NDS has established and maintained its position as a market leader by always being ahead of the curve. The TV business has changed radically over the past 20 years, and NDS has consistently anticipated the changes, providing its customers with the technologies they need to take full advantage of new business opportunities.

That was true of the transition from analogue to digital pay-TV, from linear TV to time-shifting and from SD to HD. It remains true as the TV industry approaches its next major inflexion point: the commercial introduction of three-dimensional (3D) TV in the home.

There is wide consensus in the industry regarding the importance of 3D TV. Jeffrey Katzenberg, CEO of Dreamworks, has called it "the single most revolutionary change since colour pictures." Brian Lenz, Head of Product Design and Innovation at Sky, has said publicly that "there is a very good chance you'll see the London Olympics in 3D."

3D adds depth to video

Put simply, 3D is the addition of depth to video, providing a realistic, three dimensional viewing experience. As depth is a function of synchronised viewing by both eyes, 3D normally involves the filming of an image by two or more cameras and the synchronised projection of that output.

3D is not new. It dates back to the beginnings of photography in the mid-19th Century and has popped up periodically over the years. But it has never become a mainstream technology – until now.

Technological developments, primarily digitisation and HD, have made the delivery of 3D video to a mass audience both viable and increasingly cost-effective. There are already over two thousand screens in the US capable of projecting 3D digital cinema and all the major studios are already producing movies in 3D format. "In 2010, we expect to see a fair amount of movement in the 3D space," said Darcy Antonellis, President of Warner Bros. Technical Operations in a recent interview.

For the movie industry to cover the additional costs of producing content in 3D – estimated at about 15% above the cost of a non-3D movie - home distribution will have to be part of the business model. A significant percentage of the studios' traditional ROI comes from broadcast TV. Without that income, 3D production will not be cost-effective.

3D TV challenges

The major challenge of 3D TV is in packaging, encoding/decoding and broadcasting high definition 3D streams for simultaneous display on a wide variety of screens – without any loss of resolution, colour or quality.

There are two formats that need to be considered. The Delivery Format is for the delivery of the video from the broadcaster to the STB, and the Presentation Format for the transfer of the content from the STB and its display on the TV.

Neither of the formats has been standardised as yet, though a number of organisations are currently defining parameters as a first step towards standardsation. These include the SMPTE, the ITU, the Consumer Electronics Association, DVB and ISO/MPEG. MVC (Multiview Video Coding) for example, is an amendment to the MPEG-4 part 10 (AVC) video compression standard that enables efficient encoding of sequences captured simultaneously from multiple cameras using a single video stream.

While the techniques of creating 3D video are well understood, there are still many challenges in delivering and presenting them on the TV screen

When it comes to presentation formats, TV manufacturers have opted for four different technologies:

• Frame interleave, using shutter glasses (which have lenses that open and close in rapid succession, exposing each eye to the appropriate frame)
• Checkerboard (or pixel interleave) also using shutter glasses;
• Line interleave, using polarised glasses;
• Autostereoscopic, which does not require glasses.

Only frame interleave, which is used by Panasonic, provides full HD (1920x1080) resolution. Samsung and Mitsubishi use checkerboard, while Hyundai, JVC and Samsung use line interleave. Philips, the only major TV vendor using an autostereoscopic display, recently shut down its 3D Display Division without explanation. It is assumed that autostereoscopic displays are too expensive for consumers at this stage.

NDS' objective is to provide advanced 3D digital video recorder (DVR) technology with support for up to full 1080P HD per eye. The goal, according to Yossi Deutsch, VP Business Development, is to show a 3D-enabled DVR at IBC 2009. Concurrently, NDS is looking into the implications of 3D for Conditional Access and DRM, EPGs, on-screen displays, subtitles and trick modes.

Until 3D DVRs and TVs are widely deployed, interim solutions are likely to be required. These could entail 3D upgrades for existing STBs and some lower resolution technologies which can work on existing legacy boxes. These are being assessed by the NDS 3D Lab at the company’s R&D centre in Jerusalem.

