The world's most influential media, entertainment & technology show
RAI Amsterdam | 13 – 17 SEPTEMBER 2019
Over the five days of the conference over 1,400 delegates and guests from across the globe will hear from our outstanding line-up of 400+ speakers, enjoy fantastic networking opportunities and be inspired to embrace the changes in our industry.
Combining a world-class exhibition with free-to-attend feature areas and events, the IBC Exhibition provides the perfect platform for you to network and build relationships with suppliers and customers, discover the latest trends and technologies and drive your innovations and strategy.
5 Days
1,700+ Delegates
400+ Speakers
100+ Sessions
Italian regulators have given conditional approval to Sky Italia’s bid to buy the R2 unit of Mediaset, with restrictions placed on the distribution of exclusive content.
Agcom – Italy’s anti-trust regulator – will impose a three-year ban on Sky preventing it from distributing exclusive content on its online video-streaming service in order to push through the deal.
The competition watchdog expressed concerns over the “irreversible” anti-competitive impact the deal would have if it had approved it without conditions.
Sky agreed a deal last year to buy Mediaset’s digital terrestrial pay-TV assets as part of a wider content agreement between the two broadcasters. However, the two agreed last month to partially cancel the sale amid regulatory concerns.
Agcom said on Wednesday that it would rubber-stamp the deal but partially cancelling the R2 transaction was insufficient to level the playing field.
Sky has already said it will appeal the decision, claiming the ban on online exclusives is “completely unjustified and disconnected to the issue of the terrestrial technical platform raised by the authority itself.”
Mediaset has already unveiled plans to shut down its premium pay-TV service after losing around 80% of subscribers after it dropped several football rights packages, including the UEFA Champions League and Serie A, from its offering.
Amid global protests over climate change, a recent report revealed that watching one feature-length film online via streaming sites such as Netflix requires the same amount of energy as boiling a kettle for 60 cups of tea.
Content creators and broadcasters alike should take note of the recent research from Lancaster University that focuses on energy implications of increasing internet-based traffic. The paper, Digitalisation, energy and data demand: The impact of Internet traffic on overall and peak electricity consumption, by Janine Morley, Kelly Widdicks, and Mike Hazas, is published by the journal Energy Research and Social Science and is available here. It seeks to highlight how changing practices, such as increased mobile media viewing and streaming, and the rising levels of data traffic required to deliver digital services, have a significant impact on energy consumption.
The researchers focus in part on what the report calls the ‘normally invisible energy demand’ of watching TV and films via the internet, how moves towards UHD streamed media are adding to that demand. The report also cites the fact that activities like checking social media have become more data intensive as videos, including adverts, are increasingly embedded in feeds.
“The ability to stream UHD content, or multiple TV programmes and films simultaneously is being written into minimal requirements that all households in the UK will have a right to expect and request,” says Hazas. “By encouraging extra data traffic, such policies have implications for electricity demand and carbon emissions. But they make little, if any, consideration of this. In other words, they could be seen as ‘invisible energy’ policies.”
The paper reports that although smart innovations to reduce energy usage are being implemented, they too are dependent on increased internet traffic, which further boosts the demand in data. It argues that a better understanding of how everyday practices are shifting, in concert with the provision and design of online services, could provide a basis for the policies and initiatives needed to mitigate the most problematic projections of internet energy use.
Viewing habits
The report states that in 2011 UK households consumed an average of 17 GB of broadband data each month. By 2016 this had risen to 132 GB. The volume of global data traffic is expected to nearly triple within the next five years, according to Cisco. Electricity consumed by data centres means that data traffic will contribute to the rise in IT’s share of energy consumption, from its current estimated level of about 10% of global electricity, to an anticipated 20% or more in 2030.
“What we know, from larger studies from Sandvine and Cisco, is that data demand has grown year-on-year and that video streaming is a significant part of this,” says Widdicks.
