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Enabling Digital Media Content Delivery - Emerging Opportunities for Network Service Providers
March 30, 2010 | By ALU
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Transcript
Table of Contents
1 Trends in Digital Media Consumption  
2 Threats and opportunities for service providers  
    2.1 Potential threats from over-the-top content providers
    2.2 Industry Open Platform Initiatives: Catalyzing the market
    2.3 Potential opportunities in content delivery for network providers
3 Creating a Content Strategy  
    3.1 Audience & Editorial strategy
    3.2 Content channel distribution strategy
    3.3 Content management strategy
4 Content Partners  
5 Business models for Digital Media delivery
    5.1 Retail business model
    5.2 Wholesale business model
    5.3 OTT Repackage model
    5.4 Content Aggregator Model  
    5.5 Business Model Comparison Results  
6 Alcatel-Lucent Multi-screen Solution
    6.1 Multi-screen Application Platform
    6.2 Multi-screen Foundation
    6.3 High Leverage Network
    6.4 Velocix Digital Media Delivery Platform
7 Conclusion
8 References and Sources

Enabling Digital Media Content Delivery  
Emerging Opportunities for Network Service Providers

MARCH 2010

FOR EXTERNAL USE

STRATEGIC WHITE PAPER
..........................................................................................

Abstract  
The surge in consumer demand for high quality multimedia entertainment on television, Personal Computers and mobile devices is having a profound impact on the network infrastructures and business models in place.  
Premium content delivery and retail is an untapped opportunity for network service providers to leverage their strategic network and subscriber assets and break the spiral of broadband service commoditization, costly capacity upgrades and margin erosion.  
This paper discusses how network service providers can leverage and enhance their strategic network infrastructure assets to enter the value chain of premium content delivery.



Table of Contents
1 Trends in Digital Media Consumption ................................................................ 4
2 Threats and opportunities for service providers .................................................. 6
2.1 Potential threats from over-the-top content providers .................................... 6
2.2 Industry Open Platform Initiatives: Catalyzing the market ................................ 8
2.3 Potential opportunities in content delivery for network providers ...................... 8
3 Creating a Content Strategy ......................................................................... 10
3.1 Audience & Editorial strategy .................................................................. 10
3.2 Content channel distribution strategy ........................................................ 10
3.3 Content management strategy ................................................................. 12
4 Content Partners ....................................................................................... 13
5 Business models for Digital Media delivery ....................................................... 15
5.1 Retail business model ............................................................................ 16
5.2 Wholesale business model ...................................................................... 16
5.3 OTT Repackage model ........................................................................... 17
5.4 Content Aggregator Model ...................................................................... 17
5.5 Business Model Comparison Results ........................................................... 18
6 Alcatel-Lucent Multi-screen Solution .............................................................. 20
6.1 Multi-screen Application Platform ............................................................. 21
6.2 Multi-screen Foundation ........................................................................ 22
6.3 High Leverage Network .......................................................................... 23
6.4 Velocix Digital Media Delivery Platform ...................................................... 24
7 Conclusion ............................................................................................... 27
8 References and Sources............................................................................... 28




1  Trends in Digital Media Consumption


We live in a digital world that communicates, educates and entertains through digital media. Internet TV is already changing the way we watch television programming and movies, with on-demand services increasingly competing with traditional linear broadcast programming for our viewing hours.
In parallel, the Internet has come into its own as a global delivery medium for all types of video content ― from user-generated content through YouTube™ to professional content such as TV shows through companies like Hulu™ and movies-on-demand through Epix™ and Netflix™. The estimated volume of video downloads over the Internet in 2009 is a staggering 1 trillion, based largely on user-generated content. Adding the exploding supply of professional content from traditional and independent studios will grow this number to four trillion in 2014. Consumers aren‘t just watching video over the Internet; they are seamlessly weaving content in their social networking activities on Facebook™ through reviews, recommendations and reference links.  
Already attention is turning to the third screen, the mobile device, where an explosion in video consumption is imminent. Personal communication is transforming from words to images as nearly every mobile phone can double as a camcorder. Today‘s expanding number of mobile devices . including netbooks, laptops, smartphones, PDAs, in-vehicle entertainment screens and portable gaming devices ― are giving consumers an opportunity to watch movies and TV while traveling and to share personal videos with friends and family wherever they are.  
The growth in digital media consumption and resulting IP traffic presents significant economic and performance challenges for network service providers, whether ISPs, telcos or cable operators. As digital media becomes the primary driver for service demand and network utilization, this will inevitably impact existing business models. Content delivery has become the de-facto core business and a critical success factor for network service providers, whether they realize it or not! The question is how to turn these trends into new revenue streams and sustainable growth.
The Internet was not designed to meet these needs and has a lot of catching up to do.  Ten years ago, the Internet was predominantly text-based with a few low-resolution images here and there; video was nowhere in sight.  Fast-forward to today, and our Internet experience is vastly different.  
The problem is that continuing to use bandwidth in traditional terms is not going to work. Dropped streams, poor performance and constant buffering will all become an inherent (and unwelcome) part of the online viewing experience . fairly annoying if you are watching the climax of a car chase in 24 . and consumers will, most likely, simply switch off.  
To get from where we are to where we need to be, there are two significant problems to solve.  Firstly, fault-lines run through the Internet economy today with financial flows not appropriately compensating those with a crucial role to play in delivering video online.  Secondly, with the Internet traffic growth rates being witnessed today, we are racing headlong towards the inherent limitations of existing Internet infrastructure.  
Back in the early days of television, physical national broadcast networks were built-out. This included the installation of regional broadcast transmitters in close proximity to viewer homes to ensure they received high-quality TV reception.  The Internet needs to go through a similar phase of evolution to be able to deliver high-quality video to the masses.
The Internet was designed to provide relatively short duration connections for delivery of web pages.  If a page fails to load properly, it is an inconvenience, but clicking the refresh button usually fixes the problem. For video however, long duration connections are required, lasting anywhere from a few minutes to several hours. 30 minutes into a video, clicking refresh to re-start the video again is more than an inconvenience… It is unacceptable.  Bandwidth consistency is also needed for video, rather than the choppy bandwidth that many of us experience when browsing from our homes today.  How well would TV sets work if the electrical supply varied wildly throughout the day depending on national demand, as is currently the case with the bandwidth available on broadband connections?  
For an answer to these economic and performance challenges, Alcatel-Lucent has developed a solution for service providers that provides them with their own advanced digital delivery capability.  The aim of this new initiative is to fix the economics of the video delivery value chain, while also providing significant improvements in online video delivery performance.


