Table of Contents
Hardware Security and Android Disrupt Competitive Landscape; Monetization Remains Elusive
•The digital rights management (DRM) market has seen considerable upheaval over the last few years: connected devices are replacing computers as the mainstream destination for Internet video; over-the-top (OTT) services are making rapid inroads into pay-TV viewing time; and the monetization of content is evolving from a well-understood business model to exciting but uncharted territory.
•Traditionally, content formats and content protection were closely tied to the consumption platform: Microsoft had Windows Media Video and Windows Media DRM, Apple had QuickTime and FairPlay, Adobe had Flash and later Access. To reduce costs, promote interoperability, and maximize device performance, the industry successfully standardized at least the core components, such as AES-128 encryption and AVC video compression; although fragmentation still exists.
•Despite some standardization, the DRM value chain remains complex—platform companies provide the core logic and ongoing maintenance, chipset vendors may offer built-in support, application developers provide secure porting services and secure rendering applications, server-side vendors provide licensing and management services, and consumer electronics (CE) vendors make the actual devices. Building on these components, service providers attempt to monetize content after having licensed it from content owners.
•As resolutions rise toward 4K and beyond, and more early window content is delivered OTT, robustness requirements on DRM clients are rising, for example, in terms of secure video paths and in-home networking restrictions.
•The rise of Google’s Android, coupled with its acquisition of Widevine, is one of many disruptive factors in the DRM landscape. The drive to provide standardized hardware security and DRM client interfaces is another; the growing trend of bringing the managed content experience to unmanaged devices is a third.
•Motivation for DRM vendors remains diverse—Adobe and Verimatrix seek to directly monetize their DRM offerings; Microsoft seeks to build value for Windows and the Xbox ecosystem while maintaining media solutions leadership for the entire video devices industry; Google seeks to maximize reach of premium video to the Android ecosystem and power content transactions in the Google Play store; and Apple maintains its philosophy of a vertically siloed, walled-garden implementation for the iDevices ecosystem and the iTunes store.
•Caught in the midst of this disruption, consumer electronics vendors need to determine which DRM systems to natively support, knowing that margins are already slim and every penny counts; service providers need to determine which DRM systems to leverage (and port to specific platforms as necessary), knowing that monetization is as yet uncertain; and online video platforms (OVPs) need to recommend DRM systems and build out support and applications as necessary, knowing that the entire technology landscape may change yet again on a dime.
•This insight provides a detailed look at disruptive trends in the DRM industry today and the expected impact on the DRM competitive landscape over the next x years.
•The Internet changed how video is consumed, and then devices changed it all over again. Yet, some aspects remain constant—content must be guarded from uncontrolled sharing, and it must be monetized.
•This study discusses ongoing technical trends that are disrupting the video ecosystem and hence the content protection market. To set the discussion context, the next 3 slides provide estimates and forecasts of growth in various classes of consumer devices.
oThese slides are sourced from Frost & Sullivan’s research study NC68, Analysis of the Global Consumer Video Devices Market. Please note, numbers do not include unit sales for computers and laptops.
oOver a billion video-capable connected devices shipped in 2012, and the number will nearly triple by 2017. Smartphones account for well over half of these devices, with Apple and Samsung duking it out for market share leader and Android emerging as a significant competitive force.
•More important, the installed base of connected devices, which is the total number of devices in service worldwide, is continuously growing, and in a highly fragmented fashion. While new sales reflect an opportunity for companies seeking to build DRM systems into clients, the market for new applications (apps) or for browser-based services is the entire installed base within targeted region(s).
oSlide 12 sourced from research provided by Frost & Sullivan’s Mobile and Wireless Communications group, provides specific current market shares for new and installed devices by operating system. Android and iOS clearly rule the roost, while Windows is expected to carve out a growing niche over time.
Market Trend—OTT Video is Everywhere, Even on TV
•Not long ago, the desktop was the primary destination for OTT video, with Windows accounting for nearly the entire installed base and Flash securing over x% of the video. Following its dramatic introduction of the iPhone, Apple took a rapidly growing position in the ecosystem, further cemented with the iPad, which is now among the topx must-support profiles for online video services.
•With the subsequent rise of Android-based devices, the field today is mostly balanced between Android and iOS. Other commercially significant targets for OTT services include gaming consoles, particularly the Xbox; smart TVs, particularly from Samsung; and a host of other devices, including IP streaming boxes and connected Blu-ray players.
