- Cloud DVR technology makes all TV content available on demand, on any device and in any location
- Service providers reduce the cost of delivering DVR services while increasing features for subscribers
- New revenue opportunities are enabled across the TV content creation and delivery ecosystem
Moving video storage and processing from the set-top box to the network benefits subscribers, service providers and content owners alike.
Something for everyone
Moving digital video recorders (DVRs) into the cloud is the natural next step for home-based DVRs. Service providers can use cloud-based DVRs to reach more subscribers, devices and locations with content. Cloud DVR technology removes hardware – such as hard disks and tuners – from set-top boxes (STBs) and puts it into the service providers’ network (Figure 1). This move improves end-user experience and reduces cost and complexity in the service provider’s network. It is part of a broader IP video strategy, in which service providers can use the network to deliver premium content directly to a broad range of consumer-owned devices.
With cloud-based DVRs, end users can watch their favorite TV shows on any device, anytime, anywhere. Service providers can deliver DVR services without installing or maintaining expensive hardware in subscribers’ homes, which reduces costs. Furthermore, service providers can increase profitability by offering new capabilities to both subscribers and partners.
In addition to opening new revenue opportunities for service providers, cloud DVR technology extends benefits to other members of the TV ecosystem (such as advertisers, broadcasters, TV channels and content owners), who gain greater control over how content is recorded and consumed.
Despite these benefits, content rights legislation has not kept pace with technology in all jurisdictions. Local regulations may affect how service providers can offer cloud DVR services to their subscribers.
Improved viewing experience for subscribers
TV on demand on any device
The cloud DVR approach allows end users to access the TV programs they have recorded from any device, with full DVR capabilities. They can also access a range of time-shifted TV services, including pause live TV, rewind TV, start-over TV and catch-up TV. Cloud DVR technology allows subscribers to start watching on one device in the home and continue on another while on the go.
Subscribers can also use cloud-based DVRs to record programs while away from home, even if the STB is turned off.
Moving to the cloud means DVR storage capacity isn’t limited by the size of the STB hard disk. Subscribers can potentially access unlimited hours of video from the cloud.
Recording in the cloud does not consume any access bandwidth or any STB processing power, allowing subscribers to simultaneously record multiple TV programs while watching linear TV.
Reliability and availability
Content stored on an STB can be lost if the hard disk crashes or if the STB has to be changed. Service providers can build their cloud DVR services with redundant storage that guarantees content is always available. The solution can also provide some back-up capabilities for subscriber personal content.
Reduced costs and increased revenues for service providers
Lower capital expenditure (CAPEX)
DVR components – including the hard drive, multiple tuners and additional memory – make up a large portion of the cost of DVR-capable STBs. Moving these components to the cloud greatly simplifies STBs. Using central storage is less expensive than the end-to-end cost of maintaining large numbers of hard disks in home-based DVRs, particularly when the “shared copy” approach can be used (see the content rights challenge section).
Service providers can deliver DVR services to any STB in subscribers’ homes, and don’t need to deploy any other hardware to support whole-home DVR capabilities. A subscriber can turn any “smart” device into a DVR by downloading an application and authorizing it for the service.
Reduced operational expenditure (OPEX)
Cloud-based storage makes it easier to operate and maintain DVR services, particularly when hard disks fail. The increased reliability and availability of storage in the cloud reduces the number of calls to a service provider’s help desk, as well as hardware shipments to subscribers’ homes, with or without truck rolls.
Service providers can potentially increase revenues by offering their subscribers value-added, time-shifted TV services that are available on all devices.
Cloud DVR technology allows service providers to charge for increased storage capacity and for the ability to record more programs at the same time. They can make these extensions happen in the network without making any changes to end-user equipment or shipping new hardware.
Cloud DVR deployments may not create new revenue opportunities in every market. Nevertheless, the technology will improve subscriber experience and the perceived value of the service provider’s TV service, increasing customer satisfaction and reducing churn. Cloud DVR technology can also kick off a multiscreen or over-the-top strategy, which will attract both new and existing customers with engaging premium services.
Benefits for the ecosystem
Ads are still watched with DVRs
Subscribers and service providers are not the only ones to gain from cloud DVR technology; advertisers, broadcasters, TV channels and other content owners can also benefit. Advertisers initially expressed concern about DVRs when the technology came to market because they feared subscribers would skip commercials. Studies show, however, that viewers watch ads both at the time of broadcast and on programs they record with their DVRs, effectively increasing viewership. This shows that the business model for broadcasters and advertisers is not entirely broken by DVRs.
Time-shifted viewing methods have largely complemented traditional TV business models and subscriptions, rather than acting as a substitute. Another study from the UK shows that DVR-equipped homes watch more hours of TV in total than those without DVRs, and this effect can compensate for any ad-skipping that does occur.
Finally, research has shown viewer’s attention actually increases while fast-forwarding commercials and in response, advertisers have created ads that work equally well if subscribers watch them live or fast-forward them with their DVR.
Unlike home-based DVRs, cloud DVR technology allows participants in the TV value chain to control variables such as storage capacity, how long recordings can be stored and the number of tuners available to record content at the same time. The technology can also specify the type and number of mobile devices subscribers can use to playback content.
New revenue opportunities
Cloud-based DVRs also give service and content providers more insight into how consumers watch live and time-shifted TV, potentially opening the door to new revenue models. For example, they can use this information to better target their content and services. An advertisement might not be appropriate if a subscriber watches a recorded program weeks or months after it first aired. Advertisers can replace commercials in catch-up and recorded programs with new ones targeting individuals or groups of users, making advertisers more relevant and providing additional revenues for broadcasters and service providers.
The content rights challenge
Despite the benefits for all players in the value chain, content rights issues have inhibited cloud DVR deployment in many regions.
While copying video content or TV programs on personal devices such as DVRs is generally accepted, it’s a different story for recording and storing TV programs on the service provider’s network. Whether or not cloud-based recording violates copyright laws has significant implications for service providers.
The model service providers use to deploy their cloud-based DVR services (Figure 2) depends on agreements negotiated with content providers, as well as country-specific intellectual property rights legislation.
Shared-copy cloud DVR
Shared-copy cloud DVR deployments store a single copy of each recorded program in the network and use them for multiple subscribers. The key advantage is efficiency: the service only ingests and stores one copy of each recorded program, significantly reducing storage costs.
Private-copy cloud DVR
Private-copy cloud DVR deployments store one copy of the requested TV program in the network per subscriber, and each stored program is only available to the subscriber who made the recording request. If two end users request the same content to be recorded, duplicate copies will be made, making this model less cost-efficient than the shared-copy model.
Matching technology to content rights – today and tomorrow
Cloud DVR technology needs to be flexible to allow service providers to fully benefit from its implementation. Ideally, service providers will be able to use the shared-copy model, as they have done in Switzerland. In less favorable situations, such as in the United States, service providers can deploy the private-copy model. This approach will ease the technology’s acceptance by content owners or comply with copyright legislation, and provide a path to a more efficient solution. Service providers can then introduce shared copies on a-per content basis using simple software settings as negotiations with content owners progress. This would allow service providers and subscribers to benefit from the flexibility and efficiency of cloud DVR technology today and in the future.
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-  Nielsen, “C3 TV Ratings Show Impact of DVR Ad Viewing”, April 4, 2009.
-  Thinkbox, Op. cit.
-  S. Adam Brasel & James Gips, “Breaking Through Fast-Forwarding: Brand Information and Visual Attention”, American Marketing Association Journal of Marketing, 2008.
-  Daniela Walker, PSFK, “VW Ads Target Viewers Who Fast Forward Through Commercials”