The lab's current activities primarily involve the identification and evaluation of 3D technologies from companies such as TDVision, Sensio, DDD and RealD. It is also in discussion with leading chip manufacturers such as Broadcom, ST Microelectronics, Intel and Horizon.

With revenue from 3D TV display sales projected to grow by 95% annually, from $140 million in 2008 to $15.8 billion in 2015, 3D TV is likely to be big business in years to come and NDS is planning to be a leader in this space.

Experience counts as Cox chooses NDS for tru2way

World Vision: Can we start with the new Cox EPG and how Cox and NDS began working together?

Steve Necessary: The genesis of the UI project was almost four years ago when we at Cox began to do an assessment of our own and other user interfaces. The result of that assessment was that Cox stacked up rather poorly. So we began designing a next-generation UI, where the basic premise was that the amount of content that operators provide today has increased so significantly that the old grid-and-menu paradigm is simply unworkable.

WV: In what way is it unworkable?

SN: Customers can't find the content and the operators don't have the tools to promote all of it to them. A customer who can't get to the content can't enjoy it. After a lot of work, we came up with the fundamentals of a new UI and got the go-ahead from our management to develop it.

Cox partners with NDS

WV: How did NDS enter the picture?

SN: I'm happy to say that we were smart enough to look for an external company to do the coding, rather than doing it in-house. There's always the temptation to do it ourselves, but we understood that it was best to focus our energies elsewhere. So, we went through a tender process, assessed several companies and decided, eventually, to work with NDS.

WV: What was it about NDS that won you over?

SN: There were three reasons we decided on NDS: It had a lot of IPG (Interactive Programme Guide) experience, such as with DIRECTV; it had OCAP experience with customers in Korea and it had previous US experience with Cablevision.

WV: In retrospect, did you make the right choice?

SN: So far, we have absolutely no regrets. Both I personally and the company as a whole are very happy with the work done by NDS and the way our two companies have worked together.

"I'm very proud of Cox that we were able to make a candid assessment of our capabilities and choose to partner with NDS."

WV: At what stage is the UI project right now?

SN: Our scheduling is on track. We are currently on the fourth round of our QA test cycle and expect to begin technical trials by the end of this month. We should begin rolling it out to paying customers in September.

WV: I understand that the satisfactory progress of the UI project has led to further joint work between Cox and NDS?

SN: Correct. A few months ago we decided to expand our cooperation to another level, namely that NDS will be responsible for integrating a wide variety of network components onto our tru2way network.

Cox is part of an industry-wide agreement to support tru2way, formerly called OCAP. Previously, we were in a joint venture with Comcast called TVWorks, which would have undertaken a lot of the tru2way work. But TVWorks was terminated amicably in January this year, with the result that several activities needed to be done alone. We turned to NDS for that work. So, in effect, NDS is taking the responsibility as prime integrator for our tru2way platform.

WV: Was there another tender process before NDS was chosen?

SN: No, there was no RFP. We negotiated on the basis of our experience. It speaks very well of the relationship.

NDS as Prime Integrator

WV: Can you give us an idea of what NDS' responsibilities will be as prime integrator?

SN: NDS will be integrating all the elements that need to come together in support of tru2way. That includes the next-generation guide, which we've already discussed, the OCAP stack, overseeing the integration on Cisco and Motorola STBs, putting DOCSIS comms into the STBs, overseeing the integration of all network components into a network control system, integrating the servers from TVWorks. In short, providing the full tru2way environment.

WV: It doesn't sound trivial. What about the timing?

SN: We're on a fast track. The short-term milestone for the first tru2way STBs is July 1. The next milestone is the end of the year.

WV: Is there anything on the drawing board beyond the tru2way integration project?

SN: The relationship between Cox and NDS is likely to be ongoing, so long as it makes operational and economic sense for both companies. We expect and hope that the relationship will continue.

WV: Where does Cox's tru2way project fit in the context of the US cable industry as a whole?

SN: I'd say that Cox is in the middle of the pack. We're not the pace-setter but neither are we lagging behind. We do, believe, however, that our new UI will leapfrog us over most of the other cable operators.