Though electricity demand is traditionally high between 4pm and 8pm, peaks in data tend to fall later in the evening, reflecting the use of online entertainment. This is far from fixed. “Certainly, streaming has increased data demand in the morning and late evening,” says Widdicks.
”Data demand has grown year-on-year and that video streaming is a significant part of this”
The rise of bite-size content aimed at commuters, such as that found on mobile-first streaming video service, Quibi, may herald a change in consumption, however.
“If mobile viewing out of the home, during commuting hours, increases this will almost certainly add to electricity load at peak times of travel, heating and cooking.”
Going mobile
It’s no surprise then, says Hazas, that researchers in this domain have focused on the data-demanding nature of smartphones and tablets. “Mobile data traffic is growing at an alarming rate, increasing 55% from 2016–2017,” he says. “However, the bulk of global internet traffic is still accessed through fixed networks, such as in-home WiFi, demanding 67 Exabytes (EB) per month [this is 57 EB more than mobile] in 2017 with an estimated 225 EB by 2022. What’s more, there are many other types of internet-connected and non-mobile devices that have yet to be studied in sustainability terms, including smart TVs and games consoles.”
Given the rise of mobile, particularly among younger generations as an alternative screen to the TV in the lounge, is the increased data demand and thus environmental cost really being driven by OTT platforms, or are VOD/streaming video services like YouTube causing more of a data drain? According to the researchers, it’s both. “Our study did find that YouTube was a significant contributor to data demand in our households,” says Widdicks. “[it represented] around 50% of video streaming data demand, particularly with Generation Z and Millennials. YouTube’s prominence in this study may be due to the type of content it can provide – users listen to YouTube for music for example – and therefore it can integrate into more aspects of everyday life.”
“We cannot pin the issue of growth in data demand for video on specific platforms”
According to Widdicks, their research showing YouTube’s significant contribution to traffic is backed up by larger scale studies for Europe. The Sandvine Global Internet Phenomena report of 2018 for example, states that YouTube tops downstream traffic.
“However, the same studies by Sandvine have found Netflix to be the top contributor to downstream traffic in America, with YouTube coming in as the 5th most demanding streaming service there,” adds Widdicks. “We cannot pin the issue of growth in data demand for video on specific platforms, particularly as different service providers may make efforts to run their data centres on renewable energy.”
Centre of power
A 2017 report by the International Energy Authority (IEA) says increased connectivity drives demand for data centre services energy use ‘with multiplying effects’. It quotes research by Cisco that states for every bit of data that travels the network from data centre to end users, another five bits of data are transmitted within and among data centres.
Loudoun County in Virginia claims 70% of the world’s internet traffic passes through its borders. The reasons are historical, but the fact that the majority of the world’s internet traffic goes through one conglomeration of data centres, dubbed ‘Data Center Alley’, makes it a prime focus for concerns over the amount of energy needed to power data centres and their rapid growth.
Clicking Clean Virginia – The Dirty Energy Powering Data Center Alley, released by the environmental pressure group in February, focused attention on northern Virginia, describing it as the ’physical beating heart of the internet’.
The fact that data centres tend to be highly concentrated causes a significant increase in local electricity demand, says the report, so “the source of electricity deployed by the local utility in these data centre hotspots takes on global significance”.
Greenpeace accused provider Dominion Energy of relying heavily on growing electricity demand from Data Center Alley to justify further fossil fuel investments, including the construction of the $7B Atlantic Coast Pipeline.
“How we power this digital infrastructure is rapidly becoming critical in determining whether we will be able to stave off climate change in time to avoid planetary catastrophe,” states the report.
The data companies also point the finger. In a letter delivered in early May by industry body CERES, some of Dominion’s largest customers, including Amazon, Apple and Microsoft, stated unequivocally they did not want their demand to be met with more fossil fuel projects, asking regulators to instead direct the utility to invest in renewables and storage. According to Greenpeace estimates, the ten companies that submitted the letter represent over 50% of the more than 4GW of data centre electricity demand projected in Virginia.
Green players?