2 Threats and opportunities for service providers


All major studios, broadcasters and entertainment players, and many well funded startups are trying to capture momentum in the digital media space. The battle for eyeballs is heating up and is fought on multiple screens by multiple contenders.
Providers of Consumer Electronics and entertainment gear such as game consoles already support built-in Internet video download and viewing. Terabyte digital video recorders (DVRs) and downloadable video may impact DVD sales in the same way that iPods and iTunes impacted the CD business.  
Digital media retailers such as Amazon and Blockbuster have gone on-line with a host of other players such as Netflix, Movieflix and Hulu. Also YouTube has recently developed initiatives towards distributing commercially produced content.


Figure 1. Competitive landscape in multi-screen content delivery
2.1 Potential threats from over-the-top content providers



The fundamental threats and challenges that network providers may face from over-the-top content usage are the following:
. Escalating cost from transporting over-the-top video traffic without associated revenues as subscribers in most cases pay a flat-rate network access fee, independent of usage.  

. Potential disintermediation from subscriber base as over-the-top vendors enter into direct selling relationships


Diminishing value and increased commoditization of basic network access services as the true end user value shifts further from connectivity to content. Over-the-top content providers are in fact competing with the network provider for the same household budget.
In essence the network provider is bypassed in terms of revenues in the over-the-top delivery model although they in fact carry a large part of the delivery cost of that content (see Figure 2) This delivery cost is much higher than necessary as content needs to be fetched anew from the Internet for each individual demand. However, there‘s little that network providers can or will do to improve the over-the-top delivery model due to net neutrality regulations. There are no incentives.  











Figure 2. Business Model Challenge
As a result of ―bypassing the network provider. however, the over-the-top model itself faces inherent weaknesses:
. The over-the-top service is unable to provide quality guarantees as the critical last miles of the delivery channel is supported by an unmanaged, best effort service. This prevents a lot of the inherent value of the content to be monetized and impacts the user experience. When content is only available for download it fails to provide the type of ―instant gratification. that only on-demand streaming content can offer.  

. Subscriber acquisition cost. Over-the-top providers need to spend heavily on subscriber acquisition and face prolonged pay-back periods. Leading over-the-top content provider Netflix for example reported a cost of $26.86 per gross subscriber addition for the third quarter of 2009. Their net revenue was $30.1 million derived from 10.8M paid subscribers which amounts to a net profit of $2.89 per subscriber per quarter. It takes Netflix about 9 quarters (over 2 years) to recover the subscriber acquisition cost. With a churn of 4.4% per quarter, which is actually fairly low, this is not that easy.

. Sustaining competitive differentiation.  It is not hard to replicate the over-the-top content delivery model and there are already many players in this space and they basically all have access to the same type of content. Without content or quality being real differentiators, what compels subscribers to pick one over-the-top provider over the other besides cost?  


The landscape of over-the-top application and content providers is changing daily. Though revenues are still modest, significant amounts have been invested. A dizzying array of partnerships are emerging and collapsing each week as the search for a viable business model continues. With large players such as Google/YouTube and Amazon entering, the profitability of the over-the-top content delivery model could become very challenging.  



2.2 Industry Open Platform Initiatives: Catalyzing the market



One of the challenges of on-demand content today is the variety of players and lack of a consistent user experience to drive a move to a true mass market service. In fact open TV initiates are expected to be a major catalyst for on-demand content in the i.e.  a comfortable web experience on TV will be the real driving factor that will accelerate adoption, quickly followed by the provider‘s wish to provide a differentiated service for their users, that will enhance the user experience, e.g. through technical innovation (e.g. multi-screen, HD, multicast) or business model innovation (e.g. content relationships, exclusivity etc).  
The demand for TV content online is clearly evident with all major broadcasters now offering an on-demand service, for example in the UK the BBC claim to have had over 23.8 million requests per week for programs in the first week of 2010. This demand led to the creation of Project Canvas, led by the BBC, in February 2009 an alliance was formed to promote a standards based open environment for internet-connected digital television devices. The intention is that for consumers this would enable a subscription-free access to on-demand television services and other internet-based content, through a new broadband connected digital device. In addition to the UK activities there is also the Hybrid Broadcast Broadband TV (HbbTV) initiative which is a pan-European initiative aimed at harmonizing the broadcast and broadband delivery of entertainment to the end consumer through connected TVs and set-top boxes, based on elements of existing standards and web technologies including OIPF (Open IPTV Forum), CEA, DVB and W3C.
Obviously this simplification of access will lead to a significant increase in traffic, which represents a challenge for operators to manage in their networks, as well as an opportunity to utilise the service uptake to position the value added services mentioned previously. This will require a CDN to create the differentiation between Canvas providers in terms of quality of experience, including quicker access to content and play out.  
2.3 Potential opportunities in content delivery for network providers



Network providers have already faced ongoing substitution and commoditization of their basic service offering for several years. This trend has been partly countered by increased service bundling and network consolidation to increase the average revenue per subscriber.
Although there are a number of real threats that network providers are facing, they do have strategic assets that can be leveraged for a content play:  
. Unlike OTT content distributors, network providers own and control the critical last miles of the delivery network. This allows them to effectively manage and preserve the quality of content on-net during its delivery which is key to monetize the inherent value of the content itself and all content providers are very concerned with maintaining quality of their content and brand reputation.  

