The Challenges and Benefits of Replacing Your Legacy IPTV/OTT Platform

Webinar: The Challenges and Benefits of Replacing Your Legacy IPTV/OTT Platform with a streaming industry expert Dan Rayburn and Setplex CEO and co-founder Lionel Dreshaj.

Download Webinar: The Challenges and Benefits of Replacing Your Legacy IPTV/OTT Platform

Lionel: My name is Lionel Dreshaj. I am one of the co-founders at Setplex. Today we are presenting “The challenges and benefits of replacing your legacy IPTV/OTT platform” with a streaming industry expert Dan Rayburn. 

Dan: […] What we wanted to do is find out from some of your peers in the industry what exactly they’re seeing when it comes to the topic of the IPTV/OTT platform and some of the challenges that they’re having. What I did working with Setplex is: I went out in July of this year and got over 300 respondents from different companies in North America, South America, Europe, India, APAC, and Africa. And we asked them a series of questions around some of the challenges they’re having and some of their best practices. 

The first slide gives you an idea of where the attendees were coming from, who filled out the survey.

1. Which multi-screen applications does your competition currently offer that you would like to add?

Dan: The first question we asked here is — “Which multi-screen applications does your competition currently offer that you would like to add?”

As you see, there’re a lot of different ones here. We’re looking at all the different platforms in the market and which ones are most important to them.  Browser-based video and Android TV are the two that got the highest number of votes. In this question, we also asked everyone to select all that apply. And that’s why you see something really high. 

Lionel, just tell us why you think that Android TV and browser-based video are the two here that are most popular?

Lionel: Being that Android is one of the most popular devices now in the market and the capabilities of what Android TV has to offer, it’s no surprise that Android TV is up there. A little bit more surprising is the browser-based video. 

But as you can tell now, the set-top boxes and all these connected devices are a thing of the past. So, it’s no surprise there. Then also you can see some of the non-popular devices like iOS and Apple TV, which is 17%. It looks like it’s making a great comeback. I think if you did the same survey a couple of years back, Apple TV would be way out of these statistics. I think the industry is changing. A set-top box probably about five-six years ago would have been the most popular device. It’s going way down to 5%.

Dan: It has changed in the market if we think about what are some of the devices that have really made good inroads globally over the last couple of years, right? What has it been? It’s been some of the standalone streaming boxes. So, to your point, it’s not surprising that today’s set-top boxes are lower. But a couple of years ago probably it would have been the highest piece of hardware on the list.

Lionel: Correct, and one other thing I see is the Xbox/PS4 making at 14% which shows that the connected gaming devices are coming on the market a lot more now than they were in the past.

Dan: Yeah, I’m also curious what happens this holiday. PS5 and the new Xbox, how does that impact as well. 

2. Is your current app development up to date with bug fixes and across devices and platforms?

Dan: We asked in your current app development — “Is your current app development up to date with bug fixes and across devices and platforms?” 51% said “yes.” The way you look at that is 50% said “no,” right? Three months behind, a year behind, and they don’t know. I know you deal with a lot of different companies in different regions in the world where this is a big problem. What are some of the things that you’re seeing in terms of the challenges that they’re having with this?

Lionel: Yeah, it’s one of the biggest expenses of any company: it’s usually the R&D team, and staying ahead with features and bug fixes, and keeping up with the market itself. There’s no surprise here that 50% are having that issue. 

Dan: What do you feel is the best practice there? Is it them coming up to speed? Is it the slide before saying “Okay, let’s really focus our efforts and our engineering time on two or three platforms?” Is it working with a third-party company? Is it focusing on the region of the world you’re in? Combination of all that?

Lionel: It’s probably a combination of all. But it’s also what we saw on the first slide where so many devices are coming into the market and just keeping up with those devices is pretty hefty, pretty hard. With all the bugs and everything that those platforms are since they’re written in different languages, you can only imagine what kind of bugs these companies are running into. 

Dan: Is it much harder? You deal with a lot of companies in many different countries of the world, I forget how many, but you’re working with companies on a regional level and global level —  is it much harder for companies acting on a regional level? I think some people would think because reaching a global audience is harder. I find with regional you have to think about all the issues that take place with a specific ISP, telco, or carrier that may be very unique and different from another country.

