The traditional set-top box (STB) is all set to disappear. The functions of today's STB hardware will be carried out in the network and by the connected device itself, eliminating the cost and complexity of managing home-based STBs.
Traffic will be all unicast. Over time, device format fragmentation, time-shifting viewing habits, and service personalization will erode broadcast and multicast efficiencies. Ultimately, every end user will be served with a unique stream.
Services will be deployed in the cloud. Dedicated video platforms will migrate to cloud-based services, reducing costs and accelerating time-to-market. Operators will move from vertically integrated middleware stacks to more open architectures with best-of-breed components. Cloud DVR, DNLA CVP2, and content delivery networks are the three key technologies that pay-TV providers will need to embrace to migrate smoothly to IP video and realize the potential of cloud TV.
TV usage is changing rapidly. Consumers of video content are turning increasingly to alternative video services which allow on-demand access to thousands of programs on platforms such as Netflix. The traditional DVR at home is just not enough anymore. Live TV content must be stored, processed, and delivered from the cloud so that subscribers can access it anytime, from anywhere, and on any device.
Digital video recording in the cloud (cloud DVR) offers service providers the ability to respond to the transformation of TV-viewing habits. Unlike traditional PVR, viewers can save and consume TV content on the go. Cloud DVR overcomes the physical constraints of the local hard drive. Instead, it offers a library of video assets stored in the cloud and available on devices such as mobile phones, tablet computers, TV dongles, and game consoles.
Cloud DVR has the capability to free viewers from all existing barriers inherent in traditional TV recording systems by allowing them to record a potentially unlimited number of programs and replay them on any device of their choice at any time.
The global cloud DVR market is expected to grow at a CAGR of 31 percent from 2016 to 2020. Since cloud DVR is the latest technology in the home entertainment market, a key factor fostering the prospects for growth in this market will be the rising digitization of television networks. In recent times, governments from across the globe have started mandating the installation of STBs in countries including India and China, where a high proportion of TVs are sold. Digitization helps service providers to offer more channels at affordable price and also provides consumers with HD audio and video at affordable cost. As digitization offers consumers a wider range of channels and better picture quality, it will encourage consumers to use cloud DVR services. This recent increase in the preference for digitization will, in turn, augment the demand for cloud DVR during the estimated period.
An important trend spurring growth in this market is the change in the architecture of cloud DVR. Owing to the growing volume of content on cloud DVR, service providers face a huge challenge of storing their unique copies. To deal with such issues, vendors have started creating a private copy of various broadcasting contents. Each of these recordings is stored in a centralized storage facility, where vendors can share the hard disc drive space with the user's cloud to eliminate the redundancy of orders. Additionally, these hard disc drive spaces can also be shared with various private clouds based on the user's recordings.
The market for cloud DVR has been segmented into three types - satellite, IPTV, and hybrid. The satellite segment dominated the market and accounted for a market share of more than 37 percent during 2015. Consumers from North America and Western Europe are rapidly upgrading their existing satellite DVRs to latest technologies like IPTV DVR and hybrid DVR due to which this segment is likely to witness declining growth in the coming years. However, the declining market in the West has coincided with the increasing adoption of satellite DVR in developing countries like China, India, and Brazil, which in turn has led to the growth of this market segment during the forecast period.
During 2015, the Americas dominated the market and accounted for close to 55 percent of the total market share. The United States is the major revenue contributor in the region as the buying power of the consumers in the country is the highest globally. Also, rapid digitization in South and Central American countries will contribute to the growth of this market in this region.
Major vendors for cloud DVR include ARRIS, Alcatel-Lucent, Cisco, and Ericson. Other prominent vendors in this market are ABOX42, ADB, Broadcom, Comcast, Comtrend, Edge-Core Networks, Hansun Technologies, HYUNDAI Digital Technology, Huawei, Lenovo, Pace, Technicolor, and ZTE.