. Network operators already have direct billing relationships with a large subscriber base they can retail content to. Unlike OTT content distributors they can simply up-sell a content offering to their existing subscriber base which is far less costly. Since content providers such as major Hollywood studios and broadcasters are not set up for retail, network providers are a natural partner.


By getting into the business of content retail and delivery, network providers have the opportunity to provide a missing link in the value chain for premium content delivery. At the same time they prevent disintermediation by over-the-top content retailers while generating new revenue.  Availability of premium content is augmenting the value of the service bundle (See Figure 3)


Figure 3. Leveraging network and subscriber assets to build a two-sided business model
Content distribution and retail offers the network provider the means to move up the value chain from bit transport to content delivery. Over-the-top delivery of content does not leave the network provider any option to differentiate and leverage the value of the network. However, if the network operator would deal directly with content providers to become a content aggregator and retailer, he can now fully leverage his networking capabilities and subscriber base to build a differentiated content offering.  
Doing so would enable a superior quality of experience which in turn is key to obtain the right to deliver premium content and generate associated revenue. Effectively the operator creates a two sided business model that creates added value for the subscriber base by compiling a portfolio of quality content from a variety of application and content providers that in turn obtain a trusted delivery channel for premium content to a large audience, with virtually no overhead cost or effort from their side.
By extending the service bundle with a premium content offer the network provider not only has the opportunity to generate new revenue from the content itself, he also stimulates demand for the premium broadband access services needed to deliver this content to the attached consumer devices. This will help to both combat commoditization and price erosion of basic network services.  
A multi-screen content play brings yet another dimension with the opportunity to cross-leverage services in a triple play or quad play offering. By enabling consumers to use and enjoy the same content on all their devices, whether TV, PC or mobile a seamless content experience can be created across the entire bundle.  
Besides the ability to view content on multiple devices, services in the bundle can cross leverage each other in various ways, for example by enabling viewers to use their mobile to operate the PVR function on their home service or to side load recorded TV programs to their PC or mobile. Other examples are to enable viewers to watch user generated Internet content on their TV set and enhance the TV experience by enabling consumers to visit websites with related content, or merchandise.  
In conclusion, network providers have excellent opportunities to enter the market with a game-changing multi-screen experience. Doing so will increase service take-up and brand value, help to build stronger consumer relations and competitive differentiation. However, network providers are not the only game in town, and in many cases are already fairly late to the game, so time is of the essence. Alcatel-Lucent believes that network providers are uniquely positioned to transform themselves for content delivery and retail, especially in a multi-screen delivery context.  
As the old media saying goes: ―If content is king, then content delivery is King Kong..
3 Creating a Content Strategy


Prior to engaging in the content market it is critical to establish the strategy for the market i.e a content strategy is an essential step to focus on prior to entering the world of digital media . to understand why you are entering the market and what are the goals to achieve. A content strategy defines the creation, publication, and governance of content and should be focused on 3 key elements;
. Audience & Editorial strategy defines the target audiences and their profiles as well as the  guidelines by which all online content is governed

. Content channel distribution strategy defines how and where content will be made available to users.  

. Content management strategy which defines the technologies needed to capture, store, deliver, and preserve content. Content life cycles and workflows are key considerations of this strategy.  

3.1 Audience & Editorial strategy



The audience and editorial strategy is a strong influencer on both the revenue and cost implications of deploying a content delivery solution. When approaching any new market, the most important question to ask is ―Who will watch the content, who is the audience?.. Defining the audience is critical as it will shape not only what content is acquired and what is the right business model to support that content, but also will impact the design of the network and revenue potential as different audiences have different profiles. For example the service provider may wish to distribute content such as the TV series ―Lost. which clearly has a commercial value associated with it and would fit well with a retail business model (see Section 5 on business models), whereas content that a service provider is unsure about in terms of viewing potential, would best fit with a Wholesale model, where an operator can mitigate risk in exchange for lower margins.
On a basic level defining the audience in terms of (Age, Demographic, Viewing Habits Influences) is essential, as large audiences require more capacity, but also large audiences of different .profiles‘ blends the traffic profile. Different profiles exist for different types of content, allowing the service provider the potential to support multiple audience types, without increasing the network overheard, typical profiles are defined by genre, which have typical defined audience profiles such as viewing times. In general the following profiles hold true for  
. Children\'s programming . 15:00 . 19:00

. Sports highlights . 21:00 . 23:00

. Home and leisure . 11:00 . 14:00  


Defining the different audiences will help to predict the .busy hour‘ for content traffic as well as the capacity planning for peak usage
3.2 Content channel distribution strategy



Once the audience has been defined, the focus then should move to where will they be located and how they access content. This is important to consider for network capacity planning, but also to manage regional content differences, and whether the content delivery network needs to focus on a regional, national or international basis and critically the formats of content that must be provided for the different access devices. For example content such as catch up TV of regional news programming would have a far more focused audience than a catch up TV of popular chat show.  
3.2.1 Defining content access




