IN DEGREE PROJECT COMPUTER SCIENCE AND ENGINEERING,SECOND CYCLE, 30 CREDITS

, STOCKHOLM SWEDEN 2016

IoT-enhanced Entertainment: A new use case for 5G Fixed Wireless Access

Exploring next-generation media consumption in the Smart Home

LEONIE FRANKA MELBER

KTH ROYAL INSTITUTE OF TECHNOLOGYSCHOOL OF COMPUTER SCIENCE AND COMMUNICATION

IoT-enhanced Entertainment:

A new use case for 5G Fixed Wireless Access

Exploring next-generation media consumption in the Smart Home

LEONIE FRANKA MELBER

Course: DA224X, 30 ECTS

Master's program in Media Management

Examiner: Haibo Li

Supervisor: Christopher Rosenqvist

Industry supervisor: Kim Laraquiri

Company: Ericsson

Date: May 31, 2016

Degree Project in Computer Science

and Communication

KTH Stockholm Royal Institute of Technology

School of Computer Science and Communication

i

IoT-enhanced Entertainment:

A new use case for 5G Fixed Wireless Access

Exploring next-generation media consumption in the Smart Home

Abstract

The next generation (5G) of mobile networking comes with a range of game-changing

ambitions, particularly as a driver for the Internet of Things (IoT). In order for 5G to

achieve its vast potential, the consumer expectations and market dynamics need to

be translated into plausible use cases and viable business models.

Content providers compete for the attention of the viewer and listener whose

consumption patterns are changing dramatically; at the same time, the consumer-

centric IoT is on the rise, but struggling to make appealing value propositions to end-

consumers. This thesis investigates IoT-enhanced entertainment, an innovative use

case based on data collected about the user and her environment in order to deliver

highly personalized content of contextual relevance.

The report analyses this service across technology, business and consumer aspects

with the aim of assessing the viability of 5G Fixed Wireless Access as an enabler of

innovative media delivery in the smart home. In-depth expert interviews as well as a

conference visit delivered key insights into the emerging category of IoT applications

in the entertainment sphere, previously unexplored in connection with 5G.

The analysis shows that IoT-enhanced entertainment as envisioned in this report

caters to arising demands of media consumers for robust connectivity and tailored

content, while responding to challenges of players in the entertainment and

Information and Communication Technology sector. Hence, the case holds great

potential in bringing value to both consumers and businesses, provided that data

privacy needs are met with a reliable networking solution.

ii

IoT-stödd mediaunderhållning:

Ett nytt användningsfall för 5G-baserad trådlös

kommunikation som ersättare för fast bredband

Undersökning av nästa-generations mediekonsumtion i smarta hem

Sammanfattning

Nästa generation (5G) av mobila nätverk har omfattande ambitioner, särskilt som en

drivkraft för sakernas Internet (IoT). För att 5G ska kunna uppnå sin fulla potential

måste konsumenternas förväntningar överföras till rimliga användningsfall och

affärsmodellerna anpassas till marknadsdynamiken.

Leverantörer av olika medier och innehåll konkurrerar hårt om konsumenternas

uppmärksamhet och gunst, i en värld där mönstren för mediekonsumtion håller på

att förändras radikalt. Samtidigt växer intresset för konsument-centrerad IoT, dock

utan att kunna värdesättas utifrån ett konsumentperspektiv. Denna avhandling

utforskar potentialen för en IoT-förädlad underhållning till mediakonsumenter, som

ett sätt att leverera personifierad underhållningtjänst på ett kontextuellt relevant

sätt.

Rapporten analyserar sagda IoT-förbättrad tjänst utifrån olika perspektiv, inklusive

konsumenten, teknologin och den affärsmässiga bärkraften. Ett uttalat mål i analysen

är att undersöka värdet av en 5G-baserad Fixed Wireless Access som en innovativ

teknik för att leverera media och underhållning in i framtidens smarta hem.

Djupgående intervjuer med experter samt konferensbesök, skapade helt nya insikter i

ett ännu så länge outforskat område för IoT i 5G.

Analysen påvisar att IoT-stödd mediaunderhållning möter framtida

mediakonsumenters behov med avseende på robust konnektivitet och skräddarsytt

innehåll, samtidigt som den uppfyller framtida krav ifrån aktörer inom

mediabranschen samt informations- och kommunikationsindustrin. Sålunda antyder

analysen ett stort potentiellt värde för såväl konsumenterna liksom för industrin i

stort, så länge som konsumenternas integritetsbehov tillgodoses av de tekniska

lösningarna.

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Preamble

This thesis work was done in tandem to Desiree Jonek's (2016) report. Both papers

represent the final assignment for the Media Management master program at the

Royal Institute of Technology (KTH), Stockholm, Sweden, in cooperation with the

Stockholm School of Economics (SSE). The Media Management major was taught at

SSE, providing students with skills to take on an interdisciplinary perspective on the

media industry, combining technology and management know-how.

This thesis constitutes a collaboration with Ericsson in Stockholm, Sweden, and serves

to investigate a new use case for 5G Fixed Wireless Access, a technology currently

being developed by Ericsson, among a few other global telecommunication players.

The initial research to narrow down the topics as well as the collection of primary

data was performed in teamwork, and certain content such as some of the

theoretical background and the methodology are largely shared. In order to achieve a

broad range of insights, the analysis and results parts of this thesis were guided by

separate research questions, leading to conclusions regarding a shared use case from

two different angles.

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Acknowledgements

I would like to thank all the people who supported me in writing this thesis.

The interviewees who were kind enough to share their expertise and insights with us,

each and every one of whom contributed significantly to the quality of this work:

Jon Carter, Adrian Drozd, Jon Giegengack, Jean-Claude Kiessling, Andreas Promny,

Mateus Santos, Ricardo Souza, Gustav Söderström, Vlasios Tsiatsis, Maximilian

Wernicke, Yiru Zhong.

Further, my thesis supervisor Dr. Christopher Rosenqvist at Handelshögskolan for his

guidance.

Our examiner Dr. Haibo Li at Kungliga Tekniska Högskolan.

Our company supervisor at Ericsson, Kim Laraquiri, as well as Per Ljungberg for their

help and continuous involvement. Further, Sándor Albrecht, Neiva Lindqvist, Ioanna

Pappa, and Henrik Almeida from Ericsson Research for their valuable feedback, and

all the other colleagues who welcomed me in this department.

Moreover, I thank the Ericsson Research department for financing our research and

making our visit of the TV Connect conference in London possible.

I would also like to thank my parents for their encouragement and advice.

And of course, Désirée Jonek for the teamwork, companionship and support.

v

Table of contents

A st a t…………………………………………………………………………………………………………………………………..….. i

“a a fatt i g…………………………………………………………………………………………………………………………. ii

A k o ledge e ts………………………………………………………………………………………………………………….... iii

P ea le…………………………………………………………………………………………………………………………………….. iv

Ta le of o te ts……………………………………………………………………………………………………………………….. v

List of abbreviations and definitions………………………………………………………………………………..………….. vii

List of figures…………………………………………………………………………………………………………………………….… ix

List of tables………………………………………………………………………………………………………………………………… x

1. Introduction……………………………………………………………………………………………….……………………………. 1

. Ba kg ou d……………………………………………………………………………………………………..…….…. 1

1.2 Purpose a d o je ti es…………………………………………………………………………………………….. 1

. ‘esea h uestio s……………………………………………………………………………….….………………. 2

. Hypothesis………………………………………………………………………………………………………………… 3

1.5 About Ericsson…………………………………………………………………………………………………………… 4

2. Definitions and Theory……………………………………………………………………………………………………………… 4

2.1 5G FWA as an enabler…………………………………………………………………………………..…………… 4

2.1.1 5G – More than just the next generation of mobile networks?..................... 4

2.1.2 5G FWA - How does it work? Infrastructure and equipment…………….……….. 6

2.1.3 Benefits and capabilities of 5G FWA …………………………………………………..……… 7

2.1.4 Project roll-out and implementation…………………………………………………………… 8

2.2 Deriving a new use case……………………………………………………………………………………………… 9

2.2. The I te et of Thi gs IoT ………………………………………………………………………… 9

. . “ a t Ho e……………………………………………………………………………………………….. 11

2.2.3 From Connected Entertainment to IoT-enhanced entertainment………………. 12

3. Methodology……………………………………………………………………………………………………………………………… 14

3.1 Literature review………………………………………………………………………………………………………… 15

3.2 Qualitative research…………………………………………………………………………………………….……… 16

3.3 Limitations………………………………………………………………………………………………………….…….… 17

4. Results and Analysis........................................................................................................................... 18

4.1 Technological aspects: 5G and the IoT………………………………………………………………………… 18

4.1.1 5G value propositio s fo e te tai e t…….……..………………………………………. 19

4.1.2 5G FWA benefits for the end-consumers……………………………………………………. 19

4.1.3 5G for entertainment: Meeting new demands on connectivity…………………… 21

4.1.4 5G FWA as a driver of fixed-mobile convergence……………………………………….. 22

4.1.5 The Internet of Things and the Smart Home………………………………………………. 23

4.1.5.1 5G as a driver for the IoT…………………………………………………………….. 23

4.1.5.2 IoT architecture…………………………………………………………………………… 24

4.1.5.3 IoT challenges……………………………………………………………………………… 26

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4.1.6 Data generation in the home………………………………………………………………………. 29

4.1.6.1 Data analytics as a service…………………………………………………………… 30

4.1.6.2 How is the scenario-enabling data gathered?................................. 30

4.1.5.3 Are screens the future? New ways of engaging with the system.... 33

4.1.7 Intermediate conclusion: 5G FWA for Entertainment & the Smart Home…… 34

4.2 The Smart Home industry and Entertainment…………………………………………………………….. 35

. . “ a t Ho e i dust y………………………………………………………………………………….. 36

4.2.1.1 Traditional players in the home…………………………………………………… 37

4.2.1.2 Tech companies………………………………………………………………………….. 38

4.2.1.3 Start-ups……………………………………………………………………………………… 38

4.2.1.4 Who will rule the Smart Home market?.......................................... 39

4.2.1.5 Opportunity: Overcome the over-the-top threat………………………… 40

4.2.2 Smart Home business models, opportunities and challenges…………………..…. 41

4.2.3 Drivers and barriers for the Smart Home……………………………………………..…….. 44

4.2.4 Entertainment in the Smart Home…………………………………………………….……….. 45

4.2.5 How do modern smart home hubs compete?................................................. 46

4.2.6 Intermediate conclusion: Smart home industry………………………………………….. 48

4.3 Consumer expectations for entertainment and the IoT……………………………………………… 49

4.3.1 The smart entertainment market – How to define it?.................................... 50

4.3.2 Emerging IoT applications: Creative ways to enhance daily experiences……… 51

4.3.3 The keys to success: Simplicity and intuitiveness………………………………………… 53

4.3.4 Personalization and Content Discovery……………………………………………….……… 54

4.3.5 Intermediate conclusion: Demands for entertainment and the IoT…….……… 55

4.4 Connecting the dots: IoT-enhanced entertainment…………………………………………….……… 57

4.4.1 Scenarios………………………………………………………………………………………….………… 59

4.4.2 Overview- the o e ted li i g oo …………………………………………….…………… 63

4.4.3 Value chain and business models………………………………………………………………… 64

4.4.4 Revenue potential……………………………………………………………………………….……… 68

5. Discussion……………………………………………………………………………………………………………………….………… 71

. Dis ussio of key fi di gs…………………………………………………………………….………… 71

. Pe so al efle tio s…………………………..…………………………………………………..…….… 75

5.3 Other application areas & further research suggestions………………………..………. 76

6. Conclusion ………………………………………………………………………………………………………………………………… 77

References…………………………………………………………………………………………………………………………………….. xi

vii

List of abbreviations and definitions

4G Fourth generation of mobile

telecommunications

technology

5G Fifth generation of mobile

telecommunications

technology

8K 8,000 pixels resolution The currently highest ultra-high definition resolution in

digital television, refers to the horizontal display

resolution of 8,000 pixels

AT&T American Telephone and

Telegraph Company

Beamforming / Massive

beamforming

A 5G-enabling evolved antenna technology that involves

narrower, more directed, high-frequency beams of

connectivity, where one beam can even serve an

individual user.

BT British Telecommunications

CE Consumer Electronics

e.g. exempli gratia, for example

eMBMS evolved Multimedia Broadcast

Multicast Service

The goal with MBMS is to provide network operators

with the possibility to broadcast media content over

their cellular networks.

Etc. et cetera

FWA Fixed Wireless Access A variant of wireless broadband, where a radio link is

used instead of cable or fiber for data transmission.

Particularly suitable for broadband access in areas where

a roll-out with fiber or other infrastructure is expensive.

All users can get broadband access within the central

ase statio s a ea of o e age, hi h lo e s the installation costs.

FWT Fixed Wireless Terminal The terminal is the device which enables the access, with

a function comparable to a router.

GBPS Gigabyte per second

GSMA Global System for Mobile

Communications Association

Hyperpersonalization An evolution of personalization, providing even more

personalized and targeted products, services, and

content by leveraging personal data.

ICT Information and

Communication Technology

IFTTT If This Then That Service which allows end-consumers to link apps and

create ules a d e ipes to t igge auto ated processes.

IoT Internet of Things The network of physical objects as well as users

embedded with network connectivity and sensors that

enables them to collect and exchange data. The IoT

allows for remote and automated management of

objects, increasingly integrating the physical world into

computer-based systems, resulting in advanced

viii

efficiency, accuracy and economic value.

IP Internet Protocol

IPTV Internet Protocol Television The process of transmitting television programs through

the Internet using a broadband connection. In contrast

to traditional TV broadcasting, IPTV sends only the

program requested by the viewer.

LTE Long-term evolution

M2M Machine to Machine

M2P Machine to Person

MNO Mobile Network Operator

Mbps Megabit per second

OEM Original Equipment

Manufacturer

OTT Over-the-top Over-the-top content entails the delivery of audiovisual

and other media content from a third party – such as

Netflix or Amazon Video, over the Internet to an end-

user, with the Internet service provider simply

transporting IP packets.

Smart caching A strategy for media content delivery, which involves the

pre-loading of popular content in strategic places in the

network to increase the efficiency of the distribution.

Smart home Describes technologies which aim at increasing the

quality of living for consumers in their homes by

improving the convenience, security, efficiency of

processes etc. mainly by connecting objects to the

Internet to manage them automatized and remotely.

TV Television

UE User Equipment In telecommunication, UE means any device an end-user

deploys to communicate via a network, e.g. smartphone,

or a tablet with a mobile broadband connection.

VoD Video on demand Interactive multimedia service which allows users to

access videos independent from a broadcast time,

usually using content delivery via the Internet to TVs and

personal computers.

WiFi Wireless Fidelity

ix

List of figures

Figure 1: 5G as copper / fiber alternative (Ericsson 2015, 1), slightly adapted..……………………………….. 6

Figure 2: Deriving IoT-enhanced entertainment from existing use cases (Adapted from Ericsson)….…… 9

Figure 3: Research design comprising literature research, expert interviews, and a conference visit..…. 15

Figure 4: The end-to-end media services value chain and associated roles (Gerdfeldter et al 2015).…... 22

Figure 5: Entertainment as an IoT application, adapted from Frost & Sullivan (2015, 3).…………..….……… 24

Figure 6: Protocol-unifying function of the 5G Fixed Wireless terminal………………………………………………… 28

Figure 7: Why 5G FWA for entertainment in the smart home?.................................................................. 35

Figure 8: Adoption barriers and adoption drivers for the smart home………………………………………….……… 45

Figure 9: Different app oa hes fo s a t ho e hu s………………………………………………………………….………… 47

Figure 10: The interconnection of IoT-enhanced entertain e t, the s a t ho e, a d G FWA…………… 48

Figure 11: Opportunity to become the next smart home hub with a unifying technology……………………. 49

Figure 12: Consumer demands matched with exemplary expert quotes

(Source: Interviews and TV Connect conference)……………………………………………………….….…….. 56

Figure 13: The connected living room………………………………………………………………………………………………….. 63

Figure 14: Data input, command, and data output in the IoT-enhanced entertainment scenario………… 64

Figure 15: IoT enhanced entertainment value chain……………………………………………………………………………... 65

Figure 16: Conclusion: IoT-enhanced entertainment framework…………………………………………………………… 77

x

List of tables

Table 1: 5G value propositions for entertainment services..………………………………………………………………… 19

Table 2: Consumer demands matched with exemplary expert quotes………………………………………………... 56

1

Introduction

1.1 Background

If the projection about the Internet of Things (IoT) for the next few decades, that everything that can

be connected will be connected (Key 2015), turns into reality, the question remains which added value

the connectivity creates in different use cases. Vendors of IoT devices increasingly begin to address

end-consumers, and devices such as smart watches are being adopted by a large number of

consumers. As pa t of the o su e IoT , the concept of the smart home demonstrates the

progressing convergence of industries such as utilities, entertainment, and telecommunications, but

the involved companies are still in the process of figuring out sustainable business models enabled by

the seemingly huge potential of IoT applications. In an increasingly complex world of interconnected

devices, consumers wish for a simple and convenient solution. It needs to be simple both in terms of

setting up and managing the devices, as well as receiving technical support. A major challenge for

vendors wishing to participate in the IoT business is to find compelling ways to make use of consumer

data. Not everything that is technically feasible also creates value for the consumer. This, however, is

key for a sustainable adoption. Infrastructural premises and consumer habits and demands differ from

country to country, and no provider will be able to satisfy the needs across all markets. Therefore,

there needs to be a high degree of collaboration and partnerships in order to create a successful

ecosystem.

Ericsson is one of the global players substantially involved in the deployment of 5G, the next

generation of mobile networking, and one major application will be Fixed Wireless Access (FWA),

partly or entirely substituting the residential fixed broadband connections. Defining use cases for this

new connectivity technology is an important part of the research and development.

1.2 Purpose and objectives

The purpose of this research is to explore a novel use case for 5G Fixed Wireless Access (FWA) which

can be i teg ated i E i sso s e isti g f a e o k of use ases ad o ati g fo G. Fixed Wireless

Access means a mobile internet connection, as opposed to fixed broadband, which serves to connect

all web-enabled devices in a household. Both Smart Houses and Media Delivery have been defined as

use cases by Ericsson, and the category connected or internet-enabled home entertainment

constitutes a merger of these two. In the course of this thesis work, the use case of interest has been

denoted IoT-enhanced Entertainment by the author and entails hyper-personalized multimedia

applications which function based on the collection and interpretation of data generated by various

2

ki ds of o e ted de i es i the o su e s households. IoT-enhanced entertainment stands for a

higher degree of personalization and improved user experience, and may bring about new revenue

streams for various industry players. This thesis shall assess the potential of the 5G terminal in the

home as the central hub for future entertainment, and moreover, project the extendibility of the hub

as a smart home platform for a broader range of IoT applications. Leveraging IoT for entertainment

purposes may lead to a solid selling proposition in order for 5G to find its way into the homes. It is

therefore of interest how 5G challenges alternative technologies and what added value 5G can

generate in the homes of end consumers.

The market potential of the proposed use case shall be assessed by taking a closer look at existing and

potential business models for IoT services as well as the future consumers interested in such

applications. Further, the role of the 5G FWA terminal as the data hub for IoT data shall be briefly

illustrated, and respective initiatives to offer data hubs for the smart home shall be compiled as

benchmarks. Based on the outlined scenario of a hyper-personalized entertainment experience in the

smart home, a possible future reality of the connected consumer shall be created in detail, taking

ongoing trends in media consumption and device usage as starting points. Further, implications for all

involved industry players shall be derived, by taking into account the convergence and interrelation

seen in the market today and what various sources project for the 2020+ timeframe.

5G networks possess the potential to deliver extremely high data rates, and the question one might

ask is: Wh do e eed these? The a s e is, o su e s e e da li es toda a e al ost

unimaginable without connectivity, and the demands they have in terms of smoothness, convenience,

and efficiency, are steadily increasing. The Networked Society is already real today, but there is vast

potential that is yet to unfold. Zooming in to a small, exemplary building block of this big picture, this

thesis will discuss future home entertainment solutions enabled by 5G networks. It will describe 5G

FWA as an enabler for the consumer-centric IoT. What we already know, is that the technology is

powerful and highly flexible. For the commercial success of the 5G technology, not only the technical

feasibility, but also the market potential in terms of fulfillment of consumer needs and expectations

and sustainable business models need to be taken into account, and this thesis aims to deliver a

contribution to the ongoing research in precisely this area.

1.3 Research questions

The main research question is:

What is the potential of a 5G Fixed Wireless Access terminal to enable hyper-personalized

entertainment based on the interplay of IoT devices in the smart home?

3

With the additional questions:

Which data sources does IoT-enhanced entertainment utilize and what kind of value can be

generated?

What is the smart home-specific competitive environment for new entertainment services?

What are some of the drivers and barriers for the implementation from a technical

perspective and for the adoption from a consumer perspective?

What are the emerging consumer expectations future entertainment applications should

address?

The aim of this thesis is to explore a very specific aspect of potential applications of 5G Fixed Wireless

Access, and at the same time, take on a broader analytical perspective, in order to cover both

technological, business, and consumer factors, which may also be transferred to other application

areas. Based on the in-depth discussion of the interplay of these factors, chapter 4.4 will present IoT-

enhanced home entertainment, considering both the functionalities as well as the projected

implications for the value chain.

1.4 Hypothesis

This work is based on is the hypothesis that IoT applications will enhance the entertainment industry

of the future and lead to a previously unimagined extent of personalization of the multimedia

experience. 5G Fixed Wireless Access is thereby seen as the enabler. The characteristics of IoT

applications in the smart home and the potential of these for entertainment purposes shall be

explored, as well as changing consumption patterns and consumer expectations.

The popularity of over-the-top (OTT) and premium music streaming services prove that the willingness

to pay for entertainment products exist today. What made people choose services such as Netflix or

Spotify, which offer content that most users would also be able to access illegally, was the

convenience that was attached to them. As for services and applications for the smart home, on the

other hand, which is also a defined as a use case for 5G deployment, the initial barrier to mainstream

adoptio still has to e o e o e, a d e do s ill ha e to a s e the o su e s uestio Wh

would I need this? ith p odu ts that ge e ate lea e efits. E te tai e t se i es ould the efo e

be seen as a way to bring 5G into the homes, as this category is far more established and therefore

perhaps easier to market than novel smart home products such as smart lighting. As soon as the

connectivity is in place, more services could be added in a modular way, which is the proposal that will

be explained in detail in chapter 4.4.

4

1.5 About Ericsson

Increasing complexity of networks and demand on low latency and high reliability will favor the

implementation of a new generation of networks – 5G. Ericsson spearheads the development of 5G

and represents a company which demonstrates how technology can positively impact society, by

empowering consumers, improving infrastructure, creating environmentally friendly solutions, making

all kinds of transactions more efficient and many more. High capacity networks also bring about higher

potential for society as a whole and every person individually to drive change.