Lionel: Yes, correct. Then, with the competitors and with the OTT coming into play now, even at the regional level, I think what happens is these ISPs are having a very hard time competing in those markets. Because they have to keep up with all these new devices that they have to integrate into their system. A lot of these systems don’t support those devices. They have to probably redo the whole stack of software. 

Dan: Device support is key as well. 

3. Is your UI/UX missing any of the following features you would like to add?

Dan: Here we asked: “Is your UI/UX missing any of the following features you would like to add?” Again we asked people to select everything that they were most interested in. Recommendations, limiting access by username, and playlist was the highest. 

Lionel, I’m going to let you pick a couple of things out of this slide because I think there are a few different ones we could cover. Which one are you seeing most important whether they are red on this slide or not?

Lionel: No surprise. I think any company’s biggest problem is just customer churn and being able to keep the customers. It’s not just about acquiring new customers on a regional basis. But for ISPs, it’s just keeping the customers with recommendations, for example. 

It’s one of the most essential features that now any platform should have because it’s about keeping the customers, not letting them go out to other OTT players that are in your market. Their recommendations are one of the important features. 

Limited access by user name — that’s also another important feature: just being able to limit what each client can do or not share accounts and stuff like that. Here is one of some other features which probably now are almost standard in the market, like catch-up, live rewind. This is something that was new probably about five to seven years ago. If we did the survey, those would probably have been on top but now almost every platform has those. 

Dan: Think about Network DVR and Adaptive Bit Rate. We’ve been doing that for a couple of years already.

Lionel: Yeah, exactly. Chat is actually a surprising one. That’s with the newer generations. Definitely having a chat integrated into a player and having that communication back and forth with the client is always a good thing. 

Dan: Yeah, especially on mobile. 

4. What are your 4K video support plans?

Dan: We also wanted to ask a question about 4K because 4K is an interesting one depending on the type of content you have, the device you’re playing it back in, and the region of the world you’re in. 

I’ve been someone in the industry. It’s been very vocal that 4K is not something that the vast majority of content owners need and there are a couple of things I think to take away here. First and foremost, a lot of people have opinions about 4K but let’s separate facts from opinions. 

If you go and talk, say, to the commercial CDNs, a very small percentage of their overall traffic for their customers in many cases less than 5% is in 4K quality. If you look at someone like Netflix or Amazon, their overall content in 4K is very small as well. 4K obviously makes sense for certain types of content. It doesn’t make sense if you’re viewing on a small screen or a device where you just don’t benefit from that quality. So, we asked: “What are your 4K video support plans?”

Let’s see here. Purple is 17%, plus blue. You have 35% of people that say that currently don’t support 4K and don’t plan it. Not really surprising. You then have another 32% that say they’ll add it in six months. 63% here just over say that they’re gonna add it in the next six months or a year. Lionel, does that surprise you? 

Lionel: No, not at all. Just because 4K is more like a marketing extent to say that we support 4K. I think there are very limited titles that you can actually distribute in 4K. Especially with the commercial CDNs. I think they will probably make more sense on a regional level, probably an ISP where you actually own the network. The bandwidth consumption is not that big of a deal for you. But if you’re doing more like on a global scale, 4K is probably a little bit ahead of its time still. 

Dan: Yeah, it makes sense if you own the network, you want to control it. Do you also think that that’s the case because in that case, you’re using a set-top box?

Lionel: That could be one thing as well. Another thing it would be I think from a consumer standpoint. How many average consumers can tell the difference between a true HD and a 4K?

Dan: Yes, sure. A lot of them can’t. That’s why the industry has moved to really HD with HDR as opposed to 4K.

Lionel: Correct. 

5. Would the ability to support a multi-tenant environment be of interest to you?

Dan: Here we asked: “Would the ability to support a multi-tenant environment (meaning running different branded apps on the same Middleware with separate revenue streams and user bases) be of interest to you?” Not surprisingly some were unsure, 25% say “yes,” 45% say “no.” But we’re looking at this and now going okay, 55% said “yes” or “possibly.” 

Lionel, what is the most important thing that they should take away from when it comes to the ability of running different branded apps on the same Middleware? What’s the advantage?