Device access to the content is critical in defining the types of content (Standard vs High Definition), format of the content (Adaptive streams, downloads, Flash/HTML5 video) that has to be offered on the network. Each device type will also have a different audience/consumption profile i.e. the profile of a user with a STB and a large television will be different to the same user when they are accessing via a mobile device . not only due to the screen differences, but also due to the subscribers environment and willingness to watch long or short content.  
Devices must be considered on the basis of :
. Home PC or Laptop

. STB and large screen TV

. Game device (PS3, Xbox, Wii)

. Mobile device (cell phone, iPad)


How does this dictate content requirements?
. Screen resolution - Large TV (1920x1080) or iPhone (480x320)

. Codecs and file formats - MP4 (H.264/AAC), FLV (VP6/MP3), WMV  

. Bitrate (DVD quality 5Mbps, HDTV 15Mbps)


Based on a 60 minute video
  

16Kbps
=
7.20MB
Videophone Quality

512Kbps
=
230MB
Low Definition web video

1.25Mbps
=
562MB
VCD Quality

5Mbps
=
2.25GB
DVD Quality

15Mbps
=
6.75GB
HDTV Quality

54Mbps
=
24.30GB
Blu-ray Disc Quality


. Delivery mechanism - Progressive Download, Flash Streaming, HTTP Live Streaming




3.3 Content management strategy



Content management is strongly linked to both Audience and distribution strategys, as certain content may not be available on certain platforms i.e. HD content on SD or Mobile device. Critically content management relies on defining a clear and well defined relationship with content owners, which will depend on the business model associated with the content (discussed in section 5).  
Content management is a critical consideration of the content owner in terms of how they get the content into the network, in the right formats, and to ensure the content they are licensing or delivering is only accessible by authorized subscribers.  Also that content is delivered with complete integrity and is available for the agreed amount of time (where relevant). Content owners will want to see clear support for:
. Quality assurance (file integrity checks)

. Cataloguing and management  

. Publishing (availability on the network)

. Delivery (Number of views, locations etc)

. Support for content workflow

. Version control

. Rights and distribution management (Authorization, Geo Blocking)

. Retention rules  




Content doesn‘t last forever.  Content on a delivery platform has an overhead, specifically the cost of storage, network replication and management costs. A clearly defined policy has to be setup for the different content providers and segmented into the different types of content e.g. catch-up TV shows will have different rights to a movie.


4 Content Partners


One of the most challenging parts of enacting a path into digital media is engaging and partnering with content providers. There are several options open to new entrants to this market, directly going to content providers is not always necessary.  Content aggregators today are able to facilitate a wide range of content to be ingested quickly into the network, compared with the time taken to negotiate with many individual content providers. Although it must be noted that most premium content . such as major brand TV shows is only generally sourced directly from the content owner rather than the content aggregators.  
Rights
Content rights can be thought of as a pyramid, with individual writers, musicians, sportspeople and performers at the base. At the top of the pyramid are the Pay TV operator taking fees from subscribers.
The individuals in the base are of course, the foundation of the whole industry and the rights of these contributors are well protected (unionised) and enduring. The individual contributor has the right to control the commercial exploitation of their contribution. Their individual contracts engaging them on a production represent the smallest .unit‘ of rights.  
The next level up the pyramid is the production company which gains its own rights in the content by creatively bringing together the work of all the individual contributors. The value of the final production rests on the contracts with the individual contributors.  The production company has the right to exploit the programming within the terms of these individual contracts.
In the linear TV world, the next step up the pyramid are the TV channels which aggregate program content from many sources. The channels add another level of rights to the pyramid as they have the right to decide the terms under which a viewer gets access to them. In the Pay TV example, it sells the right to air the channel to Pay TV operators who typically reimburse it on a .per subscriber‘ basis.
Pay TV operators & Bundling
At the top of the pyramid are the Pay TV operators who bundle channels into subscription packages. The larger the package of content the better, because the .eat all you can buffet‘ approach has proven to be much more successful than an A la carte option. Pay TV operators expertly bundle high cost and low cost content together into packages. This results in higher revenues than a .pay-as-you-go. service with the same content would achieve.
Chanel negotiations over .per subscriber‘ fees from Pay TV operators are a minefield.  For example, a premium football or movie channel might only get watched a few hours a week but in the customer‘s mind could be the key justification for subscribing to a larger channel package. As a result, these channels will take more than their .fair share‘ of subscription revenues. At the other end of the scale, some smaller channels that don‘t drive subscription decisions, may get no share at all and have to survive on advertising revenues alone.
It is tempting to see an A la carte content offering as a way to attract subscribers who are disgruntled with the bundled approach of their current Pay TV operator. An la carte/pay-per-view system is fine for premium content but it kills the use of ordinary content that makes up the vast majority of viewing time.  Most TV content, even high quality content  needs an .eat all you can‘ approach to generate use.
Knowing how to get the premium content that will really drive subscription and knowing how to bundle that content into attractive packages is not skill easily obtained and in the VOD world, is largely unknown. New entrants would be wise to partner with content aggregators already experimenting in this area.
Lessons from Linear Pay TV
The linear Pay TV world still has some important lessons for the VOD industry.  Pay TV aggregators have learned that a subscription that gives unlimited access to a well marketed, large and fast changing pool of content is the best way to maximize revenue. They get masses of .long tail‘ content from third party channels that they bundle together to boost the larger pool of content but they go more directly to the source of super-premium content. When they can, they use super-premium content to create their own channel brands for Sports and premier Movies that are at the heart of the marketing effort.
The immediate future
The intermediate stage of aggregation that a linear TV channel can offer a content originator is under threat from VOD where the content can go directly into a larger pool. This is particularly true of channels that rely on older .long tail‘ content. Super Premium content needs channels less because when it enters the VOD arena it is still being marketed by its originators. They want to extract its value as close to the completion date as they possibly can, as speed is the essence in maximizing their return. Content which is still being marketed hard by the originator has its own brand value that will drive viewers to seek it out or cause them to recognize its value when they stumble across it. This is the near-future opportunity for operators who can connect their subscribers directly to the originator through their own content portal.
Pay-per-view movie content is viewed very much like the DVD market by the content creators and the business models are similar - they want a profit share on each transaction. In the future, the company in the best position to bring you super premium content in HD directly from the originator will be the Service Provider equipped with a CDN. There is a good margin in this business


