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Monday, March 23, 2015

Will TV Viewing Habits Change Metro Architecture?

According to a couple recent surveys, TV viewing is dropping in the 18-34 year old age group.  Some are already predicting that this will mean the end of broadcast TV, cable, and pretty much the media World as We Know It.  Certainly there are major changes coming, but the future is more complicated than the “New overtakes the Old” model.  It’s really dependent on what we could call lifestyle phases, and of course it’s really complicated.  To make things worse, video could impact metro infrastructure planning as much as NFV could, and it’s also perhaps the service most at risk to being itself impacted by regulatory policy.  It’s another of those industry complications, perhaps one of the most important.

Let’s start with video and viewing changes, particularly mobile broadband.  “Independence” is what most young people crave.  They start to grow up, become more socially aware, link with peer groups that eventually influence them more than their parents do.  When a parent says “Let’s watch TV” to their kids, the kids hear “Stay where I can watch you!”  That’s not an attractive option, and so they avoid TV because they’re avoiding supervision.  This was true fifty years ago and it’s still true.

Kids roaming the streets or hanging out in Starbucks don’t have a TV there to watch, and mobile broadband and even tablets and WiFi have given them an alternative entertainment model, which is streaming video.  So perhaps ten years ago, we started to see youth viewing behavior shift because technology opened a new viewing option that fit their supervision-avoidance goal.

Few people will watch a full hour TV show much less a movie on a mobile device.  The mobile experience has to fit into the life of people moving, so shorter clips like music videos or YouTube’s proverbial stupid pet tricks caught on.  When things like Facebook and Twitter came along, they reinforced the peer-group community sense, and they also provided a way of sharing viewing experiences through a link.

Given all this, it’s hardly surprising that youth has embraced streaming.  So what changes that?  The same thing that changes “youth”, which is “aging”.  Lifestyles march on with time.  The teen goes to school, gets a job and a place to live, enters a partner relationship, and perhaps has kids of his/her own.

Fast forward ten years.  Same “kid” now doesn’t have to leave “home” to avoid supervision, but they still hang out with friends and they still remember their streaming habits.  Stupid pet tricks seem a bit more stupid, and a lot of social-media chatter can interfere with keying down after a hard day at the office.  Sitting and “watching TV” seems more appealing.  My own research says that there’s a jump in TV viewing that aligns with independent living.

Another jump happens two or three years later when the “kid” enters a stable partner relationship.  Now that partner makes up a bigger part of life, the home is a better place to spend time together, and financial responsibilities are rising and creating more work and more keying down.  There’s another jump in TV viewing associated with this step.

And even more if you add children to the mix.  Kids don’t start being “independent” for the first twelve years or so on the average.  While they are at home, the partner “kids” now have to entertain them, to build a set of shared experiences that we would call “family life”.  Their TV viewing soars at this point, and while we don’t have full data on how mobile-video-exposed kids behave as senior citizens yet, it appears that it may stay high for the remainder of their lives.

These lifecycle changes drive viewing changes, and this is why Neilson and others say that TV viewing overall is increasing even as it’s declining as a percentage of viewing by people between 18 and 34.  If you add to this mix the fact that in any stage of life you can find yourself sitting in a waiting room or on a plane and be bored to death (and who shows in-flight movies anymore?), you see that mobile viewing of video is here to stay…sort of.

The big problem that TV faces now isn’t “streaming” per se, it’s “on-demand” in its broadest sense—time-shifted viewing.  Across all age groups we’re seeing people get more and more of their “TV” in non-broadcast form.  Competition among the networks encourages them to pile into key slots with alternative shows while other slots are occupied by the TV equivalent of stupid pet tricks.  There are too many commercials and reruns.  Finally, we’re seeing streaming to TV become mainstream, which means that even stay-at-homes can stream video instead of watching “what’s on”.