Lionel: The advantage is keeping control of one of the leading providers that use this feature. It’s companies within a country, and they want to control all of those ISPs that are within the same country. They can run everything from the same environment, from the same Middleware compared to today, if they have 100 or 200 ISPs within the country. 

It’s hard to manage and see how many active subscribers, or hard just to keep management of all ISPs in the country, for example. I think that’s when this feature comes in very handy because, even though there will be different ISPs with different branding and clients, all can be managed within the same platform.

Dan: Do you see this trend more regionally or globally like other certain parts of the world where this is what customers are looking for more than another?

Lionel: I think in South America, this is a very big thing, and I think it’s also from a content standpoint, this is the way for the providers to control pretty much the content, the clients, and just having complete control of all the ISPs, compared to most likely what they’re doing now is pretty much they all run as separate entities and they have no control over.

Dan: Got it. 

6. Would you discard your legacy system if you could repurpose any of the following hardware?

Dan: Next question — “Would you discard your legacy system if you could repurpose any of the following hardware?” These set-top boxes, transcoders, and middleware servers are all pretty high. Again we asked to select all that apply. Many of them selected all three. But doesn’t it surprise you that these are so high? To me, it doesn’t but also sometimes depending on the customer you ask and how legacy their system is, right? We didn’t ask how legacy is their system. This is what they answered. 

Lionel: Yeah, it’s really straightforward. You could see that a lot of these platforms that they currently have in place were investments, they were done probably 5-6-10 years ago. If they’re able to use the same set-top box and provide a better service, I think, that makes a lot of sense because, as you can imagine, a lot of these providers have somewhere around 200, even 200 millions of these devices. It will be a big capital investment to replace all of them. So, yeah, no surprise there. 

Dan: And thinking about your average customer, and I know it’s different based on size and region of the world, but how long does their hardware really last, right? What is legacy? Are they swapping out every three years, every ten years?

Lionel: Probably, I’d say around three to five years anyway. And again these set-top boxes would work, it’s just based on the hardware requirement and how much limitations they would have. It’s about how much you want to offer to the consumer, so they would work 100% to be able to view costs…

Dan: But they won’t have functionality.

Lionel: That’s not saying functionalities and features.

Dan: You know I saw an interesting stat recently. I think it was put out by the Consumer Electronics Association that said the average set-top box in the home in the US is seven years old. And it makes sense if you think about it because that was the last time your cable company called you up and was like “Hey, let’s replace your set-top box.”

Lionel: It’s the opposite. You have to call them a couple of times.

Dan: Right. 

7. Have you not upgraded from your legacy OTT platform due to any of these reasons: cost, resources, quality?

Dan: Talking about legacy, we asked: “Have you not upgraded from your legacy OTT platform due to any of these reasons: cost, resources, quality?” And asked a couple of different things.

Lionel, what’s most important here?

Lionel: I think it’s what we just mentioned on the slide before. Cost is always the primary issue here because most of the providers think that they cannot repurpose those set-top boxes and transcoders. They are stuck with them, and it’s a huge capital investment they’ll need to replace them all, which is actually not true because you can repurpose all those set-top boxes. 

So, it’s just probably and also the second one is “can’t measure quality.” I guess it’s hard for them to tell what features they’re lacking unless they see something better. 

Dan: Okay, this is interesting. Cost is typically something that companies obviously look at when they’re talking about replacement. But I think here it’s more of a business problem as well. If they’re saying “can’t measure quality,” okay. So, if we’re actually swapping out boxes or legacy systems. If we can’t measure the difference from a business standpoint, why would we do it?

Lionel: Exactly. 

Dan: Is this more a technical problem or is this a business problem?

Lionel: I think a combination of both. I think it’s all it costs. But also finding the right company that is able to repurpose that equipment and offer better quality. I don’t think there are many costs involved in that. 

8. Does your current system support any of the following devices?

Dan: Another question we asked: “Does your current system support any of the following devices?” Here we wanted to find out what they’re doing as far as iOS, Android phones, and tablets. This is really about content on the go which is the question we’re asking here. 

Not surprisingly, Lionel, a lot of these are super high, but 25% say “none of the above.” Do we think that’s simply because they’re not currently offering something on mobile?