5 Business models for Digital Media delivery


In addition to the basic cost savings inherent in any CDN network through the prevention of increased transit/peering costs from fetching the same content multiple times, there are a number of different business models that can be used in content delivery:
1. Retail model - essentially enables the network provider to become a full bore content retailer that directly deals with content providers to secure distribution rights. This model has the highest profit potential, but also has more operational requirements in terms of establishing a content management and retail operation. Tier 1 full service providers are the most likely to adopt this model.

2. Wholesale model - establishes a premium content delivery service for direct use by Application and Content Providers. ACPs can publish their content directly into the operators network and authorize delivery to individual consumers that purchased the content. The network provider is compensated as a CDN provider which is essentially a volume based carriage fee. Profit margins are smaller then the retail model, but so is the operational overhead. Tier 1 broadband access providers are most likely to pick this service but it can also be an option used in conjunction with a retail model, where the value of the content to an operator‘s offering is unclear and the operator‘s risk is reduced on acquiring content that may not payback.

3. The third model is one that enables over-the-top content delivery. It packages, markets and delivers web content to subscribers, without a direct relationship with ACPs. Transport cost reduction is the primary driver for this mode.

4. The last model is that of a content aggregator and broker. This could be a tier 1 network provider or carriers‘ carrier that resells content to tier 2 and 3 network providers.


Table 1 - Business Model Comparison

Revenue  
Margin  
Cost
Risk

Retail
High
High
Medium
Medium

Wholesale
Medium
Low
Low
Low-Medium

OTT Repackage
Low/None
None
V.Low
Low  

Content Aggregator
Medium
Medium (Wholesale + content resell)
Medium
Medium


Table 2 - Business Model Comparison




5.1 Retail business model



The content retail model is depicted in Figure 4 As we can see the service provider acquires and ingests content from a range of content providers in its on-net CDN and makes it available to its own subscriber base though a branded webportal on a retail basis. The service provider receives both the monthly network access fees as well as fees related to content usage. The content provider receives content fees to compensate for content distribution rights.  Table 1 provides a quick reference guide to the relative revenue, costs and savings that an operator can expect to see in a retail model.
We will now contrast the retail model with the wholesale model.

Figure 4. Content retail model
5.2 Wholesale business model



The added value of the service provider in the wholesale business model lies in providing a premium delivery service for content. The content providers purchase CDN capacity from the service provider and directly retail their content to the connected subscriber base using their own branded portal. The service provider still receives the usual monthly access fees from connected subscribers and is also compensated for delivered content on the basis of traffic volume generated, see Figure 5.
The wholesale model will be attractive to content providers and aggregators that also have retail relations. The whole sale model is very close to the over-the-top model with the difference that delivery quality is now managed by the service provider and the fact that the service provider is compensated for that traffic. Because of the involvement of a CDN, content is delivered more cost effectively which represents a cost reduction for the content provider/retailer who previously could have been paying OTT CDN operators to deliver the content, but with no guarantee on the ―last mile. from the CDN operators servers on the internet to the subscriber.  



RGBNG/SGWEANANIP/MPLSbackboneBSRContentPeeringDelivery POPRANStorage POPContentmanagerContent Ingest$ (Monthly access fee)$$ (Content fees)$ (CDN service fees)Service POPPortal

Figure 5. Content provider enablement . wholesale
5.3 OTT Repackage model



In this model the operator simply caches and repackages existing OTT content to reduce the peering and transit costs they are incurring from this traffic. Figure 6 shows one potential scenario for the savings, this assumes that the same content that could have been monetized is now being cached, but in this scenario the potential to cache could be a lot greater since the focus would be on all OTT content, not just the traffic that could been monetized. In this case the potential savings for the traffic could be significantly higher as even free OTT content could be cached reducing peering and transit costs further.  
5.4 Content Aggregator Model



In this model, the operator in effect is running their own CDN for their direct customers, as well as offering smaller or alternative service providers access to the CDN and it‘s content so it can be re-package for this secondary operators business. In Figure 6Error! Reference source not found. the example is basically a blend of the wholesale and retail modes, since it is assumption that the operator would be offering a retail model to their own subscribers and a wholesale like model to the secondary operator.  



5.5 Business Model Comparison Results



The different business model options facing service providers are presented in Figure 6 below where the relative benefits of each model are shown on the same scale. It is unlikely that an operator would choose a strategy solely based on a comparison of some of these models. Given different types of content targeting different market segments and also there being opportunities not just in the consumer segment, but also in the enterprise and B2B segments, an operator will likely mix between the retail and the wholesale models depending on the level of perceived risk/return and the brand positioning/skills required to make that content a success.  










Figure 6. Business Model Comparison
Note: Bandwidth savings assume only charged for content would have delivered OTT prior to the CDN and represent only operator investment saving not peering/transit savings.  
In example business cases that Alcatel-Lucent has run, an operator who is mixing both the retail and wholesale models would generally have a profile of revenue similar to that displayed in Figure 7 below, with the majority of revenue coming from retail content and wholesale being a small portion of the operators business. The graph also shows the relative savings for an operator in terms of bandwidth investment compared to a non-CDN case.  










