The continuous innovation of the broadcast and media industries is a constant in the sector. Each new innovation brings with it a mix of excitement, opportunity, and ultimately apprehension about how to successfully cope with and adapt to this ever-changing environment.
Recently, programmers and content owners are undergoing a fundamental shift in power in the marketplace. These entities are tasked with reinventing their business model to ensure control and exploitation of opportunities in the OTT content value chain.
In this complex future, the value proposition of programmers and content owners lies in the control they have over the distribution network. How can they optimize their resources, both existing and new, to maintain customer loyalty and take advantage of the opportunities OTT offers them?
This article explores how with proper competition and industry planning, programmers and content owners can increase their value proposition, regaining control of the content delivery system.
New habits in TV consumption
Programmers, who were once in control of content distribution and viewing experiences, have witnessed a shift in power in the market. Currently, consumers are the ones who make the viewing decisions, they choose to view any content they want, on different devices and at the time they want it. As a result, programmers have lost some of their value proposition.
To change these rules of the game and regain a position of relevance, programmers and content owners have to regain control of distribution, maintaining customer loyalty and taking advantage of additional monetization opportunities with new distribution formats.
This is of particular relevance to the Latin American market. As broadband access rates and mobile device penetration increase in the region, the VOD and OTT market is expected to grow in the coming years. According to a recent dataxis study, VOD and OTT revenue in Latin America will grow 262 percent by the end of 2018, for a total of $1840 million.
With the right set of tools, including an inexpensive and scalable content delivery platform, programmers and content owners can easily take advantage of the opportunities that OTT provides with excellent results.
Today, the influence that content owners and programmers have on the IP broadcast system chain is very limited. In most cases, content is delivered, ahead of time, to other companies in the ecosystem to perform critical processing functions before the content is effectively disseminated to viewers. Consequently, beyond the initial functions of content capture/creation and primary encoding, content owners and programmers have no control over broadcasting.
If they want to remain relevant in the market and remain competitive, it is critical that they reassess their position and the influence they have on the video broadcast workflow. Regaining control begins by regaining possession of the origin. A modern video source must go far beyond the initial encoding/transcoding stage. It should include video ingestion, recording, program reselection and grid programming, playback, content protection, and encryption.
However, many of these essential processing functions have been transferred to third parties, broadcasting partners. When a CDN (content delivery network) becomes a processing point instead of a classic CDN transmission mechanism, the performance of control, visibility and quality measurement is lost. These are fundamental features to guarantee an economical and high quality solution over IP.
The ability to have control over content between the encoder and the point of origin provides powerful client analysis and observation tools, such as network stress and load, as well as information on buffer failure rates of third-party CDNs. By having more access to information about user experience, content popularity, and other fundamental metrics, content owners and programmers have the ability to conquer and maintain customer preference.
Having a better understanding of user experience, content popularity, and network performance can lead content owners and programmers to make better and smarter business decisions. The information also affects the possibility of implementing personalization features, such as the dynamic insertion of advertisements and the insertion of graphic elements to hide the content.
If decision makers' capacity for action is strengthened, they can benefit from the ability to easily incorporate premium services, such as cloud DVR, multi-screen, VoD and specialized content distribution. Giving consumers what they want is a must. If you know what the end user wants, you can meet these demands. But at what cost?
Impact on financial results
Taking control of the origin, in the traditional sense, does not usually lead to the business model to which both content owners and programmers are accustomed. Without the right infrastructure, the costs associated with transmission could be much higher than the benefits.
However, content owners and programmers can economically expand their video service offering. The key is consolidation. A consolidated origination platform integrates traditional source components into a single operating unit.
This means less equipment and lower infrastructure maintenance costs, while opening up huge revenue expansion opportunities, strengthening the action capacity of programmers by allowing them to see more and do more within the header transmission processes. Such a local source provides the control, visibility, and measurement capabilities that are essential to monitor the effectiveness of CDN transmission across the chain.
Content is king
Latin America is known for being one of the most exciting HUBS of TV content around the world. For example, many of his telenovelas have record audiences year after year and are exported to countries around the world.
Content owners and programmers are aware of the power of their content. It is they, first and foremost, who benefit from usable content files. From black-and-white images of football classics, to the big breaking news about important events, to the soap operas that have marked several generations, programmers have valuable and unique content in their files that they can turn into new sources of income for loyal customers.
Unfortunately, storing, accessing and distributing this content over today's fragmented IP infrastructure is not a viable solution. With a scalable source, content owners and programmers have more options to leverage all their files and do so directly from the source, providing new monetization opportunities for archived content and specialized services, while making use of encryption and security features so they don't have to worry about piracy or copyright.
Benefits of OTT
With the right strategy, content owners and programmers can increase their value proposition for a fragmented audience and regain their influence on viewing decisions. The implementation of new video services can attract and retain viewers, no matter what device they choose to view the content.
By taking back control, content owners and programmers can achieve significant cost savings, ensure streaming quality, incorporate a personalization component into their business models, and take advantage of the new revenue-generating opportunities offered by OTT service offerings.
When planning to deploy their source platforms, content owners and programmers should consider a solution that adapts to future needs and is scalable to emerging demands. If they have all these components, they will have assured a successful trajectory to regain control and recover a position of relevance in this competitive landscape.
*Matt Parker, Director of Business Development, Edgeware