2. Definitions

The following pages shall give an overview of the central concepts in this thesis, firstly, the next

generation of mobile networking, 5G, and 5G Fixed Wireless Access as the key enabling technology.

Secondly, in order to lay the foundation for the proposed new use case IoT-enhanced entertainment,

the underlying key concepts of the Internet of Things and the Smart Home as existing 5G use cases

shall be introduced. The entertainment aspect will be investigated from the consumer perspective in

chapter 4.3. This chapter concludes with the derivation of the new use case as the evolution of

connected entertainment. The larger focus of this thesis lies on IoT technology and the smart home,

whereas my partner Désirée Jonek takes a closer look at the media content perspective (as shown in

Figure 2, p. 9) in her report (see Jonek 2016).

2.1 5G FWA as enabler

This chapter will serve to describe 5G in more detail, and focus on the application area of in-home

coverage: Fixed Wireless Access. A brief overview of the distinct requirements for 5G as opposed to

previous mobile networking generations, how 5G FWA works, and the implied benefits and

capabilities, as well as the time line for the implementation will be given.

2.1.1 5G – More than just the next generation of mobile networks?

5G stands for the next and fifth generation of mobile networking and will integrate existing standards

such as LTE and WiFi, as well as include new spectrum and spectrum sharing. This way, the new

system will be capable of delivering up to 10 GB/second over the air, enabling up to 100 times faster

data rates and mobile data volumes to be expanded by a factor of 1,000 (Ericsson 2016). 5G will

especially fuel the deployment of the Internet of Things, which will be one of the central subjects of

dis ussio th oughout this thesis. G is e isio ed to e o e a e d-to-end ecosystem to enable a

5

full o ile a d o e ted so iet NGMN . It is projected to empower value creation for

consumers and businesses, enabling existing and emerging use cases, one of which shall be explored

in this report.

Judging by its name, 5G seems to be an evolutionary development of mobile networks and simply the

next step after 4G/LTE. The buzz around the technology, however, suggests otherwise. So what is the

major distinction? The GSMA describes two different interpretations of the role and significance of 5G

as the e t ajo phase of tele o u i ation standards beyond the current 4G/LTE standards G

Americas 2016). The fi st is the h pe -connected isio of a de se et o k allo i g high o e age

and availability, as well as higher network density with regards to cells and devices. The key

differentiator from preceding generations is the fact that the new radio technology provides greater

connectivity and enables low power, and low throughput field devices. These factors serve as enablers

for services based on Machine-to-Machine (M2M) communication and the Internet of Things (IoT).

The se o d ie is o e of a t aditio al a d e olutio a ge e atio -defi i g ie , hi h is ai l

concerned with specific data rate and latency targets in order for the new radio interfaces to be

assessed agai st these ite ia. This ie allo s fo a lea disti tio et ee a te h olog that

meets the criteria for 5G, and another which does not (GSMA 2015). Some of the technical

requirements for 5G can indeed be enabled by 4G or other networks. What necessitates a true

generational shift are sub-1ms latency and >1 GBPS downlink speed, and only services that demand at

least one of these would be considered 5G use cases under both definitions (GSMA 2015). As opposed

to G/LTE, G is desig ed to i g a out u i uitous o e ti it a d eate a fi e -like e pe ie e

(European Commission 2014) and thus be able to compete with fixed broadband technology. An

argument for why 5G is more than only the next generational step is that 5G Fixed Wireless Access

means a convergence of internet and mobile phone technologies, which will be addressed in more

detail in chapter 4.1. From that perspective, 5G will bring about major infrastructural changes, as its

effects are more far-reaching than just introducing capacity improvements of existing mobile

networks. Requirements for 5G can be subdivided into two categories: Firstly, user-driven

requirements in terms of quality of experience, user satisfaction, reliability and speed of the

connection, and secondly, network-driven requirements in terms of network operation and

management (4G Americas 2014). The subsequent paragraph will give a brief overview of the

functionality of 5G FWA.

6

2.1.2 5G FWA – How does it work?

What Lawson (2016 des i es as the lesser-known aspect of the e e gi g G i eless sta da d ,

and Ovum forecasts to be an early use case of 5G (Ruby 2016), is Fixed Wireless Access. As opposed to

i eless o ile se i e, fi ed refers to wireless services delivered to fixed locations and devices in

homes and offices (Wolde 2016). The popularity of this use case is reflected in the ongoing trials for

this particular technology, for example by the major US-American telecom players Verizon and AT&T.

Fixed Wireless Access (FWA), as defined by Ericsson Research, is a way of using technology originally

developed for mobile broadband e.g. to mobile cellular phones or user entities, but applied in a

slightly different manner: Instead of serving mobile devices, the network is now used to connect fixed

devices, the so-called terminals, that serve the homes with a number of connectivity services. A FWA

terminal (or FWT) consists broadly speaking of the following entities, often integrated inside one

physical box: User equipment (UE) and a WiFi access point. The UE connects the FWT back to the

network, and the WiFi access point which is connected to the UE, enables the home devices to

connect to the FWT. The FWT thus acts as a gateway between any connected devices in the home and

the external network e.g. Internet. From a mobile network and hardware perspective, the FWT is

perceived like any other UE, such as a smart phone, but the terminal does not need mobility support

due to its fixed nature (Laraquiri 2016). The basic functionality of 5G to the homes is illustrated in

Figure 1.

Figure 1: 5G as copper / fiber alternative (Ericsson 2015, 1), slightly adapted.

7

From an end-user perspective, in order to use the fixed wireless broadband service, an outdoor

antenna, for example mounted on a windowsill (Lawson 2016) will pick up the 5G signal, radiant from

a base station in the neighborhood. This new model for connectivity could lead to gigabit broadband

coverage coming sooner to many areas than it would have been the case with the fixed fiber

alte ati e. The de elop e t ill e d i e o ile a ie s, ho a t a faste , heape a to

deploy giga it ‘u . Using a 5G FWT as a residential gateway constitutes a major

technological shift, as the terminal should – after a probable phase of transitory hybrid deployment,

using both fixed broadband as well as fixed mobile broadband – entirely phase out WiFi routers in the

home, and therefore, making copper or fiber to the home become obsolete (Laraquiri 2016). Hybrid

access will be explained in more detail under 4.1.

2.1.3 Benefits and capabilities of 5G FWA

5G can provide support for very high peak rates, and a capacity so high that it can compete with the

latest fiber broadband connections, and at the same time, comes with a number of benefits due to its

inherit mobility and robustness. The deployment of 5G to the homes means that there will be the

same infrastructure for mobile broadband and fixed wireless access, which means that the expertise

of i f ast u tu e e do s a d o ile ope ato s a e e led , as opposed to creating a completely

different technology. Especially for incumbents such as AT&T, beaming data to and from homes

represents a use case with great potential, as they have the advantage of not deploying FWA as a

standalone, but rather as a complement to the infrastructure already in place (Lawson 2016).

Specifically for media delivery to the home, 5G FWA can function as a driver for evolved Multimedia

Broadcast Multicast Service (eMBMS) for scalable distribution of popular content, such as smart

caching of content, to increase network efficiency. The key value propositions of 5G specifically for

consumers are highe data ates as ell as lo e late ies e ui ed to suppo t new and demanding

applications NGMN . This de elop e t is p oje ted to shape the h pe - o e ted so iet ,

ith o ile e o i g i easi gl sig ifi a t i people s li es G“MA ).

Unlike in traditional mobile networking, one tower is not sufficient to cover a whole neighborhood in

the case of FWA. This need for more, smaller cells, closer to homes, makes fixed wireless technology

more expensive than traditional cellular technology (Lawson 2016). However, compared to a fixed

broadband infrastructure with fiber, definite cost advantages can be realized, and because opening up

the ground to put in the fiber is avoided, the process also saves time. Fixed wireless is therefore likely

to e i teg ated i the i fo se i e p o ide s olli g out faste oad a d o e the e t se e al

years (Lawson 2016). A major opportunity for 5G is the deployment in emerging markets and in those

8

areas where fiber or copper connections in residential areas are currently not installed for financial,

geographical and/or infrastructural reasons. In these markets, fixed broadband connections are likely

to never be installed, as the installation from scratch would be very cost-inefficient in comparison to

o ile oad a d solutio . The efo e, o ile et o ks ill i easi gl e o e the p i a ea s

of network access for person-to-person and person-to-machine connectivity Hua ei . Vendors

need to make sure that, in order to be an adequate substitution to fixed networking, the mobile

et o ks a at h ad a es i fi ed et o ki g i te s of deli e ed ualit of se i e, elia ilit

a d se u it Hua ei . G is desig ed to fulfill these e ui e ents.

2.1.4 Project roll-out and implementation

As described in the paragraphs above, 5G holds manifold opportunities to significantly rebuild mobile

networking as we know it, and enable new products, services and business models while increasingly

connecting humans and objects.

At this point in time, some features or subsystems of 5G are readily available, but the requirements

and standard specifications for 5G mobile broadband are not conclusively regulated yet, (Lin et al

2016) or as Ovum analyst Schoolar said in March 2016, we are now just at the point of exploration –

the e do s i g out thei esea h a d thei gea , the ope ato s i g out hat the e ee doi g,

and everyone puts their stuff on the table and tries to figure out what it is we do with it (Ruby 2016).

An important issue on the a to G deplo e t is the defi itio of spe t u a ds. “pe t u

bands availability by region and the local laws that govern their usage will need to be harmonized so

the global circulation and economies-of-scale for mobile devices are not negatively impacted Hua ei

2013). The global telecom industry is expected to release official 5G standards in 2018, but various

players have begun planning test runs. American telecom provider AT&T announced in February 2016

that it plans to begin trials of 5G technology by the end of 2016, and its competitor Verizon

announced the same in late 2015 (Wolde 2016). As for the actual deployment of 5G, 5G is expected to

launch commercially available by 2020 (Lawson 2016).

9

2.2 Deriving a new use case

On the road to 5G deployment, various use cases have been defined by infrastructure vendors, device

makers, telecom providers, as well as regulators and standardization bodies. The Internet of Things

(IoT), including smart houses, is a major component of the various collections of use cases, and the

same applies to media delivery, especially of video content (Ericsson 2016). The aim of this thesis is to

explore a novel use case specifically for 5G FWA, and therefore Connected Entertainment has been

chosen as a starting point, as it taps

into several major use cases, such

as Media Everywhere and Human -

IoT interaction (as shown in Figure

2), at the same time being a specific

niche application which has not

been described in relation to 5G

yet. A brief introduction to the

major buzz topic IoT, and the

related concept of smart homes,

will be followed by an introduction

to the new use case.

Figure 2: Deriving IoT-enhanced Entertainment from existing use cases (Adapted from Ericsson).

2.2.1 The Internet of Things (IoT)

The IoT needs to be understood as one key element of a broader development towards what Ericsson

describes as the Networked Society (Dahlman et al. 2014), which also encompasses industry

convergence and the emergence of cloud computing, sensor and identification technology, and big

data analytics (Cisco 2016). The interpretation of the concept differs from author to author, but at the

core of it, the term IoT describes the emergence of an internet-e a led et o k of thi gs hi h a

include anything from household appliances to living organisms with the purpose of exchanging

information about these things and their properties. The International Telecommunication Union (ITU)

has defi ed the IoT as a glo al i f ast u tu e fo the i fo atio so iet , e a li g advanced services

by interconnecting (physical and virtual) things based on existing and evolving interoperable

information and communication technologies (ITU 2016). Whereas this definition expresses the

potential global scale of the IoT, also short distances and more local and perhaps silo-like applications

are part of the IoT, and the smart home would be an example of a very small IoT ecosystem. Major

drivers for the IoT are the increasing availability of broadband internet as well as the skyrocketing

10

smartphone penetration around the world, decreasing costs of connectivity and hardware, a growing

number of devices being manufactured with the capability to connect as well as the integration of

sensors (Morgan 2014).

The IoT comprises the data produced and transmitted between machines (M2M), as well as between

machines and people (M2P). An example for this machine-produced data within the IoT is data

gathered by sensors, which is transmitted via connectivity technologies (Cisco 2016) such as WiFi,

Bluetooth, or ZigBee. What this thesis focuses on is the M2M and M2P communication within the

home. Whereas the concept of the IoT generally just encompasses scenarios of connecting devices

and sensors via the internet, the real value of connecting them will be generated by the interpretation

of the data and insights they produce, which is the task of Big Data analytics. The use case scenarios

under 4.4 will consider various data sources in the home and their potential in enhancing the

entertainment experience with the help of the data they collect.

From a technical perspective, every IoT application has different requirements which might limit some

of the following factors: Performance, reliability, cost, robustness, efficiency, flexibility, power

requirements, data throughput, and licensed versus unlicensed spectrum (Cisco 2016). Besides the

technical limitations, a major challenge in the IoT is the question of who owns the large amounts of

data generated, which will be addressed in the analysis part of this thesis. The industries involved in

the IoT are extremely diverse, but this thesis shall have a clear focus on what can be described as the

consumer-centric IoT, which today predominantly encompasses wearables and other gadgets which

can serve entertainment, infotainment, productivity, health or fitness purposes. The types of devices

relevant to the in-home entertainment use case this thesis proposes will be described in more detail in

chapter 4.1. Gartner predicts consumer uses to account for the largest number of connected things,

whereas the largest spending will be generated by enterprise uses. 4 billion connected things are

estimated to be in use in the consumer sector in 2016, and will reach 13.5 billion in 2020 (Gartner

2015).

The Fraunhofer Institute for Material Flow and Logistics (IML), one of the first organizations dedicated

to esea h o the I te et of Thi gs, states that the IoT is u e tl e pe ie i g eteo i g o th

(IML 2016). As for why the popularity of IoT strategies among vendors and governments is increasing

so rapidly – as reflected in IoT being a key theme for all international mobile and computing

conferences – the International Telecommunication Union (ITU) suggests that we are advancing from

a positio he e the IoT deli e s i e e tal effi ie i p o e e ts to e isti g usi ess odels

(ITU 2015) to a position where it has the potential to positively impact new business models and

processes as well. The progressing implementation of IoT technology will lead to a high degree of

11

cross-industry cooperation, competition and regulation. IoT applications go far beyond the

competencies and capabilities of traditional players within Information and Communication

Technology (ICT) and will also involve various vertical industries, such as cars, healthcare, or farming.

A i po ta t aspe t of the IoT o ept is the possi ilit to exchange of data across multiple industry

se to s (Cisco 2016), which will contribute to ever-increasing degrees of convergence. The smart

home, described in more detail in the subsequent chapter, is a striking example of how multiple

industries converge in a single concept.

With the high demands on the seamless interplay of devices in order to generate useful data, comes a

list of requirements for any vendor who wants to play a relevant part in the consumer IoT ecosystem.

A su essful platfo e ui es oad pe et atio i to the digital lifest le seg e t, a soft a e

platform combined with a healthy developer ecosystem, and a massive infrastructure at disposal to

deal with demanding computing, storage, networking and database needs (Janakiram 2015). Only

few players in the industry possess all these capabilities, and it does not surprise that the Forbes

contributor Janakiram lists the five online and tech giants Amazon, Apple, Google, Microsoft and

Samsung as the companies that will dominate the consumer IoT market (Janakiram 2015). A detailed

discussion of current and projected developments on the consumer IoT market will follow in chapter

4.2.

2.2.2 Smart Home

As part of the IoT phenomenon, smart homes are currently on the rise. The terms Smart Home and

Connected Home are mostly being used interchangeably, and describe the concept of devices in the

home communicating with each other in order to create value for the persons living in this household,

which could range from saving cost by smartly adapting the consumption of utilities, feeling reassured

thanks to a sophisticated surveillance system, to having a more fun and customized entertainment

experience. The Ericsson Consumer Lab defines the connected home as a home he e household

appliances and services are enhanced by internet connectivity (Ericsson 2015, 2). According to Frost

& Sullivan (2015, 1), the penetration rate for security solutions, comprising surveillance and home

monitoring, is currently the highest among existing Western European users of smart home solutions,

being closely followed by connected home entertainment, which they describe as the t o t aditio al

solutions (Frost & Sullivan 2015, 1). The Deutsche Telekom describes a heightened concern about

energy saving among home owners in their report C eati g G o th f o the Co e ted Ho e , and

suggests that smart lights and thermostats will gain traction on the German market in the next few

years. The report also states that a mature smart home market will not exist until 2020-25, however,

12

30% of Western European homes are predicted to have a type of smart system in their homes until

2019 (Deutsche Telekom 2016).

With regards to control interfaces, smartphones seem likely to remain the central point of user

interaction, and all major smart home systems, such as Samsung Smart Things or Nest, come with a

mobile app to control the system. On the other hand, software companies which offer a stand-alone

app capable of operating across systems are emerging. A major challenge for the pervasiveness of

smart home technology is interoperability, meaning that devices from different manufacturers should

work alongside each other in a seamless way. Interoperability also serves to maximize the ease of use

f o a o su e s poi t of ie a d akes su e that the ea l adopte s a e a le to aug e t the

functionality of their home system by adding devices without experiencing trouble.

With technological advances enabling countless sophisticated solutions and the costs for hardware

and sensors steadily declining, the acceptance by end-consumers is the actual frontier that needs to

be considered (Frost & Sullivan 2015, 2), which is facilitated by renowned vendor brands. While smart

watches, wristbands and connected consumer electronics are making their way into the mainstream,

the concept of a fully connected home still needs to be established. This entails that the complexity for

the customer needs to be reduced while maximizing the functionality, interoperability and

convenience, which will ultimately translate into value creation.

2.2.3 From Connected Entertainment to IoT-enhanced Entertainment

As entertainment applications and especially video content account for a large percentage of data

traffic to and from the homes, the media delivery use case deserves special attention with regards to

the deployment of 5G to the homes. With connectivity increasingly being the default for consumer

electronics, the entertainment industry today is characterized by a fast emergence of innovative

services which rely on a broadband connection. The TV Connect conference in London in April 2016 is

the self-proclaimed leading conference and exhibition for the connected entertainment industry (TV

Connect 2016), and is dedicated to the evolution of media content consumption and a new

entertainment ecosystem. Insights from visiting this conference and engaging with industry experts

will be included in the analysis part of this thesis. One theme of the TV Connect conference was IoT,

Co e ted E te tai e t & the “ a t Ho e , and this particular combination of concepts seems very

unprecedented and was therefore deemed worth exploring with regards to finding additional use

cases for 5G to the homes.

Co e ted ie i g is defi ed a edia fa ult of the U i e sit of Califo ia as a p odu t o

service that augments the entertainment experience by integrating internet access, game play, and/or

13

so ial et o ki g Ca se -Wolf Center 2015). Over-the-top (OTT)-services, apps, and second screen

content are examples of connected viewing. Connected entertainment is the umbrella term which,

beyond video content, also entails connected music, a segment the smart speakers from Sonos, which

can connect to all music streaming services, and be managed with one app (Sonos 2016), are

exemplary for. Further, gaming, such as games integrating virtual reality glasses, is part of connected

entertainment. With the media industry increasingly being constituted of entrants from formerly

loosely related or unrelated industries, such as telecom providers or technology manufacturers, the

o petitio fo the o su e s atte tio is o l e o i g fie e . It is o su p ise that pe so alized

offers which suggest knowing the user better than generic services are becoming available. The

advancement of data analytics, which promise to make sense of big data and create value-added

services based on the analysis, is a strong driver of personalization.

This thesis proposes a new level of connected ente tai e t, hi h ight e ette des i ed as IoT-

e ha ed e te tai e t . This ea s, that the ho e e te tai e t e pe ie e is ot o ly based on

connectivity to the internet and among commonly connected consumer electronics devices such as

smart TV, smart phone, set-top box etc., but also among wearables and sensors. More precisely, IoT

enhanced entertainment is defined as an ecosystem of interconnected devices for multimedia

applications which operate based on the collection and interpretation of data generated by various

ki ds of o e ted de i es i the o su e s households. Be ause data a lea l e assig ed to a

specific person, this entertainment solution offers a high degree of personalization and improved user

experience, and may bring about new revenue streams for various industry players, which is going to

be discussed in more detail in chapter 4.

14

3. Methodology

This chapter covers and reviews the methods that were used to collect data in order to achieve the

research objectives and reach a conclusion after the thorough analysis of the data. The research

design will be of exploratory nature, which means that the relationship between two variables will be

examined with help of open questions and qualitative expert interviews (Saunders et al. 2012). The

nature of the relationship between the following variables will be examined:

X1= Independent variable = 5G FWA

X2= Dependent variable = IoT-enhanced entertainment

Since the thesis work will be carried out in cooperation with Ericsson AB in Stockholm, the author will

have access to their research on and insights into the current state of 5G technologies. A multi-

method qualitative study comprising four stages will be conducted:

Initial exploratory discussions with experts from the research department and other departments at

Ericsson in Stockholm. Initial discussion about practicalities, scope of the research and finally technical

introductions to 5G FWA.

Individual in-depth interviews

a. With Ericsson employees: About technical feasibility and their assessment of

the solution that is being proposed.

b. With external key actors / experts in various industries that will be relevant

to the proposed scenario.

Continuous presentations for Ericsson employees familiar with the topics 5G FWA and/ or media

distribution and the IoT to have a direct feedback and input loop.

Final conference visit of the TV Connect conference and exhibition in London, which is dedicated to the

topic Connected Entertainment. Speakers will represent key actors in the media, consumer electronics

and telecommunications industry. The data gathered at the conference will serve as final test and

validation of the proposed hypothesis and solution.

Given the exploratory nature of the research, only qualitative methods drawing on a broad variety of

sources were applied, as well as academic and industry research. It was refrained from using

quantitative methods such as consumer surveys for this thesis, because the author believes that the

feasibility and appeal of a future use case of a technology is nearly impossible to assess for consumers

who have never tested the technology and its value. For this kind of research, an actual prototype of

IoT-enhanced entertainment would have had to be developed, in order for consumers to be invited to

15

a hands-on study to test the experience. IoT-enhanced entertainment was derived from existing use

cases for 5G networking, and has not been researched in relation to 5G so far. Therefore, the

objective was rather to analyze the technological, business, and consumer context this use case could

be embedded in, in order to assess its eligibility.

The image below (Figure 3) illustrates the research design, including the variety of industry

representatives who could be won for expert interviews.

Figure 3: Research design comprising literature research, expert interviews, and a conference visit

3.1 Literature review

In order to be able to group the literature and the insights gained in the interviews better, the analysis

part of this thesis was roughly divided into three areas: Enabling technologies, market context, and

consumer expectations.

The technological insights this work covers were partly derived from the continuous dialog with

Ericsson employees of both the Research and the Media department, and partly obtained from the

study of online publications such as 5G white papers. As the technology is still in the process of being

16

designed and standardized, the available material is rather an ongoing advancement of a technology

vision than a set of definite statements.

