“Alexa, Record Next Week’s Show and Order That Actor's Shirt”

The video market is in an interesting place. Earlier in the year, ABI Research discussed reframing the pay TV concept to better incorporate some of the trends in today’s environment, but increasingly, thoughts and discussions within the video market are moving toward addressing how the video market will change in the coming years. Incumbents, for example, are exploring ways to adapt or alter course, and while this has resulted in revenue declines and divestures/spin-offs (e.g., Cisco and Ericsson of their media/entertainment groups), these are not surprising near-term outcomes as synergies change and dynamics of the market shift. Some of the key targets identified include Artificial Intelligence (AI)/Machine Learning (ML) and dynamic advertising. Before discussing how these technologies will impact the video market, it is worth identifying some intriguing developments and statements both within and tangential to the video space.

The Spread of Virtual Assistants

As the number of smart homes expands and these homes become “smarter,” we are increasingly seeing crossover into both the video and entertainment markets (for more in-depth analysis of the smart home market, please refer to ABI Research’s dedicated Smart Home coverage). Google Assistant is available on Android TV and the latter is expected to continue shipping in increasing numbers from operators (see ABI Research’s Service Provider OTT Services and Set-Top Boxes Update (PT-2160)), which complements the increasing use of voice as an alternate User Interface (UI) to traditional remote controls. Amazon’s Alexa is reaching further and landing on third-party devices; Microsoft announced the availability of Alexa on its Xbox platform (even though Cortana is still available); more recently, NVIDIA added Alexa support to its NVIDIA Shield TV (which also supports Google Assistant); and Qualcomm is partnering with Amazon to bring Alexa to wireless headphones (paired with smartphones with the Alexa app). Smart displays are also garnering quite a bit of attention and this leads to a second topic.

Cameras in the Home

The notion of using cameras within the home to identify users and to collect information (e.g., profile sign-in) is not a new concept within the video space (operators like Comcast have experimented with the idea and companies like Microsoft have implemented it with Kinect), but to date, it has not gained traction. Privacy was a concern, but the technology and the associated value/applications did not come together to present a particularly strong business case, so it faded away. Now with cameras making a comeback in the home, this could create an opportunity to resurrect the previous ideas and begin experimenting anew, and more importantly, come together with AI to begin uncovering what a potential future might look like for video.

A Vision of the Future?

Gong Yu, founder and CEO of iQIYI in China, espoused the virtues of AI in the video space at a keynote at MIPCOM in Cannes, suggesting it could have a seismic impact on the market:

Using machine learning to provide personalized services will be a key trend going forward and will reshape the entertainment industry over the next ten to twenty years, much more so than the Internet did over the past three decades…AI technology can be applied to many aspects of the online video industry, including content production, content distribution, viewing, monetization and customer service.

AI/ML is already finding early traction in the video space, particularly as a means to create efficiencies in content production and workflows (e.g., metadata creation, special effects, optimizing content distribution pathways/decisions, etc.). AI will also play a critical role in the development and rollout of dynamic/advanced advertising. When you factor in the other components like virtual assistants and cameras, it engenders a wealth of new information that (if implemented) will greatly enhance the value proposition of the content and related advertising. The combination of a user’s searches, product purchases, and content choices would afford both service operators and potential advertisers unprecedented access to information about the users, which will enable them to serve targeted advertisements that, to date, have not been as tailored to each individual user’s needs and wants. The way consumers interact with content could also change, greatly altering the way we think of metrics like click-through rates; for example, embedded tags or metadata from a scene in a movie or Television (TV) show could include apparel worn by actors (or furniture within a scene), allowing the viewer to ask their virtual assistant about these items and then make a purchase decision. While this is currently an unrealized vision of the future (even though these use cases were raised years ago), there are examples in today’s market, albeit in more curated experiences (e.g., looking through virtual catalogs and selecting items in an arranged display and obtaining additional information/pricing). Expanding the role and value of advertising will bring additional advertisers onboard and will help monetize those services that rely on ad revenue and in regions where payment systems are not as universally available/accessible.

As much as companies and platforms may wish to erect and maintain walls around their ecosystems, many aspects of technologies are moving away from these types of restrictions. The game console market, for example, is progressing toward a day when the hardware (which has already moved toward homogeneity) will cease to matter, as the platforms move to the cloud and are made available to myriad devices. Google and Apple may reach a wide breadth of device types, but eventually a degree of interoperability or support across platforms will serve as the optimal solution. The connectivity no longer just means devices can connect to the Internet or a network. As services and applications become more interconnected, our devices and platforms will have to function together, and barriers or silos run counter to this edict and, consequently, retard progress.

A future, where video services are curated to each user and content bleeds into other areas like e-commerce, will require significant coordination and management of available resources. This remains a role that pay TV operators and Internet Service Providers (ISPs) could fulfill. At a minimum, these operators can serve as a home’s central hub (e.g., via the gateway), but more significantly, these operators could bring together a user’s various sources of content (need to openly support and integrate Over-the-Top (OTT) content/services in search and recommendations) and integrate/partner with various ecosystems (e.g., those with virtual assistants) to bring together some of these future-looking features. It will no longer suffice to just provide a weather forecast and today’s headlines in standby mode, but rather to transition from a travel show to helping the viewer plan and prepare for a trip to an exotic location. Privacy and data sharing remain key areas that require further consideration, but this is not an all or nothing proposition, and most users will see these changes taking place at a deliberate and gradual pace. Video will still be video, but eventually, it might not be the same for everyone. It will take time, likely well beyond ABI Research’s 5-year forecast window (as Gong Yu suggested), but despite this long-term horizon, it is still worth contemplating such a future in order to start laying the right foundation today.