Lionel: Exactly. They just have a legacy system that’s probably purely set-top box-based. They don’t support any of these devices.

Dan: Wow, that seems pretty scary in today’s market where mobile is so big and no matter what country you go into that they’re running such a legacy system that they can’t have a mobile video offering.

Lionel: Yeah, more than likely they just have a legacy IPTV system that’s probably multicast. And they haven’t done anything on unicast OTT.     

Dan: Wow, that’s incredible. It’s amazing to think that in today’s market you have companies who still can’t support mobile because that’s such a large percentage of the overall market. 

Lionel: That’s right. 

9. Are you looking to support a hybrid model with subscriptions and ads?

Dan: Next question we asked a little bit in the business model here — “Are you looking to support a hybrid model with subscription and ads?”

41% want to add it in the next 12 months. Let’s add up orange. So, 72% want to add it in the next year. That’s a super high number. Now, why are almost 9% of the people supporting it today?

Lionel: I think it comes with the advertisements, SSAI, and CPMs. It’s just a little harder, especially on a global scale, I mean, outside of the US and Europe and more of the developing countries and areas. It’s very hard to get any high CPMs where it makes your business worthwhile or even being able to do it.

Dan: Yeah, I think it seems like a very low number though. So, is the issue here more technical or more business, right? Yes, SSAI has more issues and whatnot, but even if SSAI works perfectly from a technical standpoint, are the CPMs high enough? Is there enough?

Lionel: Exactly. That’s something we have to determine, I guess, based on region or based on the country itself.      

Dan: Do you see it changing some of the regions that you’re in based on advertising?

Lionel: Yes, we do that. I think it’s also because a lot of these companies are actually offering this model. Sometimes they operate on a loss just to be able to attract more customers and turn them into a subscription-based.

Dan: Okay, so they might be using this as a loss leader for other products and services they sell.

Lionel: Exactly.

10. Would you consider server-side ad insertions as part of an integrated solution for ad-supported video, for these specific benefits?

Dan: Next question number ten — “Would you consider server-side ad insertions as part of an integrated solution for ad-supported video, for these specific benefits?”

We asked about bypassing ad blockers, replacing dynamic ads with dynamic targeting or broadcast ads, increasing your revenue with pre-rolling, and supporting all the platforms. 

Increasing revenue, not surprisingly, is something that was high, right? Everybody wants to increase revenue. I think it would be important, Lionel, if you just took a minute to go through each one of these 4 things here. What are the differences between bypassing ad blockers versus increasing revenue because if you bypass ad blockers, doesn’t that increase revenue already?                    

Lionel: It depends on the platform, on the device itself. Some of the devices tend to have higher CPMIs. For example, connected devices, connected TVs compared to mobile and then browsers as well. It depends on the device itself.  

Dan: Depends on the device, okay. And I would assume it depends on the region of the world as well.

Lionel: Correct, of course.

Dan: Lionel, what I found interesting with Setplex when we were talking about just all the different things you guys do is the number of different countries and regions of the world that you guys actually provide solutions to. Maybe you list off five or six different countries because what I found interesting is that what’s taking place in one country is very different from taking place in another country. Where are some of the countries that you’re actually deploying systems?

Lionel: We are on a global scale now. We are in Argentina, Columbia, and many different places in South America. Then of course we are in the Asia part as well. We’re in Taiwan, Europe as well. We are in Albania. What am I missing here? In Italy, Pakistan. 

Dan: It’s interesting because you’re seeing in Pakistan, Italy, right? You’re seeing a lot of different use cases between Latin America, APAC, the Middle East, Europe, US. I think that’s also why we are seeing so many differences as we’re talking about today, different models, and different implementation strategies.

Lionel: Correct. And I think one of the leading causes of this and what’s why are these companies switching from legacy systems I think what’s igniting this as you can see on one of the slides was that a lot of these companies are in these legacy systems that don’t even support any mobile devices but now with the expansion of Disney+ and Netflix, and moving in all these other more in a regional level in other countries as well. It’s forcing these companies that are already sitting on these legacy systems to upgrade and offer something, so they can have more customer returns.

