Digitization has changed the way in which video is consumed, and presently video content is available to viewers over multiple media and devices. This ubiquitous demand for video has made it a ‘screen-less’ enigma for media businesses. On one hand, media companies have to enhance linear TV content and services to make it attractive as a pay TV offering; on the other, they have to make their content available over multiple devices via multiple platforms to satisfy consumer demands and keep a check on the competition. With 160 million cable and satellite households in the country, and many more viewers internationally for Indian content, the country presents an enviable opportunity for the media industry worldwide. Yet, broadcasters and service providers along with advertisers are grappling with the innumerable complexities of both technology advancements as well as next generation business models. “An otherwise vibrant growth market, India’s challenge lies in its legacy of older technologies, regulations, and policies. The growth of the industry will depend on how the various stakeholders work to innovate with technology adoption for new business models, supported by a fresh look at regulation for the video business in India,” said Vidya S. Nath, Director, Digital Media, Frost & Sullivan.
Viewership habits are dramatically changing as viewers demand their content everywhere and across multiple screens. The age of multiscreen and Over the Top (OTT) is here and with that comes both challenges and opportunities for broadcasters. Over the past six months, major players in the industry – including HBO, Univision, CBS, Turner and DISH Network – announced long-term strategies geared toward meeting viewers’ changing consumption and viewership habits.
These developments have signaled a seismic shift for the media landscape. We have officially entered the age of multiscreen and Over the Top (OTT), and with that comes both challenges and opportunities. The number of viewers watching content via linear streaming and OTT remains relatively low compared to the number accessing content via traditional linear channels. Therefore, quality and reliability are not a huge issue at this time.
Meanwhile, the global OTT market, comprised of alternative programmers such as Netflix, is expected to grow more than $10 billion in 2018, according to research firm Infonetics. The firm states that OTT providers continue to challenge traditional pay-TV providers and are in the early stages of challenging market share of the traditional broadcast and cable providers.
With that in mind, Viacom’s TV Here, There, (Not Quite) Everywhere study cautioned that while viewers may want to shift to the OTT model, OTT providers will face some technical hurdles as demand for their services increases. For example, a surge in peak demand for live streaming as evidenced by the Oscars and Game of Thrones have already highlighted technical barriers such as loading/buffering and crashing/freezing. From a business-model perspective, this could prove to be a huge issue for media companies. If the quality and reliability of the content suffers, viewership could decline. As a result, advertising revenues for media companies could be negatively impacted.
Similarly, from an economic-model standpoint, sizing a distribution infrastructure for peak performance introduces higher operating expenses and/or a less-predictable cost model. Media companies now must determine how they will contain distribution costs and keep content secure, as it is disseminated over multiple screens. Now is the ideal time to examine the technical and economic challenges that broad adoption of OTT and linear streaming present to broadcasters, programmers and advertisers. This examination will reveal that satellite operators are ideally positioned with solutions to help broadcasters and programmers scale to meet new bandwidth demand and generate strong ARPU.
Once a media company starts to distribute content across multiple screens, the comparatively high distribution cost of unicast versus multicast may come as a big surprise. As a result, satellite’s multicast capability becomes a very compelling alternative. A segment of capacity on three well-positioned satellites can distribute a program globally to the network last-mile edge, covering virtually every possible existing (and potential) viewer – at a nearly fixed cost – regardless of the number of viewers. With satellite, the delivery of content to the last mile for media companies will be secure, accessible and of a high quality.
The ability to monetize content over alternative distribution platforms is still quite uncertain, even as audiences continue to grow. Therefore, one could argue that most content providers would rather have a fixed cost base providing global coverage (and thus minimal incremental cost per user or format), than a highly variable cost structure where surges in cost might not be matched with predictable revenue streams.
Once media companies examine these scenarios, they will need to make sure they deploy the right technology to support a multicasting environment. This will be particularly important as more viewers are expected to go online.
A closer look at content distribution
The Internet and conventional content distribution network (CDN) infrastructure is a powerful tool for the distribution of OTT media. But as the industry moves into the level of service required for linear OTT distribution and advertising-based business models, this approach simply does not scale. Unplanned traffic surges, such as those from live linear events and news, can stress the terrestrial CDN.
Just as the traditional business model is changing, so must the distribution model. Today’s satellites are poised to support the distribution model of the future. As rapid changes continue to take hold, hybrid satellite services offer a compelling value proposition for those broadcasters and programmers migrating to linear streaming. The attributes that have allowed satellite to scale in the past remain relevant today.
For example, a hybrid satellite solution is a perfect complement to fiber and cable infrastructure, supplementing current CDN and fiber-network limitations. Satellite also has a long and proven track record of delivering large-scale transmissions that are high quality, reliable and secure – regardless of the screen.