Figure 7. Typical Operator Revenue Split


In Figure 8 below the overall result of the example business can be seen.  This shows that an operator with reasonable assumptions ($4 ARPU per sub/per month, for 6hrs 50/50 SD/HD content, 40% of content value going to the Content owner), can generate a healthy return through the retailing of content to their subscribers. The business case assumes capex at market rates to support the traffic demand, as well as operational expenses that would be incurred from operating the CDN network such as maintenance, content expenses, power and SG&A.  


Figure 8. Cumulative Cash Flow Result





6 Alcatel-Lucent Multi-screen Solution


A CDN is only part of the E2E solution required to support a complete content enablement and delivery model. To ensure that any investment in CDN meets the objectives of enabling efficient and cost effective content delivery, meeting customer demand for content & improving their content experience and critically enabling the monetization of content, service providers need to consider a E2E Multi-screen solution. The Multi-Screen Video (MSV) is an end-to-end media solution for service providers, allowing them to retail content towards any user using any screen in any location.  
Using Multi-Screen Video, consumers will be able to access TV and video services from any device with a consistent end-user experience and an easy access to their favorite content, on-line and off-line. MSV offers a number of ways to consume TV and video, acknowledging that the way end-users use mobile devices or PCs may substantially differ from their use of their home TV, with in particular a more fragmented and more time-shifted user experience.  
MSV can be delivered as an overlay enabling service providers to extend their legacy fixed TV service (IPTV, cable TV) towards smartphones and PC. Additionally, considering the ongoing explosion of mobile data traffic, which causes concern to Service Providers regarding their network capacity, MSV includes means to push media to end-user devices for off-line consumption, therefore reducing the need for video streaming and resulting peak-time traffic on mobile networks.
The MSV solution is composed of 3 main layers: Multi-screen Application Platform, Multi-screen Foundation and High Leverage Network.  
. Multi-screen Application Platform: this layer includes the user-facing Application delivering the media retail service to the end-user (TV, VOD, EPG). It includes the ability to encrypt contents according to the target terminal used by the end-user. It controls the delivery of contents by triggering the appropriate delivery mechanisms (streaming, download…)

. Multi-screen Foundation: this layer is a set of Application Enablers common to Multi-screen application. MSV leverages in particular the Multi-Screen Head-End, which handles all media contents, and includes a converged Asset Management application, media acquisition, encoders, transcoders and storage. MSV is compatible with all MSF enablers: converged Identity, Payment and Communication.

. High Leverage Network: MSV leverages enablers belonging to the HLN solution portfolio, in particular: Mobile Smartloading for off-line content push to devices, Network Selection for optimal bandwidth management when multiple transport bearers are available, or CDN for

contents distribution and caching in the network.



Multi-screen Application Platform
The multi-screen application platforms includes several Alcatel-Lucent products including the 5910 MITV, 5930 IMM, 5931 ADSS  and the Alcatel-Lucent 5920 MCM described in the following section

Alcatel-Lucent 5910 Mobile interactive TV solutions are ready-to-deploy, end-to-end solutions for delivering mobile interactive television service over various types of networks, including packet switched networks such as GPRS, 3G, and HSDPA with the unicast release family: MiTV2.X. Other network types include broadcast and multicast networks, such as DVB-(S)H) with the MiTV3.X family, and Anycast, (combining both of the previous delivery mechanisms), with the MiTV4.X family.
Alcatel-Lucent 5910 Mobile Interactive TV3.x complies with Open Mobile Alliance (OMA) BCAST 1.0 specifications, including the Smart Card Profile and Digital Rights Management (DRM) Profile for service and content protection. It enables broadcasters and/or mobile operators to create new, high-quality interactive television services based on an open modular architecture that can easily be integrated within existing networks, and customized to meet subscribers\' requirements while managing both content and subscribers.
Alcatel-Lucent 5930 Interactive Media Manager is an application development and management solution for interactive advertising (RFI, telescoped and portal destination sites) and enhanced TV applications (voting, competitions and polls) for multiple platforms and devices. It provides a ready-to-deploy, end-to-end portfolio of applications and tools that can be used by operators, broadcasters, and advertisers to quickly and efficiently create, manage and deliver innovative, revenue-generating interactive TV services.
Alcatel-Lucent 5931 Advertising Selection Server (ADSS) offers the possibility to marry different profiles of an end-user to offer the most comprehensive understanding of the consumer, while ensuring the privacy aspects. Personal ad space\" opens a new window between advertising and direct marketing. This space on one hand requires specific processes and rules for management of the inventory but on the other hand offers a \"Continuous Campaign Management\". This \"Continuous Campaign Management\" offers the brand the possibility to manage the campaign in near-real time, opening the possibility to refocus the campaign to the actual targets detected by the first shots. This CCM also offers a better understanding of the consumer through a bi-directional communication.



6.1 Multi-screen Foundation  



Figure 9 shows the overall Multi-screen solution components.

