Faultline: French ambition, Israeli intensity – Tying the multiscreen knot Jun 14, 2012 – Rethink Research
This week we were guests in Paris to witness the transition of Viaccess and its IPTV middleware subsidiary Orca into what it hopes is a single viable player in the multi-screen TV space. The two have merged fully, now that parent Orange (France Telecom) has given them its blessing, by rolling out Orca middleware throughout its French IPTV footprint. Previously it had wanted to the two separate because Viaccess was considered a central underpinning technology, and it felt it was strategically important and that it must own such a facility. Now we expect it feels the same way about Orca and well – and so sanctioned the full marriage.
If NDS can shift itself out of its traditional conditional access role and masquerade as a “king of all media” wrapping in a middleware strategy, a new UI and multiscreen know-how, to stimulate a $5 billion Cisco merger, then why can’t all the other successful conditional access businesses around the world try the same thing? In Viaccess-Orca (can we be the first to call it VO?) this may be a transition that makes the company, accompanied as it was with another tier 1 telco win in Europe to be announced next week and a move into the US and Latin America markets on the back of promising discussions which center around its innovative Compass recommendation and content discovery cloud product.
Companies like Conax has recently been trying to re-invent itself by partnering with other smaller multiscreen software players, which we have reported on in the past and which it has extended in announcements this week at Anga Cable, but to us these seem defensive, designed to prevent the loss of its service base to rivals by adding these features, rather than preparing a fresh assault on new markets.
There have been many multiscreen and OTT moves at other conditional access suppliers, some of which are quite well established now. Verimatrix was one of the first players to offer DRM on PCs and platforms outside the set top and to also embrace Microsoft’s PlayReady, which is an inevitable force in DRM due to its PC and tablet presence. Irdeto has aimed itself at underpinning media security on general purpose devices like tablets and PCs with its ActiveCloak for Media product, while Nagra bought the granddaddy of interactive set top middleware in OpenTV, but has only just begun to open it out in OpenTV 4.0 into something you might call a strategy.
On the wall of the VO offices there are a series of award-winning adverts, depicting scenes – a child left in a buggy as a parent forgets and wanders off, a man sitting with his back to a caged tiger, which is far too close for comfort – with the caption “How quickly Trust becomes a habit” designed to bring security to the forefront of the mind, and not leave it in the subconscious.
Perhaps the expression was lost on the select group of people who we delivering pondering the VO announcement – how come it took four years since the merger to achieve the same kind of trust between two apparently incompatible cultures.
The individual themselves talk about marriages being better after you have lived together for a while, but the calm and considered François Moreau de Saint Martin, who is CEO of the combined group, could not be further from the excitable enthusiasm of Haggai Barel, the Israeli ex-Navy Seal deputy CEO, who hates NDS with a burning passion, and has no hesitation in wearing his heart on his sleeve and telling you exactly why. “When I was negotiating with NDS I had a senior executive look straight into my eyes and re-assure me ‘We will never develop a middleware product I promise’ but now they have Mediahighway and it’s the center of their strategy” and he can’t prevent himself from going to the NDS website and showing you how even the promotional campaigns at NDS appear to be copies of campaigns Barel has himself run in the past. Of course in the end NDS never did develop a piece of middleware, but acquired it, so the executive was strictly telling the truth, but we can see that Barel’s Orca might have been in a far stronger position had it partnered with NDS instead of being bought by Viaccess.
The two individuals look incongruous, but the measured intelligence and , strategic view and culture of Moreau is what accounts for the clear communication and acceptance among the Orange main board, while Barel’s insouciance, impatience and downright nerve are the right combination of aggression with which to take on giants like Cisco and NDS.
The two tell stories of how during the initial acquisition in 2007, they attended a workshop about what the average Israeli felt about the French and vice, versa, “It’s a surprise that we went through with the merger after that,” Barel said.
And since that deal most rivals have talked about Orca in the past tense. NDS has openly referred the handful of middleware rivals it has out there and laughed when we mentioned Orca, and to be fair until it won the France Telecom full IPTV implementation, it was easy to believe that Orca was history.