When researching the current market context which the use case is embedded in, industry analyses

from specialized analyst firms based in the US, UK, Germany and Sweden, were consulted, provided

they were accessible, either as white papers, on in the Ericsson Business Intelligence Center.

Particularly for the paragraphs focusing on business models and market dynamics, many of the

insights were taken from websites such as Forbes.com, Wired or the Harvard Business Review, as they

report on the latest industry developments. Publications in scientific journals such as Journal of

Information Security or Advances in Internet of Things, serve as a source to back up some of the

statements found in other online sources.

The insights about consumer expectations were predominantly derived from the expert interviews

and the input from the conference visit, and backed up with the extensive study of consumer research

reports available online, such as from Accenture or the Ericsson Consumer Lab.

3.2 Qualitative research

A major contribution to the quality as well as credibility of the suggestions made in this report was

delivered by expert interviews, as well as insights from presentations and panel discussions at the TV

Connect conference 2016 in London. Reflecting the general perception of the author that IoT-

enhanced entertainment will touch upon a variety of industries, the aim was to contact potential

interviewees in leading positions representing the various perspectives this thesis is taking on. All

interviews were taken as building blocks on the way to come to an overall conclusion which ties

insights from different angles together. The interviewees received a short pitch of the topic as well as

sample questions beforehand. The questions of the semi-structured interviews were individually

tailo ed to the i te ie ee s e pe tise as i di ated thei positio i the o pa o p e ious

publications, and due to their heterogeneous backgrounds, these question displayed a high degree of

variation. All interviewees, however, were asked to give their assessment of current trends in the

entertainment and the IoT space, and their opinion on the use case.

In total, eight interviews with eleven experts were conducted. Five interviews were held over Skype or

telephone, as the interviewees reside in other countries, and three interviews were conducted face to

face in Stockholm. The fact that the interviewees represent different industries, makes the results not

directly comparable per se, but serves the purpose of highlighting that there might be some common

perceived trends as well as concerns with regards to the issues in question.

17

3.3 Limitations

The study will be of purely explorative nature, which means that the relationship between the

variables 5G FWA and IoT-enhanced entertainment has not been established or examined before,

which will be the aim of the thesis. The use case should therefore be studied further regarding its

technological feasibility and the design of a concrete prototype, supported by qualitative and

quantitative end-consumer studies. Furthermore, the suggested solution will only be realizable under

certain conditions, such as an existing minimal network infrastructure for the implementation of 5G,

o su e s i te est i a d illi g ess to pa fo su h a se i e, as ell as a ious i dust pla e s

willingness to cooperate and partner with other players. Finally, the solution IoT-enhanced

entertainment can have different benefits and be adapted to a varying extent, depending on the

economical state of a market and degree of population density, which should be subject of further

studies.

Another limiting factor is that 5G is still in the process of being developed, and therefore any

assumptions regarding the capability of the technology can only be made with reservation, as the

precise characteristics of 5G some various use cases still need to be tested.

Further, the available material, such as reports on the smart home industry and connected

entertainment, has a strong focus on the US-American market, which may lead to a bias. The expert

interviews largely represent Western-European views. The results are therefore by no means

generalizable for any market. The US, however, are the leading smart home market, with Western

Europe closely following, which is why insights from these markets were deemed most promising for

the analysis.

18

4. Results and Analysis

The purpose of this chapter is to elaborate on the technological, economic and consumer benefits of

5G, and in this context, to explore IoT-enhanced entertainment as an innovative use case for 5G fixed

wireless access. This requires the analysis of the technological premises, and the business

opportunities as well as the value creation for consumers potentially generated by bundling 5G and

entertainment in the smart home. The input from the eight expert interviews and from the

conference visit hereby serves to complement, validate and challenge the secondary research

findings.

4.1 Technological aspects: 5G and the IoT

Fo E i sso s isio of the Net o ked “o iet , G is a central enabler. Increasing (inter-) connectivity

goes ha d i ha d ith the ad a e e t of the I te et of Thi gs, a d G is its a k o e “a tos

2016), because it is designed to fulfill the crucial requirements on the network capability: High data

rate, low latency, high reliability, and the faster and cheaper transmission of large data volumes (Lin et

al. 2016). 5G will need to deliver massive capacity, because the current support of 5 billion users

through mobile network systems will have to expand to support billions of applications and hundreds

of billions of machines as well (Huawei 2013).

To be able to describe 5G as an enabler of the Internet of Things in general, and 5G Fixed Wireless

Access as an enabler for IoT-based entertainment services in particular, the following chapter shall

firstly relate the characteristics of 5G connectivity to the smart home as well as entertainment

services. Secondly, this chapter will describe how IoT systems are constituted, and what challenges the

implementation and adoption of IoT products and services involve. Lastly, under 4.1.2, the data

generation in the home shall be exemplified, focusing on which data sources could serve as enablers

of IoT-based entertainment services. Both high quality media delivery and smart home applications

represent strong use cases for 5G Fixed Wireless Access. Based on these envisioned applications

e a led G s high-performance, high-capacity capabilities, this thesis is exploring the new use case

IoT-enhanced entertainment which is merging these two – media delivery and smart home. The 5G

FWA terminal is designed to serve high demands on media delivery to the home as well as enable a

complex network of IoT-devices in a household, as the network complexity is – driven by smart home

applications – increasingly moved into the home (Kiessling 2016).

19

4.1.1 5G value propositions for entertainment

Media and entertainment services are consuming more and more network capacity due to increasing

usage as well as larger amounts of data being processed, for example for high definition video. More

specifically, media distribution models are currently facing increasing challenges and demands. How

5G is supposed to address these, is listed below (Table 1).

Table 1: 5G value propositions for entertainment services

While the halle ges a o e e e gize the edia a d e te tai e t i dust a d its e o o i i pa t,

they pose extreme technical challenges to the underlying distribution infrastructure. 5G should be

able to answer these challenges, and turn them into opportunities for all stakeholders (5GPPP, 2016).

4.1.2 5G FWA Benefits for the end-consumers

The 5G FWA terminal (FWT) has some crucial advantages compared to a broadband connection

brought to the home via copper or fiber. From a consumer s perspective, several benefits of 5G

deployment in the homes should be highlighted. Ricardo Souza from E i sso B azil thi ks that G is

perhaps the first technology where the consumer also defi es the spe ifi atio s. It s a e te h olog

20

that is being defined coming from both sides. Especially when we talk about home services and

entertainment, there are things that directly affect the user; he can sense how it works (Souza 2016).

Flexibility: The 5G FWT operates as a user equipment, which means that it is as mobile as a smart

phone, and could be taken along on a trip, or when a person moves. The FWT does not require the

installation by a technician, and thus offers a high degree of flexibility and autonomy of the consumer.

Problem detection: Frustrations with the WiFi router at home are common (see e.g. Pioneer

Communications 2016), and 5G promises an easier identification of problems thanks to the high

visibility of the network. This also leads to a better control and overall management of the system.

Network capacity: 5G is capable of providing a sustainable and high data rate. In combination with the

lower latency this allows for the full enjoyment of demanding applications such as virtual reality video.

Choice: A probable consumer benefit will also be the choice between multiple different operators, just

as it is the case for mobile phone plans today. Consumers will not be bound to stick to the fixed home

network operator which might have been predefined by the landlord or the previous tenant.

Local cache: Another central benefit of the 5G FWT is the possibility of a local cache. According to

Ericsson IoT-expert Tsiatsis, the personal data collected in the home should have what he calls a lo al

appli atio logi , a d a split fu tio alit et ee loud a d lo al a he. Not e e thi g a e

stored locally; othe ise the pote tial of alue ge e atio ould e st o gl li ited. “o e thi gs

eed to go out i o de to i g alue (Tsiatsis 2016), for example the cloud storage of media makes

sense for anyone who would like to access it remotely. Also for consumer IoT devices like fitness

wristbands, Tsiatsis sees that people increasingly accept that data goes into the cloud, because this

expands the range of services they can benefit from. For personal data, such as health data, or how

many minutes I spend sleeping, the anonymization and aggregation (e.g. to collect over the span of a

month) are key privacy mechanisms. Mateus Santos (Ericsson Brazil) also describes this trade-off

between a high degree of interactivity when using a cloud, and increased data security and privacy,

which is achieved when as much of the data as possible is stored locally. According to Santos, the

potential of the cloud is especially given for entertainment services and personalization, as

information can be aggregated and processed in the cloud and draw on 3rd party services, and based

on that for example deliver personal recommendations. Generally, Santos thinks that there should be

a consumer platform, an interface for consumers which they can personalize and for which they can

set preferences (Santos 2016).

21

4.1.3 5G for entertainment: Meeting new demands on connectivity

Ericsson has defined several entertainment-related use cases for 5G in-home usage, such as

immersive gaming and immersive virtual reality (as part of Human-IoT Interaction) and ultimate video

quality, mobile for in-home TV, on-demand anything, meeting consumer demands for TV (as part of

Media Everywhere). These come with different requirements, for example, low latency and high data

is crucial for video communication, gaming, and virtual and augmented reality, whereas the smart

sensors in the home demand a very reliable, always-o et o k. If G is to play a role in a large-scale

delivery of audiovisual services, it has to be capable of supporting evolving user behavior and all

relevant types of linear, on-demand and converged media services (ETSI 2015, 2). To provide a

consistent user experience, it should also be feasible to use 5G in combination with other delivery

mechanisms, e.g. broadcast and fixed broadband networks (ETSI 2015, 2) as it will be discussed in

chapter 4.1.4. The increasing adoption of the smart home in general and connected entertainment in

particular will drive the need for higher bandwidth and a reliable network.

Andreas Promny, the CEO of AK Media in Germany identified four drivers which place demands on

connectivity. Firstly, gaming is projected to become more popular for a broader audience (Promny

2016), hi h O u o fi s: Videoga es o ti ue to e pa d thei ea h d a i g i o e

o su e s o o e de i es a d aki g o e i lots of i o ati e a s. Espe iall i e si e a d

collaborative gaming and virtual reality gaming, which are also defined as 5G use cases by Ericsson,

will require high network capacity and high definition video. Ericsson expert Santos highlights the

possi ilit of usi g ou G te i al to o e t eigh o hoods i a it , p o idi g uality services for

gaming and social interactions, for example using Virtual Reality. There is great market potential for

providing these services that allow for social interactions Santos (2016). Promny (2016) also predicts

that we will need high-performance networks allowing for community gaming, requiring precision,

ualit of se i e, a d lo late . The et o ks ill e d i e those ho a e addi ted to gaming,

and addicted to quality (Promny 2016).

This leads to the second driver, demand for quality. The new generation of TV devices is 4k-enabled,

a d soo a ufa tu e s ill e e p odu e K TVs fo the ass a ket. Toda s tele isio et o ks

cannot deliver this kind of quality; highly potent broadband connections will be necessary to deliver

audiovisual content with the high quality these devices enable (Promny 2016). OTT-services are much

more flexible in dealing with image quality upgrades like these. While consumers are still waiting for

their traditional TV operators to catch up with the new definition standards, YouTube already offers

4K. Giegengack (2016) shares the view that 4K television, which is going to be the standard in the US

soon, will impact bandwidth at home. He adds that this driver will be coupled with people now

becoming accustomed to watching everything they want on-demand, having all episodes at once,

22

provided by services such as Netflix. The third driver Promny (2016) sees is IoT-applications in the

home, with more and more things requiring an IP address and connectivity. Lastly, he describes the

broad trend towards visualization and moving images, substantially increasing the volume of video

uploads a d do loads. This de a d is d i e ou ualit e pe tatio , hi h i tu is o sta tl

fueled fu the all a ket pla e s P o . E i sso o fi s, that Video-centric

e pe ie es a e e o i g o e e t al to people s i te a tio s Ge dfeldte et al .

4.1.4 5G FWA as a driver of fixed-mobile convergence

Media delivery to the homes is currently being deeply transformed by the rise of o e -the-top OTT)-

services, which lead to an increasing percentage of TV and video content being delivered via IP

networks, as opposed to the traditional distribution channels, terrestrial or satellite. With 5G FWA, yet

another method of

media delivery will

enable consumers to

enjoy super high data

rates and high definition

video. Figure 4 illustrates

the media services value

chain including the step

deli e , hi h G is

likely to impact in the

near future.

Figure 4: The end-to-end media services value chain and associated roles (Gerdfeldter et al 2015)

In the media services architecture, content first enters the media infrastructure in form of IP packets

and subsequently makes its way from one resource function to another in order to be transcoded and

stored, among other media operations, eventually being delivered to the end-use s de i e fo he to

consume the content either over IP, or as a traditional broadcast (Gerdfeldter et al 2015). 5G is likely

to lead to the reconsideration of the role of fixed networks, and also how they should be

ee gi ee ed a d ope ated i onjunction with mobile networks Malli so . Fixed-mobile

o e ge e des i es h id solutio s i hi h the o ile a d fi ed oad a d o e tio s

complement each other for in-home coverage Voigt . 5G i pa ti ula ill e a le o ile ideo

to grow much faster than any other network traffic Voigt , as latencies in the sub-millisecond

range will allow ultra-HD visual communications as well as immersive multimedia and virtual reality

23

interactions (Huawei 2013). 5G can deliver an al a s suffi ie t ate to give users the perception of

infinite capa it ET“I . What Malliso alls the di isio of la o et ee o ile a d

fixed et o ks ill e o e a e t al issue of G deplo e t, ith the ai to efficiently serve a

variety of use cases requiring different capacity and performance (Mallinson 2015).

Henrik Voigt of Ericsson delivers a strong case for using mobile broadband for media delivery,

particularly video content. High speed broadband technology such as fiber provides a suitable

platform for high quality, interactive, as well as cost-efficient TV and video delivery. However, only a

small fraction of global households currently has sufficient fixed broadband capacity for IPTV, and the

majority of global households has no fixed broadband connection whatsoever and will never get one.

Fo these o su e s, o ile oad a d is the o l hoi e, a d also the o es ith a li ited fixed

broadband connection would benefit from aggregation with a mobile access (Voigt 2016). So far, the

major barrier for mobile broadband for TV/video delivery had been the high cost associated with the

indoor-coverage of high traffic volumes (Voigt 2016). However, with 5G networking enabled by fixed

cellular antennas, e.g. on street lamp posts or roof tops, mobile data volumes may be expanded by a

factor of 1,000 (Gerdfeldter et al 2015), therefore significantly increasing the efficiency of media

delivery via mobile networks. Further, 5G directional antenna technologies, or massive beamforming,

imply narrow and precise connectivity beams, which can serve single users. This will also allow for

improved network efficiency and cost edu tio s, aki g o ile broadband a cost-efficient

alternati e to fi ed oad a d Voigt . It is predicted that by 2025, the cellular costs will have

reached a level low enough to transfer any hybrid content delivery solutions (such as switching

between terrestrial/satellite and mobile) can be transferred entirely to mobile, even in markets where

there is high terrestrial penetration Voigt . Fu the , , a ou d pe e t of the o ld s

population will be covered by mobile broadband networks E i sso , 3).

4.1.5 The Internet of Things and the Smart Home

After the 5G technology has been described in relation to media delivery and entertainment, 5G shall

be analyzed as a driver for the IoT, in the course of which the basic technical characteristics of the IoT

will be presented. Further, challenges linked to the IoT as raised by the experts will be analyzed.

4.1.5.1 5G as a driver for the IoT

Not only will 5G enable the continuous growth of high-defi itio ideo, but will also provide an

interconnected network for the billions of IoT sensors (ISO 2015). IoT applications require a reliable

network connection that allows data to travel seamlessly from the point where it is collected to the

point where it is processed and analyzed. 5G is designed to support a massive amount of connected

devices and sensors and is going to be a key enabling technology on the road to large scale adoption

24

of IoT applications (NGMN 2014). 5G wireless networks are expected to offer 1,000-fold gains in

capacity over existing networks, giving the potential to connect at least 100 billion devices with

download speeds that can reach 10 gigabits per second (Wolde 2016). The vision of smart homes and

eventually smart cities involves dense networks of sensors, which monitor the environment around

them. The main requirements for the realization of this vision are low cost devices as well as long

battery life (NGMN 2014). The switch to 5G will enable households to adapt to changing requirements

in a flexible manner, requirements which might not be foreseeable today, but will most likely involve a

powerful and stable broadband connection. Some of the key driving factors for the need for an

upgraded broadband capacity were presented in 4.1.3.

4.1.5.2 IoT architecture

The IoT requires every object that is to be connected to have its unique IP address. Thanks to the

gradual switch from IPv4 to IPv6, there are approx. 340 trillion trillion trillion possible combinations of

numbers and letters (Johnson 2015) to be assigned to a connected object. Besides having a unique

identifier, the common characteristics of any IoT-connected device are internet connectivity, the

ability to send and receive information, the ability to interact with other objects, and the ability to

perform these functions without requiring either human-to-human or human-to-computer interaction

(Frost & Sullivan 2015, 3).

Figure 5: Entertainment as an IoT application, adapted from Frost & Sullivan (2015, 3).

25

From an architectural perspective, any IoT deployment consists of three basic components, which are

the edge, the network, and the core (see figure 5). The thi gs , which in the case of IoT-enhanced

entertainment are sensors in the house and smart consumer electronics, are being managed in the

edge (Frost & Sullivan 2015, 3) where information gathering and object sensing takes place (Chan

2015). Embedded in these devices is intelligence which links them to an IoT-cloud in the core, via an

always-on network (Frost & Sullivan 2015, 3) which could be 5G, WiFi, Bluetooth, ZigBee or any other

protocol suitable for delivering the information (Chan 2015). The IoT-clouds host applications and

databases, which are either provided by the vendor of the IoT device or by the provider of the core

solution. The core registers each thing and assigns it a unique identifier, in order for it to be

identifiably by services and applications in the core. The core further serves to authenticate and

authorize the thing and to ingest data from it. A rules engine then transforms device messages for

routing to the applications and services. Machine learning occurs, and the system derives analytic

i sights. The o e of the loud sto i g the thi gs data a p o ide this data to othe pa ties. The

things are capable of browsing available functionality and, depending on the specific requirements

and context, downloading new functionality. The core can further send control commands and push

capabilities and updates to the things. This two-way communication with the core is the key to value

creating of connected things (Frost & Sullivan 2015, 3).

Especially for media service providers, cloud computing can constitute a challenge, due to the late

of the network when connecting to the cloud (ETSI 2015, 1). Bringing the cloud-computing to the

edge is described with the te o ile edge o puti g, a d is e de ed as o e of the ke e e gi g

te h ologies fo G et o ks ET“I (2015, 1). It will enable service providers and OTT players to

translate proximity and context into value ETSI (2015, 1) and ensure an enhanced Quality of

Experience for end users, which is an important aspect for entertainment applications. With regards to

IoT-enhanced entertainment, Ricardo Souza from Ericsson Brazil thinks that a recommendation

system should be based on edge computing, and therefore be really close to the user, which enables

context-awareness, high bandwidth, and low latency. When introduced to the use case, Souza states

that this idea of recommendations, of actual knowledge, is something that most IoT applications lack.

Mostly, when people talk about IoT, they talk about machine-to-machine communication, not so

much about bringing knowledge to the user (Souza 2016). He believes that actually processing this

data in the sense of understanding what the user wants is something that is usually not represented in

the research on IoT applications.

As the detailed description of the technological specifications would go far beyond the scope of the

discussion, the insight shall be limited to the notion that edge computing can be seen as an enabler for

new entertainment services, as it has the potential to meet the requirements for demanding media

26

applications. How exactly mobile edge computing using the 5G FWT can be leveraged for

entertainment purposes, and which network architecture is required for efficient and value-

generating IoT-enhanced entertainment, represent suggestions for further research.

4.1.5.3 IoT challenges

The IoT, depending on the use case, comes with a range of challenges and issues which need to be

overcome in order to realize the projected benefits. The ones listed below were also raised in the

expert interviews with Frost & Sullivan, Deutsche Telekom and Ericsson IoT-experts. As the Internet of

Things is an all-encompassing term capturing a vast range of potential application areas, the following

challenges shall be discussed directly in relation to the consumer-centric IoT, which captures the areas

of interest, smart home and connected entertainment.

Security issues

Security considerations have long been key in the information society; however, the IoT represents an

entirely new level of potential threats to data security. Hand in hand with a higher pervasiveness of

te h olog i people s e e da li es, a d the olle tio a d t a sfe of se siti e data, goes an

increased concern about what would happen if unauthorized people got hold of the data and/or were

capable of manipulating the system. A thi g ith a IP o e tio a e ha ked , sa s To Jah

from Conax at TV Connect, and points out that the smart home with its many connected devices will

become a new playground for hackers (Jahr 2016). Ensuring security in IoT services and products and

addressing the concerns of end-users is a fundamental priority in the IoT market (The Internet Society

2015), particularly with regards to services that people will integrate in their private spheres,

disclosing personal data. Especially in case of the smart home, the rather slow adoption is mainly

attributed to the consumers reluctance to have their data logged and rely on the cloud service

provider to ensure the security and protection of their data (Srivastava 2015). Further, the larger an

IoT system gets, the more extensive can the effect of the malfunction of a single device be, as IoT

networks can potentially be interconnected on a global scale. Mass-marketing IoT devices will amplify

the challenge to secure systems of increasing size and capacity. When speaking about security,

Kiessling (Deutsche Telekom) highlights the benefits of a local gateway, as opposed to cloud solutions.

The gateway wirelessly interconnects devices and services in the house, and the communication

within the house is very short-distance, which enables high data rates. Further, in case of a power

failure, the local gateway provides offline capability. Cloud services have cost advantages, but come

with the enormous disadvantage of not functioning offline, and the data lies in the cloud and not

within the house (Kiessling 2016).

27

Privacy considerations

Closely related to security, but on a more individual level, privacy concerns constitute a limiting factor

to progressing IoT adoption, as the IoT entails a constant and largely invisible exchange of data

between people and things (Virkki & Chen 2013). A hyper-connected future also entails a higher risk of

surveillance and tracking use s a tio s a d eha io , the difficulty of opting out of certain data

collection, and the potential of aggregating all available data streams to a highly detailed digital

portrait of any user. As the value creation relies explicitly on the collection, analysis and use of data,

and especially the user specificity can unlock unique benefits on an individual level, establishing trust

for the technology is inevitable, and individual privacy preferences and choices must be respected.

