What Happens Next in UK TV?

The second panel of the day was called ‘What happens next in the UK TV market?’ It was moderated by Ed Corn, an associate director at MTM. Speakers were Sascha Prueter (head of Android TV at Google); Richard Halton (CEO of YouView); Stuart Savage (director of innovation in digital TV R&D at LG); and Sylvain Thevenot (MD of Netgem).

Prueter jumped in straight away to clarify (responding to earlier comments) that “Google is not evil.” TV is still king, and Google is approaching the space with a partnership approach. Part of the problem that it is having is that it is an international company, and sometimes has issues with localisation. For example, Europe is treated as a single market, but all of the countries that form Europe are very different. Prueter added that, as broadcast and distribution become more more complicated, we are moving away from closed end-to-end systems and towards more modular ones. Features can be delivered in a timeframe closer to every six months than every five years.

YouView is now in about 2.5 million homes, said Halton. An interesting change in the industry has been reflected in recruitment. The last 20 people taken on were cloud engineers; the next half dozen will be data scientists. The industry is moving away from the set-top box and towards building a great user experience using the cloud. Halton also had an analogy for middleware: it is “like your parents,” he said. “You want it to be solid and stable, but also to anticipate what you want to do. You don’t want it to start charging you rent for living in your bedroom, and reading your text messages.”

While introducing himself, Savage said that there have been big changes in pixel quality and sound – we cannot forget these basic elements. We have also seen the rise and fall of thousands of apps on TVs, and this functionality has led to an increased use of OTT content. That’s where a lot of innovation is happening today.

Netgem is a TV solution provider for telcos; it is used in about 5 million homes in 20 countries (EE is a TV customer in the UK). From his perspective, Thevenot pointed to HTML 5 being used as ‘the’ standard for non-linear content and blending it with linear, as a big change that is being seen today. There has also been a small decline in linear TV, influenced by age; millenials, for example, massively favour mobile viewing. Older users are more likely to use a TV set.

What about experience personalisation, asked Corn? It is an important part of the connected TV experience. Halton agreed. He said, “TVs need to learn. If I’ve owned a TV for five years, why doesn’t it know that I switch it to CBeebies every night for my kids?”

Prueter pointed out that linear TV is an easy and engaging concept, and it is hard to beat. Jumping through five or six apps while searching for content is not the way to go. Universal search helps, but brings up the question of “Who can use whose metadata?” The consumer doesn’t care, of course! The only way to build a successful product in this space is by working with other players.

Savage said that harmonising search & recommendation is a “key goal” for LG. Agreeing with Prueter, he said that consumers don’t care about the source of content. Access to metadata is a challenge that must be faced by the industry over the coming years; it must be there for everyone to use. If people get a lot of useless recommendations, they will stop paying attention.

Thevenot said that recommendations are at the heart of Netgem’s business. Most of the ‘intelligence’ is now in the cloud, rather than the STB, and limitations are now metadata and rights.

That brought Corn to his next point: the humble box has been an asset for TV providers, but are we starting to see the end of the premium STB?

According to Thevenot, most of Netgem’s customers use a small IP box rather than high-end STBs. Big (in terms of storage) boxes are used because of current business models, but recordings could just as easily sit in the cloud. Netgem has calculated that up to £600 million ($868 million) is wasted on storage in 14 million PVR boxes in the UK.

Prueter agreed that storage is an issue, but not the only one. Storage costs will eventually go away in most regions, in favour of network PVR. However, other components are becoming more expensive, in order to deal with new video formats and content protection methods such as UltraHD water-marking. He concluded that the STB is here to stay for the foreseeable future, although it could be challenged by smart TVs. There is even the possibility of downloadable subscriptions.

Savage said that STBs are not going to go away: they can do more than a TV, and trying to kill them is a waste of time. TVs are very economically built, and have little-to-no spare space or money for additional components like a PVR.

Corn asked if more bundling (combining internet, phone and video services) was inevitable. Thevenot’s opinion is that these deals have a lot of momentum: price rises tend not to create churn. If bundles are offered as part of an existing subscription, for a small increase, they will be taken.

Prueter said that horizontal platforms are very different, region-to-region. The UK is unique. There is a lot more ‘slicing’ (unbundling of services) occurring in the USA. However, he is not sure that cutting the cable bill and then needing to manage seven different services is a good option, either. Pay TV operators’ role as content aggregators is still important; most projects started at Android TV over the last 12 months have been on pay-TV STBs.

On the topic of the UK market, Corn closed by asking, “How are international developments affecting the UK? Can the UK remain a leader in platform innovation?”

Savage said that the UK continues to innovate – the quantum dots that LG uses in its TVs are from the UK, the BBC is developing its Hybrid Log Gamma approach to HDR, etc. However, what we are bad at is cost-effectively implementing these (this has been a problem that the UK has felt for years, although it has given us a reputation as a great ideas exporter! – TA).

According to Halton, the UK’s broadcasters – the BBC, Channel 4, ITV, etc – are the cradle for TV investment in the country. Much of the talent at YouView came from the BBC. However, we still work in a global business and must remember so. Prueter added that innovation is due to become more global in the future. The UK is where he spends most of his time, outside of the USA.

John Williams from Pixsan asked whether or not WebOS will see the light of day outside LG, as an open source project. It is not high on Savage’s radar, but “if someone turned up with a fistful of dollars, we’d talk to them.” The important thing about WebOS is that it allows LG to control its own destiny, just like Samsung with Tizen.