Multi-screen head-end
The multi-screen head-end makes multimedia content accessible to multi-screen solutions. It includes multi-screen content enablers that provide the following main functions:
. Content storage

. Encoding/transcoding

. Live-to-file transformation

. Asset management


Figure 9 Multi-screen Foundation Solution Detail

The multi-screen head-end supports the fundamental processes of ingestion, transformation, and management of content. This includes professional on-demand and live content, as well UGC. It also includes web service application programming interfaces (APIs), which allow ACPs to partner with a network provider for multi-screen delivery of content.  
The Alcatel-Lucent 5920 Multimedia Content Manager (MCM) is an innovative platform that enables service providers to implement innovative content services across multiple screens, including PC, TV and mobile devices. With the Alcatel-Lucent MCM, service providers can manage and orchestrate the delivery of a broad spectrum of content-based services - applications, videos, music, games, ringtones, graphics and so on. Multi-screen storefronts can be customized and personalized based on individual preferences, thereby integrating and enhancing the end-user experience. This product empowers service providers to increase revenues, improve operational efficiencies and deliver a personalized, enjoyable subscriber experience - all from one multi-screen enabled platform.
Federated identity
To provide a more personalized experience to end users multi-screen services must leverage consumer specific data across multiple platforms. One of the key advantages that the traditional network provider has over a device manufacturer or Internet ASP is the ability to ―know. the consumer across all platforms simultaneously. The federated identity group of enablers is the foundation for complete unification of user data. It provides authentication and federates the different identities of a user around a single ID. It also enables the federation of outside databases, such as those from Yahoo! e-mail addresses and Google e-mail addresses, into a single identity. The federated identity and web service interface supports the association of a personal ID, such as a Mobile Subscriber Integrated Services Digital Network Number (MSISDN), to a household (broadband connection, set-top box globally unique identifier (STB-GUID)). With this association, TV applications can relate personal mobile identity to a household and contribute information that enriches a subscriber‘s data profile. The federation of data that reflects all media consumption of a given end user across all delivery platforms and screens forms the basis of detailed profile information that can be used for ad-based services. Finally, a key multi-screen identity enabler provides single sign-on capabilities for end users to authenticate them for multi-screen services. It provides the necessary support for authentication in multiple solutions.
Converged payment
The converged payment enabling group allows multimedia solutions to integrate with a highly scalable and flexible payment mechanism that supports an advanced, innovative and open suite of payment capabilities, and many business models including prepaid, postpaid and micro payments. The enablers in this group allow multiple solutions to share the same infrastructure for real-time rating, charging and billing of multi-screen services. For billing, Alcatel-Lucent can either integrate with the network provider‘s existing billing infrastructure or, if needed, propose one of its partner‘s systems as the billing foundation.
Multi-screen messaging and communication
It is difficult to imagine a sensible video delivery solution on the Internet today that does not include social networking features, such as ―share with your family and friends. or advanced converged messaging that allows users to build a community around its content. The IMS application server is the key component of the multi-screen messaging and communication enabling group in the multi-screen foundation. It allows network providers to deliver rich communication capabilities to the market, including advanced application enablers, such as presence and network address book. By building solutions on top of the multi-screen foundation and combining these with open social networking sites that hold a user‘s connections to people, friends and family in a central place, network providers can now help deliver more appealing user experiences.  
These experiences can be enriched with advanced messaging and communication mechanisms that extend across the Web and across screens. The multi-screen messaging and communication enabling group is compliant with Rich Communications Suite (RCS). This speeds and facilitates the adoption of applications and services that exploit an interoperable, convergent, rich communication experience based on IMS. As a result, network providers can deliver communication services to a large community, across a wide range of devices and maintain interoperability across different networks.
6.2 High Leverage Network



The 2 key componets of the High Leverage Network relating to mutliscreen and content delivery are the Mobile Smartloading and the Velocix Digital Media Delivery Platformm.

Mobile Smartloading
Mobile Smartloading transparently pushes relevant content to a device for offline, time-shifted consumption. The benefit for end-users is to have always their favorite content available on their device for immediate consumption, even without network access or during peak hours when mobile bandwidth will be scarce, and with little or no intervention on the download process.

Content Delivery is a key part of the HLN solution, the following section describes the Velocix Digital Media Delivery platform, which is the content delivery element of the High Leverage Network.  
6.3 Velocix Digital Media Delivery Platform



The Velocix Digital Media Delivery Platform is an intelligent and distributed content caching and delivery architecture that allows network providers to optimize investments between transport and storage capacity.  

So why a CDN? -  As video consumption is shifting to a multi-screen experience that is highly personalized and on-demand, the delivery solution needs to be optimized for an entirely different set of requirements. Viewers may still request the same content but at different times and in a different format as they may be using a different display device.  
In this situation IP multicast in the network is ineffective and the content replication capability will instead be taken over by caching appliances that are strategically placed in the network, while IP unicast is the delivery method (Figure 10). A tiered model results in which a centralized storage vault host acts as the centralized content warehouse from which requested content is dispatched to intermediate delivery nodes that perform the two-fold functionalities of content caching and streaming.

Figure 10. Non-Linear/On-demand delivery (VoD, N-PVR, Time-shifted TV)
Video streaming services
Velocix provides video streaming services and supports all major industry-leading online video formats, including Flash, Silverlight, Apple Live Streaming and Windows Media. Velocix has a strategic relationship with Adobe and was the first European technology provider to become a member of their Flash Video Streaming Service (FVSS) partner program. Velocix maintains a service provider partnership with Microsoft and provides support for video streams protected using Microsoft DRM.  
Management services
Velocix offers service providers fine-grain control over every aspect of the digital asset delivery process. A comprehensive suite of management and reporting tools allows service providers to manage and analyze delivery statistics for their digital asset libraries. Delivery options can be set by individual asset level or for groups of assets. Configurable settings include delivery method, access control, delivery speed, and geographic distribution restrictions. Velocix generates detailed delivery reports and provides real-time monitoring tools to allow for effective delivery performance and cost management. Audit trail and logging information can easily be exported for processing by external information management systems for accounting and billing purposes.  
Velocix architecture and technology
Velocix supports the entire lifecycle of content within a delivery network (see Figure 11).  
Figure 11. Velocix Architecture