Barel was one of the first executives that we got to know in IPTV – in 2003, and the highs – when he cut a distribution deal with then then powerful Nortel and sold his software to Telefonica Brazil, and the lows, when that Brazilian deal was reversed and went to Imagenio, and when Mediaroom swept all before it in 2004 to 2007, serve to illustrate all the major trends which have shaped the IPTV industry.
But even Barel admits that the past, very quiet, 4 years are what has made the product what it is today. The old Compass L shaped UI has gone, not entirely because it is still available, but France Telecom preferred its own. The Orca tools are what deliver the UI, but it was France Telecom engineers and customers which decided on the look and feel and it does look impressive, intuitive and subtle.
It is hard these days to distinguish between all the offerings out there, and many look good and many have slick UIs. Snowflake at NDs has a slick UI, but it doesn’t look much different from the UI introduced by Alticast at Cable Congress, which doesn’t look much different to the original TiVo UI. Think of the Sony Cross Media Bar on a phone, and give it to a school art class and say “make it do the same, but in a different shape,” and ensure that dimensions like time backwards and forwards are catered for, and that all items can be included in searches, and you would get more or less all the conceptual ideas behind the designs we see in the market.
They are not essentially difficult and that’s why they work as UIs, to demonstrate what a customer might want to do – whether that is to search movies by director, or to browse all sports – it is essentially the all so important race to replace the EPG.
We began pay TV with zapping, simply moving to the next channel, we have then gone to the EPG, a method of looking up and down what’s on now and what’s going to be on, across a huge channel listing, and now we are going through a series of steps – all of them designed to short cut this process and also make the process of content selection “enjoyable,” rather than burdensome.
The Orca system does this as well as any and better than most, and of course, in order to achieve this simplicity on the surface – which includes video mosaics of all your favorite channels , recommendations that start in the “info” box of the program you are currently watching and which flower slowly across the entire UI experience – it relies on inordinately complex software function beneath the surface, with each layer subtly calculated to draw you in and educate you to what is possible.
One feature that Orca offers is the ability to offer multiple operators hosted search, and in the process to search multiple internet held sources of comment and debate about TV programming, in multiple languages (things like iMDB) and to create statistical relationships between words used to describe the program, and to be able to look for programs which were described with similar words.
“Recommendations have to begin even before you have any idea of what people have watched in the past,” points out Barel. So the Orca Compass software starts with what it DOES know about you, even if it is just the program you are watching right now. It integrates with Facebook, if you let it, and that means it can source recommendations from your friends; it remembers everything you rate, and everything you watch all the way through; and attaches a weighting to each attribute. It uses conventional measures, comparisons with what you have watched and what does everyone else in the town, neighborhood or country also enjoy, but over time the system matures into your personal portal on TV. Programs you don’t watch all the way through get a de-merit, programs you ask to be blocked from your recommendations - evaporate and rapidly the service gets better tuned to your viewing.
It even lets you select your mood and how long you have available to watch TV right now, these come in drop down menus (if the operator wants) to help it select the right content for right now.
“When you turn on your TV it should know what your tastes are, and of course it should let you go back to an EPG view if you want, but it should offer a portal of everything that you usually like, taking into account the time of day, the day of the week, what mood you are in and what your friends are watching,” said Barel.
While we have the highest regard for TV Genius and TiVo search and a handful of other search and recommendation systems, we don’t think we have come across one as well tuned as this one. When Faultline first saw it, it had telltales clues that it came from a smaller supplier, but now that it has gone through the four year apprenticeship with Orange TV, the service is slicker, more reliable, easier to demonstrate and naturally intuitive.
And that’s the problem that suppliers like NDS face. TiVo too has this deep understanding of what works and what doesn’t and it has brought this to bear in what so far have been a handful of cable systems around Europe and those in America. NDS and UPC are still clearly trying to define exactly how this works and while an announcement at Anga cable said that the new German cable subsidiaries of Liberty Global would clearly get the Horizon box by first half of 2013, this looks like yet a further delay announcement, and it will likely not be actually making the code work which has slowed this process down, but making it work this naturally.
