The B2B Equation
Companies such as GlobeCast and Intelsat are one step removed from the subscriber and serve multiple access networks, which reduces their risk. But does a Web-only distribution model threaten them at all given the amount of disruption pervading today’s video ecosystem?
Streaming services such as Netflix, for example, reaches hundreds of devices, including TVs. According to BTIG financial analyst Richard Greenfield, Netflix would rank 15th in hours if it were a TV “network,” and second only to CBS, in Netflix homes. That is an astounding figure, but once again this is on-demand or catch-up (and not first-run) television or movies.
To date, very little commercially viable content has adopted a Web-only distribution model. It is true that Google, Hulu and Netflix have begun investing in original content. Google’s efforts include $100 million of seed money for 100 new niche online channels, a venture spotlighted in a CES 2012 keynote address by a YouTube executive. Such efforts merit attention. Not only will they build online viewership (and in YouTube’s case, perhaps help it turn a profit). They also could incubate content that breaks into the mainstream. But the idea that second and third screens could seriously reduce the transponder capacity required by major content providers is dubious.
By year-end 2011, for instance, satellite operator SES said it was broadcasting more than 5,200 TV channels, including more than 1,200 HD channels. “The addition of new HD channels continues to accelerate globally and will remain another growth driver for our company,” says Ferdinand Kayser, chief commercial officer of SES. “(Those numbers) demonstrate the advantages of satellite for the distribution of high-quality content to large audiences.”
The risk of disintermediation that satellite transport companies face is less a matter of consumer electronics than of fiber optics. But that is no new threat, and companies such as Eutelsat, GlobeCast, Intelsat, SES and others have already responded with fiber offerings of their own. “For us, it really is looking at expanding and exploring new technologies and how the technologies work in harmony, rather than focusing on just one technology versus the other,” says Jackson.
The growth in video display devices therefore could benefit distribution players in another way. Related increases in demand for network services, such as fiber backhaul that handles 3G or 4G traffic, will benefit anyone with available capacity. According to one Northern Sky Research (NSR) estimate, the satellite industry share of the backhaul market could reach $600 million by 2015.
Hidden Costs, Rising Tide
As online content proliferates, the cost of content rises. GlobeCast trucks that capture sporting and news events around the world, for instance, must transcode to appropriate specification for each type of device, and that creates additional capacity requirements, Palmer says.
In terms of bearing the cost of multi-screen scaling, satellite pay-TV operators have turned to in-home transcoding technology, deployed mobile applications and leaned upon fixed and wireless broadband networks to serve those among their subscribers who would like to view content on multiple display devices.
Satellite distribution companies appear confident that the rising tide of multi-screens will lift their boat, too. “I think that the growth and explosion of multi-screen, whether it be tablet or cellphone or computer or whatever, is obviously creating an increase in demand for content,” says Jackson. “And any increase in demand for content is going to be good for all of the technologies that involve themselves in the content and distribution value chain.”
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