Cloud DVR versus STB
Using cloud DVR, pay-TV subscribers can record live content and shows using storage in the operator's or third party provider's network, instead of on the hard drive in the subscriber's home DVR STB. These recorded shows can be watched anywhere, on any device, at any time. Live, VoD, and recorded content can now be stored indefinitely, delivered to legacy STB, and over-the-top to all of the subscriber's mobile devices. Additional services such as Pause Live TV, record in the past, rewind, start over, and Catch-up TV are also possible. The number of tuners and parallel recordings are virtually unlimited and provisioned on the fly.
This benefits operators as well since it reduces the cost of the STB and maintenance, and reduces truck rolls to the subscriber home. It also opens up new potential revenues through upsell opportunities to subscribers. Moving video storage and processing from the STB to the network benefits subscribers, service providers, and content owners alike.
In addition to opening new revenue opportunities for service providers, cloud DVR technology extends benefits to other members of the TV ecosystem too (such as advertisers, broadcasters, TV channels, and content owners), who gain greater control over how content is recorded and consumed.
As programs recorded by users are stored in remote servers instead of STBs, this allows the service provider to give increased storage space and not worry about changing the STB hardware configuration and specifications frequently. Once stored in the cloud, a user can access the content on a tablet, personal computer, or on a mobile. This is not possible with an STB.
Some of the major advantages of cloud DVR over STB include:
Lower capital expenditure (CapEx). DVR components - including the hard drive, multiple tuners, and additional memory - make up a large portion of the cost of DVR-capable STBs. Moving these components to the cloud greatly simplifies STBs. Using central storage is less expensive than the end-to-end cost of maintaining large numbers of hard disks in home-based DVRs, particularly when the shared copy approach can be used. Service providers can deliver DVR services to any STB in subscribers' homes, and do not need to deploy any other hardware to support whole-home DVR capabilities. A subscriber can turn any smart device into a DVR by downloading an application and authorizing it for the service.
Reduced operational expenditure (OpEx). Cloud-based storage makes it easier to operate and maintain DVR services, particularly when hard disks fail. The increased reliability and availability of storage in the cloud reduces the number of calls to a service provider's help desk, as well as hardware shipments to subscribers' homes, with or without truck rolls.
Incremental revenue. Service providers can potentially increase revenues by offering their subscribers value-added, time-shifted TV services that are available on all devices.
Cloud DVR technology allows service providers to charge for increased storage capacity and for the ability to record more programs at the same time. They can make these extensions happen in the network without making any changes to end-user equipment or shipping new hardware. Cloud DVR deployments may not create new revenue opportunities in every market. Nevertheless, the technology will improve subscriber experience and the perceived value of the service provider's TV service, increasing customer satisfaction and reducing churn.
With migration to the cloud comes a host of challenges for operators. Despite the benefits for all players in the value chain, content rights issues have inhibited cloud DVR deployment in many regions. While copying video content or TV programs on personal devices such as DVRs is generally accepted, it is a different story for recording and storing TV programs on the service provider's network. Whether or not cloud-based recording violates copyright laws has significant implications for service providers. The model service providers' use to deploy their cloud-based DVR services depends on agreements negotiated with content providers, as well as country-specific intellectual property rights legislation. Storage is one of the foremost concerns. In a private copy solution, recordings cannot be shared. A single, unique copy must be saved per user. The traditional datacenter required for this volume is very complex and difficult to maintain.
In addition, performance requirements are significant. Throughput will come into play because unlike a VoD system, subscribers are not only streaming a program but recording it as well. The potential is for 30-40 percent recording concurrency at peak times, like prime time, or during popular programs. Playout concurrency is also much higher than typical VoD applications with cDVR, typically spread over a 72-hour window after the recordings.
By allowing operators to migrate processing functions to the network, cloud DVR will create a simpler connected home that is free of STBs. Operators that take advantage of this network will deliver pay-TV services directly to subscribers and avoid having to ship hardware to their homes.
With this rapid uptake, the future looks relatively bright for pay-TV providers in the cloud DVR market; however, a rush of new vendors in this space means that providers should be careful to ensure that their cloud DVR services are maximized to increase profits over the long term and not darkened by infrastructure and services designed for a short-term uplift.