Amazon, which as of 2017, controlled roughly 40% of the cloud market through its Amazon Web Services (AWS), came in for a lot of flak in the Click Clean Virginia report, where Greenpeace claimed that in contrast to fellow data centre hogs, Google, Apple and Facebook, Amazon had backtracked on its commitments to 100% renewable energy use.
However, Amazon responded strongly to the report, with a spokesperson saying: “As of December 2018, Amazon and AWS have invested in 53 renewable energy projects (six of which are in Virginia), totalling over 1,016 MW and are expected to deliver over 3,075,636 million megawatt-hours (MWh) of energy annually… AWS remains firmly committed to achieving 100% renewable energy across our global network, achieving 50% renewable energy in 2018. We have a lot of exciting initiatives planned for 2019 as we work towards our goal and are nowhere near done.”
Netflix may be the king of the streamers (in the US at least), but its video streaming service is hosted on AWS, as are its many micro-services, such as payments and internet service providers. The energy this consumes is regarded by the company as ‘indirect’, as opposed to the direct energy used by company offices and premises.
“Although this part of our energy footprint is more difficult to influence since we don’t actually have control over it, we still try to make sure it’s as sustainable as possible,” said the company in its latest update on sustainability. “In that vein, we work with our service providers to measure and report this electricity use and then match it with regional RECs and carbon offsets. This indirect energy use was approximately 194,000 MWhs in 2018.”
Netflix claims that in 2018, 100% of its estimated direct and indirect non-renewable power use was matched through the renewable energy and carbon offset projects, which span 23 different states/regions and 16 different countries.
In a report on its US data centres, YouTube owner Google claims sustainability is part of everything it does: “We’ve been carbon neutral since 2007 and we buy enough renewable energy to account for every unit of electricity the company uses. In fact, we’re the largest corporate purchaser of renewable energy worldwide, and our data centres are the most energy efficient.”
What about the UK? In response to our queries about how green the iPlayer service is, a BBC spokesperson said: “As part of our Greener Broadcasting strategy, the BBC is helping to arm audiences with the facts on climate change and sustainability and helping them understand the contribution they can make. In addition, the BBC’s carbon footprint fell by 78% last year and we’re committed to further reducing our energy consumption and ultimately creating a positive environmental impact.
“BBC Research & Development is working with industry and academia on detailed models to better understand the environmental impact of streaming now and in the future, as well as exploring technologies to make it more efficient.”
“Researchers at the University of Bristol have outlined how efficiencies in the underlying infrastructure are not able to keep up with the growth in data demand - so efficiencies alone aren’t enough,” says Hazas. “There is more potential with digital infrastructure policy, however.
“We must highlight that there are other areas of energy consumption which are much more impactful, for example food, heating, transport,” he continues. “Data demand may be useful to outweigh other energy impacts, working online from home vs. travelling to work via a car, for example.”
Lifestyle choices
At time of writing, the research team have not yet had a response from service providers in relation to its research. However, given that there are multiple factors at play, does the responsibility only lie with OTT/streaming video platforms for ensuring that our video consumption is sustainable? What can be done to help to make the normally invisible energy demand visible? Should consumers, data centres, internet providers, or governments take charge?
“We don’t see responsibility lying with one group, rather all of these groups do play a part and most likely will need to collaborate,” says Hazas. “We suggest streaming service providers should work closely with network engineers to assess the data impact of interaction changes in digital services prior to implementation, pre-empting effects on network operators.” An example given in the research is the impact of Facebook introducing video auto-play.
“Responsibility doesn’t lie with one group - all of these groups play a part and will need to collaborate”
The researchers suggest government policy should be focussed on getting businesses to think more about the sustainability implications of data demand. “On the whole, national infrastructure policy seeks to increase bandwidth even to areas that are already well-connected,” says Hazas. “But going forward, before increasing bandwidth they should evaluate the sustainability implications, particularly since extra bandwidth has primarily been used for video streaming.
