Articles and whitepapers

Whitepaper: The Necessity of Content Flexibility in the Connected Home (2/8/2010)

By Kurt Scherf, Parks Associates

1.0 Freeing Content on the Home Network

Balancing content protection with the consumer desire for multiplatform access has been a persistent challenge in the development of connected home and digital lifestyles solutions. Consumers expect to have multiple options for consuming content, but content owners fear that once content is on the network, it is vulnerable to misuse and piracy.

Service providers and technology vendors must provide assurances to these content owners that a system is in place capable of protecting content while also tracking its use in order to provide appropriate compensation as well as user data. Otherwise content owners might stall the migration to multiplatform distribution in the home by withholding rights to premium content, which is generally the most desired type of content, with full-length movies and TV shows leading the rise in online video viewing.

Figure 1 - Rise of monthly online video viewing.

These circumstances expand the status of digital rights management (DRM) to more than mere antipiracy mechanisms. Monetising content requires controlling the content. DRM solutions must provide proactive approaches that help content owners manage their customers' expectations, which are increasingly 'any time, any device.' In addition to providing robust protection from hackers and professional pirates, these offerings must increase accessibility to digitised media content and help to generate incremental revenues.

One important question in the content protection and rights management area is whether pay-TV conditional access will migrate from a pure authentication scheme on one device to cross-platform authentication, thus allowing for more rights management elements.

2.0 The Need for Home Network-based Content Protection

When it comes to distributing content within a home network environment, there are many retail-oriented solutions that consumers can use to enable connected multimedia experiences. They can purchase and configure home media servers, digital media adapters, and wireless laptop-to-television connections for a 'do-it-yourself' entertainment network experience. These efforts typically involve distributing user-generated or non-DRM content from one networked device to another.

Networked set-top boxes that facilitate whole-home DVR functionality are becoming more common, and pay-TV service providers are looking to these solutions to provide differentiation, increased customer satisfaction, and ultimately new revenue streams. Consumers in both the U.S. and Western European markets express interest in such functionality, with Western European consumers more likely to pay an additional fee per month to receive such a feature.

Figure 2 - Appeal of Networked Set-top Boxes

Pay-TV providers can implement features such as whole-home DVR using their existing conditional access, and the appropriate set-top boxes are typically certified by the service provider as functioning within the framework of the content protection schemes that they have approved. From this fairly straightforward application of device-to-device content sharing, enabling mixed-media and mixed-device environments becomes considerably more complex when devices outside the realm of the service provider's traditional purview are brought into the home network environment.

This is precisely the challenge facing service providers and device manufacturers. Consumers will introduce new devices to the home network, and they will expect content interoperability (which is in line with the ultimate vision of the connected home). Pay-TV providers will have to develop a solution to deal with these 'unsanctioned devices', especially since they will be operating right next to their connected set-top boxes and multiroom DVRs.

Not only are consumers expressing strong interest in whole-home DVR, but they are interested in applications that would link the storage and media processing capabilities of home computers to their set-top boxes. While current usage is predominantly in user-generated and other non-DRM content, what happens when they demand that downloaded content from online sources (traditionally in the DRM-protected realm), be made available on the set-top box (traditionally in the conditional access realm)?

Figure 3 - Content Preferences for Connected Set-top Box.

Pay-TV providers will need to expand their current solutions to allow cross-platform authentication, thus allowing for more rights management elements. There are several important elements to watch in the development of these cross-platform initiatives:

* How content providers, service operators, and their consumer electronics partners agree on industry-wide digital rights management schemes.

* The development of authentication solutions that account for the consumer as both a subscriber to premium pay-TV services and a user of online services.

* The role of consumer electronics such as home computers and residential gateways to transcode media and apply appropriate management rules on content.

* Consumer demand for paying a premium on cross-platform content services.

3.0 The 'Digital Locker'

Consumer demand for 'anywhere access' to content, combined with the rising numbers of smartphones or other advanced mobile devices, is forcing content to move outside the home and into the cloud. As a result, content owners, retailers, CE companies, and service providers are all focusing on ways to store content virtually, which is taking the form of the 'digital locker.' Broad DRM protocols, as well as the ability to store and manage content virtually, are critical elements of the digital locker so that multiple connected devices are able to receive or access content coming from multiple sources.

The development of services that free-up content access comes at a critical time for content owners and their partners in both the U.S. and Western Europe. As consumer expenditures for traditional media such as DVDs decline, the use of online channels for content acquisition is expected to increase significantly. What should be most troubling to parties within the premium content distribution value chain is the percentage of Western European consumers who indicate a growing reliance on unsanctioned services that provide free access to content.

Figure 4 - Western European content spending habits.

One way to combat piracy is to bring growing amounts of premium content to sanctioned online services. The second way to alter consumer behaviour is to provide flexible usage rights on content that will both free it from its physical formats and provide greater access to it from a growing number of devices. This vision is precisely what the industry is attempting through several major initiatives.

Figure 5 - U.S. American changes in consumption habits.

The Digital Entertainment Content Ecosystem (DECE) is an industry-wide effort promoting flexible content use cases. The DECE announced several milestones in 2010, including the selection of a single file format to promote a 'Buy Once, Play Anywhere' concept, and agreement on five main DRM solutions. Other notable efforts in the digital locker space include The Walt Disney Company, which is promoting Keychest, and Apple, which purchased streaming music company Lala in 2009 - a move that may open the door for the company to expand iTunes into a virtual hosting service.

Kurt Scherf is Vice President and Principal Analyst of Parks Associates. Parks Associates is an international market research and consulting company specialising in emerging consumer technology products and services.

www.parksassociates.com