Shifting Market Dynamics Forces Content Providers to Explore New Revenue Streams

Numerous studies forecast massive growth in the consumption of video services via mobile devices, some predicting that mobile video will account for two-thirds of mobile handheld data use by 2015, and at the same time, over-the-top TV delivery services such as Hulu, Netflix and YouTube also are showing strong growth in subscribers. This growth in viewing options does not yet pose a major threat to traditional video consumption but is forcing content producers to make sure their products are more widely available.

Embracing All Platforms

Major broadcasters already making strides easily available on as many platforms as possible include MTV Networks International, says Bhavneet Singh, executive vice president and managing director of the broadcaster’s emerging markets group. “Our content and brands play very well across multiple platforms, whether in traditional or non-traditional media spaces,” he said in April. “… We are building critical mass with our brands in priority markets, extending them across different platforms so as to broaden our offerings both in terms of depth and width. We want to create 360-degree experiences so that our users can navigate and move across platforms and feel and touch our brands in a seamless manner, whether broadband, mobile VoD (video on demand) or IP downloads. … One of the issues for us is moving from a television organization to a content organization and linked to that is moving from treating our viewers as end users. The more we do that, the more we will be successful in what we are trying to achieve. As the landscape continues to fragment, our quality content will continue to be pushed across all platforms to service the needs of our users.”

The BBC also sees multi-platform availability as a key component of its future expansion, says Mark Whitehead, senior vice president and general manager of BBC Worldwide Channels Asia. “We distribute our channels via satellite, cable, SMATV, DTH, hotels and IPTV. We are working aggressively on growing our traditional linear channel business. We are also looking at VoD and other branded catch-up services.”

Broadcasters of live events, especially sports programming, also find themselves having to stay on the cutting-edge of content distribution trends. For the 2010 Winter Olympics, Canada’s CTV Inc. and Rogers Media Inc. formed a joint operation, dubbed Canada’s Olympic Broadcast Media Consortium, to produce 2,300 hours of HD coverage of the event. Along with TV delivery, the consortium worked with Microsoft to stream all of the events live to the Internet and produced about a dozen simultaneous streams. “We are not a TV company anymore,” Keith Pelley, president of Canada’s Olympic Broadcast Media Consortium, said prior to the event. “We are an integrated media company with non-traditional assets.” More recently, Asian sports broadcaster ESPN Star Sports signed a contract with SpeedCast to help deliver content via ESPN Star Sports’ mobile. ESPN which will showcase live streaming content from its television networks, delivered via satellite to operators’ platforms throughout the region. SpeedCast will provide technical services using its MobiCast platform to stream live sports events, supporting encoding requirements and distribution of the channel in the Asia-Pacific region as well as provide the channel downlink, live encoding and delivery services as well as 24/7 monitoring and operations out of its network operations center and teleport facilities in Hong Kong.

The move toward a multi-level content approach also is growing strongly among smaller news outlets throughout the United States, according to the latest RTDNA/Hofstra University Survey. The survey found that at least twice as many news outlets putting content out on mobile devices than the previous survey. “Stations are increasingly providing content on multiple platforms, including radio, cable, other TV stations, multiple web sites, mobile and more,” says survey director, Bob Papper, professor and chair of journalism at Hofstra. According to the survey, conducted in the 2009 fourth quarter, large-market news outlets tend to have a three-screen — on-air, online, mobile — approach to news with 68.8 percent of total respondents using that approach. “The point is that the business has changed dramatically in just over the last few years,” Papper says. “The TV news business is not just a TV news business anymore. We’ve arrived at a point where literally the majority of the station production news for TV put content on other platforms. That is now the norm.”