Kiessling (2016) adds, that in the smart home, the data needs to belong to the end-consumer, who

should have the certainty that the data is stored in the local gateway and that she can give consent to

which data shall be shared with service pro ide s. I a de ide hethe I a t that s ste lea s

about my patterns and that a service provider gets access to this data in order to analyze it, and

maybe give me recommendations on how to optimize my power usage (Kiessling 2016). The same

applies to IoT-enhanced entertainment, which is thought of as an opt-in service with full transparency

of what certain data is used for. The user should be able to say what he wants, the product should be

user-centric , sa s Santos (2016) in his interview. Adrian Drozd from Frost & Sullivan confirms that for

smart home services based on data analyti s, It s a out t a spa e – the consumer needs to

understand what happens to their data. Making it clear what data is being used for what makes

people understand the e efits of ope i g up (Drozd 2016), which might range from more

personalized content to better service or reduction of monthly fees etc. Generally, younger consumers

are more open to sharing data. Even though privacy still constitutes a major barrier for the smart

home, Max Wernicke from Frost & “ulli a states that People ha e already opened up in certain

sectors; for example, pe so al shoppi g is toda s reality. We will see this happening in other sectors,

too (Wernicke 2016).

Interoperability / Standards issues

With e e e s a t de i e I add to home, it gets a little dumber (...) Just about every device

has its o app fo s a tpho e, ut si e o e of the o k ith ea h othe , I e got 5 apps

controlling 15 functions Ja oslo ski 16). This quote from an unsatisfied journalist and smart home

user describes the next major issue: A fragmented landscape of proprietary IoT technical

implementations, which inhibit value for both users and industry. While full interoperability across

products and services is not always feasible or necessary, purchasers may be hesitant to buy IoT

products and services if there is integration inflexibility, high ownership complexity, and concerns over

vendor lock-in The Internet Society 2015). Yiru Zhong from Frost & Sullivan confirms that the major

28

issue of the IoT toda is that We a e still st uggli g to make everything talk to each other

meaningfully (Zhong 2016). But not only from a consumer but also from a network perspective, a lack

of standardization can lead to inefficient usage of resources and disruptions. The increasing IoT traffic

o es ith u geo i g ope ato de a d fo u if i g IoT de i e a d use data o to o o

databases (Westfall 2016) to facilitate the overall traffic management. Standards should therefore be

as generic, open and widely available as possible, in order to unlock the potential of the IoT. The

connection standards for smart devices include obvious ones like WiFi and Bluetooth, but also less

familiar ones such as Zigbee and Z-wave. The latter two are predominantly used in smart home

devices such as light switches and thermostats, but not only do they struggle to communicate with a

WiFi- and Bluetooth-enabled smart phone, they also do not communicate with each other

(Jaroslowsky 2016). ‘i a do “ouza f o E i sso B azil adds, that The usi ess modeling, cooperation

and sharing between companies is e i po ta t fo the IoT “ouza , as an IoT ecosystem can

only thrive when standardization issues are being resolved in a collaborative approach. IoT-expert

Tsiatsis also st esses sta da dizatio as the ost i po ta t ite io . G should talk to all de i es.

Even the average consumer thinks that devices should be able to talk to each other. If you have a

unifying access te h olog , the it ill e u h easie to sell this to people! (Tsiatsis 2016). Ericsson

researcher Santos (2016) o fi s, that G gi es the oppo tu it fo a u ified f a e o k for

connectivity and to provide services. The IoT involves many devices and heterogeneous technologies,

ut G has the pote tial fo

standardization and to unify these

technologies (Santos 2016). This

capability is still in the process of

being explored, but represents a

key objective in the standardization

efforts for 5G. The 5G terminal will

be capable of communicating

across various protocols, including

designated protocols for IoT devices

such as ZigBee and Z-wave (Santos

2016), as illustrated in figure 6.

Figure 6: Protocol-unifying function of the 5G Fixed Wireless terminal.

Legal, regulatory and rights issues

As described above, data collected by IoT devices may be subject to misuse, which necessitates the

definition of a legal framework specifically for the IoT in all its facets. The major challenge hereby is

29

that technological advances tend to outpace the ability to develop adapted legal and regulatory

structures. Issues range from the regulation of cross-border data flows, balancing law enforcement

surveillance and civil rights, data retention policies, and legal liability for privacy lapses or security

breaches. Yiru Zhong, Frost & Sullivan analyst, thinks that Fo us to get to a diffe e t t pe of

personalized entertainment beyond what we already know, we need a trustworthy legal framework to

make you feel comfortable. If it s ot the legal side, it is so eo e ho s de o st ati g the alue of

gi i g up a it of ou p i a Zhong, 2016).

4.1.6 Data generation in the home

Authors of IoT-related papers keep spelling it out: The value of the IoT lies in the data, not in the

things themselves. The smart home as of today mainly involves connected sensors and equipment to

optimize energy-efficiency, safety, and the overall convenience for the inhabitants. The IoT-enhanced

entertainment concept is based on the idea that the available data, particularly the data which carries

information about the individuals in the household, is used to personalize their entertainment

experience. Following this, human-centric applications in the home are of great interest, which are

here defined as those IoT applications which gather data about a human being and its direct

e i o e t. This a i ol e i fo atio a out a pe so s ell-being, level of stress or tiredness,

their location in the house, their level of attention as measured by facial recognition, etc. The data

relevant to the use case further involves o su e s personal preferences as gathered from their

social media presence or online interactions with other people, their schedule, or their previous

choices when using apps such as Netflix or Spotify. This chapter will therefore provide a non-extensive

overview of which kinds of information sources – based on technological feasibility as of today – come

into question in order to create a hyper-personalized entertainment experience. This perspective is

focused on what shall be considered the data input, that is, anything that leads to the smart system

responding. The response in the case of the entertainment use case would be the output in form of

suggestions of content options such as a certain music playlist. Further, ways of managing the smart

home system shall be discussed, namely either via an app and using some kind of screen, or via voice

commands, an emerging category of steering connected devices. The following categories can

therefore be defined:

Data sources (smart watch, sensor data as gathered by your fit bit, social media profiles,

sensor data as gathered by sensors in your immediate environment [presence, attention],

facial recognition, connected surfaces

Command / Method of control (smart phone, other screen, voice)

Response/ Output (media delivery, situational adaptation)

30

A comprehensive overview of the suggested functionality of IoT-enhanced entertainment will be given

in chapter 4.4.

Most smart home products are equipped with some kind of sensor and actuator, and in case of an

action which the device is programmed to register and report, the respective information is sent to

the network, and depending on the purpose of the message, to a cloud. The data is then analyzed and

the next step can be described as a value-added service (Parks Associates 2015). Examples of value-

added services in the smart home could be daily notification and reports for the home owner, health

monitoring, an alert in case an abnormality or a failure was registered, the self-regulated optimization

of the environment, such as temperature or lighting, or a notification for when an appliance will need

to be replaced.

4.1.6.1 Data analytics as a service

Not only can the latest smart home devices be managed and monitored through smart phone apps.

Thanks to machine-learning processes, the capability of IoT devices may also evolve over time.

Strategy Analytics (2014) describe four stages of machine learning: Monitoring (incl. location, usage,

environment, alerts enabled by sensors), control (software-enabled management of parameters on

the device), optimization (collection and analysis of information enabling algorithms to enhance

product performance, as well as predictive diagnostics and repair), and lastly, autonomy (autonomous

operation and coordinated interaction with other systems, self-diagnosis and service) (Strategy

Analytics 2014). Human beings today are already constantly surrounded by intelligent devices

capturing data about how they live. What constitutes the revolution taking shape these days as part of

the IoT and specifically the smart home phenomenon is the fact that these devices are now starting to

communicate with each other, wirelessly over the internet. A connected object that can communicate

with humans and with other objects can have far greater impact and deliver vastly higher value than

non-connected objects (Frost & Sullivan 2015). As part of the smart home, the analysis of the collected

data can be used for innovative services which promise to improve the life style of the consumer. IoT-

enhanced entertainment could also be described as a value-added service, which simplifies and

improves the entertainment experience based on the analysis of personal and situational data.

4.1.6.2 How is the scenario-enabling data gathered?

The functionality of the IoT is strongly dependent on sensor measurements which transmit data from

machine-to-machine and machine-to-person (Cisco 2016). This section provides a brief description of

wearables and sensors, which will play a crucial role in enabling value-creation through

interconnectivity in the smart home.

31

Wearables

Wearable devices can be either worn or are embedded in a person, and possess the capability to

connect to a network and to communicate either through integrated wireless connectivity or through

a othe de i e. Most o e ted ea a les ta geti g the o su e a ket a e utilizi g s a tpho es

in order to enhance their usability in terms of computing power and Internet connectivity Bergh

Insight 2015). Wearable devices are developed for and applied with sensor integration to measure

physical phenomena, and the latest smartphones and smartwatches are equipped with a variety of

sensors such as microphones, GPS, accelerometers, thermometers, fingerprint sensors, pedometers,

or heart rate monitors (Cisco 2016). This has a variety of potential benefits and the technology is

applied in a wide range of contexts. Wearables can for example be an asset in healthcare, as the body

can be monitored 24/7 at a low cost, and most importantly, mobile and with minimized effort. Not

only does the device do the monitoring job, it can also analyze the data and alert in case of emergency

without a human having to make this diagnosis. In contrast to wearable apparel, which is projected to

hit the market around the end of this decade, and constitute a radically new technology, the rise of

wearable devices such as watches and earpieces is more evolutionary, as they can be seen as an

extension of the smart phone (Harrop et al. 2015). Because of the growing popularity of smart

watches, especially since the launch of the Apple watch in April 2015, as well as the fitness wristband

Fitbit (Silbert 2015), it seems straightforward to integrate these wearable devices in the entertainment

scenario. Not only are they always accompanying the user, even more so than a smart phone (Drozd

2016) they also have built-in sensors which can deliver data about the user. This possibility to gather

data tied to a specific person may significantly improve the personalization of the entertainment

experience. Whereas a strong focus of the capabilities of wearables so far lies on fitness and health

appli atio s, the use ase IoT e ha ed e te tai e t proposes the use of the collected data for

highly personalized entertainment applications. Parks Associates (2016) propose in a webinar that

Data o i g f o ea a les ill e ke of i o ati e fu tio alities ithi the o su e IoT (Parks

Associates 2016).

Adrian Drozd from Frost & Sullivan predicts that the advancing evolution of smart watches will not

necessarily imply more functions, but rather more ways to connect to other devices, and the capability

to link into other systems (Drozd 2016). For example, fitness trackers could establish links to the smart

home, and trigger certain actions when the user wakes up, or falls asleep, and so on. All members of

the household ca e ei e tailo ed se i es. D ozd colleague, Yiru Zhong, stresses the economic

aspect of this: It s i po ta t to ake smart homes a personalized service. If a household is

determined by home automation, surveillance, energy etc. it is one bill, but if you have one bill per

person it increases the revenue flow. Wearables can be this gateway (Zhong, 2016).

32

Sensors

Apart from wearables, also sensors installed in fixed locations in the home can be used in order to

gather data which in turn can be integrated in various smart home applications. Having a home fully

equipped with sensors is projected to be the reality in the not too distant future, as the hardware

costs are currently decreasing substantially, which enables developers to work on the visualization of

the data and come up with applications for the mass market (Phillips, 2016). Further, sensors in the

home can have multiple use cases. For example, sensors which register motion and presence could be

used both for security, to detect intruders when the user is not at home, and for entertainment, such

as the seamless shift of video content, a scenario which is explained in more detail in chapter 4.4.

Fleisch (2010) lists automatic sensor triggering as one major value driver of the IoT, and describes it as

the p o ess of a s a t thi g o sta tl se si g its o ditio a d e i o e t fo ele a t

movements and initiate actio s ased o p ep og a ed ules. The de isio aki g e a led

automatic sensors can be both local (and therefore individual) as well as prompt (and therefore event-

based), resulting in rapidly increased quality of processes (Fleisch 2010).

The followi g o e ie is ased o a o p ehe si e list of se so s ele a t fo the edia- e t i IoT

as listed by the International Organization for Standardization, and relates those sensors to potential

applications within the specific IoT-enhanced entertainment context. Those may include:

1. Sensors to identify the precise location of the user (position, presence, motion, proximity sensor, pressure

sensor, intelligent camera sensor) to enable switching devices on and off, for virtual reality gaming etc.

2. Sensors in order to adapt the media output in terms of volume (ambient noise sensor) or image display

quality (light sensor) depending on the characteristics of the environment.

3. An example for a sensor-based personalized media service in existence today is the Spotify Running app,

which will be presented in more detail in chapter 4.3. It uses velocity and acceleration sensors.

4. For more situational responses, the entertainment system could be granted access to the sensor data

measured by wearables, which capture physical data for health and self-quantification reasons, but could

also be interpreted for entertainment purposes, if variables such as mood, level of stress or tiredness etc.

can be concluded from this data (e.g. blood pressure sensor, blood oxygen sensor, heart rate sensor).

5. Further, for a hyper-personalized experience, also facial features may be registered and analyzed, using

facial expression sensors, or gaze tracking sensors.

6. For the identification of a specific user, facial morphology sensors could be used see also fa ial

e og itio elo .

Smart – o e e i tellige t – sensors in the home will allow for a much more intuitive interaction with

the smart home system, as the need to actively manage or switch devices on or off etc. will be

minimized.

33

4.1.6.3 Are screens the future? New ways of engaging with the system

With the increasing complexity of the home, the question arises how the consumer is supposed to

manage the system most conveniently. Many sources predict the smartphone to remain the center of

the smart home management, which is also reflected in the fact that most smart devices have an

accompanying smartphone app (Drozd 2016). Consumers are now used to controlling many aspects of

their lives from their personal screens, whether smartphones, tablets, or PCs. It will therefore come

naturally to consumers to extend their usage of these devices from media consumption to the control

of their home. The increasing number of screens in the home makes it easy for service providers to set

up user interfaces to smart home applications in the home. The screen can be shared with other

media applications, thus reducing the cost for the consumer, and easing market development for

smart home suppliers (Gremeau 2012). Kiessling (2016) thinks that the smart pho e is asi all just

a othe s ee ; it may just as well be a screen built-in in another device. It is the personalized service

where the value for the customer lies, he says.

There are also reasons to view voice as a strongly emerging interface. Voice is e pe ted to ele ate fa

e o d shoppi g e i de s, aski g a out the eathe , a d pla i g usi G a i the ou se

of progressing IoT adoption. Voice control applications are increasingly a component in cars, as there

are clear restrictions to what drivers are allowed to do with their hands while driving, so voice offers

the obvious benefit of being able to leave the hands on the steering wheel when switching the radio

channel or initiating a call. This increased level of convenience can also be applied in the context of the

smart home. The Amazon Alexa is a prominent example of how voice control has been integrated into

the smart home concept. Gustav Söderström, CPO of Spotify, unde li es this i his i te ie . The

power of Alexa is that you can u stuff, ou a do ou ashi g a d just sa I eed o e diape s ,

ou a u ith ou oi e, a d it gets deli e ed if ou e i Ne Yo k ithi hou s, that s i sa e.

Before there was the whole, making notes, going to your garage, driving your car… all that happens

now with one voice command (Söderström 2016). The benefits of the intuitiveness of voice steering,

however, are balanced by the o su e s fea of ei g liste ed to, e e he the a e ot a ti el

using the service (Carter 2016). When I use my phone for a FaceTime call, to scroll through Instagram,

or to play a mobile game, it might not be very convenient to use it to operate my smart TV at the same

time. Jean-Claude Kiessling from Deutsche Telekom shares the view that the smartphone is actually

inconvenient for users to manage smart home applications when they are at home, also for the simple

reason that the battery is usually low when they return home. The smart phone is more relevant when

the user is not at home; then is represents the medium to keep the user in touch with what is

happening at home (Kiessling 2016).

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Further, individual voice recognition, in the sense that the system identifies a person based on their

voice, has the potential to enable a very seamless kind of personalization. At this point in time, voice

control is still much less reliable than actual touchscreen or button options. Voi e is the ost atu al

i te fa e, ut at the o e t it s a out the ualit a d apa ilit of the oi e e og itio . People

do t ha e a lot of patience. See Siri – many consumers have played a ou d ith it a d ha e gi e up

(Carter 2016).

The fa ial e og itio t e d i out-of-home advertising, driven by brands trying to find smarter ways

to reach consumers base on personalized appeal (Screen Media Daily 2011) entails recognition

software which detects variables such as gender, approximate age, and – perhaps most interesting

with regards to the entertainment use case – the mood of a person. This technology could be used in

the home entertainment context as well, both for quick user identification and personalized

recommendations. Also for commercial reasons this could become interesting, as the smart TV could

be a platform for content providers to know who is watching the program. For this purpose, the data

could perhaps be anonymized and only deliver the gender and approximate age. Whereas voice

recognition is primarily a means of simplified and intuitive control, and in terms of personalization can

act as an identification mechanism, facial recognition has the potential to deliver very detailed data

a out a pe so s u e t state. Specific ideas for how the technologies described above could be

integrated in the IoT-enhanced entertainment scenario will follow in chapter 4.4.

4.1.7 Intermediate conclusion: 5G FWA for Entertainment & the Smart Home

It was shown, that 5G Fixed Wireless Access comes with a number of clear benefits for in-home usage

for entertainment, which primarily emerge from the combination of extremely high data rates

enabling high quality of service, and sufficient capacity to support complex smart home ecosystems.

Some of the central issues with the IoT are addressed by the 5G FWT. The high network reliability

increases security, local caching enhances user privacy and autonomy, and the terminal can

communicate using various protocols and thus counter the interoperability challenge. Further, 5G

involves new opportunities for service providers to innovate their offers to end-consumers, which will

be looked at in the subsequent chapter.

The use of mobile devices for communication services and for accessing online content, especially

video, is exploding. The performance upgrade to 5G will boost the significance of mobile networks

further. 5G FWA as an enabler of the IoT can drive the emergence of complex smart home

ecosystems, and entertainment is likely to be a major application area, as it has distinct customer-

driven quality requirements and benefits substantially from improved connectivity. Because advances

35

in device capabilities d i e o su e s de a ds fo high ualit e pe ie es, 5G can be viewed as a

catalyst for in-home entertainment services due to its ability to support innovative use cases, and be

scaled and adapted as these use cases evolve further. Figure 7 sums up the issues which the 5G FWT

may address with its capabilities.

Figure 7: Why 5G FWA for entertainment in the smart home?

4.2 The Smart Home industry and Entertainment

The s a t ho e se to de otes the i dust a ou d the eatio of li i g spa es inter-connected for

communication (Dawson 2015), either between different automated IoT devices in the home, or

from these devices to an off-site location. Adrian Drozd, research director at Frost & Sullivan,

describes a shift from talking just about connectivity to more intelligent solutions and more

personalization, and a higher ability to draw on different data sources and automate these processes.

It s a out ha i g a e t a la e of intelligence within the home (Drozd 2016). In this thesis,

entertainment is viewed as an integral part of the smart home concept, and thus a basic

understanding of the smart home market shall be established in this chapter. The fact that Apple and

Google as well as Amazon are pushing into the market, is on one hand just another testimony of their

increasing dominance across industries, on the other hand indicates that the emerging smart home is

now gaining traction.

To begin with, a brief overview of smart home categories as well as the involved companies – on a

generic level – shall be given in order to illustrate the complexity of the market. Further, a

categorization of the most common business models will be presented, as well as drivers and barriers

of smart home adoption. As the central business aspects of 5G FWA were already covered in 4.1, the

36

greater part of this chapter will be limited to the smart home. However, in order to tie the concepts

together, this chapter will conclude with the proposal of the 5G FWT as a means of overcoming the

interoperability issue which constitutes a major barrier for the adoption of smart home technology.

The analysis is based on material on the North American, and the Western European market, as well

as interviews conducted with Deutsche Telekom, AK Media, Ericsson experts, and Frost & Sullivan.

4.2.1 Smart Home industry

As Jean-Claude Kiessling, CEO of Smart Home at Deutsche Telekom describes, smart home is strictly

speaking not a market, but rather a concept or a philosophy, with blurry boundaries from a business

perspective. This suggests that any statistics on smart home adoption rates are not very meaningful

unless one has a closer look at which categories are actually factored in, because the respective

definitions of which technologies and which products and services are defined as components of a

smart home generally diverge. As for entertainment, depending on the source, it is viewed either as a

central driver of the smart home (Juniper Research 2015) or as a mere side issue (Kiessling 2016). Jon

Carter from Deutsche Telekom lists e e g a age e t a d se u it as the p i e use ases that

e ist i this a ket (Carter 2016), and says that the entertainment offer is not part of the smart home

offer f o his o pa s pe spe ti e. Adrian Drozd from F ost & “ulli a adds that so e people

do t see e te tai e t as s a t ho e (Drozd 2016). The reason for this may lie in the fact that

connected consumer electronics (such as smart phones, smart TVs, or game consoles) are already a

very established category and might thus lack the novelty factor of devices such as connected light

bulbs or coffee machines, therefore at times not receiving explicit attention in smart home reports.

This corresponds to consumers rating entertainment as a category with comparatively low benefits in

a Frost & Sullivan study, which Drozd (2016) attributes to entertainment having very soft benefits as

opposed to cost savings in the case of smart energy applications. A rather comprehensive overview of

smart home categories is given by Bergh Insight (2014), who group smart home systems into six

primary categories:

1. Energy management and climate control systems

2. Security and access control systems

3. Lighting, window, and appliance control systems

4. Home appliances

5. Audiovisual and entertainment systems

6. Healthcare and assisted living systems

The focus of this thesis lies on category no. 5, however, it is challenging to treat any one category on

its own, as the smart home o ept a d the atu e of o i i g digital te h olog ith ph si al

o je ts Cha 2015) naturally involves the merging of industries, and resulting from that, an interplay

of formerly unrelated product groups. In the course of this evolution, the concept of industry verticals

37

is g aduall goi g to a ish, si e hat usto e s a e de a ding is exactly that: a mixed product

whereby he or she could choose the services that meet a specific demand (Smart Home World 2013).

Talking about the profitability of specific verticals will therefore become increasingly difficult and

depend on cost allocation.

As Promny (2016) describes in his interview, neither home automation in general, nor connected

entertainment in particular, are new concepts. However, fully equipping a house with the respective

hardware has so far been a premium product. The market is just gaining traction now that hardware

costs sink, business models are being innovated, and major global players start participating, so that

the choice of products is exploding and the smart home is slowly becoming relevant to mainstream

consumers. The current status quo shall be outlined in this chapter; however, it shall be refrained

from discussing country characteristics in detail, as the available material predominantly covers the

United States, being a reflection of the fact that North America is the most advanced smart home

market in the world (Bergh Insight 2015, 1). Western European countries, with Germany being the

most advanced market among these countries, however, are projected to catch up in the course of

the next 5 years, and the developments on the US market can therefore be interpreted as indicators

for what is expected to happen on other markets in the developed world in the near future. According

to Bergh Insight, Europe is lagging 2-3 years behind North America in terms of market maturity and

penetration (Bergh Insight 2015, 1).