Being the third-largest cable operator in the US, we sometimes think of ourselves as the smallest of the big guys and at other times as the biggest of the small guys. As the latter, it made sense for us to align with NDS. I'm very proud of Cox that we were able to make a candid assessment of our capabilities and choose to partner with NDS.

For more information:

Cox

If you like this . . . you might like TV recommendations

In competitive markets, pay-TV operators continually strive to increase their market share - not to mention retain their existing customer base - by providing more and better content. But the downside is that the more channels and content assets there are, the more the consumer is required to monitor channels, find new programmes and decide what to watch.

TV is a recreational activity; consumers don't want to work too hard for it. Statistics show that, despite having hundreds of channels at their disposal, the average pay-TV user watches fewer than 10 channels on a regular basis. There are various reasons for that, one of the most important being that most users are unable to keep tabs on all the programming that is available. Invariably, users stick with what they know.

It's a dilemma faced by virtually every operator. Differentiation in the market is critical and content acquisition is expensive, but operators lack the means to make programme access easier for the consumer, draw the consumer's attention to relevant content and effectively monitor usage to ensure that the investment in additional channels and premium content is paying off.

Consumers often churn or cancel premium packages because they are unaware of the range and quality of the programming available from their pay-TV operator. Some are giving up their pay subscriptions altogether and migrating to digital free-to-air services, many of which offer dozens of channels.

Promotion without confusion

Customer retention and increased ARPU, primarily by means of bundle upgrades and diversified pay services, are critical for pay-TV operators. They urgently need new technologies to assist them in promoting their content and services to consumers, while, at the same time, reducing consumer frustration by cutting the time and effort required to find the content they want.
One such technological capability is recommendations, a tool that is well established on the Web but which is still in its infancy on TV.

Recommendations do exactly what the word implies. They recommend content to a user or groups of users, based on content that has already been viewed by the user or information about the user's interests. The viewing suggestions can be provided by the operator, other consumers or third parties and they can be displayed in a variety of ways. What all recommendation techniques have in common is that they are a means of up-selling additional content and services on the basis of some form of knowledge of the customer.

Online, recommendations have a proven track-record. Fully 35% of Amazon's product sales are the result of recommendations, which have shown themselves to be vastly more effective than any other means of promotion deployed by the company. On Google News, recommended items receive 38% more click-throughs than those which are not recommended.

The challenge of recommendations on TV 

The challenge is to reproduce the same effectiveness on TV networks, the bulk of which are still one-way only and do not support the user interaction that is common on the Web.

In general, recommendations can be created manually by the TV operator or generated by algorithms, which compare and match the "DNA" (or metadata) of content and users. Otherwise, they can be based on ratings provided by users or third-party agencies.

NDS has developed a recommendations concept framework which is capable of supporting all the above techniques and is suitable for both unidirectional and bidirectional networks, according to NDS Product Manager Alon Weinberg. It is an end-to-end system, which is synchronised with the broadcast schedule and can be operated manually by the TV broadcaster or can integrate with a third-party recommendations engine.

Operators need technologies which assist them in promoting their content and services to consumers, while, at the same time, reducing consumer frustration

Crucially, it is built for the mass market. It is non-intrusive, contextual ("if you like this, you may be interested in …") and simple for the consumer to use. Users can be divided into sub-groups, which receive different recommendations, and usage of the recommendations can be monitored using the NDS Audience Measurement System.

The proof of concept (POC) for recommendations was developed by the NDS Marketing Technologies Group, a team dedicated to developing new functionality concepts and demonstrations. Designed for a one-way broadcast network and running on a STB with Fusion middleware, the POC comprises headend metadata components, an Operator Control Panel, a STB user interface and integration with a recommendation engine from ThinkAnalytics.

The ThinkAnalytics backend provides recommendations based on context (e.g. most recently viewed item) targeting to subscribers (two-way) or subscriber groups (broadcast) or individual preferences if available. The NDS headend synchronises the recommendations with broadcast and on-demand playout. Viewers see a real-time interactive recommendation application on the STB.