Seeking to Monetize Across Several Devices

The RTDNA/Hofstra survey received responses from 1,355 operating, non-satellite TV stations and 203 radio news directors and general managers representing 301 radio stations. “Part of what was interesting in the latest numbers was that it is the norm over all markets; it’s not a major market phenomenon,” Papper says. “That reflects that it’s a different business today. In newspapers, the problem is searching for the silver bullet to replace lost advertising. Part of what this says is that broadcasters to a large extent have come to realize is that new economic demands mean a need to be in a lot of businesses, and the search for a silver bullet is something that is just not gong to happen. You need to be in a whole bunch of businesses if you want to survive.”

Papper has been tracking the industry for 16 years, and the trends toward multi-platform distribution, especially to online outlets, have jumped in the past few years, he says. “Years ago, when did the first study on TV news online, there was a very slow realization that if you were going to make money online, you needed to be focused on the business side. One of the things we see today is a much greater focus on the business and it’s right away. Part of why we’re seeing so many broadcasters jump in on mobile so quickly is they are seeing that it is a business. Today, in the news department, you are producing content, but you are in business. You understand going in that you have to figure out ways of making money on that content not simply by having sales people sell ads, which is still the major part of it, but you have to find avenues to revenue everywhere else. … This used to be called repurposing content, but it’s a lot more sophisticated than that,” Papper says. “If you look at Web sites, you’ve seen that stations more and more understand that a TV story isn’t a Web story. You may have covered it for TV and may do it for the Web, but if all you are doing is throwing up the same story, it’s not going to mean anything for the audience. Today, most people arrive not at your homepage but somewhere within your site, so you have to do more pushing content out.”

While content producers understand the need to have their product widely available, not many want to take on any additional production cost to achieve this goal. The content companies do not want to make major changes to their infrastructure, seeking instead from the system and component manufacturers a generation of devices that can ingest content in the single format it always has been produced and converting into the various streams and formats that can be delivered to the consumer devices. “This has been happening since NAB last year, long-time customers who have had nothing to do with other platforms — they are strictly in linear video delivery infrastructure, scheduled programming over the air, terrestrial, cable, satellite and traditional methods — suddenly talking to us about how to set up a Web server, says Jeff Briden, director of product management for Sencore. “They are asking us, ‘How do I transcode content? How do I repackage my content either for live simulcasting across multiple platforms or making available in video-on-demand or request fashion?” I would say over the last year especially there seems to be a sudden interest in ‘itouch’ content in some way. ‘How do I get that delivered in new ways to new devices?’’"

Sencore is seeing this growth across its customer base, from major terrestrial broadcasters with several content sources down to the local TV news outlets and affiliates, says Briden. “All those rich content sources are looking for ways to leverage this content and take advantage of lots of new consumption devices. We are hearing the same thing from content providers, content owner-distributors, large content distributors and down to the headends and MSOs. That discussion and Q&A is coming from all directions.” And the common theme from this wide array of customers also want to make this move with as minimal impact as possible on their production operations, says Briden. “They do not want to change how the produce content. It’s ‘How do I take in what I’m doing now and distribute it? I’m not interested in reinventing the wheel.’ Content is king, and customers want to leverage that into new video streams. That includes transcoding, attaching new metadata depending on the format of signal and the requirements of how to delivery it. It’s creating files out of content as well as file manipulation of that content. Linear and streamed content will always be important as it relates to live events, but when it comes to on demand, it’s “How do I make that content available and make consumers aware of it and tailor it so it becomes ad generating and revenue generating? How do I discover who’s viewing it and make it more valuable to your advertisers?’”