Smart home devices are defined as stand-alone objects located in the home which can be connected

to the internet, be controlled or monitored from a remote location, and possess a primary function

other than o puti g. Multiple s a t ho e de i es ithi a si gle ho e fo the asis of a s a t

ho e e os ste Greenough 2015). But apart from the physical devices, the services which are

attached to these devices play a significant role and will serve as a factor for differentiation. The shift

to e e thi g as a se i e as a e t al component of the smart home concept will be addressed

further below in this paper. The list of potential suppliers of smart home products and services is

extensive, but from a company typology perspective, the smart home market can roughly speaking be

divided into three categories.

4.2.1.1 Traditional players in the home

Firstly, the smart home market consists of companies specialized in the production or offer of the

t aditio al versions of any of the abovementioned product categories, such as light bulbs, consumer

electronics, household appliances, security systems etc. Their products are now being enhanced with

connectivity and sensors, in order to create a specific added value, which generally involves

programmability and remote management. For example, these could be air-conditioners, heaters, and

38

other devices that use electricity, that adjust automatically depending on the usage patterns of the

residents. The investments being made to add sensors and other internet technology to home

appliances suggest that rising supply will lead to greater demand (Wilson et al. 2015). As for

entertainment services, traditional players would be TV-operators, cable providers as well as

telecoms. They are in a good position to offer connected entertainment solutions for the smart home,

as they can draw onto existing customers and insights on how people consume content.

The advantage for companies in this category is that they already have what you can call a gateway to

the home – the telecoms have the router, the cable companies the TV, the electricity companies have

the meter (Tsiatsis 2016). In that sense, the li k to people s households is al ead esta lished a d

those companies can build on the customer relationship.

4.2.1.2 Tech companies

Secondly, the major tech companies, such as Google, Samsung, Amazon, Microsoft, and Apple, play a

significant role in the market. Every major digital platform company now has the ambition to place

sensors i people s ho es. Not only do they possess technology expertise, they also have large and

global existing customer bases smart home technologies may be marketed to. For these companies,

any of their sensor-equipped gadgets means a new channel for communicating with the end-

consumers, and a new, much more intrusive way to gather user data.

Google, Samsung and Apple are looking to expand their existing ecosystems around their smart

pho es addi g the s a t ho e as a a esso (Tyreholt 2015). Google sells smart thermostats

and cameras thanks to its acquisition of Nest and Dropcam, and Apple has introduced HomeKit, a set

of developer tools for building apps for the home. The A azo E ho featu i g Ale a o upies a

rather special position as it is managed with voice control as opposed to with an app. Ale a is a

listening and learning service reacting to commands and questions, and also functioning as a

o e ted speake . It a also e used fo o li e shoppi g, i the sa e a Apple hopes its use s

will interact with Apple Watch (Stone 2014).

4.2.1.3 Start-ups

Thirdly, the category of specialized start-ups can be identified. These often try to offer integrative

solutions in order to tackle the central issue of smart home adoption – the interoperability of devices

and systems. IFTTT for example, is a service which functions as a data hub within the Smart Home by

letting the users setti g up all ki ds of If this the that -rules for their smart devices. Based on the

otio that A house not only needs se so s ut also a ai , “ilk La s has eated “e se , hi h is a

Wi-Fi-connected service that notices the user entering a room and initiates actions such as switching

lights a d usi o . “e se is desig ed to p o ide a s a t-home network's central coordination

(Shankland 2016). The advantage start-ups have is that they are far more agile than most of the

39

incumbents, and adapt to emerging technology standards as they can deliver their services over-the-

top. Particularly for developers, there will be the opportunity to overcome the interoperability issue by

p oposi g a s to o e t the f ag e ted la ds ape of de i es a d p oto ols ette , e ause ost

of today's smart-home devices aren't actually that smart when it comes to working together

(Shankland 2016).

It is to be expected that start-ups will drive innovation, but some of them might be incorporated by

larger companies, once their business models have proven successful. With regards to leading

positions in the market in the near future, it will therefore most likely come down to the incumbents,

what will be discussed in the following paragraphs.

4.2.1.4 Who will rule the Smart Home market?

The smart home market blurs into what can be described as the consumer-centric IoT market. Lawson

(2014) predicts, that the futu e of the IoT, at least fo o su e s, a e dete i ed just o e

player with a big market share and a good idea. Ho e e , the a ket is only nascent and the balance

of power is shifting with every major product launch or acquisition. On the other hand, some key

players occupy beneficial positions to exploit the opportunities the consumer IoT involves, and

promising business models are emerging. Those shall be briefly presented in order to outline the

competitive environment.

With the high demands on the seamless interplay of devices in order to generate useful data, comes a

list of requirements for any vendor who wants to play a relevant part in the consumer IoT ecosystem.

A su essful platfo e ui es oad pe et atio i to the digital lifestyle segment, a software

platform combined with a healthy developer ecosystem, and a massive infrastructure at disposal to

deal with demanding computing, storage, networking and database needs (Janakiram 2015). Only

few players in the industry possess all these capabilities, and it does not surprise that the forbes.com

lists the five online and tech giants Amazon, Apple, Google, Microsoft and Samsung as the companies

that will dominate the consumer IoT market (Janakiram 2015). The core of these co pa ies

i do ita ilit is that, at se o d sight, e e highl su essful a d ga e-changing start-ups often turn

out to have strong ties to the major players, for example the fact that Netflix content is hosted on

A azo s loud, o that U e is hea il suppo ted Google s e tu e apital a Ma joo . Fo

these players, the smart home is a new opportunity to build a sustainable consumer relationship

across an even broader range of services. Amazon has moved into the video content business on its

Prime on-demand platform, and has esta lished itself as o e of the sta d-out OTT smart home

pla e s Ca te with the Amazon Echo.

As Bergh Insight describe, the fact that both Apple, Amazon and Samsung participate in the Smart

Home market, substantially increases the visibility of Smart Home technology among consumers which

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ill d i e the adoptio ates a d o su e s a a e ess of the possi le appli atio s, a d thus e efit

all players in the market (Bergh Insight 2015).

The interviewees, when asked about dominant players on the smart home market, also confirmed the

perception that Google, Amazon, Apple and the like own an advantageous position in the market. As

Tsiatsis (2016) describes, the major obstacle is how to put the device in the home. Hereby, o su e s

familiarity with the brand is important, as Zhong (2016) states. Tsiatsis mentions the Google Nest

thermostat which step by step increased its functionality, expanding its relevance for the smart home

e os ste . Te h-companies will have an advantage to get into the homes. They are so pervasive in

peoples li es, and people trust them (Tsiatsis 2016).

Besides the te h gia ts , service providers are well positioned in order to exploit the nascent smart

ho e a ket. The o e a ea he e the a e untouchable at present is in broadband service provision,

and broadband connectivity will be the lifeline of the connected home (Hunter 2012). The smart

home can be used to reinforce their position and holds many opportunities for additional revenue.

Hunter (2012) sees the remote healthcare sector becoming very relevant in this regard in the near

future. Besides B2C business models, service providers can offer a platform that can be used by

utilities to deliver their services (electricity, gas, water, security etc.). The category of service providers

entails telecom operators, cable operators as well as broadcast operators. For telecoms and cable

ope ato s, the s a t ho e a e see as a atu al e te sio of thei a ilit to a age thei

usto e s home network (Gremeau 2012).

With ega ds to e te tai e t, It is ot so u h a out the a tual de i es ut a out the se i es

o . The TV is still a i po ta t de i e ut it s al a s o e i po ta t to o side hat the o te t

providers are doing for you to always be able to access the content and enjoy a seamless experience

(Drozd, 2016).

4.2.1.5 Opportunity: Overcome the over-the-top threat

Broadcast operators are currently facing severe competition from telecom and cable companies as

well as from OTT providers. In order to offer competitive services, they need to offer video on-

demand, catch up TV, gaming etc. The only way to deliver these new services is through introducing IP

technology (Gremeau 2012) as most TV-broadcasters are currently not capable of meeting the

requirements of the latest super-high definition standards. Therefore, people choose to watch

television using their fast broadband connection, which may also drive 5G FWA, as standards such as

8K emerge (Promny 2016). At TV Connect, Keith Underwood, MD of Channel 4 in the UK, talked in his

p ese tatio Cat hi g up is ot e ough a out Cha el s st o g fo us o o -demand offers and

IPTV as well as data-driven personalization, in order to compete with OTT providers.

41

Broadband service providers a e fa i g de li i g fi ed a d pote tiall o ile oi e e e ues, ut also

emerging competition in the pay TV arena from OTT providers Hu te ). The core disruptive

o ept is that the pipe created by the cable operators no longer provides the sole gateway to

o su e s tele isio s ee s. The same dynamics apply to mobile, where consumers bypass mobile

operators and thus data costs for text messages by using services such as WhatsApp and Facebook

Messenger (Balis 2015). Therefore, both mobile operators as well as television networks are facing a

serious threat by OTT providers. TV-networks might actually be completely substituted as some

consumers ut the o d a d te i ate thei TV su s iptio i fa o of OTT se i es, he eas mobile

operators are increasingly just p o idi g a du pipe for data transmission as opposed to a

comprehensive service.

I a i easi gl o petiti e i eless a d o te t dist i utio la ds ape (Team 2015), companies

decide to expand their range of services in order to gain some competitive edge. In July 2015, Telecom

provider AT&T bought the satellite television provider DirecTV, which enables the telecom to take on a

leading role in the content distribution space, both for mobile, broadband and TV (Giegengack 2016;

Team 2015). The smart home and IoT-enhanced entertainment as part of it represent an opportunity

for service providers, both telecoms and TV-operators, to counteract the OTT-threat. For service

providers, the major opportunity will lie in shared data plans such as for both mobile, potentially fixed

wireless access, as well as smart home services. This can lead to a higher degree of customer

stickiness, as the customer is making a use of a much wider range of services, all from one provider. As

Kiessling (2016) from Deutsche Telekom describes, smart home services in Germany are currently

most successfully offered to existing mobile and broadband customers. He gives the example of

offering a customer with an expiring contract period for her smartphone the choice between a new

device or smart home services.

It may be concluded that service providers have the advantage of an existing tie to the customer,

often with a commitment of at least a year or two, and can offer smart home services as add-ons in

order to create a lock-in effect. This service bundle approach and other business models for the smart

home shall be examined closer in the following paragraph.

4.2.2 Smart Home business models, opportunities and challenges

The business modeling for the smart home will revolve around the question how the IoT functionality

a e t a slated i to ea i gful o su e p opositio s deplo i g e a d i o ati e usi ess

models that will transform our markets and create new growth Deuts he Teleko . A viable

business model is based on partnerships between several industries such as utilities, health care,

security, and entertainment with service providers in order to establish an ecosystem, and offer

42

integrated solutions and a consolidated bill to customers (Chelluri 2013). After the market dynamics

have been highlighted, the focus shall now lie on the various options for revenue generation which the

smart home entails.

As Tyreholt (2015) states, it is not primarily the technology, but the choice of business model, that will

determine who can profit from participating in the market. The business models are not necessarily

alternatives, one model might also draw upon a combination of the ones listed below, such as bundles

of pay-as-you-go services.

Consumer hardware sales: The fact that the smart home relies on a multitude of sensor-equipped and

connected devices as well as stand-alone sensors, will naturally drive the production of the respective

equipment, thus representing an opportunity for growth for manufacturers. Hardware manufacturers

can also profit from partnerships with service providers who want their service to be integrated in a

smart device. For entertainment services, this is an important channel which enables them to offer

subsidized trials to customers with the aim to convert them to paying subscribers. At TV Connect,

Christian Harris from Deezer UK exemplified the partnership with the Apple watch involving the

factory installation of the Deezer app as a successful model. The same will apply to emerging IoT

services, which seem feasible to be sold as add-ons of the smart device.

Product as a service models: The IoT ill d i e a shift f o selli g products to providing service

(Press 2016). Instead of selling smart home devices to end-consumers, retailers could offer the lease

of the device (Dawson 2015), and subsidize the cost of hardware to generate the revenue with data-

driven services (VisionMobile 2015).

Pay-as-you-go house services: Smart homes could lead to the emergence of innovative micro

subscription services, such as washing machines or coffee machines automatically re-ordering powder

or beans. Further, flexible pricing models such as surveillance services on an ad hoc basis e.g. during a

holiday or weekend trip of the customer, are likely to be adopted (Dawson 2015).

Service bundles: Service providers can take advantage of cross-leverage effects when they position

smart home services as part of their portfolio (Kiessling 2016). For instance, connectivity or security

products could be bundled with related items at a discount, which is a typical model in the telco

industry, where the term triple play describes, fixed voice, broadband, as well as entertainment

services, such as pay TV. Quadruple play means adding mobile to the mix. Smart home services are

now expected to become the 5th play opportunity for telecoms and cable service providers (Carter

2016). The Deutsche Telekom is pursuing exactly this approach, as Jean-Claude Kiessling explains.

Smart Home services should be gradually integrated into the long-term ties of the telephony and

43

internet plans of existing customers. Service bundles necessitate cross-industry partnerships, such as

between utilities and security providers. In a service bundle for smart homes, also connected

entertainment could be part of the mix.

Loyalty-based models: These models aim at keeping customers with the same company over a long

time, perhaps potentially generating smaller but more secure cash-flows. Besides long-term customer

relationships in the utility market, this approach may be feasible for insurance services, as a smart

home could for example notify consumers in case a window was left open as they leave, this way

significantly reducing the probability of a break-in and therefore a payout by the insurance. This

lowered risk of cost for the insurers could be passed on to the consumer in form of a discounted

insurance rate (Dawson 2015).

On-demand models: Kiessling (2016) describes the on-demand media consumption behavior of the

ge e atio WhatsApp as a key for the smart home philosophy. He thinks that we are moving towards

the seamless integration of the IoT, smart home, and services on-demand. This view is shared by

Juniper Research (2015), who see highly successful on-demand services such as Spotify and Netflix,

representative as drivers for a growing acceptance of the access business model, where products are

rendered as services. This will aid in growing smart home traction, which will be heavily built around

the as-a-se i e concept.

Case: Nest, the rising star is struggling

The acquisition of Nest by Alphabet, the mother company of Google, for 3.2 billion USD set an

extremely high bar for the smart thermostat start-up to p o e itself as a vehicle to compete with

Apple in the growing smart-home market Be ge . The Nest learning thermostat promises

potential for energy savings, increased convenience and comfort, and the sales figures confirmed the

o su e s i te est i the te h olog . O the U“-market, Nest generated around $340 million in sales

i , hi h is a i p essi e figu e fo a o pa i the e as e t a ket of Internet-

connected devices (Bergen 2016). Fo e e g o pa ies, s a t the ostats ope up e

possibilities to introduce consumer-friendly demand response and e e g effi ie p og a s

(Murphy 2015). Du ed the da li g of the “ili o Valle Oli e , the Nest o e ted

thermostat was projected to become the genius product that could strongly drive smart home

adoption, which was also reflected in the high sum Alphabet was willing to pay for the start up. Initially

specializing on thermostats which learn the patterns of the inhabitants over time to increase energy

efficiency, Nest began expanding its portfolio with a smoke detector, as well as a security camera.

Fi all , ith the i t odu tio of the Wo ks ith Nest p og a , e a li g Nest use s to o e t a

44

range of other smart home devices to their Nest device which would function as a hub. With this, Nest

has marked its move from a manufacturer of smart home products to an all-round facilitator of the

smart home. However, more and more customers started complaining about the thermostat being

highly unreliable, turning up the heat significantly during the night or not switching it on after the user

had been on holiday etc. Now that these issues become public, the sales numbers fall short of the high

e pe tatio s, a d i Ap il , Fo es titles Google Is “itti g O A Ti e o With Its Nest

Disaste . Morris (2016) writes, The issue is not that people did not adopt the technology. The market

opportunity is there, it is the fact that the product came with major dysfunctions that is now leading to

the o pa st uggli g. As of Ma th , ‘e ol , the hu te h olog ehi d the o ks ith

Nest program, was shut down.

Examples like the one of Nest indicate that the young market will be marked by many rising and falling

stars, as there are a number of pitfalls, and high customer expectations to be satisfied. However,

slowly but surely, te h olog ad a es in the areas of broadband connectivity, networking and

managed services are enabling an ecosystem that becomes the foundation for increased consumer

adoption (Chelluri 2013).

4.2.3 Drivers and barriers for the Smart Home

The awareness of, interest in and demand for smart home products is steadily increasing, but even the

most advanced smart home market, in the US, has yet to take off (Greenough 2015). The adoption of

smart homes is slowed down by a number of obstacles, some of which were already addressed in the

previous chapters. From a technology perspective, interoperability is the major issue, which means

that any service that can facilitate the interplay of an increasing number of devices in the home taps

into a great opportunity. From a consumer perspective, the result of this hurdle to make several

devices seamlessly work together obviously means increased complexity. Further, the Ericsson

Consumer Lab identified the perceived lack of benefits as a major barrier (Ericsson 2015, 2). In its

current state, the market seems to be stuck in what Greenough (2015) describes as the 'chasm of the

te h olog adoptio u e , i hi h it is st uggli g to su pass the ea l -adopter phase and move to

the mass- a ket phase of adoptio . The ta le elo lists the issues smart home service vendors are

facing, and which consumer demands and other drivers are likely to advance the adoption, provided

the demands are being specifically addressed by a service. Both start-ups and established companies

a e p ese ted ith a a iety of opportunities, both by the process of overcoming these issues and by

developing the end result (Dawson 2015). The players within the smart home ecosystem will need to

focus on value-added features for their products as well as data analytics and cloud processing

45

capabilities. Some options for business models for smart home services are listed under 4.2.1.2. How

IoT-enhanced entertainment specifically could be packaged, will be presented in chapter 4.4.

Figure 8: Adoption barriers and adoption drivers for the smart home.

4.2.4 Entertainment in the Smart Home

Andreas Promny, the CEO of AK Media in Aachen, Germany, sells home entertainment solutions to

clients, often as part of newly constructed buildings. In that case, the entire entertainment system,

which includes multi-room audio and video, built-in speakers and screens, and a central touch panel to

manage the system, is sold as one solution, amounting to five-figure sums in Euro. Further, these

solutions are not mobile, and it is this unlikely that they will ever become mainstream, given the very

high investment, as well as commitment to the particular house they were built in. IoT-enhanced

entertainment, on the other hand, is thought of as a more modular approach (see 4.4.2), offering

more flexibility in terms of gradual expandability as well as mobility, and more importantly, a much

lower cost. Sonos is a highly successful example of a vendor that is trying to make smart

entertainment accessible to a broader range of consumers, as they offer a modular, wireless multi-

room speaker system to stream music, controlled from a smartphone or tablet (Berman 2015, 1). Both

Jon Giegengack (Hub Entertainment Research), Jean-Claude Kiessling (Deutsche Telekom) and Andreas

Promny (AK Media) mentioned Sonos as the est p a ti e e a ple o toda s o e ted

entertainment market. However, a system for the comprehensive, multi-room management of home

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entertainment is still lacking. People s a of i te a ti g ith thei ho e e te tai e t s ste

changed with the introduction of the universal remote control, as it allowed them to control their TV,

DVD player and set top box without the hassle of using separate remotes. With the progression of

technology, consumers want even more flexibility and control for their entertainment devices

(Armstrong & Munoz 2014). Within entertainment, manufacturers are trying to put forward consumer

ele t o i de i es as a hu solutio to fa ilitate the entertainment user experience (Armstrong &

Munoz 2014). In this domain, video game consoles are competing against other service delivery

platforms such as Apple TV, or Google Chromecast. The Microsoft xbox One was released with the

a itio to o solidate the use s digital e te tai e t a d o t ol the e ti e ho e theater system

using voice control (Berman 2015, 2), aiming to position the console as the connected device to access

online services from the TV, and thereby also non-gaming entertainment such as video and music

streaming, as well as social interactions such as Skype calls. Similarly, Google s edia st ea i g de i e

Chromecast lets consumers use their smartphones to select and control the playback of video and

audio content on their TVs; a p odu t hi h efle ts Google s a itio to e pa d its ea h th oughout

the home (Berman 2015, 1).

These approaches aim at consolidating entertainment in one place, however, the demand for a fully

intuitive management of the system, makes hub solutions for separate aspects of the smart home –

such as entertainment – seem highly unfeasible in the future. With more and more smart home

devices and gadgets being offered, the need to simplify the user experience despite the increasing

complexity of the system, is gaining significance. Smart home hubs are designed to offer this

functionality, as they can connect all of your devices to the cloud and give you one app that acts as a

sort of universal remote. Additionally, a hub provides the ability to automate your gadgets Prospero

2016). Parks & Associates discuss in a webinar, vendors are currently battling over who has the

apa ilities to e o e the e t al ele e t of the s a t ho e s ste a d tie all the de i es

togethe Parks Associates 2016), as it becomes obvious that interoperability is one of the major

barriers to the progressing adoption of the technology. Despite increasing efforts of vendors to

improve this issue, the insufficiencies see to p e ail: I Ap il , To s Guide titles: The Best

“ a t Ho e Hu Is Just Less Bad Tha Othe s Prospero 2016). It is striking how diverse the core

business of the competitors is. Vendors range from consumer electronic companies (apple Home Kit),

cable companies and telecom providers (DT Smart Home platform Qivicon) to e-commerce players

(Amazon Alexa).

4.2.5 How do smart home hubs compete?

According to Parks Associates (2016), smart home hubs compete in three areas:

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New touch points: Which device is used to manage and control the system?

New interaction models: Which interface does the consumer use?

Developers

Different interface options were discussed in chapter 4.1.5.3. As for touch points, the following

approaches to position smart home hubs can be observed:

Figure 9: Different approaches for smart home hubs

As Parks Associates (2016) describe in a webinar, key players in every IoT vertical, the smart home

being one of them, build their strategy around developers, as 3rd party developers extend business

into many more use cases (Parks Associates 2016) and create dynamism (Carter 2016). The

prototyping of IoT solutions is thereby facilitated by the overall cost of sensor installment,

deployment, and support [having] decreased by a hund ed ti es o e the past de ade (Cisco 2016),

resulting in sensor technology being highly accessible to prospective IoT developers these days,

enhancing innovation in this space. Further, open source solutions gain relevance, in order to spread

the power across different companies pursuing an open platform approach, suggests Zhong (2016)

with regards to the rising dominance of the major tech companies in the smart home market. A

central aspect of the smart home ecosystem is also its openness in terms of opportunities to

pe so alize the fu tio alities. Basi all , e e o su e e o es a de elope setting the rules in

the smart home Pa ks Associates 2016). Those service providers who can deploy open solutions and

grant consumers more control over their smart home ecosystem will have a major competitive edge

(Parks Associates 2014).

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The te h gia ts displa effo ts to foste de elope s o k o the IoT and home automation

standards, which reflects their ambition to manifest their early relevance in the smart home market.

