The TV Content Ecosystem

Last week I shared the talk I gave at MAX which described the the new ecosystem of connected TVs for the Flash developer.

I wanted to take a look at one slide specifically and expand on what the talk track from the presentation. Generally speaking if you look at most content driven ecosystems, there are three components that make up the majority of the revenue. The content, distribution of the content, and advertising on the content. This applies in the TV ecosystem just as much as anywhere else.

This diagram helps articulate the various ways that money flows through the ecosystem. It’s not perfect but it’s a 50,000 foot view on how the money flows with a focus on the fact that you, the consumer, are basically paying for everything. The arrows point out which way the money is flowing. I’ll focus in more detail on the top half, which is for broadcast TV entertainment. The bottom half/third is about movie entertainment.

Value Chain for the TV Ecosystem

Value Chain for the TV Ecosystem

Distribution & Content

In the United  States, the majority of television is watched through some Pay TV operator, whether it’s a cable company like Comcast or a satellite company like Dish. This is the distribution side of the equation. Distribution accounts for roughly $75 billion dollars of revenue in the value chain and is mostly from consumer spending. This is basically the second row of the chart.

Most of the money consumers pay goes to the cable operator and then from them to the content creator to pay for the content. Cable companies pay a different amount for each channel they carry. For example, ESPN is the most expensive channel, costing roughly $4.40 per household passed (e.g. if Comcast is available in 10 million homes, Comcast pays ESPN $14.4m per month).

Online distribution is basically the same (which is the middle row), with the OTT aggregators like Netflix paying for each stream delivered rather than each household passed. There’s a lot of change happening in the online delivery world, and 2011 will likely be quite a bit different than 2010 was. Two specific things will happen in this space. First, Netflix’s deals are about to expire which means the cost they pay for content is going to change (and likely the cost you pay for Netflix). One of the key contracts in Netflix’s arsenal is its deal with Starz for $30 million. It’s likely to cost over $200m to get that content this time around. Second, much online content will come behind a pay wall / TV-Everywhere. This means that when you want to watch a video online (say on Hulu or you may have to sign in to your Comcast account.


The other major side of the equation is advertising — which in the United States is roughly $83 billion. At the core, the pricing for advertising is based on the size of the audience you can deliver as well as who that audience is.  Top shows like Lost or Modern Family get paid for by the advertising the network (ABC) sells for each of the shows. Companies like Nielsen are in the business of measuring the audience, and based on the ratings (e.g. points) the networks price out the advertising for the show.

In a 30 minute slot, there are 22 minutes of programming and 8 minutes of ads, so 16 ads. Typically they’re organized in to what are called ad pods, and each pod contents multiple ads. For each available spot some number of the spots will go to the network’s own cross promotion (i.e. while watching Modern Family you see an ABC ad promoting the new fall lineup), local ads (likely served by the distributor), and proper ads. The ownership of the ads in the pods is often part of the distribution agreement between the TV network and the distributor.

The DVR radically changed the way that measurements of audiences has done. New metrics like C3 added in broadcast plus three days of DVR recordings to the mix to capture people time-shifting. That same kind of “+3 days” is now occurring in the online world, too. With TV Everywhere, broadcasters and measurement companies will start to blend the online and broadcast world when it comes to ratings. Since online and broadcast audiences will be measured the same, you’ll start to see the same kind of advertising happening within the C3 window and at rates blend (or are the same) between two delivery methods.

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Slides from MAX 2010 Flash Platform on TV Talk

I’m way late to this party, but better late than never. In October 2010, I gave a talk at Adobe’s MAX conference introducing the Flash Platform for TV which is Flash Player for TV and AIR for TV. Here are my slides that give a good overview of the TV ecosystem as a whole and Adobe’s products for the segment. I might extract some of this information in the future for a blog post, but the whole deck is here for your to download.

You can also see the recording of the session at the MAX 2010 archives. Unfortunately there were some recording issues with the audio so part of the audio drops out in the first part of the talk, but it’s great since you get the visuals of the demos in the archive.

Overview of the TV Ecosystem and an Introduction Flash Player for TV and AIR for TV

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Hi, I’m The Insides of Your TV

As televisions and TV service has gotten more and more sophisticated since the switch over to digital, the insides of your TV have gotten more and more complicated. What’s actually inside those TVs and how do they tick? Well, it’s both simple and complicated.

In the United States, almost all television is viewed by some pay-TV operator (think cable or satellite) and your TV acts as a display. There’s a ton of smarts and processing in the TV to smooth out the video, deblock compression artefacts, process the audio, etc. But the core part of the video experience is delivered by the cable box and delivered through the HDMI cable. Since the cable or satellite company own the entire pipe, they are normally built with custom made solutions by companies like NDS, OpenTV, and the like. A small percent watch broadcast TV in the United States (think bunny ears). In that case, specs made by the ATSC describe how the digital broadcast is supposed to work and the TV does all the heavy lifting.

In other markets, like in Europe, there is a lot of free-to-air broadcasts, and they’re specified by groups such as the Digital TV Group in the UK or DVB in Europe. Like ATSC in the US, these standards basically describe how broadcast digital TV is supposed to work, including things like the video codec, the audio codec, channel guides, any other data in the stream.

Most broadcast systems in the world currently use MPEG2 as the video codec, and can transmit in the high 10s of bandwidth per carrier, typically the US about 18 Mbps. Systems such as DVB-T2 are looking to move to H.264 as their video codec standard to more efficiently use the same amount of bandwidth.