•Fragmentation between streaming formats, operating systems, chipset platforms, and application technologies is an inevitable side effect of this rapid but quite chaotic growth. This chaos is expensive to cope with and limits profitability and revenue growth.
oThus, initiatives ranging from Ultraviolet to the SmartTV Alliance, standards such as HbbTV and TNT, and open interfaces such as CDMi, which was developed by Microsoft, are seeing increasing investment and industry support.
•Drive for industry consolidation is happening at many levels. Later in this chapter, the discussion covers factors such as built-in hardware support and standardized API* initiatives such as GlobalPlatform as well as device-agnostic display technologies such as HTML5.
•This standardization is important because custom porting costs for an application can easily run over $x per platform. While large services such as Netflix and YouTube have invested in making their applications more or less ubiquitous, smaller service providers cannot afford this level of investment in a financially unproven distribution medium.
•Making the smart TV an independent platform for OTT content rendition has proven difficult. One challenge is that smart TV interfaces have not evolved to provide the ease of touch-screen technology found on phones and tablets.
oMoreover, although consumers accept buffering experiences for content on their connected devices, they expect flawless viewing on the TV screen, even from the same OTT content. Nonetheless, technologies ranging from HTML5 to content mirroring (such as AirPlay) and growth in devices such as Chromecast are poised to return the television to first-class status in the OTT ecosystem.
Market Trend—A DASHing Tale of Streaming Formats
•Three streaming formats dominate OTT applications today: Apple-defined HLS, Microsoft-defined SmoothStreaming, and Adobe-defined RTMP. Notably, each company also has its own DRM system—FairPlay, PlayReady, and Access (now giving way to Primetime), respectively.
•DASH is a newly developed standard for adaptive bitrate streaming that covers a range of broadcast and OTT transmission scenarios. While the technology is yet nascent, it is well received by an industry seeking to minimize the pain and complexity of delivering a high-quality video experience across all target devices.
•Google occupies a unique place in this ecosystem. Widevine traditionally used a proprietary file and stream format but has gained widespread adoption in use cases for HLS transmission.
oMoving forward, Google is placing its bets on DASH, as is Microsoft, and both companies are aggressively encouraging the industry to move towards this standard. Server companies such as Wowza are also squarely in the camp of DASH supporters, and most media packaging and transcoding products support DASH as well.
•Apple’s plans with DASH are less certain. Although it participates in the DASH consortium, it continues to develop and enhance its own HLS technology as a core component of video quality of experience (QoE) on its devices. Thus, DRM vendors, OVPs, and app developers will need to, at a minimum, look at supporting HLS and DASH for the next few years, with continued support for SmoothStreaming, RTMP, and even RTSP.
Market Trend—Applications vs. Browsers for Content Delivery
•In contrast to desktop platforms where protected content was most often delivered via the Internet to a browser-based environment, custom-built apps are the de facto method of delivery to devices. Often, service providers have no choice but to craft these apps for every device and platform they seek to target because uniformly reliable playback environments are not generally available and content owners require specific levels of guaranteed protection as a precondition for licensing content.
oAt an average cost of $x per platform, and with over 400 individual platforms on the market today (the number grows in multiples every year), the situation is unfeasibly expensive for most service providers. It also limits the ability for services to scale over time.
•Browsers are the ideal delivery vehicle from a service provider perspective, with HTML5 in particular offering an attractive solution to build cross-platform applications. The problem is that, to date, a standardized mechanism for content protection in this framework is missing.
oChange for the better is underway, however, as industry consortia and vendors alike recognize the challenge and strive to create common building blocks and frameworks to address the gaps.
•For example, Google’s renewed investment in consistent APIs for Widevine DRM and generic DRM support within Android API mitigate to some extent the prevalent fragmentation within Android. As another example, the newly released open-source CDMi specification from Microsoft that is being adopted by the Smart TV alliance and other industry consortia offers a standardized API to deliver protected content using HTML 5 to set-top boxes and CE devices through the browser in a manner that can be DRM-agnostic.
oPartners such as Fraunhofer Fokus are already demonstrating CDMi-powered secure media rendering using a set-top box with the open source Web browser Chromium.
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