Dan: Yeah, it’s a good point. Just look at what Disney’s done in 11 months. The number of countries they rolled out to outside the US and they continue to. So, services like that certainly help. 

11. Q&A Part: How much does it cost to move from a legacy platform to something new?

Dan: We’ve got two questions already. Can you talk about the switching costs to move from a legacy platform to something new?

Now, obviously, you answer that it’s hard to say when people ask questions around pricing they say it’s like asking someone “what’s a new car cost?” Well, what do you want to do with it? Where do you want to drive it? How many people do you want to put in it? 

But give people some sort of idea when they’re looking at switching. Are they looking at or should they look at this from what is the per-user cost internally to them to switch? Is it overall reducing cost because of what they’re spending right now to keep a legacy system up and running from an R&D standpoint? What is the methodology you use to show them?

Lionel: There could be different factors in there. I think one of the most important factors would be that this doesn’t cost much if you can repurpose most of your hardware like set-top boxes, transcoders, and middleware. It doesn’t cost much to replace that system because you can repurpose most of the components and then be able to offer better service with more rich features and even being able to offer more devices out there. 

If you have a legacy system that supports only set-top boxes, if you move into another platform that also offers connected devices like Smart TVs or anything like that the customer doesn’t have to make any type of investments to be your customer because they can just use the devices that they already have. From a cost standpoint, I don’t think the cost is actually an issue. 

I think it’s more from a technical standpoint. They just don’t have the knowledge of what something like this requires. One of the biggest costs I think for any company is the R&D. I think it makes sense for a lot of these companies to third-party and source that to another company that it’s able to do that and does that for a day-to-day job and they just focus on the marketing and selling standpoint.

Dan: Focus on what your expertise is. If your expertise isn’t a technology, then really outsource that. Don’t keep it in your house. I also think in a lot of cases specifically we’re talking about OTT/IPTV legacy systems. It’s very easy for companies to just say “We’ll continue what we’re doing.” A lot of people don’t want to take that risk, right? They don’t want to put their head on the chopping block of “Okay, I’m the one who’s making the decision to change what we’re doing.” 

But to some of the points, you made and we talked about earlier. How can you not these days? Especially if your platform doesn’t support something that’s mobile-related, you’re gonna have to do it at some point. And the sooner you do it, the better. You can figure out the business model that best works for you the way you want to deliver content.

Lionel: There’re many business models out there. They’re OPEX, CAPEX, and there can also be a revenue-shared model. 

Dan: Do you see a lot of rev-share models?          

Lionel: I think, yeah. Recently with the Tier 2, Tier 3 guys we do see a rev-share model there. You know that’s a better approach I guess when you especially have a larger consumer base.

Dan: Makes sense. It’s less risk for them, less upfront CAPEX.

Lionel: Exactly.

12. Q&A Part: How easy is it to repurpose some of the apps or the software that’s already there?

Dan: You talked about repurposing some of the hardware obviously. It wasn’t too hard in some cases. But how easy is it to repurpose some of the apps or the software that’s already there? 

Lionel: Well that’s the easiest part actually because that just requires replacing your application on the app stores and it’s just a simple upgrade on the client-side. That’s the easiest part.

Dan: The easiest part is actually the apps and the software and that is because the systems today are just so much easier to deploy a single app across many different platforms. But there’s a follow-up question to that for you: “Does that mean the user experience is going to be the same across all platforms as well?” 

Lionel: Yes, most companies now have a common UI structure for all the applications so the user experience and the UX/UI are common between all the devices. 

Dan: Okay, so it means they’re also improving the user experience at the same time.

Lionel: Correct. 

Dan: Which is what this is all about, right? The best user experience, hopefully with great quality content, depending on what type of content they’re licensing and creating and making the user experience better and hopefully on multiple devices as well.

Lionel: Correct.

Dan: Well, that’s great. Well, Lionel, I am afraid we are out of time but I definitely appreciate everyone joining us. I’d like to thank Setplex for having me and Lionel for being here. 

If you have any additional follow-up questions reach out to Setplex directly. We’re happy to chat with you. If you have any other questions on the data or want to see some other data points, reach out. We’re happy to send those to you. So, if you have any questions, do that.         

Lionel: Thank you, Dan.