But enough about codecs, how does it all work? It’s acutally pretty simple. Inside the TV (or cable box) there are a bunch of electronics and at the core of it is a system-on-chip or SoC. In the TV world, there are a few quite a few companies that make these SoC, such as Broadcom, MediaTek, STMicro, Trident, Intel, Zoran, MStar and probably more I can’t recall off the top of my head. These SoCs handle all the work required to make TV happen. They process the incoming stream, whether it’s a raw feed from a cable, satellite or broadcast TV feed, decrypt the streams if it’s protected, then decode the audio and video and sync it up, then sent it along, either to the display or on to the TV.

This picture is the inside of a flat planel TV. There are there major components shown here. On the far right is the logic board. On the logic board is the SoC, connectors to HDMI, cable and audio, memory chips, and a few other parts. In the middle is the power system, which powers the actual panel. On the far left is the speaker. The most impressive part of these systems is how slim hardware vendors have now managed to make everything while still retaining quality, especially around the audio from the speakers.

TVs (and set top boxes) are typically very very good at decoding and rendering video. They can typically decode Bluray quality in their sleep (to put it in context that’s roughly 39 Mbps of data), all the while doing all kinda of real time image and video processing to make it look even better. It’s really quite impressive how much data goes through a TV system in a second when rendering 1080p (1920w * 1080h * 24fps * 24bit color + 448kbps-ish of audio).

So that’s how your TV works! Easy, right?

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Announcing AIR 2.5 for TV

I’m sitting backstage at the Nokia Theater LA Live, working on final prep and rehearsals for our CTO’s keynote. The doors are open and attendees are starting to come in. In the keynote, one of the many things we’re announcing is Adobe AIR for TV. We’re very excited that after a year+ of hard work, crazy travel, late nights, and many conference calls between San Jose, San Francisco, Seoul, Tokyo, and Bangalore that we’re releasing the first AIR runtime to television sets and Bluray players

Our launch partner is Samsung, who will be embedding the AIR TV runtime on their SmartTV products. Very exciting opportunity for developers who want to get to new screens. There’s already been a ton of overage, but if you’re at MAX come to the keynote today to check out Kevin Lynch present some exciting demos that you won’t want to miss.

Here’s a list of places you can learn more:

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Speaking at Adobe MAX 2010

I’m speaking again at Adobe MAX this year, as well as co-teaching a set of lab sessions.

Here’s more info from what I just posted to the AIR Team Blog.

Adobe MAX is right around the corner and we’re super excited to start showing off the latest and greatest that AIR has to offer. There’s going to be a ton of exciting sessions covering desktop, mobile devices, and now the newest screen, TVs.

We’ve got two sessions specifically aimed at getting our customers excited about and educated in what AIR for TV is going to offer them. We also have a lab that will give you a chance to learn how to actually develop AIR for TV applications. Plus, as usual, we’ll have a couple of surprises up our sleeve that you won’t want to miss!

Our two sessions will help you learn two things: first, the ecosystem around TVs, Blu-ray Players, and set top boxes; and, second how to actually use the new AIR for TV platform to build and optimize applications that run on those devices. Expect these to be info-packed, fun, and engaging sessions to learn about a whole new screen to take your apps and content.

Flash Platform for TV: A New Ecosystem by Aditya Bansod (Principal Product Manager)
Join us for a sneak peek of Flash Player on Google TV and how Adobe AIR will soon power a whole new class of devices in the digital home, helping Adobe Flash Platform developers build experiences for an entirely new market of consumers. This session will provide an exclusive first look, with product demos of Google TV and AIR for TV

How to Develop & Optimize AIR for TV Applications by Don Woodward (Principal Scientist, Consumer Electronics)
Learn how to build engaging applications for the TV screen using Adobe AIR. Special focus will be made on design considerations and optimizations for building applications for the television.

In addition to the two sessions above, we will also be hosting three hands-on labs at MAX. You won’t want to miss these! We’ll be giving you all the tools you’ll need to walk out of the lab a super-charged TV developer.

Lab: Developing Your First AIR for TV Application by Don Woodward (Principal Scientist, Consumer Electronics)
Learn in this lab how to build engaging applications for the TV screen that run on Adobe AIR. Special focus will be given to design considerations and optimizations for building applications for the television.

So join us at MAX, sign up for the sessions, and learn what Adobe has been doing the last year to open up a whole new ecosystem for our community.

Aditya Bansod
Principal Product Manager

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Flash Player 10.1 on Google TV

I posted over on the Flash Platform blog over work we’ve been doing to bring Flash Player 10.1 to the Google TV.

Adobe and Google are working closely together on a number of different efforts including support for Flash Player 10.1 and AIR across various platforms and devices. One of these new platforms is Google TV, Google’s new Android based platform that brings the power of the web in to the living room. Google TV includes Flash Player 10.1 integrated directly into the Google Chrome browser delivering the full Web to consumers on their television sets. The digital home is a huge step for Flash and it represents an amazing new screen for developers and content creators to bring rich interactive content to the TV.

With support for Flash Player 10.1, Google TV customers have access to the full web. This includes the approximately 75% of online videos and web games that use Flash, the vast numbers of rich Internet applications, and content across social networks. Flash Player 10.1 will support hardware-accelerated video playback and deliver smooth, HD (1080p) quality video on Google TV devices. We’re excited that having Flash Player 10.1 as a key part of Google TV will enable an additional screen for the more than 3 million Flash developers to create content for.

We are seeing widespread interest from our partners in the digital home space and we are working closely with them to include support for Flash. Today, consumers can experience rich Flash-based applications, content and user interfaces in televisions, set-top boxes, and Blu-ray players from Samsung, Vizio, Haier, BestBuy Insignia, and Tivo. Game consoles such as Nintendo Wii and Sony PlayStation 3 also feature Flash technology.

Want to see it in action? Check out this video we shot on site at the Googleplex showing Flash Player running on Google TV.

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