Apple, for instance, offers HomeKit, a framework for communicating with and controlling connected

accessories in the home. Users can group actions together and trigger them using Siri (Apple 2016).

Google offers Thread, an Open Standard Protocol designed for low-power connected products in

home automation space (Chakrabarti 2015), Brillo, a cut down version of their Android operating

system for IoT devices (Chakrabarti 2015), and Google Weave, a platform for IoT devices that will

allow easy communication between phones, the cloud, and smart appliances (Ung 2015). In their

interview, the Frost & Sullivan analysts name the Google OnHub router, the Samsung Smart TV as well

as Amazon, as a non-device company trying to be the hub via voice recognition as prominent

approaches to offer a hub. Fo o , it is a ga e fo all – everyone is trying to do certain things from

thei pe spe ti e. Ho e e , o o e as a le to offe t ue i te ope a ilit , o e se i e to ake all

devices and services talk. And nobody addresses end-use s eeds ta geti g spe ifi people i the

household, such as the teenager, the parents, or the elderly (Zhong 2016).

4.2.6 Intermediate conclusion: Smart home industry

This chapter has established a connection between the use case IoT-enhanced entertainment, the

Smart Home, and 5G FWA. Connected entertainment offers are likely to become part of smart home

service bundles; the smart home may be significantly driven by powerful, reliable and integrative 5G

connectivity, and 5G FWA implies new opportunities for user data management, which would

facilitate IoT-based applications, also in the entertainment sphere. Figure 10 sums up these relations.

Figure 10: The interconnection of IoT-enhanced entertainment, the smart home, and 5G FWA

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It was shown, that the smart home market is slowly but surely gaining traction, and is characterized by

a large variety of companies trying to become relevant for consumers. However, the market is still

struggling with fragmented vendor ecosystems, which represents a major opportunity for 5G in-home

deployment. 5G is designed to function as a unifying technology across protocols, and this would

constitute a powerful value proposition for the smart home. It will be necessary to integrate multiple

i sula s ste s, as the de a d fo i te fa es a d a u i e sal o t ol i te sifies. I e pe t that the

integration of formerly isolated systems in one co t ol pa el ill e offe ed as a se i e , sa s A d eas

Promny in his interview. Figure 11 illust ates toda s f ag e ted a ket a d the isio fo a u if i g

smart home hub.

Figure 11: Opportunity to become the next smart home hub with a unifying technology.

4.3 Consumer expectations for the IoT and Entertainment

After the competitive environment for introducing the 5G FWT into the smart home market has been

described in chapter 4.2, the following chapter will investigate which consumer expectations are

relevant when we talk about IoT-enhanced entertainment as pa t of the s a t ho e. For this

purpose, preferences both regarding the emerging IoT as well as entertainment services were derived

50

from the expert input. The identified insufficiencies shall serve as the basis for the proposal of the use

case in chapter 4.4.

4.3.1 The smart entertainment market – How to define it?

The statistics platform Statista.de presents recent data on ownership of smart entertainment systems,

which they define very narrowly as multi-room entertainment systems, for which Sonos sound

systems would be an example. The numbers explicitly do not include home automation such as

lighting management, nor do they include smart TVs, as they are not directly controlled using wireless

connectivity, the connectivity is rather limited to enabling the access of online content. The revenue

generated with this particular product category is projected to increase by 30-50% per year in the next

five years. For those households which do have some kind of smart entertainment system, the yearly

revenue amounts to 494 EUR in Sweden, 503 EUR in Germany, 564 EUR in the UK, 669 in the US

(Statista 2016). In a survey by Icontrol Networks, about 46% of consumers said entertainment was an

important factor in smart home adoption—and 5% even stated it as their number one reason to

purchase a smart home system (Weinswig 2015). The category smart entertainment includes Smart

TVs, home theater systems, set-top boxes/digital video recorders (DVRs)/digital media players, and

speakers – which is a broader categorization that the one of statista.de.

Frost & Sullivan (2015, 1) on the other hand, present the study "Home of the Future", in which home

entertainment scores near the bottom compared to all other application areas (security, surveillance,

energy, healthcare), when consumers are asked about perceived benefits of the smart home. The

analysts suggest that respondents see this low personal benefit perhaps because home entertainment

offe s softe e efits as opposed to cost-saving potential or the reassuring feeling to have a well-

secured home. Adrian Drozd from F ost & “ulli a e plai s that so e people do t see

entertainment as smart home. People were looking at tangible benefits, such as managing energy

consumption to save money. Benefits of personalized entertainment are nice to have but not as

tangible as saving money on your energy bill (Drozd 2016).

These introductory paragraphs have demonstrated how difficult it is to discuss the connected

entertainment market on the basis of statistics and reports, as the market is defined differently by

different sources, and perceptions change depending on which context entertainment is embedded

in. Resulting from that, this chapter shall therefore be less about current numbers regarding the usage

of connected entertainment, because different statistics are strongly diverging as the category is far

from being clearly defined. It is expected to be emerging category, which will grow once marketers

have found ways to address consumer expectations. The focus shall lie more on what these consumer

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expectations are, what current services are lacking, and how technology can satisfy them in the

context of entertainment in the Smart Home.

In terms of expert input, the interviews conducted with Jon Giegengack, principal researcher at Hub

Entertainment Research in Portsmouth, New Hampshire, and with Andreas Promny, CEO of home

system installation firm AK Media in Aachen, Germany, will be used to strengthen the analysis.

Further, the interview with Gustav Söderström, Chief Product Officer at Spotify, delivered valuable

insights on consumer demands and how innovations in the music streaming domain are shaped by

these.

4.3.2 Emerging IoT applications: Creative ways to enhance daily experiences

IoT-enhanced entertainment is meant to address a number of challenges of the entertainment

industry by merging entertainment platforms with the IoT-platforms. With regards to the consumer

IoT, researchers witness a shift from product- or device-oriented perspectives, such as considering the

Fitbit as an IoT-device by itself, to a more human-centric perspective which expects not only

automation, but also personal augmentation from an IoT-service. Consumers are clearly choosing to

infuse tech i all fa ets of thei li es CTA , a d according to the Harvard Business Review, they

a t li i g se i es , hi h e a le people to p og a a d o e t s a t de i es (Wilson et al. 2015).

That means that consumers focus their attention less on a device or an individual purpose, but are

more enjoying an enhanced experience based on the seamless interplay of several devices based on

their preferences. An example of this could be a person coming home, greeted by music which was

activated by the smart lock, which also interacts with the temperature and lighting control in the

house.

O e of fou ke li i g se i es ep ese ti g What people eall a t f o the IoT hi h A e tu e

has ide tified is C eati e a s to e ha e dail e pe ie es , so ethi g which is strongly reflected in

the IoT-enhanced entertainment use case. Today still a luxury product due to price-intensive

hardware, the researchers see a clear consumer need which will come into effect once the technology

is affordable for the mainstream customer as well. Enhanced experiences will find a good outlet,

e ause this ki d of personalization speaks to a hunger for technology experiences that make homes

feel distinctive (Wilson et al. 2015). Promny (2016) CEO of AK Media, which installs home

entertainment systems for Intelligent Living knows the German market well, and confirms the

emergence of this category. IoT platforms in the home will connect smart sensors and devices and

have them communicate with each other in order to augment ordinary everyday moments. A student

who wishes to increase her focus while studying with some natural lighting and an inspiring playlist

does not need to get up and manually make these changes, but the settings can be activated

automatically by various connected devices in the room. Once a connection is established, the

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functionality can range from mere just-for-fun applications, such as having he lights adapt to the

movie you are watching to applications for personal safety, such as light bulbs blinking red once a

severe weather alert has been received (Wollerton 2014). This example shows how the same device

can have a shared functionality, and thus a variety of value propositions for the user.

The A e tu e stud fou d that o su e s a t a IoT that p o ides personalized services that can

be adapted to different contexts (Wilson et al. 2015). The most popular applications are those which

make life at home easier, more pleasant, and more distinctive, which entails li i g se i es that

anticipate their wants and act on them. I thei stud ep ese ti g 279,000 early adopter

i te a tio s ith IoT de i es (Wilson et al. 2015), they further identified technology that extends

security, for instance, with the app Presence, which connects old phones with functioning cameras to

your current smartphone to enable users to remotely view areas in their house. This case exemplifies

how simple and budget-friendly solutions increasingly enable mainstream consumers to benefit from

IoT connectivity. Thirdly, apps that quantify the self are appealing to consumers, because consumers

are interested in data that tells a story about them. Self-measurement, the comparison with others, a

status quo and a progress expressed in numbers delivered by wearables tell such stories. T a ki g our

sleep patterns and levels of daily activity, and looking at simple dashboard analytics to understand this

data, is just one example of how we self-quantify (Wilson et al. 2015). This is also reflected in the fast

adoption of wristbands with embedded sensors within the category of internet-enabled consumer

electronics. The value of these devices and appliances tracking your behavior is the fact that they are

capable of learning about your preferences and predicting your needs.

Lastly, the research ide tified “e i es that opti ize ou a hi es as a popula appli atio , e taili g

any program that substitutes the active and manual action by the user, such as switching interior lights

on during sunset. Smart devices can optimize processes to save consumers time and money. This

o stitutes another area where we might be willing to let devices and appliances track our behaviors

so that they can learn about our preferences and predict our needs (Wilson et al. 2015). As will be

shown in 4.4, this desire to have devices register and respond to our individual condition and

preferences can be addressed with IoT-enhanced entertainment.

Gustav Söderström, Head of Product at Spotify, thinks that IoT-related services will particularly serve

to increase the productivity of humans (Söderström 2016), and productivity can also be transferred to

entertainment, where personalized apps can basically save users time, for example in the case of

“potif , o ki g ith u ated pla lists hi h at h the use s eeds i a given situation.

53

4.3.3 The keys to success: Simplicity and intuitiveness

In his customers, Promny (2016) sees that people expect high quality, such as a great sound quality of

their intelligent sound system, but they also value the ease of use and an intuitive design more than

ha i g all the utto s to a age it the sel es. The athe el o te h olog to do the fi e tu i g

and prefer to have a simple app to operate the devices, with everything ideally being self-optimized

and automated. Reducing the functionality to the basics is also what Jon Giegengack describes as the

key of the success of the iPod. Technology companies confound things that are possible to build with

things that we should build because people want them (Giegengack 2016). The success of the iPod

was owed to its stripped down functionality, Apple made it just do one thing really well, and the

handling is highly intuitive. Promny (2016) adds another perspective: Smart systems which users can

set up independently. They do not want to depend on a technician, and enjoy the rewarding feeling

that they can manage a complex system all by themselves, when they are really just letting the

technology work for them. Both Giegengack and Promny bring up Sonos as an example of a well-

executed modular s a t ho e p odu t. Giege ga k a k o ledges that the eate a e

personalized environment, without creating a hugely complicated system to set it up (Giegengack

2016). For the development of new features, Spotify works with a hypothesis around what job this

featu e should do fo the o su e . The e t al uestio is, hat o t ol should the use ha e to do

this kind of job, with less input and less knowledge, and have the greatest possible experience

(Söderström 2016). This also reflects the wish for a system that understands the user, and allows for

an intuitive usage of the service. Söderström (2016) confirms that the IoT has great potential to

improve this experience further, by providing higher automation as well as personalization.

Traditional media companies, such as record labels or TV networks often fail to fulfill the expectations

of toda s o su e s. iTu es su ess is att i uta le to thei la el-independent library, because

people did not know or care which label published the content they were searching for, which is why

the la els o digital libraries did not take off. Giegengack (2016) says, the popularity of iTunes

originated from the fact that Apple could offer all music from all five major labels on one platform.

Further, iTunes enabled consumers to buy one track at a time instead of having to buy an album with

16 tracks. Spotify then took the ubiquitous access to the next level by providing a streaming flat rate

as opposed to the purchase of single songs. The television industry is considerably lagging behind in

this respect, TV et o ks ake ou u a pa kage of ha els a d the e is o a to o l pa

for one says Giegengack (2016). He sees the evolution of the music industry and the disruptive effect

of first iTunes and late “potif as a good i di ato of he e the tele isio i dust ill go once the

dust has settled (Giegengack 2016).

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4.3.4 Personalization and Content Discovery

Personalization as a macro-t e d has e o e a u ial ele e t of toda s edia offe i gs, a d is,

according to Gustav Söderström from Spotify pa t of the t e d of A tifi ial I tellige e a d a hi es

becoming more intelligent trying to help you solve jobs (Söderström 2016). Examples are personal

assista ts like “i i fo the iPho e, o Netfli recommendations, trying to help you not having to choose

as u h. These se i es t to lo e the f i tio of so ethi g that is i po ta t to ou, gi i g ou the

same value or even better, just with less work “öde st ö .

Especially when it comes to TV consumption, there is an evident shift from passive consumption

behavior to active content selection. With the emergence of music streaming services, people started

forming on-demand habits, the same development Netflix and the like have driven in the video

do ai . This shift f o o e ship to a ess is sig ifi a tl shapi g toda s entertainment offerings

(Curtis 2016 at TV Connect). However, there is an emerging issue with the ubiquitous content, as a

ite f o Te hhi e e p esses: If st ea i g is the future of television, it needs a better way to

browse the shows you like Ne a . The choice has in fact become so broad that it tends to

be overwhelming for the consumer. Therefore, narrowing down the choices to save time and effort

has become as important as the choice itself.

I thei a ual t a ki g stud Co ue i g Co te t , Hu E te tai e t ‘esea h easu es the

appeal of different kinds of features when watching TV, and for the third time in a row, a universal

listing was the top choice (Giegengack 2016). Such a universal listing, according to Giegengack (2016),

ea s that I ould go to o e s ee a d it k o s that I ha e Hulu, HBO, Comcast, and so on. His

research partner Peter Fondulas adds: Yes, o su e s a e dis o e i g o e a d ore shows they

like, ut the feel like the e dis o e i g the o e lu k tha desig P‘We . In order

to guide consumers through the vast amount of choices they have today, content providers use

recommendation engines as means of differentiation and to provide a more simplified access to the

content. Having a service pre-select content for consumers, on the other hand, might conflict with

ie e s pe ei ed a ti e ole i the edia o su ptio p o ess. People do t like so eo e else o

somethi g to ake the hoi es fo the . But the do like thi gs that p edi t , sa s Jo Giege ga k

(2016). He refers to Netflix, which applies a predictive algorithm resulting in the number of stars you

see as a ati g of a sho is based on the likelihood that you in particular will enjoy this content, not

actually on the ratings of other users. This highly interesting perspective can serve as an indication for

the feasibility of IoT-enhanced entertainment: The service could help narrowing down the choice

based on completely individual and situational data and thereby potentially address the challenge of

getting recommendations right. Based on a system that gets to know you better step by step, a whole

new level of anticipation can be enabled.

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Giegengack (2016) describes that microtargeting is becoming a crucial approach with regards to

efficient content distribution. Mircotargeting means that a service acknowledges the individual

preferences of users and tries to satisfy them, instead of merely offering content divided into

categories based on very generic factors such as demographic groups. This is the aspect most TV

networks continue to neglect, because they base their offers on Nielsen ratings, which in turn only

reflect live, linear television, which by no means is representative for the actual content consumption

a o e Giege ga k . PwC (2015) confirm this issue, and describe how cable companies run

danger to misjudge the success of their shows by neglecting to consider viewing of their content

through OTT, VOD or other platforms, which are, despite their obvious relevance, still not included in

the statistics, as the ratings system and metrics have not been adapted so far (PwC 2015). Brian Curtis

(2016) from Comcast describes the improvement of content discovery as a central issue of the user

experience design at TV Connect. He says that raising the quality of content discovery will be enabled

through a backchannel of user data being fed into the system. IoT-enhanced entertainment would

provide precisely this backchannel. Access to more granular user data and better analytics enabled by

new technologies not only serves to improve the user experience, but is also highly relevant for the

content providers, as they can learn more about their consumers and thus derive which content to

source and to produce in order to satisfy their audience. IoT-enhanced entertainment applications

which register the gaze of a person using sensors could be an important building block in terms of

measuring actual consumer engagement. In addition to that, presence sensors could deliver

information about if and how many persons are watching, and connectivity to smart phones or smart

at hes ould e e ake the pe so ide tifia le. F o the o su e s pe spe ti e, these

mechanisms could make the access to content much more simple and seamless, as well as better

tailored to their preferences.

4.3.5 Summing up: Demands for Entertainment and the IoT

To explore the consumer perspective for the use case, insights from researchers and industry leaders

were deliberately applied as opposed to insights from a consumer study. In the early stages of using

IoT for entertainment, it was deemed more relevant to find out what consumer preferences the

decision makers in the respective industries believe their services need to address, and which trends

researchers identified in this regard. Both the expert interviews as well as the presentations at TV

Connect provide the basis for the overview below (Figure 12). These consumer demands will be

matched with the four scenarios for IoT-enhanced entertainment in the subsequent chapter, in order

to demonstrate the eligibility of the use case.

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Figure 12: Consumer demands matched with exemplary expert quotes (Source: Interviews and TV Connect conference)

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4.4 Connecting the dots: IoT-enhanced Entertainment

The previous chapters have outlined the technological premises and business context, as well as the

consumer expectations that are of relevance for the use case IoT-enhanced entertainment, which

shall be presented in detail in this chapter.

The visit of the conference TV Connect in London in April 2016 served as a clear indicator for the

connection between entertainment and the IoT now being made by representatives of the

entertainment and ICT industry. Phil Sellick, Lead Technologist at Virgin Media, prefaces the industry

de ate o E plo i g the possi ilities fo IoT a d Co e ted E te tai e t ith the o ds,

Connecting the IoT and entertainment is the next wave of aki g e te tai e t o pelli g (Sellick,

2016) – a key statement in the support of the use case this thesis is putting forward. So what are the

reasons IoT is emerging as a driver for entertainment? E e o e should a e a out the IoT i the

e te tai e t i dust , sa s Che Assayag, Executive Vice President of Sales at ViaccessOrca. The

IoT and in the entertainment space will have many features and key concerns in common, such as

security, big data, personalization, ease of use and control (Assayag 2016).

Jon Carter of Deutsche Telekom UK highlights in his interview, that the connection between those

a eas is eall a out data a d a al ti s a d the a ilit the to le e age that data to pe so alize

advertising. Now you know exactly who is watching that screen. You can give people content which is

o e pe ti e t fo the , hi h is o iousl fa ilitated th ough IoT, ea a les, a d the s a t ho e

(Carter 2016). Trimby (2016) from BT goes so far as to say that the convergence of the smart home

hu a d the e te tai e t hu ill e the hol g ail fo the ICT i dust . Samer Geissah also

pe ei es ig data as the e hea t of connecting these two together. You get the intelligence, you

get the data, you analyze it, and without the customer feeling it, these things start becoming available

as hoi es (Geissah, 2016).

Consumer electronics are the product category which first introduced consumers to internet

connectivity. Therefore, entertainment and infotainment as key uses of these devices can be seen as

the area in which connectivity is most intuitive. To Jah of Co a poi ts out, that Millennials are

shapi g the futu e of TV a d IoT. The e pe t all de i es to o k like the o e ted de i es the e

used to (Jahr 2016). Linked to that, Gustav Söderström, Chief Product Officer of Spotify, sees the IoT

as a proliferation of devices being turned into general-purpose devices with computing power, driven

the o su e s o e a d o e atu al i te a tio ith o e ted de i es. With smart TVs and

smart watches being increasingly adopted, entertainment seems like a logical starting point to

introduce consumers to the IoT.

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Söderström (2016) confirms the emergence of data-driven personalization features in music

streaming. Spotify Discovery is an individual and dynamic playlist which is based on the song choices

the user makes and adapts to her taste over time. Further, Spotify is already experimenting with the

merger of IoT and entertainment, as part of their app Spotify Running, in which the music playback is,

unperceived by the user, adapted the speed the user is running at, as measured by the motion and

acceleration sensors in her smart phone. Söderström (2016) sa s, as usi e a e soft a e, e

[did] not need to adhere to standards anymore. So we started experimenting with the format itself.

And on top of that you have sensors which can actually solve a really hard music problem of

understanding, how fast am I running, what music is my taste right now at that pace, this is a problem

which is very hard to solve manually, but very easy to solve technically. “öde st ö (2016) thereby

touched on the very heart of the use case: Using sensors to understand the situation the user is in, in

order to adapt the content to the specific demands the user might have, raising the level of

convenience, and p o idi g pe so alizatio to situatio s a d o e ts as opposed to just

individuals (Söderström 2016).

Geissah (2016) believes that consumers will not have the patience to set up rules for every automated

process in their home themselves. Phil Sellick from Virgin agrees, and suggests that as much as

possible will have to work with pattern recognition, to demonstrate the value to consumers without

them having to invest much time to define fu tio alities. I see you come home, do you want me to

turn the lights on and put on your favorite show? exemplifies Sellick (2016) a system prompt.

Existing products should be enhanced with help of IoT in a way that will be practically invisible to the

user. The technology is not the hard bit, the hard bit is the use cases around what you would do with

it. Sellick (2016). He elie es, that there will be a rapid expansion over the next two years and we

will start to see that kind of personalization in the next year! (Sellick, 2016)

The following pages are dedicated to four envisioned scenarios for the abovementioned use cases for

entertainment services upgraded with IoT functionality.

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What shall e alled o te t shift is the o ept of the o te t follo i g the use th ough the house,

completely seamlessly and without the user having to actively steer anything. Interoperability of

devices is a key requirement for this use case, as the data analysis and resulting personalization

mechanisms are based on the data gathered by various devices, ranging from camera sensors to

devices the user carries. A smooth content shift can only be ensured by the interplay of motion and

presence sensors and the respective output screens or speakers. The popularity of on-demand

ie i g is a lea i di ato fo the o su e s e pectation that the content they are interested in

should be accessible whenever they want. Not only does the content shift feature ensure the

availability across devices and different rooms, potentially also extending to cars and the mobile

phone outside of the home, it also drastically increases the intuitiveness of the media consumption,

which can be fully automated.

Louise is watching the live broadcasting of the season finale of her favorite show and does not want

to miss any minute of it. But her parents will come over this evening and pick her up to go out for

dinner, so she needs to take a bath and get dressed. Without having to press any button, Louisa

leaves the room and continues listening to the audio of the sho he she s alki g th ough the hallway, and is greeted by the show on the TV screen in her bathroom. Louise especially enjoys

listening to the radio news channel every morning regardless of whether she is making breakfast in

the kitchen, making the bed, or doing her make up in the bathroom, as her speakers are all

connected, and the program is switched on as soon as she steps out of the shower in the morning. If

she is in a rush, the program is available for her to continue listening in her car on the way to work.

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In order to achieve consumer satisfaction, this particular scenario places demands on high definition

video. Due to a very high downlink and uplink speeds for video content, enabled by 5G FWA, new level

of immersive virtual reality, or telepresence applications, will be made possible. Telepresence

applications will appeal to those consumers who wish for an immersive experience, and besides being

entertaining, could also save user time and effort, as reflected in the case of the virtual yoga class.