Envivio also is seeing this demand from customers, with the broad range of new handheld devices being rolled out as one of the drivers. “A couple of things have happened,” says Boris Felts, Envivio’s vice president of marketing. “First, there is the popularity in Europe of devices such as the BBC iPlayer. People are consuming a lot of content for catch-up TV services on the PC, and it’s one of the mass services to view TV on different screens. In Europe, this started early with YouTube and Hulu, and the fact that this model is generating revenues today is drawing interest from a lot of content providers. Another reason was what Apple did with the iPhone first and now the iPad. We saw that as a trigger to move to a lot of various devices. When Apple enabled TV on the iPhone, there was a large pickup for a lot of various content providers that wanted to be present on that platform. It started a year ago, and the trend is there now. A big requirement from our customers is to push content to the iPhone and the iPad.” In June, Envivio announced that it had upgraded its 4Caster C42 encoding/transcoding platform to offer HD video support to mobile devices such as Apple’s iPad and iPhones. “Envivio started with telcos and cable companies and broadcasters, and we’ve already added platforms for set-top boxes and mobile phones. Today we are doing deployments with BSkyB, the iPad, iPhone, Xbox, for any kind of device that is in the house or mobile. We’ve been focusing on that market and given the growth in the last nine months, it’s a massive move,” he says.

Cost-Efficient Technology Solutions

The content companies have an idea of what they want to accomplish in this new media world, but want they also want is a simple and cost-effective means to reach this goal. “When we talk about mobile TV today, we’re talking about Wi-Fi at home or 3G outside. This has a lot of pickup today. We’re strong on pushing new content, either linear or assets like VoD to all devices at once. We started in 2006 with one product, C4, that would take one feed and put multiple profiles out — the same to mobile TV, phones, PCs and TV sets. This is a way to enable content distribution to maximize the reach to all of these different devices. Everything we do is inside one box. This is a shift from one-input-to-one-output to one-input-to-all-outputs. The technology of the content delivery mechanism has improved to provide the ability to deliver massive content with a good quality of experience, and on the other side, the costs have dropped dramatically, so now it’s possible to do high-quality streams to all devices, and it’s all happened during the last year,” Felts says.

The simplicity can be as easy as a home theater in a box, Briden says. “That’s our goal, our mission, to make it plug-and-play. Plug in the existing content and then it’s repurposed for any platform. In reality, it’s not that easy. Today you need tools to convert the content and verify it was converted correctly, to monitor the delivery systems, and make sure the content is getting where it needs to go. Once all that is in place and running, the operating cost are not really high. People are hitting the low-hanging fruit first — sporting events, high-interest, one-shot live events that gather a lot of eyeballs. When those events occur, dedicated viewers will consume information about those events in any form they can. It becomes the perfect event for multicasting across many platforms, the cell phone, on a computer, video on demand, wherever they can get it.”

Felts agrees that while the advancements look simple, they do provide challenges for the manufacturers. “You have to have a specific mindset. If you optimize for one device, you create one set of specifics for one box. If you take this and multiply it by multiple, different devices, you have to optimize the quality across all devices and support various codecs. It’s not a revolution in technology but it takes a lot of effort to make it happen and to make it happen right. It takes a lot of effort on our part and also some effort in the industry mindset. I think the industry is changing itself in the way it thinks,” he says.

    “The first step for many is how to do this without a technology or manpower investment,” says Briden. “The beauty of it technically is that delivering content over an IP-based infrastructure, whether at the front end of the delivery chain, or at the delivery facility, or the middle men collecting and redistributing, or at the last mile at the headend or MSO, any one of those can set up a Web server for live content or on-demand access or create some redelivery path over IP protocol, and we’re seeing that happen. Where the content is repurposed can be anywhere in the delivery chain. IP is a key to that, but IP and the network as a general technology is very complex, more so when trying to do live streaming of real-time events. Someone used to pushing analog TV signals through a particular medium – copper or over-the-air – now has to learn a whole digital world, the IP world, which is a bursty and unreliable delivery method, at least when it comes to high-quality video. It’s making leaps and bounds of progress, but the demand for expertise in that area has gotten quite high. We’ve made it a focus in our company to become experts in this area to provide solutions. IP one of the key elements, but not the only one,” he says.

