Comcast and Time Warner to become the video service operator with the largest number of paying subscribers in North 9 NOV 2011 . ISSUE 62 America. This is putting unprecedented pressure on multiple system operators (MSOs) to expand and/or diversify their lineups. Telecom operators are also refining their IPTV offerings; AT&T’s live HD channel not only reduces the channel switch delay to less than one second, but also provides rich online content that easily competes with MSO offerings, which often seem a little behind the curve. MSOs must seek ways to stay competitive and continue their market dominance in the content distribution field. They can exploit the integration of the cloud, pipe, and device, and provide massive and diverse video content, better QE, higher-speed bandwidth, and smarter equipment, both in the home and on the go. Huawei Communicate Cloud The Internet is not restricted by time or space. Nearly all commercial TV programs and movies are available online, as are amateur videos of a respectable quality. MSOs can certainly make their lineups more rounded by supplementing their premium pay content with Internet video. Traditional video services that have moved online are thriving. The China Central Television (CCTV) International Channel, which has always been broadcast by satellite, is now also available online. This channel, once an obscure offering often viewed by hotel room occupants in lieu of CNN, has become hugely popular, with dramatically increased ad revenue. Another new opportunity for MSOs may lie in cloud gaming, where users no longer need to use a high-end PC or game console, or even buy software, in order to enjoy the latest and greatest games. The platform converts game images and voices into videos and sends the encoded video stream to the STB. Upon receiving user operation messages, the STB sends them back to the platform. OnLive, for instance, provides some of the latest cloud games and enables play on a TV set, all without a video card. The cloud can also provide storage services that enable users to store videos and pictures to the data center through the STB. Meanwhile, by using a cloud desktop, users can work at home, and enjoy personal applications such as bank transfer and payment service. NOV 2011 . ISSUE 62 10 Strategic Transformation Cloud-Pipe-Device: Integration for success Some of the most popular video websites now provide application programming interfaces (APIs) that were once available only on the likes of Facebook and Twitter. Viewers can rate and comment on content, exchange ideas, and watch recommended videos. Pipe Innovative services keep hitting the market, such as 3D TV, 3D gaming, home surveillance, home healthcare, and intelligent home control, all of which require heavy bandwidth and better service performance. Cable TV networks in the U.S. have become digital communications networks. Triple-play subscribers can send and receive email, browse websites, make calls (including voice calls, video calls, and video conferences), order TV programs, and watch paid programming. They can also perform e-commerce activities such as real-time stock transactions, online education, and telemedicine. Enterprises can manage security surveillance, gas leakage reports, meter reading, etc. All of these applications require serious bandwidth. However, some applications depend on more than just bandwidth, such as the aforementioned cloud gaming. Du r i n g p l a y, u s e r o p e r a t i o n s a re uploaded to the cloud game platform. The platform processes game images, compresses and encodes them into high- and low bit-rate video streams, and then transmits them through the network to the terminal. The terminal decodes these streams and displays the images. Online gaming service requires more from the pipe when compared with live video service. It requires not only adequate bandwidth but also a strict limit on delay, jitter and packet loss. If the network delay exceeds 80 milliseconds, the game will be considered unresponsive. MSOs should not only expand bandwidth, but also understand the network requirements of different services, so that they can better add value to their networks. Device Internet video is here to stay; the STB is no longer the only choice for diverse content. Users can now 11 NOV 2011 . ISSUE 62 enjoy video through devices such as tablets, IP-enabled televisions, and smartphones. Time shifting and wireless networking enable viewing on these devices whenever it is convenient. Some of the most popular video websites now provide application programming interfaces (APIs) that were once available only on the likes of Facebook and Twitter. Viewers can rate and comment on content, exchange ideas, and watch recommended videos. Smart TV is an emerging trend; it is a platform that promises interactivity, connectivity, personalization, and responsiveness. With smart TV, Internet surfing will replace channel surfing, and users will be entirely in control of what content they view, if they choose to be. Video content will be HD, at least in the home; the slightest connection glitch can be easily noticed on a 40-inch screen. In response, MSOs need to provide devices that not only allow users to watch videos, but also interact and innovate. Flexible devices will enable timely innovation, so that MSOs can stay on top of what’s cool without the need to replace hardware. Improved mobile devices will reduce the need for STBs, which will help alleviate the dilemma of home wiring. High-definition video on IP is changing the course of Internet development and having a great impact on existing network architecture. New devices, such as the XBox 360 Kinect and the iPad, will probably spearhead video service innovation. Moreover, they will accelerate the offline-toonline digital shift of content distribution and further change the operational model for fixed network bandwidth. To consolidate their market position and create greater value for their customers, MSOs need to improve their pipe performance and service management capability, deliver content and manage bandwidth more efficiently, and better integrate the cloud, pipe, and device. Editor: Long Ji [email protected]
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