Velocix architecture overview
A Velocix delivery network (see Figure 11) is architected with three distinct network tiers:
. Service nodes: Core services - Including management console and APIs, reporting/log file and audit processing, billing engine, cache selection engine & geo-configuration engine, live streaming publishing servers and authentication

. Storage nodes: Publishing and content services . Content storage and content ingest


. Delivery nodes: Delivery services . HTTP download, Flash and Windows Media Servers (Live and VoD) progressive download


Content publishing  
A Velocix network provides FTP and RSYNC ingest services for content owners to load content into the network. These solutions use standard FTP client technologies to allow the upload and replication of content onto the content storage servers. Customers are also able to use the FTP client to continually manage content without having to use the Velocix console asset management features. An HTTP REST service is available in addition to the FTP ingest services. For content owners who want to POST content requests to a Velocix network, this can be done using simple HTTP POST requests, without the need to manage an FTP client interface. Content is then acquired from a customer or content partner‘s origin server. The REST interface also provides methods to query the Velocix network caches for availability of the published content.
Content storage
The Velocix publishing appliance analyzes the content and creates a metadata profile of the asset, which contains details that can be used in controlling asset delivery speeds, delivery protocols as well as other identification information. These attributes can be set on an individual asset basis to help differentiate delivery speeds and delivery costs for higher value assets.
For replication of assets as well as their storage, The Velocix network creates multiple pieces from each asset, so an asset may be broken up into hundreds/thousands of individual pieces on the Velocix network. The SHA-1 hash of each piece of each file is verified before it is written to disk and whenever it is read from disk. This granular level of integrity checking not only prevents the insertion of malicious content but also provides a much stronger mechanism for preventing asset corruption (especially with high-definition assets that reach multiple GB in size) or the retransmission of whole assets due to corruption.
Content delivery
Consumer requests for media assets are directed to the most optimal delivery appliance based on consumer location, content availability, server load and network conditions. Both single-source and multi-source delivery are supported, depending on the delivery requirement.  
Single source service is suitable for delivering any type of digital content. Data is delivered from high-performance delivery appliances controlled by Velocix software that is optimized for high-throughput delivery of large files. Multi-source delivery is one of the key mechanisms used within Velocix to improve the resilience and performance of delivery.
Content management
Velocix has been designed to integrate easily with leading 3rd party Content Management Systems (CMSs) via industry standard APIs and client libraries. This has been completed successfully in a number of previous customer engagements, allowing protected (DRM), pre encoded/transcoded content to be published to Velocix directly from a CMS, and for log files and reporting to be communicated back to the CMS for analysis. Velocix is fully integrated with the Alcatel-Lucent Multimedia Content Manager (MCM).  





7 Conclusion


There is great promise for operators that leverage their position to establish a clear and successful content strategy; Sheer unlimited choice with a premium quality of experience at an affordable price. For this prospect to become reality there are major challenges that can only be overcome with the participation of the network providers in an extended value chain for content delivery. Network providers have important assets they can leverage and contribute: they own a distribution infrastructure and have existing billing relationships to a broad subscriber base they can retail their content to. Since content owners such as Disney and major broadcast studios are typically not set up for retailing and since customer acquisition presents a major cost, the inclusion of the network provider in the value chain as content aggregator and retailer provides significant net benefits.  
However, content distributors and service providers will have to act swiftly as the digital economy is moving forward at an ever faster pace and several new entrants are already positioning themselves. As companies define their content delivery strategy they should understand: How content will be delivered over the Internet to multimedia devices, how they can contribute and add value to this process, what options exist for monetizing this content and how these options impact distribution agreements. Quality and accessibility concerns of consumers need to be addressed in conjunction with the required investments in infrastructure to ensure high-quality delivery of content because despite their common use of IP, the delivery of content over IP is not equal.
Alcatel-Lucent believes it is uniquely qualified to help network providers transform themselves for multi-screen content delivery. Three key elements to make that happen are:
. Our High Leverage Network offering to bolster and scale the network for mass-media delivery at premium quality

. The Velocix Digital Media Delivery Platform to enable this content to be delivered to any device in a reliable and optimal manner

. Multimedia Content Management to help manage digital assets and consumer retail relations

. Alcatel-Lucent has deployed more than 100 multimedia projects, 60 IPTV solutions and more than 200 mobile media solutions around the world. The Company has demonstrated its commitment to working with network providers to develop and implement effective multimedia offerings. Alcatel-Lucent supports network providers with:  

. Professional services . A broad and comprehensive set of professional services that encompass the entire network life cycle . Consult & Design, Integrate & Deploy, as well as Maintain & Operate  

. Bell Labs . Part of the new Alcatel-Lucent innovation engine, Bell Labs designs products and services that are at the forefront of communications technology, and conducts fundamental research in fields important to communications  

. Alcatel-Lucent Market Advantage Program . A consulting resource that can help network providers better understand market opportunities, enhance their competitive advantage, reduce time-to-market, and accelerate revenue from new services  

. Products and solutions . A comprehensive Service Delivery Environment made of specialized service delivery platforms and common service enablers  

. IP transformation centers . A global network of multivendor IP transformation centers to lower costs and mitigate risk for next-generation network integration and migration programs  


8 References and Sources


[1] For Alcatel-Lucent Multimedia Solutions, see www.alcatel-lucent.com/multimedia
[2] For Velocix information please see www.velocix.com
[3] “The Global Multi-Screen Experience: A Consumer Perspective”. Alcatel-Lucent Strategic White Paper, 2009. http://www.alcatel-lucent.com/multi-screen
[4] “Multi-Screen Foundation - White Paper”. Alcatel-Lucent Strategic White Paper, 2009

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