Sencore’s customers are seeking help in video delivery and signal quality, and the company is responding with new products that focus on delivering linear video in real-time streams. “We have introduced a new platform, a highly dense multi-channel transcoder, the TSX 3453, that can process up to 16 stream simultaneously and convert those from MPEG-2 to MPEG-4 and from MPEG-4 to MPEG-2. It can convert video from high resolution to low resolution during that process. It’s not a file processor; it’s a real-time processor with delivery to multiple platforms as these processes are happening. The Allegro AL2000 is similar in that it can do live and file-based transcoding and support some of the newer video transport mechanism. It has the smooth streaming that Microsoft has introduced for OTT, and we’re getting really good traction in these types of applications,” Briden says.

Envivio has been focused on multi-stream delivery for many years and has “spent a lot of time to take the best of each platform to get the best user experience,” Felts says. “There are quite a few core technologies we have implemented. One essential technology is that everything we do is based on h.264. We’ve used versions of the same codec for each platform. If you have a set-top box that has dedicated hardware decoding, then you can take the most complex video stream and encode it perfectly. Then we can reoptimize it and the quality is fine. On the other side, a not so high-powered platform, like a cell phone that is not capable of supporting all tools for h.264, we have coded and optimized it for that platform. So we have the capability to optimize and get the best out of every platform. DRM and encryption also are really key for that market. You’re not able to put premium content on a device without protecting it, so we have embedded protection inside the decoder so customers don’t have to go through different partners for integration. We also support multiple DRMs.”

Changing the Dynamic

The demand by content consumers — and the impact it’s having on the traditional media business model — is leading old customers and new customers to seek help from companies like Sencore, Briden says. “Certainly we all know one of the primary models that drives this industry is advertising, and the key business question comes down to ROI and how do I monetize content if I’m going to repurpose it to create new revenue streams. Where do those dollars come from and how do I make money doing that? We’ve seen a variety of different approaches, from subscriber-based to making all the content available for free and funding strictly through advertising dollars, such as a small, short 15-second blips of ads right before the online content starts. From a business sense, they are looking at what can I do with existing content and what can I do with my existing infrastructure to reach consumers either to create new ad revenue or if compelling enough, create a subscriber-type service that people are willing to buy or pay for,” he says.

Customers that used Sencore during the digital transition are returning to seek help in navigating the new media world. “Big projects are coming back. We’re rolling out whole IP-based networks related to repurposing structure and content. It’s a very optimistic environment, and, to me, it’s a sign of lots of good things to come. I am continually surprised at how quickly that IP-based and mobile consumption and distribution is coming on. It’s almost as if we were holding our breath and now everybody at the same time has decided to go. Customers are quickly learning the challenges of how to deal with IP networks and re-encoding and reformatting content. This is where, for us, it’s about new offerings in support and services and being able to provide onsite engineers to train the customers. For the most part, these are technologies that once you get them up and running, they tend to continue to run with little operator input, especially if you invest in monitoring system and tie back into central control,” he says.

Felts also sees the shifting business dynamic having a positive impact throughout the media delivery chain. “Before, if you wanted to distribute to a mobile platform, the content owners would have to strike an agreement with the telco operator to make sure the content can be put on that platform and be distributed that way. You had to strike agreements for revenue sharing and so on. There was no way to access these platforms without going to the operator. Today it’s different, as changing technology allows content producers to distribute directly to the phones. They might not want to do it just to remain friendly with ISPs, but you’re not obliged to. In the case of a few broadcasters we deploy with in France and the United Kingdom, customers not on any network can subscribe to services. In the case of BSkyB, they have a commercial agreement with O2 for O2 customers to get content from BSkyB, but they don’t have to do anything specific to go on the network. For BSkyB it was an experiment that is now part of their core strategy. For BSkyB, it was priced correctly, the package was attractive, the platform was attractive, and the service was of good quality. They got everything right. In France, it was the same thing with Canal+. We did the same thing with their launch, an it was overpriced at the beginning, which killed the launch a bit, but it was corrected and now they want to expand. If these services are priced correctly, the experience on phones is really, really good.”