theibcdaily
Executive Summary 13 Embracing change The innovator's dilemma
Pete Thompson SVP Mediaroom Business Group, Ericsson
Region: Worldwide Interviewed by: Kate Bulkley
“If the
incumbents can figure out how to move at web speed then they can continue to hold the lion’s share of the market”
The video industry is going through what Pete Thompson calls a classic innovator’s dilemma: how to adopt new technology and business models to keep pace with the rapid changes in video delivery and consumption while also continuing to support and grow the traditional business. “It’s about remaining relevant in the marketplace,” says Thompson, especially as companies like Netflix are reshaping consumers’ expectations. “The question is how to continue to grow existing investments at upwards of 20% a year but at the same time position to be ready for the new kinds of competition.” Thompson lives in Silicon Valley where innovation is key
4K is already a rich asset
Clyde Smith, the SVP of New Technology for Fox, has just finished a complete overhaul of his facility in order to handle playout to multiple second screen devices. He desperately wants established IP standards, but 4K doesn’t worry him too much. “We are already big users of 4K in our football, baseball and Nascar coverage, and have been using the technology for three years very specifically,” he says. “In football, for example, we shoot the sightlines in the end zones, and it gives us insurance when there’s a question whether the player was in or out of bounds. We can go into that footage and extract good HD out of it and in some cases show fans the little puffs of white dust where the foot touched the line. You'd never see it in ordinary HD.” There are additional benefits
from 4K, Smith finds. “We've already captured a ton of wonderful stuff in 4K. It gives us footage that we can study and work on in the lab, and also in very many cases put into the archive. We have some
memorable key plays, including those which have led to final minute decisions and which will be talked about for years to come. It is already a very rich asset.”
Smith says Fox is comfortable that it could shoot a show end- to-end without too many issues. But ‘live’ sport is still a challenge. “There are gaps in the capabilities of the equipment. We are still faced with too shallow a depth of field, and we have sensitivity issues especially in night events. We are doing a lot of lab work to better understand how we can resolve these issues.”
In part this is why Fox has no timeline to introduce 4K, claims Smith. “I suspect when we do start 4K we will all again be surprised at how long, and close, people will look at the screen. When we started in HD people were almost glued to their sets. And they watched the HD commercials! But in those days the audience measurement systems were not that sophisticated. Now they are. Then, we couldn't monetise the improvement in viewing quality.
Now we could, and the industry needs to move to a census-type ratings system so that we can monetise 4K. “We are in a whole new experience,” says Smith. “For most people the first time they ever saw HDTV was via a broadcast signal. Now, 4K is being watched today on Netflix and other streamed services. Online is first, then cable and satellite will follow, and poor old broadcast will be last. And in the US, because of the broadcast regulations, it might be way off.” The ATSC is drafting
its ATSC v3 specification for the end of 2015, which will then take six months for ratification. “Then the FCC has to act on that, and they’re not the speediest of organisations. So, we are a way away from any early adoption by [US over-the- air] broadcast,” he says.
and consumer relevance is what it’s all about. With a background in music and games, the 45- year-old joined Ericsson as part of its acquisition of Microsoft’s Mediaroom Business in September 2013. He and some 500 Mediaroom software engineers were added to Ericsson’s TV portfolio. But the Mediaroom team
wasn’t shoe horned into an existing Ericsson business; instead Thompson added some 700 Ericsson employees to the new business he now runs, including employees in Sweden, Canada, Atlanta. GA and China. “The engineers from the
Mediaroom side work on the application layer of software where the competing companies are Facebook and Google. This
“The
industry needs to move to a census-type ratings system so that we can monetise 4K”
brings a lot of new culture into Ericsson like how to set up software development and get high-value margin out of it.” For Thompson, the answer to keeping ahead of the video innovation curve is to create a “smooth migration path” to a more modern technology platform while keep the existing business model chugging along. He believes that the biggest risk to broadcasters is posed by the digital giants like Google, Apple and Facebook because they are cash-rich and can invest heavily to re-invent the entire TV stack. “Rarely are the incumbents the ones that can innovate and rarely do they continue to own the biggest market share,” warns Thompson. “That said, there is a strong value proposition to the aggregation and the bundling of video services and the ability to have high quality and live TV. You also cannot assume that the quality will stay constant, so with 4K and other things coming there could be an on-going road map where TV quality is difficult to match.”
Clyde Smith SVP New Technology, Fox TV
Region: United States Interviewed by: Chris Forrester
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