TVA Plus: VOD, IPTV and OTT services have become quite entrenched in North America and Europe, with Netflix, Hulu and others quickly becoming commonplace. How do you view the emergence of such services in Asia? Paul: Video on Demand (VOD), Internet-Protocol TV (IPTV) and Over-The-Top (OTT) services will all impact TV viewers in Asia in different ways. VOD is a service that will complement, but not replace traditional TV viewing and premium TV services. There is a lot to be said for the traditional programming schedule, people still want to view live content such as sports, news and the latest season of their favourite programme when it is first aired. VOD can already be delivered by the most progressive platform operators in Asia – including the satellite operators. The majority of NDS customers are able to provide VOD services with their existing broadcast systems. IPTV and OTT delivery can be described as both delivery of content via a broadband line, but with IPTV, it is a managed service from the telco where they can guarantee enough bandwidth to stream both linear (channels) and VOD (on-demand) content. OTT on the other hand is the delivery of content via the internet – which is an un-managed service which requires different techniques to ensure that the experience is acceptable for the viewer. The majority of OTT delivery services currently provide only on-demand content. This on-demand service provided via OTT is likely to impact the video rental market rather than having a direct effect on pay-TV operators. Instead of going to the video store to pick a movie to rent, a consumer would select one from an OTT library to be streamed directly into their home over their broadband connection. In regions where internet access allows OTT delivery of content, it will allow the entry of new players, though there is absolutely no reason why existing broadcast operators could not also launch such a service. In fact, a progressive broadcast operator who started a service via OTT would likely be the best positioned to provide a local service as these companies have the experience in packaging and promoting valuable content to their viewers. All of these services will certainly become more popular in Asia-Pacific, but a major factor that will affect their uptake is the varying range of broadband penetration across Asia, with around 80%penetration in Singapore to around 1.5% in India (Media Partners Asia, average of 2010 and 2011 data). Moreover there is great variation in broadband data rates achievable, with the vast majority of broadband connections in India not currently capable of supporting even standard definition TV quality video. Realistically, for much of Asia, the broadband delivery infrastructure is not of a sufficient quality or at a level of penetration to make OTT viable across Asia Pacific. NDS believes that traditional TV viewing will continue to increase in hours per person per week. Research from Nielsen* has shown that in the US, people are watching even more TV than ever before (158 hours 25 minutes per month) which is an increase of over 2 hours compared to the previous year. In contrast, monthly viewing of video over the internet only accounts for 28 hours and 36 minutes. Nielsen also report that Latin America and Asia Pacific tie as the two global regions with the highest rates of TV viewing. Pay-TV represents fantastic value for money in most Asian countries, providing subscribers with an extensive range of channels for a low monthly fee. For example, in India subscribers pay between US$3 and $4 a month to receive as many as 150 channels. Aside from the network issues, subscription OTT services based on the business models of Netflix or Apple TV would find it difficult to compete on choice or value in such markets. In all cases, established OTT services from outside Asia would have to acquire rights to a lot of localised and preferably locally generated content to achieve critical mass within Asia Where network bandwidth and reach are sufficient, there are already established local OTT service providers offering a variety of services from free services for limited bandwidth, allowing limited time and/or access to a limited number of programmes, which are advertising heavy to subscription based services for superior bandwidth connections, with unlimited time/ number of programmes and options to download and store content. TVA Plus: How do you see these services impacting NDS’ business here? Paul: The increased availability and variety of digital content, together with the enhanced mobility and proliferation of internet-enabled devices such as connected-TVs, tablets and smart phones, and progressively lower consumer equipment costs, are transforming consumer demand for digital content. Consumers are increasingly demanding: • Choice of Content. Consumers want the broadest choice and diversity of content, regardless of whether the content is delivered through traditional broadcast networks, internet protocol-based broadband networks or OTT • Quality of Experience. Consumers expect to utilize the latest viewing technology, such as high definition (HD)-TV and three-dimensional (3D)-TV as well as highly functional, intuitive and robust user interfaces for content discovery and navigation; and • Convenience of Viewing. Consumers demand the flexibility to view content anytime, anywhere and on any device. In the evolving digitally connected world, the fundamental requirements of content security, as well as improved functionality and convenience, are critical to the growth of the Pay-TV industry. We believe these critical factors present significant opportunities for us in both developed and emerging markets. We believe we are well positioned to benefit from these trends given our leading-edge software solutions, our unique end-to-end capabilities, our proven security track record, and our ability to deliver complex system integration services. NDS have been offering solutions for VOD, IPTV and OTT services in Asia Pacific for the last 10 years, with over 15 customers providing content via broadband networks – either in combination with their broadcast delivery to hybrid broadcast/broadband set-top-boxes or broadband on its own for IPTV providers, so further uptake of these services represents further opportunities for NDS. NDS is already working with customers to deliver these services in Asia Pacific and as bandwidth penetration grows and as the speed of content delivery over the internet grows, these services will continue to become more popular. NDS has solutions for existing pay TV operators wishing to offer OTT services and IPTV to complement existing platforms and also potential new entrants such as content providers and connected TV manufacturers. TVA Plus: What potential do you see in the growth of VOD/IPTV/OTT services in Asia, and where in particular would be the strongest and most receptive markets for this? How will this affect the paradigm of television broadcasting in Asia? Paul: In the territories with high broadband penetration such as Hong Kong, Singapore and Korea, IPTV and hybrid IPTV and pay-TV services already have significant market share and contribute to vibrant competition. Excepting these relatively small markets, and those of New Zealand, Australia and Taiwan, NDS believes that the impact on the television broadcasting paradigm in terms of market share will initially be limited. This will partly be because traditional pay TV operators complement and extend their service offerings to compete with the perceived threat of these service offerings from non-traditional players. Over time, as broadband speeds increase, more services will be rolled out across Asia. However, NDS sees these services complementing the existing pay-TV services rather than replacing them.