Communications Service Providers in EMEA See Video as Central to Next-Generation Business Models

Mercedes Pastor, President of Technicolor Connected Home EME

• To compete in the EMEA region and fulfill significantly changing consumer demands, Communications Service Providers (CSPs) are adopting service-oriented approaches with video as a key component.
• CSPs are now competing with Amazon, Netflix, and other OTT companies that are influencing the culture of the entertainment industry. Therefore, they must expand beyond their traditional service offerings to include new technologies like IoT and cloud, and also deliver personalized multi-layered services.
• CSPs are looking to Technicolor for technical and market expertise and advice as they navigate the burgeoning market for immersive experiences.

The European, Middle Eastern and African (EMEA) region is undergoing a dramatic transformation as consumers are demanding more content and higher quality experiences – on any device, from any place, at any time.

This is generating new pressures — and new opportunities — for communications services providers (CSPs) that span the EMEA region.

We caught up with Mercedes Pastor, President of Technicolor Connected Home EMEA, to learn about the ongoing evolution taking place in the region; how service providers are navigating it; and how Technicolor can work with CSPs and others to facilitate a successful transition toward next-generation services such as immersive experiences.

Q: There’s been so much change in communications and entertainment technology. How would you characterize the market for Connected Home devices in EMEA today?

Pastor:  There have been significant changes in consumer behavior. Consumers are demanding more content and higher quality experiences that can be accessed at any time, from any place, and on any device.

This is leading to a big transformation of the carrier community in the region. To differentiate their offerings, providers are evolving into more service-oriented approaches in which video is the key component.

Providers are rapidly deploying new technologies in their access networks, and are also deploying different devices to homes to provide more bandwidth. The market requires devices that will be faster, more powerful, more open, with more connectivity and a lot more capabilities in order to provide new services at home.

Apart from that, in the video space, I think the offerings in the EMEA region have evolved very quickly from a linear service (pure broadcast) to a multiple screen and more personalized model -- in which both video quality and seamless customer experience across different devices is a key differentiator.

Q: How does that translate to the way service providers may have to change their behaviors? In other words, what are the opportunities they will have to pursue, and what challenges do they have to address?

Pastor: Our service provider clients are facing many challenges, and they must turn these challenges into opportunities for the future if they want to survive and continue to be key players in this industry. In my view, we are in a transitional and evolving period in which there are very quick shifts in the requirements from audiences. Specifically, they must adapt to new technologies that are popping up: such as the cloud, the Internet of Things, and Big Data analytics.

These technology trends are colliding with a competitive landscape that is evolving very rapidly. The challenge posed by over-the-top (OTT) players – and the increasing demand of video with other technologies and channels – are forcing service providers to be more innovative and more agile.

The big opportunity for the established service provider community is in their knowledge of their audience.  They know better than anybody what their subscribers’ preferences are -- how they want to consume content, and how content is experienced at home.

CSPs can control the full end-to-end value chain, and they know how to differentiate from the competitors. However, they need to make a big transformation in the way they act and in how they design their business models. They have to compete with companies like Amazon, Netflix, and other OTT companies that are influencing the culture of the entertainment industry.

Q: You’ve mentioned video services several times. How does that translate into a new kind strategy? Does it change the way we think of average revenue per user? What are the business models you think service providers need to consider as they move into this new environment?

Pastor: I think they are changing their strategies very quickly. I think that video is a primary service that is bringing additional revenues and traffic into their networks, and they are trying to adopt the technologies available in the market (like 4K) in order to be faster and more competitive.

In the EMEA region, the very specific trend of service providers integrating OTT services like Netflix in their offerings helps them to compete. And some key service providers are also starting to offer modems that include Apple/Android TV^TM and other Google services as a complement.

The consumer viewing experience is another critical factor. That is why we have seen so many CSPs focus on next-generation technologies, specifically HDR, as a new breakthrough. This will help them bring a different experience to customers, and how this will accelerate the consumption of video.

In the longer term, we will see other types of content – such as virtual reality and augmented reality – gain consumer acceptance.  This will provide new platforms for content services and creation. The experience in the future will be more immersive.

Q: All of the dynamics you describe assume that broadband access is going to be widely available and very capable, with high capacity. How do you see the broadband access piece of this playing out; especially across the different types of service providers?

Pastor: The European Union has very ambitious objectives for 2020 in terms of speed and penetration of broadband services the region. This will drive the massive deployment of new technologies and gateways in broadband access. This includes technologies like DOCSIS 3.1; but also other access technologies in the corporate space, like dark fiber access service (DFAS), or even fiber.

So we will see that in the next three years there will be a big transformation of the networks.  This will have major implications for the kinds of devices that will have to be in the home.  Gateways, set-top-boxes, and other customer premises equipment (CPE) will have to provide more capabilities in terms of processing and memory and capability to be faster in the home.

Also, service providers are moving toward open networking as they see more demand for new applications. In order to integrate these new applications, the capability to deliver application program interfaces (APIs) and other technologies will be key.

In general, delivering more bandwidth will improve the customer experience. But that just gets content to the home.  Once in the home, Wi-Fi is a technology that will have to be integrated with network devices and the personal devices of consumers.

We believe Wi-Fi will have to evolve in order to address the more complex environments that will exist in homes over the next few years.

These are the things that show promise in the broadband space where opportunities are still growing.  That said, we still have a long way to go to achieve the objectives that the European Union is trying to reach.

Q: What is Technicolor doing – how it is working with partners to help support this evolution and meet the EU objectives – and in general, deliver the kind of immersive experiences that consumers are starting to demand?

Pastor: That is a very interesting question, but I have to say, at least in the EMEA region, we are still in a very early stage as far as immersive experiences.

We have seen that 4K has become a reality in the market now.  We fully expect HDR will be the next big breakthrough in customer experience. We have been discussing this with the largest service providers in the region, and they are all interested in knowing our views about immersive experiences.

The industry is working out how this is going to be integrated into CSP strategies and business models. However, I believe Technicolor has a great opportunity in this area because HDR really does transform the video experience.

Our clients are increasingly leaning on our expertise across the full value chain – from content creation to content delivery.  This allows Technicolor to be a trusted advisor to the industry. I think this is the right time for us to facilitate and help our service providers through the journey that is required to reach the delivery of immersive experiences.

This will not be something to be done by Technicolor alone, because for video we know the complexity of the ecosystem and the amount of time needed to deliver a good experience at home. We are working with the right partners to build an ecosystem that allows us, and the whole ecosystem, to be as successful as possible. It will be a discovery path for us and for the service providers, but it will be a very exciting journey.