It’s no secret that TV viewing habits are changing. Multiscreen on-demand TV is on the rise as more consumers choose to watch TV on their own schedule. Today, almost every pay-TV company offers digital video recorder (DVR) services with a hard drive that can record shows for playback anytime. In 2016, six in ten households owned a DVR, with consumers under 40 watching over 75 per cent of their content outside the scheduled airtime.
But while TV consumption habits are rapidly changing, DVR equipment has remained largely unchanged – and this comes with certain drawbacks. The traditional set-top box (STB) only enables users to watch their shows in rooms with a DVR; limits simultaneous recording; and offers limited storage capacity. For example, viewers who have used up all the storage on their DVR box are forced to delete programmes before they have even watched them. Moreover, the box’s settings are set by the service provider at the time of deployment and can only be updated with a scheduled service appointment.
Now that TV is increasingly taking the form of video delivered on-demand over IP networks, service providers have to rethink what should be stored locally and what should be moved to the cloud. By moving storage onto the network, providers can offer viewers the choice to record and store more content – and sell additional recording capacity – while freeing the STB from the complex job of handling real-time file management.
There are other benefits too. With cloud DVR, subscribers can download recorded programmes to their smartphones and watch them on-the-go. Cloud DVR also offers additional services, such as catch-up, never-delete, and look-back TV. Now that subscribers expect more choice and flexibility, providers need to put themselves in a position where they can offer these services as standard. After all, happier customers mean greater loyalty and lower turnover.
The Legal Dimension
The deployment of cloud DVR is regulated in most markets. One of the challenging requirements is the “unique copy” approach. In many regions, a “unique copy” of a programme is required for every subscriber. This means that when users record a programme, service providers need to keep a dedicated copy of that file. The increased storage and infrastructure requirements can be daunting. Yet, this can be overcome thanks to cloud technology. The core infrastructure required to deliver cloud DVR can be brought into large data centres that take advantage of significant economies of scale. This has two primary benefits: first, it increases the speed and flexibility of rollouts; and second, it means processing and storage is less expensive. And as a bonus, the cloud enables storage to be dynamically allocated. This means providers can buy storage more efficiently and take advantage of the fact that subscribers tend to use only a percentage of their virtual space. In a “single copy” context, cloud DVR offers significant storage costs benefits. So whatever the legal context, cloud DVR offers a flexible approach that can also adapt to changing laws, technological configurations and new business models.
While cloud DVR can reduce STB costs, adapting backend infrastructure to the cloud model can be complex. Providers have to scale their recording, storage and streaming capabilities in line with subscriber numbers. The recoding interface and schedulers need to be moved onto the network and aligned to the content management system, subscriber management systems and electronic programming guide (EPG). This comes at a price. And finally, the CDN infrastructure also has to support peak viewing times. During such periods, higher video volumes equate to greater delivery costs. But providers can leverage cloud DVR to their advantage by offering on-demand addressable advertising during playback time to cover the higher costs.
The bottom line is the consumer appetite for on-demand video is growing all the time, driven by the use of new connected devices such as smartphones and tablets is, and service providers need to ensure they are ready to meet this new demand with an infrastructure designed to scale. Because in a future where more choice means more flexibility to consume content, cloud DVR promises to give viewers a better, more personalized TV experience, resulting in better perceived value and customer loyalty over time.