Date 11. April 2011
Interviewee Bjarne Andre Myklebust, Head of IP Distribution, NRK
Type Phone interview
NRK is Norway’s largest broadcaster, counting both commercial and non-commercial ones. Based on a pre- sentation by Bjarne Andre Myklebust, Head of IP Distri- bution, at Digitalforum 2011, the interview was tailored to deeper explore some of the statements made during the presentation.
Today’s situation and current business models
Currently NRK is working to release a holistic OTT TV-universe that will be available on all types of devic-
es, offering both linear and on-demand content to the consumer free of charge. According to Myklebust this initiative is an attempt from NRK to communicate their brand more clearly to the consumer in a market which currently is highly fragmented with respect to the experience available on different platforms for TV-consumption.
NRK is not the only actor working on their own OTT-solution; this is also done by other broadcast- ers as well as distributors. When it comes to licens- ing NRKs OTT offering to third party distributors Myklebust said that «today there are no rights manage- ment mechanisms that allows this». This is also part of why NRK is working on developing their own OTT- universe, since practically it’s the best way of reaching the consumer with a holistic experience. The rights issues in the marketplace today mainly concerns rights to on-demand content, making it hard for distributors to license this content for use within their solutions. NRK has looked at the possibilities for making this work, but the diverging rights interests in the industry currently makes this infeasible, Myklebust commented. As a broadcaster NRK also licenses content from other producers to fill their own linear broad- cast schedule. Thus, when building an OTT-universe
they are also dependent on being granted on-demand rights for that content to be able to provide the con- sumer a complete offering. Today some of these rights are offered by content producers as part of the pack- age when NRK licenses content from them, while still others negotiate more money for these types of rights. Typically a rights window of 7 to 30 days is offered for making the content available on-demand follow- ing the linear broadcast of that content. Myklebust emphasized that «we are very reluctant to pay extra for on-demand rights, because we view this as a part of the total package». At the same time he sees that more and more studios are realizing that broadcasters are not interested in buying content without also being granted on-demand rights.
Complications in the industry
With several supply chain actors working on their own OTT-solutions Myklebust raised the concern that if distributors are to be the aggregators of all content then they are likely to operate out of self-interest. Since NRK is a non-commercial public broadcaster he is concerned that they might drown in that type of regime because the distributors cannot capitalize on offering NRKs content. «We are afraid that distribu- tors will manage the experience based on cash flow opportunities and not necessarily what the public wants to consume», Myklebust said.
Myklebust was confronted with the opportu- nity the distributor has to make the experience equal regardless of which broadcaster has provided content to the distributor. In his response he stated that he doubts that one will be able to solve the problem of wanting everything to look the same. He also believes that this route is not in the best interest of neither the
58 consumer nor the industry. Myklebust argued that what will be important is seamlessness between linear and on-demand consumption. This is to relieve the consumer of having to leave one universe and enter another to switch between the two consumption modes, like with the current connected-TV solutions in marketplace.
Telenor have issued a public statement saying that they want the content provider to also pay part of the bill when it comes to financing high quality video ser- vices such as OTT-solutions. Myklebust commented «we will never pay for the access from our customers to our CDN; this must be handled by the ISPs [offering Internet-connectivity], and our opinion is that this is a cost that the consumer already has covered when he buys [Internet] capacity». In his point of view NRK is already helping out by utilizing CDNs for distribution of content, thus reducing the network capacity neces- sary in the Internet backbone. This is a part of the cost they gladly take on, and this is the content provider’s part in bettering the access to OTT-content for the consumer.
Some ISPs – that also act as distributors – have started rolling out their own CDN-solutions for con- tent providers to use. Myklebust said the most impor- tant thing for NRK in choosing a CDN-provider is that it is able to offer the same quality of service to all Internet-users, not only those in the ISPs own net- work. He does not believe that national ISPs will be able to offer the same balanced offering in all networks as large, global actors such as Akamai can do.
The future situation and related business models
Going forward with creating their own OTT-universe, NRK is willing to offer this solution to all distribu- tors that operate on standardized platforms and are not trying to create their own walled gardens around the content that they aggregate. The most interest- ing development is according to Myklebust the new hybrid-TV systems where the consumer does not nec- essarily have to go through a distributor portal to reach the content, but which allows access to NRKs universe
directly. Myklebust also believes that the content pro- vider is best positioned to create a connection between linear and on-demand content in a way that is intui- tive and simple for the consumer to relate to.
It will be important for the content producers to retain their position and be able to maintain their brand in this market. Myklebust said that «if all the content is experienced as it is delivered from Viasat or CanalDigital for the consumer, then eventually none of the broadcasters will be left with any value». He fears that if consumers do not experience that the con- tent necessarily comes from a particular broadcaster, this will cause the broadcaster to struggle with regards to business models – and to justify their existence in the market – and thus becoming marginalized.
When it comes to industry positioning Myklebust agreed that those distributors that are able to provide two-way communication, and thus IPTV, has a com- petitive edge compared to satellite and DTT actors. This is because of their ability to provide services such
as on-demand instantly, using the two-way capabili- ties of the connection that is used for receiving the TV-signals, allowing them to quicker reach a higher
penetration for these services.
With regards to what services proper hybrid-TV solutions will bring to market in the future, Mykle- bust visualizes that there will be options for alerting the user to new or previous content available in con- nection to what he is currently consuming. He also believes suggestion of similar content directly on the TV-screen with access only a button push away will be attractive. Additionally the TV-experience can pos- sibly be enhanced with localized information during elections or augmenting information that can be accessed alongside sports events through overlays of what is being watched. He believes that we will see an «interactive TV-experience that is rendered possible in a whole other way than what we have had previously».
The development in the industry the next five years
About the future Myklebust said «we will to a larger degree have a better user experience and better
seamlessness with regards to being able to switch between linear and on-demand viewing much more simply than today». He also believes that there will be a large increase in on-demand services available on the TV-screen itself: «In the future we will have much larger content-catalogs available on the TV through the remote. I believe this might be the biggest
development and this might do something about the attractivity of linear TV-programming in time».
Another aspect of future TV-viewing that Mykle- bust believes in is seamless transitions with regards to moving content between devices as the consumer is on the move. He commented «TV will not only be TV on the TV-screen, but TV on several types of devices».