Back in 1994, NDS was keenly involved in shaping the introduction of digital technology into the existing pay-TV and public broadcasting models. It was a time when there were a lot of questions about how this emerging technology would change the pay-TV business.

Today, the digital TV industry is experiencing another of these transitions. New technologies are forcing broadcasters to re-think their strategies for content distribution and to ask where their potential audience now wants to consume and interact with their content. These changes are accelerated by evolving social factors.

Different devices for different people

Members of the so-called “Generation M” -- people currently in their teens -- are going to have a changing relationship with free-to-air broadcasters and may take a long time to become customers of established pay-TV operators. Why?

Basically, "Generation M" has neither the strong need nor the ability to subscribe to traditional platforms that tie them to a physical location. They do not own or control the property they reside in, nor do they expect to do so, even 10 years from now.

Instead, this generation is growing up with the ability and expectation to access services wherever they are, relying on whatever is available. Traditional TV and radio will feature on the list of devices they use, but increasingly they will opt for the convenience of mobility and the appeal of a device that is personal to them. While the cell phone may be the perfect solution for some, it is likely that other devices tailored to business or media will also succeed. Manufacturers of games consoles, portable media players and flash memory storage devices all have their eyes on this market.

Generation M already shares content among themselves freely (usually illegally), because they do not strongly associate content with physical media. To members of this brave new generation, content is but part of a constantly updated ecosystem that includes music, TV, video content, email and social interaction.

The combination of these trends could result in a Doomsday scenario for traditional pay-TV broadcasting and the continuing fragmentation of a free-to-air TV audience. Both of these traditional models depend on fixed location viewing, so most content owners are already attempting to find new ways of delivering content to their future audiences. One of these is the delivery of live broadcast TV and Video-on-Demand services over the public Internet. This is an area that NDS considers to be important.

Making Internet distribution pay

The relative cost of content distribution over the Internet is currently running at about $.20 per Gigabyte (delivered globally within an hour). Although this price will probably halve in the next 12 months, advertising has become the dominant method of covering the incremental distribution cost. Only when the audience grows to tens of thousands of people does subscription become viable.

While TV advertising revenues on free-to-air channels are either flat or in decline due to fragmentation in the audience, Internet TV ad revenues are growing, largely because the audience can be targeted more directly. But video advertising in this domain is still in its infancy – click-through and banner advertising still dominate.

So how does NDS plan to enable this kind of content delivery? Our prime target is to provide an infrastructure to address broadband enabled set-top boxes and then extend this to the PC and any other Internet connected device. Via NDS xSPACE™ we will support the efficient delivery of targeted advertising, whether it comes from an operator’s existing advertising inventory or from third party suppliers. Advertising formats will not be limited to traditional video ads, but will exploit new ways of linking the advertising experience to viewing.

xSPACE™ brings the best video content seamlessly from the Internet to the TV, and it also enables platform operators to combine and mix the services they offer across a variety of devices. Sometimes the devices will be used simultaneously (e.g. the PC and TV with a dual-screen experience), but even if used separately we aim to deliver a user experience which improves convenience and access wherever they are.

New world, new content security challenges

With more and more legitimate content available to people on the move, it is easy to think that content owners don’t care about where their content is being viewed. While for broadcast use, the geographic rights are already sophisticated and complex, Internet distribution rights have been relatively unsophisticated. In many cases, this was because the content was seen as being of low value and not a significant threat to mainstream broadcast TV.

Clearly, this situation will have to change if the ability to deliver a broadcast experience over the Internet becomes commonplace. However, there’s a problem. Philosophically and technically, this type of rights management challenge is just not built into the infrastructure of the public Internet and, in fact, not in many private content distribution networks either. Peer to peer technology has engaged designers of IP routing in a cat and mouse game of deep packet inspection, but this has been less about controlling content and more about limiting and shaping bandwidth.

The content protection and access problem for video is therefore going to get more challenging, not less. And yet, some would say that it should go away entirely, by allowing the free passage of content and therefore potentially increasing the overall market.

His Master’s Voice: a trusted guide?

When Steve Jobs (CEO of Apple) made his widely quoted statements about the fact that DRM was blocking the growth of online media, he did so at a time when audio CDs had no content protection. While many people would say this statement was also made in the confident knowledge that only Apple would be able to benefit from the vertical integration of iTunes with iPods, it is also deeply connected to the way audio content rights have been granted for years.

Unlike music, video is typically at its highest value when first viewed; it doesn’t become more valuable with repetition. Therefore, owners of video content are forced to maximize the first run value, and in some cases this can be 80 percent or more of the total revenue from a particular property.

NDS sees the deep integration of content rights management with distribution networks as a key enabler for the business of TV on the Internet. In the future, it will be necessary for content owners to know where their content has travelled, and to ensure the rights they have negotiated with one platform are not eroded by the actions of another.

Putting it all together

It seems that new video services with worldwide reach are being launched every week. Many will probably not succeed, but some will, and they will start to change the expectations of the TV audience. NDS is building on its experience in service protection and set-top box middleware to enable this future. Working within the domain of the Internet presents a set of technical challenges. But these are challenges which, thanks to our expertise, NDS is well equipped to take on, to the benefit of the operators and their customers.