Chem Assayag (ViaccessOrca gi es a e pli it e a ple fo this at TV Co e t: Let s sa this is a out

virtual arenas and it creates an experience where you feel immersed in a stadium; maybe you want to

reproduce the temperature like in the stadium, which is 2000 km away. I think in Virtual Reality we will

pretty soon see some intersection between the IoT and entertainment industry (Assayag 2016).

Emil and Silvia love to dive into their virtual reality (VR) experience after a stressful day at work, and

there are endless opportunities to pursue their real-life hobbies without actually leaving the

apartment. Silvia has discovered the virtual yoga class, and every other day, she joins her friend

Caroline and some strangers in the virtual yoga studio, with the actual environment being recorded

in a yoga studio in California. Wearing her VR glasses, she feels like she sits right in the middle of the

lass, ith the fla less sou d of the tea he s oi e ho gi es i st u tio s ei g t a s itted he connected speakers. Emil likes to play VR games with his friends ever since they purchased the 5G

terminal with the IoT-entertainment package. Before that, he already owned VR glasses, but soon

gave up playing games, as the occasional lags and poor image quality annoyed him.

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The ke alue p opositio of h pe pe so alizatio is the a ilit of the s ste to o te tualize. It

entails content selection based on mood, physiological parameters such as excitement or tiredness,

and might even increase productivity. The entertainment system could react to specific situational

cues with the objective to increase the well-being of the user; something that will certainly become

more and more feasible as artificial intelligence capabilities of devices advance, and thus achieve

pe so alizatio to situatio s a d o e ts as opposed to just i di iduals “öde st ö , . The

s ste a a ti ipate the use s preference in a particular moment and recognize patterns over time,

as it is the case with most smart home features. Specifically for media applications, this also means

that the navigation through content could be simplified, as the service will be capable of making

individual predictions. This s e a io e essa il i ol es detailed pe so al data gathe ed i people s

private sphere, and therefore full transparency and privacy mechanisms such as the possibility to opt

in and out, and to choose which data categories are disclosed, need to be in place.

Caroline has 5 hours left to finish important presentation slides for a meeting, so the TV which

usually switches on and streams the evening news when she comes home, stays off today. Because

her smart watch registers her getting more and more tired, but the deadline for the slides as posted

in her Google calendar is approaching, it displays a pop-up message suggesting the coffee machine

to make an extra strong coffee for her. It also triggers her Sonos speakers in the kitchen to play

so e t a ks f o he You a do it pla list u ated “potif , he she e te s the kit he to pi k up her coffee. The next day, on her way home from work, her smart watch displays a notification

that her favorite show has been recorded for her, as the system could see from her geolocation that

she would not make it back home in time to watch it live.

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Group personalization is an interactivity feature, which should serve to simplify the consumption of

media together with friends and family by merging preferences without the users having to deliver

much conscious input. The data, which could be playlists on Spotify, viewing history and ratings on a

movie platform etc. could be rapidly gathered by cloud-based services. With all the personalization

efforts of content providers today, social interaction should not be neglected. Personalization for

individuals is certainly easier to achieve, particularly on mobile devices with a specific owner. But

sensor-enabled and IoT-based applications may provide a solution for taking into account the

preferences of several users, greatly enhancing the social aspect of media consumption.

Whenever Andreas is hosting a party he is clueless which playlist to choose when he has a lot of

guests. This time he tries out the new feature of his music streaming service, which his guests had

the option to opt in to, when they accepted his Facebook invitation for the party. Now, with every

guest who enters and is identified by the sensors in his hallway which connect to their smartphones,

the playlist gradually reorganizes itself based on the preferences and favorite songs of the present

guests, using an algorithm to create a harmonic mix and transitions between genres. His friends

do t i d sha i g thei pla list, as the a e e u ious ho the featu e o ks. Whe A d eas d ops his f ie ds pla e the da afte , the de ide to at h so e tele isio . As soo as the switch on the TV and confirm their user profiles, the system comes up with a suggestion, excluding

movies one of them had seen lately, drawing on their online movie ratings, and considering that

Andreas only has an hour left before he has an appointment. They pick the 45-minute documentary

which was selected for them as both of them had recently watched the trailer.

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4.4.2 The connected living room

IoT-enhanced entertainment is achieved through the interplay of various sensors, both fixed sensors

in the home as well as built-in sensors in wearables and mobile devices; further, the integration of

explicit preferences, which could be votes, ratings, tweets, or likes the user has submitted on any

o e ted o li e platfo o so ial et o k i the past, as ell as sou es su h as o e s ale da or

upcoming travels (an overview is given in figure 13). The 5G FWT serves as the hub to bridge the non-

interoperability of devices which stems from different device manufacturers and service providers

using different communication

protocols. For the system to actually

create the value of a fully

personalized entertainment

experience, all components need to

work together without any

communication barriers. On the

other hand, the user may choose

which components she wants to

include, and assemble the system

individually.

Figure 13: The connected living room.

The realization of this innovative form of entertainment requires the installation of sensors in the

home, particularly in the living room as the traditional location for home entertainment. The costs for

sensors in the context of the consumer IoT, as mentioned in chapter 4.1, are rapidly decreasing and

are therefore assumed to be affordable for the average consumer in a developed country in the near

future. Further, it requires the ownership of a smartphone, smart TV, and a smart watch – devices

which already are (or are on their way to being) adopted on a mainstream scale. Lastly, any relatively

active online user has a rich amount of data which could be used in order to tailor the entertainment

experience even more specifically. Any of these sources should be integrated based on the active

choice of the consumer. Scientists of the Human-Computer-Interaction Institute at Carnegie Mellon

University recently created Emsense, a system which allows for automatically launching context-based

applications (Stinson 2015). For example, it lets reminders for meetings pop up when the user touches

the doorknob of the office door, or starts a countdown when the user is brushing her teeth, which is

being registered by smart watch sensors which detect when the user is touching specific objects

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(Stinson 2015). This example demonstrates how context-awareness created through sensors could

create value for the consumer.

Motion and presence sensors communicate with various means of identity detection in order to

automatically adapt to whoever enters the room, in the case of a household with several people.

These could entail facial detection, or the detection of the smart watch or phone, identifying the

owner. These mechanisms allow for a high degree of seamlessness and intuitiveness. The overview

below sums up the steps from data input in terms of se so data a d the use s p ofile, to data

output, meaning the actual personalized content delivery, connected by a command or trigger, which

is either automated, or human-initiated, as represented in figure 14.

Figure 14: Data input, command, and data output in the IoT-enhanced entertainment scenario.

4.4.3 Value chain & Business models

The value chain for smart solutions (see figure 15) is relatively complex, firstly, because for any smart

system to function, various components, both objects and services, are required. Those are usually

provided by different vendors. Secondly, the competitive landscape is very heterogeneous, as players

from a broad range of industries participate, based on their expertise in a certain step in the value

chain. Which player i the alue hai has a ess to the o su e s data, has dramatic implications in

terms of how that smart device is used to enable new value propositions, new services, and how data

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is then exploited Ca te . Connectivity is the central element of all smart solutions, a d the ig

li k et ee the IoT a d e te tai e t Geissah . Therefore, the mobile network operators

(MNO) and telcos providing this service are of primary interest. Telcos already own a gateway to

people s ho es – the router (Tsiatsis 2016) – and resulting from that have a large existing customer

base (Nagasinghe 2014). This is what makes the router a very feasible option to be the smart home

hub. Carter (2016) from Deuts he Teleko e plai s, We s ap out these oute s e ery couple of

years and it has the capabilities and the design in terms of radios, it can support multiple different

protocols. It is the most

natural way to build a

position in the home

because all our customers

have that (Carter 2016).

Any services the MNOs can

offer beyond connectivity,

represents new oppor-

tunities for revenue (see

also 4.4.4).

Figure 15: IoT-enhanced entertainment value chain

Co side i g the u e t state of s a t ho e se i es, o su e s eadil spe d thei i o e o

security, TV a d edia o te t, as ell as oad a d se i es (GSMA, 2011). However, in order to

make smart home services attractive to the mass market, service providers will have to expend

considerable effort to educate consumers about the benefits and convince them to pay a monthly

premium for such services. Hereby it is crucial to find ways to increase the value smart home services

can generate for the consumer, potentially bundling services with each other, which will be discussed

fu the elo . The e te tai e t sector might provide some valuable lessons: The introduction of

double and triple-play service packages by broadband providers, for example, created strong demand

for rich media and TV services G“MA, . Much more than just connectivity needs to be provided

to consumers if they are to pay for any additional services. Spotify, for example, is adding much value

by offering what can be described as music-as-a-service, services wrapped around the core product

(Lewis 2014), such as personalized playlists curated by DJs.

Entertainment as part of the smart home is predominantly defined as a category comprising smart

TVs, blue rays, game consoles, and media players. IoT-enhanced entertainment involves a range of

additional hardware components, such as the sensors, as well as new services, which manage the data

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gathering, analysis, and matching with content. Therefore, the current interrelations of players in the

smart home value chain do not entirely apply to the IoT-enhanced entertainment use case, as the

envisioned system relies on collaborations not yet in place today. For example, any OTT content

provider would need access to the respective user and sensor data in order to predict and deliver

individual content. Currently, sensors are mainly being used for security, home automation, and

energy efficiency purposes, and the reinterpretation for an advanced entertainment experience

implicates entirely new business models. The following paragraphs will elaborate on some central

business models that were brought up in the discussion with the experts.

Content packaging & Service bundling

The G“MA suggests a suppl -side push (GSMA, 2011) as the key driver of entertainment applications

in the smart home, as broadband penetration, OTT media services, as well as viewing devices are

ei g pushed i to the a ket. This d a i ge e all des i es a app oa h used fo p odu ts a d

services whose benefits are previously not well understood by the consumer or entirely unknown

(Godefroid et al. 2009). This certainly applies to IoT-enhanced entertainment, which, as this thesis

proposes, involves an innovative combination of smart home technologies and data analytics, and

corresponds to latent consumer needs. These need to be converted in an explicit demand in order for

the concept to actually take off. Therefore, early adopters need to be addressed with solutions which

ideally come with both options for customized content packaging as well as options for bundling with

services offered by vertical industries in order to cover a broader range of value propositions.

However, if one aims to offer entertainment as part of a bundle, says Promny (2016) in his interview,

such as positioning an audio system in the smart security market to generate synergy effects in the

home, one needs to understand the trends and dynamics in this respective market, too, and consider

the interfaces between the different areas of application. Bundling options further open up

possibilities for cross-industry cooperation, such as offering an entertainment package plus home

automation. This could provide mutual traction for both involved industries. The Deutsche Telekom is

currently offering smart home options to existing mobile telephony customers in order to convert

them into smart home users (Kiessling 2016).

Content packaging is viewed as the key value proposition for end-consumers by some of the experts.

IoT-enhanced entertainment would go beyond this by offering the additional value proposition of an

entertainment package based on conscious choices as well as situational and environmental factors.

This would enhance the convenience, overall user experience and life style, corresponding to Chelluri

(2013) who suggests that key value propositions of entertainment as part of the smart home are

increased convenience, and lifestyle improvement. The feasibility of a business model can vary greatly

from market to market, as Jean-Claude Kiessling (2016) from Deutsche Telekom exemplifies. In North

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America, consumers are far more likely to enter subscription-based contracts for services such as

entertainment packages or home automation solutions, whereas German consumers prefer one-time

investments over regular payments. Consumers can only be expected to pay a price premium when

the service upgrade addresses the needs they are already aware of today. One of these needs, as Jon

Giegengack (2016) explained, would be customization of content. Specifically for the entertainment

i dust , the popula it of o -de a d o su ptio of audio isual o te t has fueled the

consu e s ish fo se i es that let the hoose thei o te t u li itedl . P o idi g o su e s ith

the choice to pick smart services and allocate content packages therefore seems to be a crucial

element of smart entertainment solutions.

New ownership models: Leasing, subscription, everything-as-a-service

The changed attitude that becomes apparent in the rise of streaming as opposed to purchasing single

pieces of content such as song files or blue rays, represents a broader paradigm shift from ownership

to access (Lewis 2014; Drozd 2016), which digital technology with its disruptive dynamic has recently

brought about. Particularly because high initial cost is a barrier for smart technology adoption (Zhong

2016), new ownership models will be relevant when it comes to successfully convincing end-

consumers to integrate innovative IoT-based solutions into their homes and everyday lives. Providing

hardware to consumers which is subsidized by players in previous steps in the value chain could lower

the expenses for the end-consumers and thus significantly lower this barrier.

In the battle for consumers, companies occupying different positions in the value chain are competing

for the position as the gatekeeper which is in charge of the data management. Owning that position

comes with the obligation to provide superb customer experience, including 3rd party apps,

communities and recommendations – the o e use e pe ie e, the o e i te action, and thus: The

more data Le is . This is likely to be achieved with a platform-app oa h, e ol i g f o o e-

time transactions and product-focus, to flexible consumption and as-a-service models Le is .

Co-creation of value

As mentioned above, the value chain is being replaced by a network of vendors, competitors and

consumers, who collaborate in order to co-create the value (Lewis 2014). This can be directly related

to IoT-enhanced entertainment, where the process of co-creation can be seen in the output in terms

of a personalized content selection being based on the information the user is willing to disclose about

herself and her immediate environment. From this perspective, the personalized user experience

represents the key differentiator, which not every player will be able to live up to. As consumers get

more empowered, the crucial prerequisite is to establish trust. For consumers to be able to trust the

technology, they need to be sure that the e ai i o t ol of thei data. F o a use s pe spe ti e,

IoT-enhanced entertainment should feel like a loop of information – personal data fed into the system

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to boost the entertainment experience, with the potential to increasingly adapt and deliver spot-on

content.

4.4.4 Revenue potential

In this chapter, the revenue potential specifically for the use case IoT-enhanced entertainment

enabled by 5G FWA shall be discussed. As illustrated in the value chain in 4.4.3, IoT-enhanced

entertainment as a concept involves a number of interrelated players, as the requirements range from

the enabling technologies, hardware, to network providers, and OTT services, and potentially also bear

partnerships with vertical industries. In fact, as with many digital products and services, a network

seems much more appropriate to describe the structure of the market than a chain. Or as Lewis

(2014) puts it, As o su e s get o e e po e ed, usi esses ust ei e t thei alue hai to

become a value network embracing collaboration and co-creation. In order to unclutter the complex

network of relations and options, this chapter shall be limited to the actors mentioned in the

simplified value chain above and their potential revenue opportunities assuming the specific scenario

of realizing 5G FWA-enabled IoT-enhanced entertainment in the home of the future. It should be

noted, that these opportunities can be mutually exclusive, for example in the case of media content,

which can be offered using various channels (cable networks or OTT). It remains to be seen which

providers can actually generate sustainable revenue by working with IoT-based services; the rise of

one player might mean the failure of another.

Revenue for telecommunications infrastructure vendors: 5G FWA patent

The patent for the 5G Fixed Wireless Access technology, sold to hardware manufacturers, represents

the source of income for the telecommunications infrastructure vendors, which are the beginning of

the value chain.

Revenue for hardware manufacturers: IoT devices

Increasing smart home adoption implies that consumers will equip their homes with many new

internet-e a led thi gs , a gi g f o se so s, a d o e ted o su e ele t o i s to household

appliances. These will constitute a new source of income for hardware manufacturers. Further, the 5G

FWT functions as the new router in the home, which provides connectivity and substitutes fixed

broadband connectivity, which opens up a new hardware business opportunity.

Revenue for Mobile Network Operators: 5G FWA

Most interesting for the MNOs will be the commercialization of 5G FWA, because new opportunities

to expand their influence on the value chain of media delivery to the homes will arise. With regards to

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entertainment, MNOs may find ways to enter the content market through partnerships, for example

by offering entertainment bundles, which may compile different OTT services, such as video and music

streaming. Partnering between OTT players and MNOs can already be witnessed today, which

Lies hi g elie es to e d i e the MNO s desi e to u de sta d the content market.

However, with 5G FWA offering more consumer-centric ways to manage personal data, such as the

user managing her local cache, and deciding which data may be accessed by 3rd party services, issues

ega di g hi h a ket pla e ill host this data ill i e ita l e e ge. The e is a fu da e tal

conflict in this type of partnering, as both organizations want to o the usto e e pe ie e

(Liesching 2015). To succeed in the IoT market, telcos will be required to partner with players from

vertical industries and position themselves as network enablers and platform providers for vertical

solutions (Nagasinghe 2014). This platform approach is being pursued by the Deutsche Telekom, as

described in chapter 4.2.

Revenue for TV operators: Personalized entertainment packages

TV operators are currently severely threatened by all kinds of OTT providers representing a parallel

distribution channel, because the traditional TV industry did not manage to serve the changing

demands of their viewers with a digital lifestyle, such as anytime-anywhere access to content

(Giegengack, 2016). The li ea oad ast odel a o lo ge p o ide the a s e i a o ld of

mobile, connected and sophisticated viewers (MPP Global Solutions 2013), and the pay TV channel

package options mostly frustrate the consumers, who pay a monthly price for content of which only a

fraction corresponds to their interests (Giegengack 2016). IoT-enhanced entertainment is an

opportunity for TV operators to strengthen their position in the content market and to profoundly

innovate their image, if they work with developers to find ways to create IoT-based content delivery

applications. This would result in more personalized pay TV options as an alternative to the OTT

options consumers are paying for today. Potential partners could be found in the MNO part of the

value chain, as the network operators share the ambition to find ways to curb the success of OTT

providers, which let the networks increasingly take o the ole of du pipes (Liesching 2015).

Revenue for developers: IoT platforms

IoT platforms will need to perform the crucial rule of ensuring the frictionless and value-generating

communication between devices, so that the smart TV can actually display the content selected based

on sensor data, and so that the motion sensors trigger the talk show to continue in the room the user

just entered. Making these processes work smoothly is the task of developers, who may be hired by or

sell their code to service providers.

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Revenue for OTT content providers: More paying subscribers

With a compelling personalized service, content providers can increase their paying subscriber base.

Thanks to their over-the-top content delivery channel, they have the advantage of being more flexible

than their traditional competition such as the TV networks.

Revenue for content providers: Ad-supported content

It goes without saying, that the described mechanisms for bringing personalized content delivery to

the next level imply significant opportunities for advertisers. IoT-based data may provide information

ell e o d a pe so s o line identity, online shopping transactions, or Google searches, which means

that advertisers are likely to be attracted by the opportunity to deliver messages to individuals they

understand so much better than it was possible before. An ad-revenue-based approach can generally

serve to quickly build a large user base due to the ability to offer a free or partially subsidized product.

As IoT-enhanced entertainment will be an experience consumers have no direct comparison to, which

affects their willingness to pay, it will be crucial to demonstrate the value of the product to consumers

without them facing high initial costs in order to receive this opportunity. For innovative services, a

push-approach as described in 4.4.3 seems most promising, and in this specific case it would involve

providing the sensors necessary for the personalized home entertainment as part of a business model

i hi h the ha d a e is at least pa tiall su sidized, i o de fo the use to e illi g to si pl t it

out . While having advertisers become part of the value chain seems likely on the long run based on

the high value of the consumer data for marketing purposes, it should be avoided to let data access

for 3rd party companies be part of the equation from the beginning, as the consumers reluctance

might be too high for such as service to be accepted. Further, it is a prerequisite that content

providers are willing to make their content accessible. The strong argument for content providers to

engage in the use case, however, is that they can learn more about their audience, in order to make

ette de isio s o hich existing content to source and which new content to produce (Brian

Curtis, 2016, Comcast). Thereby, they can benefit from a higher level of user satisfaction as well as

loyalty, as frustration with content discovery, as Jon Giegengack (2016) described it, can be decreased.

Keith Underwood (2016) from Channel 4 stated at the TV Connect conference, that data-enabled ad

revenue – meaning that ads that were placed individually based on the analysis of who is watching the

program – has increased by 30% in 2015, and is projected to increase by another 50% in 2016. The

personalized ads consider demographic variables, the location of the viewer, or even the weather at a

given point. Giegengack (2016) points out that people have a higher tolerance towards this

pe asi e ess toda . The athe get tailo ed ad o te t ased o thei data tha ge e i o te t.

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5. Discussion

Quotes from the interviewees and conference speakers provide the basis for the following chapter,

which serves to discuss the most relevant aspects of the IoT-enhanced entertainment use case, as

identified in the analysis of the enabling technology, market context and consumer expectations.

5.1 Discussion of key findings

In order to tie all devices in the smart home together, the FWT as the source of connectivity holds a

lot of promise, as it may serve as the hub. Whereas various vendors aim at positioning, among others,

the smart TV or connected speakers as smart home and entertainment hubs, Jon Carter (2016) from

Deutsche Telekom UK describes the router as the most natural and obvious place to be the platform.

The router is the one thing every household definitely needs on order to establish connectivity and to

be transformed into a smart home. Martin Trimby from BT adds a othe pe spe ti e: The oute as

the hub makes most sense because it has a shorter life cycle than other devices in the home and can

therefore offer more innovative functionality (Trimby 2016). This constitutes a huge opportunity for

any vendor who can offer a router with an integrative functionality as well as add-on services to

leverage the data which the connected things in the home are capable of collecting. IoT-enhanced

entertainment will make most sense as a fully integrated part of the smart home, because the

envisioned functionality requires a number of sensors, and the hardware costs need to be justified by

the value they can create. Shared use cases can create more value by utilizing a sensor for various

applications, such as motion sensors for both security purposes and seamless automated events such

as switching light, heating, or entertainment services on and off. The experts of the Deutsche Telekom

stated in their interviews, that fo toda s a ge of s a t ho e se i es, a egula WiFi oute as

sufficient (Kiessling & Carter 2016). It should be noted, however, that their smart home platform only

offers a curated list of devices which are made sure to work together. For a user who freely wants to

pick and combine single services, the interoperability challenge persists, which is why 5G FWA as a

unifying tool gains relevance.

F o IoT e e he e to p i a o he e (Assayag 2016)

The trade-off between having user data in the cloud and storing and managing data in a local cache, as

described by the experts, leads to the central issue of privacy which the analysis identified as a major

challenge of offering IoT services to consumers. Cloud-based services enable more personalized

features and more options for data analytics, as the data can also be fed into other systems. This is

particularly relevant for IoT-enhanced entertainment, as it relies heavily personal user data, and as

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Trimby (2016) states, o e ted e te tai e t ill o l e a su ess if it ill e a ope e os ste .