In the future, when IP and hybrid STBs are more widely deployed, the recommendations concept framework will support user profiles and ratings, recommendations according to profile, content push based on profiles and a comprehensive audience measurement solution.

World Vision: In its recent report, Asia Pacific Pay-TV and Broadband Markets 2009, MPA says that pay-TV in the region is facing its biggest challenge since its inception almost 20 years ago. Is that challenge primarily due to the economic crisis or are there systemic problems that need to be addressed?

Media Partners Asia: MPA is  broadly positive on the future of pay-TV distribution platforms in the long-term. In particular, some of the players who find themselves in the strongest position are:

• Deployers of next generation digital TV (DTV) and broadband systems in Australasia and North Asia;
• Operators whose growth is anchored to massive consumption (i.e. India, Indonesia);
• Dominant near-monopolies which have built up unbeatable content franchises and are now developing the mass market (i.e. Astro in Malaysia).

However, it is our belief that regional pay-TV broadcasters and content providers are facing their biggest challenge since the start of pay-TV in APAC close to 20 years ago. The challenge is being shaped by a number of key factors, including:

1. The economic crisis, which is eating into pay-TV advertising growth and, in some cases, limiting subscription revenue growth for channels as distribution platforms limit content spend;
2. Shifts in media consumption, with the exponential growth of online media as well as on-demand networks reshaping audience and advertiser trends;
3. The demands of a current cycle of competition and digitisation, which means the costs of creating better, more relevant content and increasing market share continue to grow, though current returns are often commoditised due to a combination of regulatory and commercial barriers.

In spite of these growing challenges, we believe that originators of local content, especially those catering to Chinese and Indian audiences, among others, will continue to remain relevant and profitable. But the outlook for English-language broadcasters isn’t as favourable, as distribution platforms in key markets invest more aggressively in local and non-linear programming and curb their spending on regional and international TV channels.

Deteriorating investor sentiment is a big, near-term concern

As for platforms, or pay-TV operators, we believe that a number of distribution platforms will remain or emerge at the forefront of industry growth if they maintain and/or step up investment in next-generation digital infrastructure, including HDTV, DVR, VOD and advanced fibre- and cable-based services. However, there is no doubt that in certain markets, rising unemployment, falling consumption and softer demand will slow the growth of new subscribers to pay-TV, while also limiting ARPU growth in others.

On a regional basis, net new subscribers to both pay-TV and broadband will continue to average 20–25 million per annum over the medium term while DTV, boosted by migration in North Asia and India, will average 30–40 million.

Much depends on a sustained recovery in capital markets, as well as broader stability in GDP and currencies. Deteriorating investor sentiment is a big, near-term concern, as distribution platforms need more funds to acquire subscribers, upgrade infrastructure and invest in content. How capital is allocated and available will be a big factor in how DTV and pay-TV develop in China, India and Indonesia, amongst others.

WV: Which pay-TV markets are likely to cope best with the economic crisis and for what reasons? Which will cope worst?

MPA: Capital constraints have probably hit India, Indonesia and Korea the worst. The advertising slump has been severe on Taiwan, Japan, Korea, Hong Kong and South-East Asia. India, Indonesia and China have fared better, though growth in these markets has also moderated significantly.

Demand for pay-TV has softened in Hong Kong, Japan and Australasia, but is still robust in India and several other markets. The pace of subscriber acquisition has slowed in India, Indonesia and, to some extent, China, as funding remains low and a number of players are keen to conserve cash.

Short-term funding expected to continue

WV: You said that deteriorating investor sentiment is a big, short-term concern. What levels of investment have been assumed for the purposes of the forecasts? What will be the effects if investment falls below the assumptions?

MPA: We have assumed that private equity firms and strategic investors will continue to fund the top tier of cable MSOs and DTH companies in India over the next 6-12 months. Some of the new funds have already gone through to DTH and one or two of the top MSOs are close to another new round of capital. But a lot could change in the strategic roadmap for DTH.

Now that the elections have been completed in India, with a highly favourable result for investors, we expect more momentum in the market. Foreign direct investment in Indian cable and DTH should increase significantly over the next few months. 