All of which brings us to how VO thinks that it can make in-roads into both the North American market and also the Latin American market, with a two-fold attack – taking the Compass recommendation engine to traditional cable in the US, as a Trojan horse for the middleware, UI and EPG engines and finally the CA, or using any CA customers it has there already (very few) and using them as a way to slip in the middleware and recommendations.
It should get its best success where Mediaroom has let everyone down. It already has a lab implementation of Compass working with Mediaroom, “And Microsoft doesn’t even need to know about it,” boasts Barel, since it sits on a remote server or even a cloud hosted server, and just needs an API to Mediaroom to tell it what to load. This is the specific weakness of Mediaroom – not understanding that UIs need to change and that recommendation, search and social media are the way ahead. But the VO system does not have to be limited to IPTV. The TP deal involved a satellite version, as did the Orange system, and cable is the next stop.
The company when talking about its organization structure speak about being a “product” company with a solutions strategy – and this is something of a compliment to NDS, because the precise structure is not dissimilar. Products can be sold, but if a customer has an additional requirement, either in the service implementation, which will be taken care of by an implementer, or in some precise product variations, which will mean changing core code – the company will embrace it.
The company will have an innovation team, which will throw up technologies that might be used, while the R&D team is actually a product development team “with very little R,” Barel says. The company will go after any video opportunity but is focused on TV Everywhere solutions for Pay TV operators and wants only large installations.
So suddenly VO has two tier 1 players in Europe and it claims to have advanced negotiations around Compass in the US, but if you look across the remainder of Europe, purely among the IPTV customers, there is Deutsche Telekom as the jewel which is destined from someone’s crown. Mediaroom will not offer it a route to this type of social/search/recommendation TV or OTT so it has to get that from elsewhere. Its options are to go along with NDS, which we don’t expect, because that will lead it to the same place as Unity Media and Kabel BW, two subsidiaries of Liberty Global, which will take on the NDS inspired Horizon strategy; it could go to TiVo, but that has never dealt with an IPTV company before (although it does not have to replace Mediaroom, but could work side by side with it in OTT, but it would need a multicast set top). It could build something itself, ask Nokia Siemens Networks to come up with something multi-screen – but that company has no further interest in anything which is not cellular.
Other options are to continue to surround itself with a non-TV PC-only web browser OTT service, which it already has, and which will not protect it when Liberty Global gets its horizon act together. It might simply add OTT as a separate function for tablets, but not TVs perhaps using software from Ericsson, Netgem or Beenius, or it could replace Mediaroom, which will be expensive. But VO has to have a shot at, what in 2004 was, the defining contract which established the next decade of IPTV flavor for Europe and which will again in the OTT world.
Swisscom is another that needs to change, and KPN, Belgacom and Portugal Telecom. It’s not that these systems do not work, but that they do not fit neatly into the smart TV, tablet multiscreen world that is coming.
Cisco clearly believes it can soak these all up as long as it partners with NDS. We would question that. There is more than one way to skin a cat, and we suspect that opting for a global superpower, as many of these did before in Mediaroom, has not worked out too well. It might win some of these, but not all.
And after Mediaroom, VO’s RightTV now has 5 million subs in France and another 650,000 in Poland, and other smaller ventures elsewhere, probably bring it closer to 7 million set tops under its control. And it is even being worked on to go to an HbbTV natively, using a new VO app, which would go down well in Germany, so no set top needed.
And if the NDS merger does not complete soon, what with TiVo legal actions against Cisco, and indirectly against NDS, and with the continuing delay of the Horizon system, if you add to that the freshly aggressive European middleware firms – VO, Netgem, Beenius, US players TiVo and Rovi, and another interested giant in Ericsson and the fact that the NDS merger was massively overpriced, it is not beyond the imagination that seeing more and more rivals growing from a strengthening base of conditional access into more than just nuisance competitors, that Cisco may think twice and call off its own marriage.
Of course that would only happen if someone other than NDS lands those OTT deals at Deutsche, Swisscom, KPN, Portugal Telecom and Belgacom and although it might have been the infectious elation that hangs in the air around France right now, in the wake of its historical ejection of Sarkozy and election of Hollande, it does feel as if some of these deals may well happen for the new VO.
Faultline: French ambition, Israeli intensity – Tying the multiscreen knot