“Consumers should be made aware of the impacts of their streaming, for example video platforms could introduce an energy rating alongside different videos, as with other products such as fridges,” continues Hazas. “This will no doubt require involvement from policy makers to push businesses, such as internet providers and streaming services, to make these changes.”
So, when you’re next choosing where, when and how to watch Stranger Things, spare a thought for the impact your choices have in the real world.
The temptation to make a great first impression often has the power to undermine serious core objectives. This is because it deprioritises these objectives in favour of shiny, decorative features. After a product has been launched, that temptation persists in adding even more shiny new features.
As users, we know that a certain familiarity between different products within the same category is important. As an extreme example, when buying a new smartphone, we don’t expect it to have a round shape (does anyone remember Microsoft Kin). We don’t look for a phone with buggy software or very weak battery life. We’ve come to expect certain things that make it possible to use this device in every basic task we need it for.
As designers, the priority is to materialise the experience our audience expects, and ensure their primary needs are met before we can stun them with a ‘special attraction’. The user may, at first sight, feel more attracted to a specific attribute in our product than its overall utility. If that appeal is all there is to the product, it will never be successful.
Innovation can be a deceptive agent if you haven’t been around long enough to know that it needs a support cast. A fundamental element to consider at the beginning of any project in product design is the audience–who we’re innovating for.
At Ostmodern, we use a term that keeps us focused on the user: empathy. There’s a reason why the first step in the creation of a unique selling proposition (USP) is understanding the target audience. Before considering the problem, your product needs to solve, before addressing industry pain points, a great product is built on customer insight.
One of the most common offences we find in the design of OTT products is the preference for more features instead of fewer, better ones. This has emerged from the proliferation of online video platforms; a consequence of multiple industry leaders constantly striving for innovation. Smaller newcomers and panicking incumbents gather every possible tool to fight this by cramming a product with features that end up suffering from grave problems. Those features are never interesting enough to sustain the audience’s attention.
It’s an understandable error to make when navigating an industry that sees itself to be living in the shadows of Netflix. The number of streaming services today is staggering, and the subscription market appears saturated.
Audiences have expectations about content diversity but that won’t make a difference if it is difficult to find content in the app. The titans in this industry that others follow and whose features they try to duplicate didn’t start at the level at which they find themselves now, drawing millions of global viewers. Their library growth brought on technology improvements, not the other way around.
Even after years of studying this business, learning from competitors and launching ingenious features, these companies still work hard to understand their audiences even better. They excel at acting on what their audiences care about, presenting the information they want to show in the most compelling way possible to their target audience. This can’t be done by every company wanting to launch an OTT product.
Our dedication to delivering the most useful and captivating digital products is linked to our acknowledgement of core principles. They represent a set of values which guide us in the right direction, all the while considering the expectations of our audience, the business we’re working with and the complexities of building a product.
This leads to an approach in product development we advocate: the 80/20 rule. Our stance is to focus 80% of our effort in simply making sure that the product works, as users expect it to, by getting the core principles and interactions right. In the case of video and broadcast products this usually means that people need to be able to find and consume the content efficiently. This leaves you with 20% to push the product to express its individuality, reflecting its USP. The features that set you apart from competitors, your biggest brand differentiator and what will truly resonate with your user base all boil down to these 20%. The key objective, nonetheless, is that it will just work.
This is why we always meet and get into the mindset of an audience when we are defining product strategy. Understanding how they want to be spoken to – and what they really care about – will always save a lot of time and money.
Standing out isn’t just about being innovative. It’s easier to have a lot of different ideas and packing a bunch of new features into a platform than breathing new life into an older set of features that users are accustomed to.
True innovation in user experience comes from the harmony between design and technology. Your unique proposition should reflect your strengths and the ultimate goal of your product, and not be based on a template that could be used by any other service. The 80/20 approach will ensure your product stands out from the start, without breaking the bank or gambling on a crazy feature set. It’s all about keeping the user happy.
Tom Williams is CEO and co-founder at Ostmodern.
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