O the othe ha d, o su e s eed to feel o fo ta le ith this data ei g p o essed. Use

skepticism towards data collection is one of the major restrictions for connected home services,

whether it is entertainment, health, or ene g , sa s Ma i ilia We i ke (2016) from Frost &

Sullivan. Both with the IoT a d e te tai e t, sa s Che Assa ag, it s a out p i a fi st, si e ple t

of data will be collected about what you consume. In both worlds we have to be clear who is going to

collect the data for what in order to create trust with the consumer (Assayag 2016). Having a

consistent ecosystem created by one vendor for multiple devices and services may be favorable for

the sake of a seamless interplay of devices, and facilitating the service and the user experience.

However, as Assayag (2016) otes, „the e is a te sio et ee ease of use a d p i a . If ou ha e

one single provider, it might be more convenient, but he might know everything about you. The

experts are split over whether privacy concerns are inhibiting the success of consumer IoT applications

o hethe people ill g aduall ope up. Vladis Tsiatsis, IoT e pe t at E i sso , thi ks people do t

want this data to be exposed to companies. I do t thi k the people a e eady yet, maybe in a few

years (Tsiatsis 2016). Adrian Drozd (2016) from Frost & Sullivan thinks that the willingness to share

data will be raised when people get benefits, such as personalization, better service or a reduction of

monthly fees etc. Specifically talking about IoT for entertainment, Samer Geissah states at TV Connect:

I thi k te h olog is o i g so fast toda that people ill a ept this inor inference in their

privacy (Geissah 2016), which corresponds with entertainment researcher Giegengack (2016) saying

that o e s a out p i a ill e lo e ith ou ge -aged people, they have never known a time

without that kind of technology. To o lude this issue ith a hu o ous statement of Giegengack,

The o st that could happen in your scenario is that you put up some song that the person might not

a t to hea , it s ot like so eone could hack your bank account (Giegengack 2016).

Lack of awareness

For the consumer IoT, interviewee Santos (2016) thinks that what Steve Jobs once said applies very

well – that use s do t k o hat to do ith te h ologies u til ou show them. Brett Sappington from

Parks Associates confirms at TV Connect, that the lack of awareness is holding back the adoption of IoT

technologies, because people do ot uite u de sta d hat is the smart home and what can it do for

e? (Sappington 2016). Smart home service bundles with multiple value propositions are propagated

as the most promising approach to reach consumers in the early stages of adoption.

With regards to the entertainment industry, at TV Connect as well as in some of the expert interviews,

content bundles were singled out as the ideal business model to address the demand of

entertainment customers to be autonomous in their content choices. Ferrone (2016) refers to the

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g eat u u dli g of hat o su e s a e used to e ei i g as a u dle toda , su h as the la ge

number of TV channels with no choice of specific channels they are actually interested in.

‘ea a gi g the a aila le content into new, ski ie pa kages Tata , Channel 5) will be a way

to serve the changing consumer demands. Both Jon Giegengack (2016) and Simon Trudelle (2016)

from Nagra suggest that a la a te o te t i depe de t f o the et o ks a ge e ate more

revenue, and in that sense the re-packaging would be a win-win situation. IoT-enhanced

entertainment could assist users in discovering the content they will like and at the same time, deliver

valuable user insights for the content providers, which can adapt their offer accordingly.

Navigating content more conveniently has also been identified as a challenge. Making it easy for

viewers and listeners to find what they want, and for them to be able to discover new content, should

be a central objective for content providers. In this regard, blending linear TV and video on demand

(VoD) content was raised as an issue at TV Connect. The challenge is hereby to maintain a seamless

and intuitive user experience across the various distribution channels, says Simon Trudelle (2016),

Senior Product Marketing Director at Nagra. Giegengack (2016) said in his interview that his research

has shown that people want the technology to work behind the scenes for them when steering them

through the content. Correspondingly, IoT-enhanced entertainment would allow for a very subtle way

of content discovery. Brian Curtis (2016) from Comcast refers to Netflix CPO Neil Hunt who stated that

75% of the content consumed on Netflix is driven by recommendations. This underlines the relevance

of content discovery beyond what people already know they are looking for. IoT-enhanced

entertainment would represent an entirely new wave of personalization by integrating not only

insights about the user which can be directly derived from her usage of the service, but also

contextual, dynamic data. This potentially also corresponds with the aspect Giegengack (2016)

mentioned in his interview, about users being unwilling to rely on the Othe users have watched

this - kind of suggestions, but wish for a more individual service, that gets to know them better over

time, in order to express predictions rather than recommendations based on transactions.

Group personalization

Adrian Drozd (2016) from Frost & Sullivan added for consideration that personalization efforts as

described by the use case might lead to features with an isolating effect, as they only consider one

pe so at a ti e, he eas edia o su ptio a also e a so ial e pe ie e. We talk a out

personalizing, but in front of the TV is where people want to watch and sit together, how can this be

perso alized? Drozd 2016) Also Andrew Ferrone from ‘oku poi ts out that the TV is a co-viewing

de i e. Do t fo get that he ou thi k a out o te t discovery and recommendations (Ferrone

2016). IoT-enhanced entertainment as this thesis envisions it would tackle exactly this issue by

74

providing the technological premises for group personalization, as users could be identified through

various means, and preferences could be merged and harmonized automatically. Gustav Söderström,

ho is i ha ge of shapi g the p odu t “potif , o fi s the e e ge e of this atego . We do a lot

of personalization for individuals; there is a separate track, which is personalization for groups

(Söderström 2016). Precisely in line with what the group personalization idea in this thesis suggests,

he describes a scenario of someone entering a house party with music playing, and the playlist

adapti g a o di gl . The i te esti g thi g fo “potif is, ou k o [the guests ] pla lists, so ou

ould sa , the fou of ou, ou all lo e these so gs, that s the o e lap, he eas i di iduall the ight

like other stuff, so we could try to automatically create the best possible match (Söderström 2016).

He o ludes: That is definitely something to look at – the combination of knowing the situation and

the moment, and that could be enabled by technology and sensors (Söderström 2016).

Solving problems for consumers

At Spotify, the product developers work with the jobs-to-be-done framework introduced by Clayton

Ch iste se at Ha a d U i e sit : Fo the o te t e li e se a d the pla lists e p og a , e a e

t i g to ha e a lea h pothesis of hat jo the re trying to solve for the user (Söderström 2016).

IoT-enhanced entertainment addresses a number of jo s . What Ch istia Ha is , MD of music

st ea i g se i e Deeze des i es as the t a of hoi e , a e su sta tiall si plified a d

turned into an engaging rather than cumbersome experience. As Jon Giegengack (2016) points out,

the music industry is well ahead of the television industry in terms of adapting to digitalization and

serving new consumer expectations. Both Deezer and Spotify work with features for the discovery of

new music, and constantly analyze the use s hoi es i o de to adapt these suggestio s ette .

Harris (2016) states that Deeze a ts to p o ide the liste e s ith a jou e e o d hat the e

usuall o su i g le di g hu a -curated content and algorithms. Söderström (2016) says that

a lot of people use “potify when they actually go to sleep, so the job is to make you fall asleep faster

a d ette . Co su e s ha e this eed, ut fi d it ha d to hoose so ethi g app op iate themselves,

ut we have curators who do only that, so we simplify that job for you (Söderström 2016). IoT-

enhanced entertainment can bring these personalization efforts to a new level by taking into account

contextual information.

Why entertainment?

The Deutsche Telekom smart home platform is entirely unconnected to their entertainment offer

(Kiessling 2016), and also Frost & Sullivan (2015, 1) consider entertainment an area which has less

potential on the smart home market than energy and security-related services. However, various

arguments for why entertainment can be categorized as a driver of the smart home and the IoT were

75

identified. Bergh Insight (2014) describe entertainment as u i e sall desi ed , a d internet-enabled

entertainment services such as Spotify, Netflix, Hulu etc. are already highly popular and consumers are

familiar with their benefits. Energy saving and security might be important issues for homeowners;

however, those areas are presumably lacking the appeal which is attached to entertainment. Christian

Harris (2016) from Deezer explains that bundling music streaming with mobile phone plans works

really well, because the key propositions of phone plans – free calls, data volume, etc. – tend to be

highly unemotional and not very engaging. By adding entertainment services to the mix, and thereby

adding something that is of interest to almost everybody, the product can be emotionalized.

Consequently, on a bundle level, entertainment can thus be leveraged as the emotionalizing building

block that attracts consumers and drives interactivity and engagement with the technology. Further,

5G is predicted to be a major driver for future media applications which will deliver more immersive,

more engaging experiences, and experiences are what consumer want most from their entertainment

services, as Ben Pyne (2016) from Disney states in his presentation. Therefore, increased quality of

service for entertainment may constitute a central value proposition of 5G access in the home.

OTT-threat: New ways for broadcasters to reach their audience

B oad aste s a e the slo est g o i g g oup i edia (Dixon 2016), and Netflix going global,

simultaneously launching in 130 new countries around the world in January 2016, was a clear

indicator of OTTs pushing change. Integrating IP-based content delivery will be an inevitable tool for

oad aste s to ai tai thei ele a e i the e te tai e t spa e, a d to ea h the ille nials

audience. Another central aspect is that new ways of content consumption are additive (Brian Curtis

2016, Comcast), which means that the time people spend consuming media is generally increasing,

and the rising popularity of one channel does not automatically necessitate that people spend less

time engaging with another channel. This finding should encourage content providers to try to grow

the pie by delivering to consumers hat the a t, hi h also ea s to offe the o te t

e e he e the audie e e pe ts to fi d it Ja es Cu ell 2016, Viacom). A big theme at the TV

Connect conference was the streaming of linear TV on the smart phone, for which robust mobile

networks could be the driver.

5.2 Personal reflections

One major limitation for this thesis has been that the feasibility and success of IoT-enhanced

entertainment could only be analyzed hypothetically, in terms of matching the identified consumer

demands, market barriers, and value propositions in an overall framework. As the use case in this

particular context with 5G Fixed Wireless Access is unprecedented, no existing data could be drawn on

to in order to validate its eligibility. Further, the connection between the smart home and

76

entertainment was established, particularly based on consumer demands which are likely to drive the

bundling of smart home and smart entertainment services. However, this connection depends on the

willingness of players from both industries to collaborate on joint services, and whether or not this will

occur will only become apparent in the next few years.

The aim of the expert interviews was to cast light on the technology, business, and consumer context

of the use case from various angles. This variety was achieved, and the fact that there were many

common perceptions among the experts and industry representatives indicate the strength of the

findings. However, the results can only serve to give direction, reflecting broader trends towards

personalized services and artificial intelligence. This results in the inability to give clear

recommendations for market players. It was possible to win leaders with diverse relevant backgrounds

(IoT research, smart home research, entertainment research, [smart home] service provider and

digital content service), and these represented Germany, Sweden, the United Kingdom, the United

States as well as Latin America. In order to improve the basis for discussion further, within each of

these markets, experts from each industry vertical should ideally have been interviewed, to be able to

judge the influence of the industry background as well as to identify potential cultural differences in

their assessment of the use case. The number of interviews was, however, limited by a lack of

resources for a more extensive acquisition of interviewees.

A limitation that stems from the chosen qualitative method of expert interviews is the subjectivity of

the responses. The conclusions needed to be drawn independently and based on my interpretation of

the espo ses, ot o je ti e fa ts. Co po ate ep ese tati es a s e s a e likel to e i flue ed

the a the ai to p ese t thei o pa , a d the esea he s i te p etatio s a e led y their

specific backgrounds. The data gathered through expert interviews is shaped by personal views and an

individual assignment of relevance to certain issues. Every single interview can therefore strongly

influence the outcome of the research as it may add very different perspectives on an issue. On the

other hand, the fact that there were numerous notions all experts agreed upon, helped establish the

credibility of the findings, and those issues entailing opposing views primarily reveal which discussions

can be expected to arise with regards to IoT-enabled media services.

A challenge of this work might have been that, from an academic perspective, I do not possess an

explicitly technical background, and therefore had to rely on the judgement of colleagues and experts

to assess the technical feasibility of the use case IoT-enhanced entertainment. However, the aim of

this research has also been to represent the general objective of the degree course Media

Management, which is to equip students with the ability to take on an interdisciplinary perspective

77

across technology and business. This comes with the requirement to familiarize with previously

unknown subjects as well as the necessity to leverage a network of specialists to draw informed

conclusions.

5.3 Other application areas & further research suggestions

The focus of this analysis has been to explore the benefits of IoT-enhanced entertainment for end-

consumers as well as for certain players in the converging space of smart home and smart

entertainment. There could also be additional applications, for example could the more detailed

information about when a user is watching something lead to more efficient network management.

The TV could use presence sensors in order to detect whether or not the user is actually watching, or

perhaps left the room and adapt the data rate at which the content is delivered. Further, embedding

the entertainment service in the larger consumer-IoT context could enable the pre-caching of content

for example when the user is on her way home, also allowing for more efficient allocation of

networking resources. Application areas like these, and the combination of sensors and other IoT data

and entertainment services in general constitute interesting subjects for further research. This may

involve the technical details of sensor-enabled and context-sensitive content sourcing, and algorithms

enabling the media delivery to a specific user taking into account IoT data. In terms of market

research, consumer demands in emerging markets should be studied, as the results of this report

largely apply to Western, high-income societies. 5G FWA as a technology per se, however, also has

great potential in newly advanced markets, and the use cases for these markets are supposedly

divergent from the those deemed viable for highly developed markets.

78

6. Conclusion

Media delivery and the IoT have been described as use cases for 5G by the various entities developing

5G technology. The proposed use case IoT-enhanced entertainment represents a fusion of these two

into one framework, giving rise to new media delivery and home entertainment solutions, and in

relation to that, innovative business models. This chapter serves to answer the research questions as

presented in chapter 1.3 and derive the essence of the analysis. Figure 16 sums up the findings and

their interrelation.

Figure 16: Conclusion: IoT-enhanced entertainment framework

To revisit the hypothesis in the introduction – it as p oposed that IoT applications will enhance the

entertainment industry of the future and lead to a previously unimagined extent of personalization of

the ulti edia e pe ie e. The o espo di g esea h uestio this thesis ai s to a s e as

concerned with the potential of a 5G FWA, meaning the deployment of mobile networking for in-

home usage, to enable the use case IoT-enhanced entertainment in the smart home. The analysis has

shown that 5G FWA can be described as a future driver of smart home service adoption, as it may

facilitate interoperability of complex device and vendor ecosystems. Further, 5G will be particularly

79

suited to enhance home entertainment, for example due to its high capacity and low latency

characteristics. With regards to IoT-based applications, the new options for data management in the

local cache which 5G FWA entails can be seen as a significant enabler. Therefore, a correlation of the

independent variable 5G FWA and the dependent variable IoT-enhanced entertainment could be

established.

As for which data sources IoT-enhanced entertainment utilizes and what kind of value can be

generated through these, wearable devices and sensors have been described as suitable components.

Wearables can naturally deliver very individual and most importantly, situational data, and therefore

enable highly personalized media output. Sensors are gradually becoming universally deployed, in

consumer electronics as well as emerging smart home devices. Assuming the possibility of a shared

functionality of most sensors, such as motion sensors for entertainment, monitoring and security

purposes, cost advantages may be realized.

In this thesis, the smart home industry is described as the market IoT-enhanced entertainment is

embedded in. This complex environment is characterized by a multitude of players with highly

di e ge t i dust a kg ou ds, ishi g to e efit f o detailed i sight i to o su e s lifest les i

order to create more accurate selling propositions and to provide better service.

For broadcasters, IoT-enhanced entertainment represents a new channel to learn about their viewers

and in turn, be able to deliver more appealing content to individuals; an expectation many TV

operators, with their territory being disrupted by OTT services, fail to live up to these days. For

connectivity service providers, IoT-enhanced entertainment may constitute a tool for moving into the

smart home market. Entertainment is universally desired and connected entertainment is something

that is already well-understood by consumers, as opposed to entirely innovative IoT applications, such

as connected lighting. Bundling is a big theme in the smart home market, where vendors seek to

reduce the complexity for the consumer by offering combined solutions. These can either be bundles

of interconnected smart home services, or bundles of established services such as telephony, mobile,

and broadband, with smart home as an add-on. Further, the network capacity is not adequate to

enable more immersive applications such as virtual reality gaming. 5G FWA will deliver high

sustainable data rates in order to satisfy future demands on connectivity. 5G connectivity can tackle

some of the identified technological issues encountered in the smart home today. A reliable and

flexible network promises to deliver an improved quality of service and user experience. The router is

arguably the most obvious device to function as a smart home platform, and the 5G FWT, as the

analysis shows, will be designed to overcome interoperability and data security issues. This represents

a major opportunity for hardware manufacturers and service providers to market this device.

80

Understandably, concerns about data security and privacy act as major restraints of smart home

service adoption, as highly personalized and adaptive services necessitate a certain degree of what

consumer might perceive as intrusiveness. These concerns need to be addressed with services which

can demonstrate data security and enable the users to manage their own data at their own terms,

which the local cache option of 5G FWA allows for.

Due to the cost savings that can be realized with FWA as compared to fixed broadband as described in

chapter 2.1, the technology has particularly great potential in emerging markets and underprivileged

areas where fixed broadband solutions are not a viable business option. These areas, however, are

perhaps not congruent with the areas where the target group for a service like IoT-enhanced

entertainment resides, as the service was rather derived from demands of people in urban high-

income city locations. Therefore, the relation between the variables 5G FWA and IoT-enhanced

entertainment as demonstrated in this report, might be challenged by infrastructural and socio-

economic factors. However, as the precise use cases and business models for 5G FWA are still in the

process of being designed, and will likely be scrutinized and refined as the technology actually gets

launched, considerations regarding target groups and target markets can only be hypothesized at this

point.

These days, the entertainment industry is trying to put the consumers in their increasingly active role

in the center of attention and innovate around consumer preferences. However, both in the expert

interviews as well as at the TV Connect conference, clear insufficiencies were highlighted, in terms of

navigating through content, cross-platform access, and the quality of recommendations. IoT-enhanced

entertainment addresses precisely this desire: Guidance through content based on personal and

context-aware data, in order to present consumers with individual options. According to the experts,

TV-viewers are also lamenting the lack of freedom to assemble their content bundles. The music

industry is a few steps ahead in this regard, providing consumers access to single tracks as well as

unlimited streaming.

One ke uote f o the e pe t i te ie s as that se so s a e sol i g p o le s fo people

(Söderström 2016, Spotify). There are a number of challenges and inconveniences people encounter

in their daily lives, and those services that manage to demonstrate the value of solving problems, will

be adopted. The enhancement of daily experiences was described as a key expectation of the

consumer-IoT in chapter 4.3. IoT-enhanced entertainment can save users time, entertain them in an

innovative way, boost social activities, and generally improve their well-being and their productivity.

The analysis, including extensive research, expert interviews with high-profile representatives of

entertainment and smart home industry and research, as well as a conference visit, have delivered

81

arguments for why IoT-enhanced entertainment corresponds with present and emerging consumer

needs, such as intuitiveness, seamlessness and better ways to navigate content. Applications such as

Spotify Running are hinting at the nascent blend of entertainment services and the IoT. The macro-

t e d pe so alizatio is d i i g i o atio i the e te tai e t spa e a d the pe so alizatio of

content can be substantially refined using IoT-data. As hardware costs sink, and competition fuels

innovation in the smart home market, solutions such as sensors in the home become available for

mainstream consumers. Therefore, IoT-enhanced entertainment can be seen as a viable concept to

serve the demands of the next generation of media consumers, entailing business opportunities for a

variety of actors, and leveraging the potential of 5G FWA for high-quality and smart media delivery.

The following overview sums up the key findings of this research.

Key findings

#1 IoT-enhanced entertainment meets a wide range of the key consumer demands regarding

entertainment services as identified by the research, such as intuitiveness, convenience, and

personalization.

#2 5G Fixed Wireless Access as a technological enabler caters to the o su e s de a d for high-

quality media delivery. At the same time, 5G FWA represents a unifying technology with the potential

to overcome the interoperability challenge in the smart home market.

#3 Entertainment can be leveraged as a driver for smart home adoption on a bundle level, as it is

universally appealing and can serve to familiarize consumers with the benefits of the IoT.

xi

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Webinars

Parks Associates (2016) IoT Megatrends 2016, February 25th, 2016 Parks Associates (2015) Unlocking the value of connected products, October 15th, 2015

Expert interviews

Carter (2016) Jon Carter, Head of Business Development Deutsche Telekom UK, Skype interview on May 3rd, 2016 Drozd (2016) Adrian Drozd, Research Director ICT Europe Zhong (2016) Yiru Zhong, Senior Industry Analyst, ICT Wernicke (2016) Maximilian Wernicke, Consultant Smart Buildings

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Frost & Sullivan (Frankfurt, GER & London, UK), Telephone interview on March 23rd, 2016 Giegengack (2016) Jon Giegengack, Principal Researcher Hub Entertainment Research (Portsmouth, NH), Skype interview on March 23rd, 2016 Kiessling (2016) Jean-Claude Kiessling, Head of Business Development Connected Home Platform, Deutsche Telekom AG, Telephone interview on April 7th, 2016 Promny (2016) Andreas Promny, CEO, AK Media (Aachen, Germany) Skype interview on April 1st, 2016 Santos (2016) Mateus Santos, Experienced Researcher Souza (2016) Ricardo Souza, IoT Management & Operations Ericsson (Indaiatuba, Brazil), Skype interview, March 14th, 2016

Söderström (2016) Gustav Söderström, Chief Product Officer, Spotify (Stockholm, Sweden), Interview

on April 29th, 2016

Tsiatsis (2016) Vlasios Tsiatsis, Senior Researcher IoT

Ericsson (Stockholm, Sweden), Interview on March 23rd, 2016

TV CONNECT speakers

– ExCel Center London, United Kingdom, April 26th – 28th, 2016 Assayag, Chem, EVP Sales & Business Development, Viaccess-Orca

Currell, James, Chief Operating Officer, Viacom International Media Networks

Curtis, Brian, Senior Director, Product Management, Comcast

Dixon, Colin, Owner & Principal Analyst, nScreenMedia

Ferrone, Andrew, Vice President Pay TV, Roku

Geissah, Samer, Vice President, Consumer New Business & Innovation, Du

Harris, Christian, Managing Director, Deezer UK & Ireland

Jahr, Tom, EVP Products & Marketing, Conax

Lee, Weijun, Top Strategic Technologies Executive, ZTE

Pyne, Ben, Predisent Global Distribution, Disney Media Networks

Sappington, Brett, Director Research, Parks Associates

Sellick, Phil, Lead Technologist Advanced Video, Innovations and Trials Team, Virgin Media

Tatam, James, Director of Digital Media & Commercial Development, Channel 5

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Trimby, Martin, Principal UX Designer, Connected Home Research, BT

Trudelle, Simon, Senior Product Marketing, Nagra

Tuma, Sef, Chief Strategy Officer, Accenture Digital Video

Underwood, Keith, Director of Strategy and Technology, Channel 4

www.kth.se