I’ve been trying to model this whole media/video mess with uncertain results, largely because there are a huge number of variables.  Obviously network television creates most of the original content, so were we to dispense with it we’d have to fund content development some other way.  Obviously cable networks could dispense with “cable” and go directly to customers online, and more importantly directly to their TV.  The key for them would be monetizing this shift, and we’re only now getting some data from “on-demand” cable programming regarding advertising potential for that type of delivery.  I’m told that revenue realization from streaming or on-demand content per hundred views is less than a third of channelized real-time viewing.

I think all of this will get resolved, and be resolved in favor of streaming/on-demand in the long run. It’s the nature of the current financial markets to value only the current quarter, which means that media companies will self-destruct the future to make a buck in the present.  My model suggests that about 14% of current video can sustain itself in scheduled-viewing broadcast form, but that ignores the really big question—delivery.

If I’m right that only 14% of video can sustain broadcast delivery then it would be crazy for the cable companies to allocate the capacity for all the stuff we have now, a view that most of the cable planners hold privately already.  However, the traffic implications of streaming delivery and the impact on content delivery networks and metro architecture would be profound.

My model suggests that you end up with what I’ll call simultaneity classes.  At the top of the heap are original content productions that are released on a schedule whether they’re time-shifted in viewing or not and that command a considerable audience.  This includes the 14% that could sustain broadcast delivery and just a bit more—say 18% of content.  These would likely be cached in edge locations because a lot of people would want them.  There’s another roughly 30% that would likely be metro-cached in any significant population center, which leaves about 52% that are more sparsely viewed and would probably be handled as content from Amazon or Netflix is handled today.

The top 14% of content would likely account for about two-thirds of views, and the next 30% for 24% of views, leaving 10% for all the rest.  Thus it would be this first category of viewing, widely seen by lots of people, that would have the biggest impact on network design.  Obviously all of these categories would require streaming or “personalized delivery”, which means that the total traffic volume to be handled could be significant even if everyone were watching substantially the same shows.

“Could” may well be the important qualifier here.  In theory you could multicast video over IP, and while that wouldn’t support traditional on-demand programming there’s no reason it couldn’t be used with prime-time material that’s going to be released at a particular time/date.  I suspect that as on-demand consumption increases, in fact, there will be more attention paid to classifying material according to whether it’s going to be multicast or not.  The most popular material might well be multicast at its release and perhaps even at a couple of additional times, just to control traffic loads.

The impact of on-demand on networking would focus on the serving/central office for wireline service, and on locations where you’d likely find SGWs today for mobile services (clusters of cells). 

The goal of operators will be to push caches forward to these locations to avoid having to carry multiple copies of the same videos (time-shifted) to users over a lot of metro infrastructure.  So the on-demand trend will tend to encourage forward caching, which in turn would likely encourage at least mini-data-center deployments in larger numbers.

What makes this a bit harder to predict is the neutrality momentum.  The more “neutral” the Internet is, the less operators can hope to earn from investing in it.  It seems likely that the new order (announced but not yet released) will retain previous exemptions for “interior” elements like CDNs.  That would pose some interesting challenges because current streaming giants like Amazon and Netflix don’t forward-cache in most networks.  Do operators let them use forward caches, charge for the use of them, or what?

There’s even a broader question, which is whether operators take a path like that of AT&T (and in a sense Verizon) and deploy an IP-non-Internet video model.  For the FCC to say that AT&T had to share U-verse would be a major blow to customers and shareholders, but if they don’t say that then they are essentially sanctioning the bypassing of the Internet for content in some form.  The only question would be whether bypassing would be permitted for more than just content.

On-demand video is yet another trend acting to reshape networking, particularly in the metro sense.  Its complicated relationship with neutrality regulations mean it’s hard to predict what would happen even if consumer video trends themselves were predictable.  Depending on how video shakes out, how NFV shakes out, and how cloud computing develops, we could see major changes in metro spending, which means major spending changes overall.  If video joins forces with NFV and the cloud, then changes could come very quickly indeed.

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