We have also assumed that two of the big platforms in Indonesia get the money they need; IPTV gets the rights and capital it needs in Malaysia and Singapore ... the list goes on.

Various government organisations are essentially funding the DTV industry in China, both on cable and, now, on DTH, though private equity and strategic investors are getting involved in minority positions and JVs. If Indian DTH and cable companies don't get the money they need and transition to more realistic business models, then that affects the whole ecosystem and we're in for a very tough time.

US video consumption is on the rise on all three available screens – TV, the Internet and mobile - according to a new report from Nielsen. The most significant increases are in time-shifting, usage of which is up 37% year-on-year, and mobile video consumption, which is up 52% .

The average American watches 153 hours of TV at home every month (or five hours a day) as Nielsen reported in its Q1 2009 Three Screen Report. In addition to TV watching, the 131 million Americans who watch online video consume three hours of video a month and the 13.4 million Americans who watch video on mobile phones consume 3.5 hours of mobile video each month.

Traditional TV is still dominant, accounting for almost 99% of all video watched in the US. TV watching increases with age. Adults aged 65 and over watch 210 hours of TV a month, double the amount of time spent by teens between the ages of 12 and 17. The most avid users of time-shifting are adults between the ages of 25 and 34, who spend an average of 12 hours a month watching time-shifted video.

Teens between the ages of 13 and 17 are the leading users of mobile video, logging an average of 6.5 hours a month, according to Nielsen.

The report notes that online video audiences are likely to grow as broadband penetration in the US increases and consumers upgrade to PCs capable of supporting decent quality video.

Pay-TV will continue to grow in 2009

Global pay-TV subscriber numbers will increase by 8% in 2009, despite the economic crisis, according to the first quarter update of Pyramid Research's Media Forecast. That represents a drop of 3% from the 11% growth in 2008.

There will be almost 733 million pay-TV subscribers at the end of the year, according to the forecast.

While commenting that first quarter results had been better than anticipated, research manager Ozgur Aytar cautioned that "the more significant impact of the recession will be felt in customer spending on pay-TV services in 2009." Average expenditure per pay-TV household will decrease by 6% in 2009 and by as much as 20% in some emerging markets, as operators roll out "economy" bundles and multi-play tariffs.

"The slowdown in the global economy has hit both capex and the speed of broadband network deployments in emerging markets," Aytar said. "In order to manage through the perfect storm, operators are scaling back their capex by as much as 20% to 30% and most are holding back on expansion plans."

Mixed views on the state of IPTV

Researchers seem to be having a hard time figuring out how the global economic crisis is affecting pay-TV in general and IPTV in particular.

Predicting bad times ahead, international consulting group Frost & Sullivan has revised its previous forecast of three-year compound annual growth for IPTV from 29% down to less than 15%.

ABI Research, on the other hand, has reaffirmed a three-year CAGR of 29%, forecasting that IPTV will achieve 47 million subscribers by the end of 2011. The current concentration of subscribers in bandwidth-rich countries such as France, South Korea and Hong Kong will spread as networks improve in countries such as China and India, the company said in its quarterly Pay-TV Subscriptions report.

The number of global IPTV subscribers at the end of 2008 stood at anywhere between 15.5 million (according to Point Topic) and 19.6 million (according to Gartner). Growth has been best in Europe, where Pyramid Research predicts that IPTV subscribers will account for 15% of the total pay-TV subscriber base by the end of 2009. Elsewhere in the world, IPTV subscribers will account for less than 5% of the total market.

Half of UK TV households choose pay-TV

Almost half of all TV households in the UK now pay for access to additional television channels, according to research from the regulator Ofcom.

49.5% of UK TV households have a pay satellite or cable service on their main television set, up from 48.6% in the previous quarter, Ofcom revealed in its Digital Progress Report for the fourth quarter of 2008. That compares with 39.3% of households which have free television services through digital satellite or digital terrestrial television (DTT).

In all, 88.8% of households in the UK had a digital TV service connected to their main TV set at the end of 2008, up by 2.4% since the end of 2007.

Homes with access to a High Definition (HD) service rose to an all-time high of over 1.5 million.