We’ve Been Here Before, But This Time It’s Different
The mobile industry has a mixed track record when it comes to hailing new technologies. Mobile video harbours a particularly dark and disappointing past thanks to failed services built on technologies such as DVB-H and MediaFLO. However, the failure of such services was an important lesson for the mobile industry. Rather than creating a technology to deliver an established entertainment model, in this case linear broadcast TV, the rise of “over the top” services and business models has seen content and its delivery become highly tailored to the mobile screen. Services such as Amazon Instant Video, Netflix and HBO have become tightly focused on mobile delivery.
Coupled with ever-more capable video capture on devices, this has contributed to an explosion in video traffic. In the US, AT&T and Verizon have stated that video accounts for well over half their mobile network traffic; Cisco Systems estimates that mobile video will increase 13-fold between 2014 and 2019 to account for 72% of all mobile data traffic. Mobile video was a leading theme at the CTIA Super Mobility show in Las Vegas this month, where Verizon highlighted that one in three Americans watch content daily on smartphones and that a fifth of households don’t subscribe to pay TV.
This represents a sea change not just for the mobile industry but for content creators, advertisers, network owners, developers and many, many others. Mobile is disrupting a host of industries and content is arguably at the forefront. As viewing shifts to mobile devices, Verizon predicts that by 2019 more than half of total advertising spending will be on mobile video. This, of course, is the thinking behind its acquisition of AOL.
Mobile is also poised to change the format of video content. Jeffrey Katzenberg, CEO of DreamWorks Animation, predicts “a revolution in the types of entertainment we consume and it’s all going to be mobile”. The established format of 30- or 60-minute programs interspersed with adverts simply won’t work on mobile. This means that the highest-quality content will be made native to mobile rather than being repurposed. The result will be content delivered in four to 10 minute pieces.
This is a huge change. Netflix and Amazon have been part of the disruption in delivery and have begun to disrupt the creation of content itself, through investments in original programming such as House of Cards. But this is just the start. The mobile explosion is going to drive a radical change in the way content is designed, produced, created and delivered. In this scenario, TV will no longer be the primary canvass for high-quality content by 2018.
That’s not to say this vision will be without its problems, though. First among them are providing enough network capacity and questions about who’s paying. When 3G was launched in 2001 the persistent and, it turns out, erroneous question was “What’s the killer app?” Fast-forward 14 years and this notion is laughable in an age where the mantra is “mobile first” and networks struggle to keep up with demand.
The result is that mobile video and the infrastructure to deliver it have gone from a solution looking for a problem to a significant problem in desperate need of a solution. In our view, LTE broadcast is one means to help address this issue. The principle is simple: most content today is streamed in a unicast model — every user accesses and streams content separately; with LTE broadcast the content is distributed to multiple users simultaneously. This creates far less strain on the network, freeing up all-important bandwidth for other applications.
Admittedly it doesn’t work for all content. It’s unlikely to suit on-demand programming from Netflix and others, although it could perhaps work in a Jeffrey Katzenberg world where content exists in five-minute chunks. It’s also feasible that some on-demand content could air first at a certain time delivered using LTE broadcast. However, the technology is ideal for content that continues to work in a linear fashion. News is one example, but sports events are the real opportunity. Verizon has led adoption in the US in close cooperation with Qualcomm. Trials in 2014 have been followed by commercial live broadcasts of IndyCar and NFL football, accessible on dedicated apps.
Other networks are implementing LTE broadcast technology. Verizon launched its Go90 video service at the CTIA show; AT&T is running trials, and in the UK, operator EE transmitted test coverage of the FA Cup final in May. Telstra and SK Telecom have already launched commercial services. In our experience of the technology, the way it augments a live experience by providing different views of the event in addition to game data is truly impressive.
There’s no magic solution to the problem of mobile video delivery. As Verizon’s Go90 service illustrates, mobile video needs a mix of different mechanisms to provide the best experience and ensure efficient use of spectrum. However, within this equation it’s hard to argue against LTE broadcast, particularly given that support for the technology features in a growing range of Qualcomm Snapdragon chipsets and it forms a major part of LTE-Advanced networks. With other applications also appearing for LTE broadcast beyond video, ranging from smart billboards to the distribution of over-the-air software upgrades, the case for the technology is well-established.
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