These service attributes are critical to advertisers that are shifting their dollars to digital and mobile advertising. A hybrid satellite network helps with the quality of delivery, reflected in reliability metrics that can exceed 99.999 percent. With its end-to-end solutions, satellite-based solutions provide media companies with more flexibility in terms of the modes of transport.
For example, current CDN unicast-focused delivery business models rely on bits delivered per user that are variable attributes. Satellite distribution enables content owners to deliver linear multicast streams close to last-mile networks while providing predictable distribution costs, with a non-variable, fixed monthly charge – regardless of the number of purchases of content.
The flexibility of hybrid networks
Satellite operators have long recognized that one of the biggest challenges facing our media customers is the need to distribute in multiple formats for the growing multiscreen environment. To meet that challenge, Intelsat built the IntelsatOne terrestrial network to complement current satellite services. The network includes managed services based upon fiber, fiber-plus-satellite, and teleport services.
Ultimately, we believe that satellite, combined with the current infrastructure, will also facilitate new targeted advertising opportunities for media companies by transporting and distributing customized, broadcast-quality linear streams via OTT to multiscreen devices.
This requires satellite to devise network solutions that have different processing capabilities and equipment that are much closer – or as part of last-mile networks. In the case of OTT, top satellite operators must continue to evolve their services to efficiently transport and distribute the many different media formats for the multiscreen environment. Behind our expectation that the growth of OTT will expand its market are clear indicators that traditional linear advertising-based television will be viewed on multiscreen devices.
Satellite has the unique attributes needed to supplement terrestrial infrastructure limitations to meet media companies’ increasing requirements for large-scale, broadcast-quality linear content. By combining efficient capacity provisioning and management with transparent caching – and enhancing its network capability at the edge – satellite is positioned to more flexibly support the many different types of media formats needed for OTT distribution.
Cloud technology changing TV viewing landscape
Cloud technology is making its mark on economies and business models across multiple industries worldwide. Leveraging utility — computing, storage and network bandwidth — it enables flexible, boundless and globally coordinated operations. It also allows the timely scaling of infrastructure in tune with business needs, and helps in developing distribution models that let businesses reach their end-users directly.
Broadcasting as an industry is at the cusp of change. Internet has transformed into a viable and highly desirable content distribution infrastructure. This, in turn, is leading to tectonic shifts across the industry, enabling end-user distribution opportunities for broadcasters. It is critical to have comfort in choosing the cloud architecture that guarantees security of content. Multiple networks across the globe are leveraging this model to either augment their existing satellite feed with a few hours of local content in specific geographies, or to completely adopt an edge channel playout infrastructure.
As broadcasting responds to the existing market dynamics of global content access and to the Internet as a distribution platform, cloud computing infrastructure is the only option for TV networks and content owners to scale their business.
Competition is set to intensify with OTT
Frost & Sullivan’s market insight on the OTT video market in India finds that there are about 66 million unique connected video viewers in India every month, and about 1.3 million OTT paid video subscribers. With increase in the use of smart devices in India, content owners and aggregators are using non-TV platforms to improve reach and generate revenues through subscription and advertisement. Success in OTT video distribution will depend on the ability to offer variety of content, new content, at a reasonable price and impeccable user experience.
While today a few broadcasters are driving services as well as viewership for OTT video, there is an expectation of more and more broadcasters to follow suit expanding their OTT services. Among content types, there is an increasing demand for short duration video content. This is primarily attributable to the average low Internet speeds and changing preferences of many Indian viewers.
OTT platforms accelerate the growth of TV broadcasters
The drive towards digital or Over the Top (OTT) platforms is expected to grow exponentially with increasing efforts from TV broadcasters on the digital front and slow progress of digitization. We had taken a look at broadcasters eyeing OTT services in order to grow their business in a single TV household (Broadcasters eye digital platforms to enhance viewership in single-TV households). We saw many developments and launches of apps and streaming platforms by broadcasters for monetisation (TV broadcasters look to monetising the digital beast in 2015). A recently launched report says that the improving infrastructure such as the increase in internet enabled devices will support OTT services and will push advertising revenues here.
India’s active OTT video subscribers in 2014 were 12 million (12,300,000). By 2020 India’s active OTT video subscribers are expected to grow to 105 million (105,123,000). Though broadband charges are high as of now, the report expects competition within the telecom companies to intensify, bringing down data tariff rates as 4G rolls out.
TV broadcasters are now in high gear to push their own OTT platforms. This comes at the cost of pulling off all their content from YouTube. This is what Star network had done some time before the launch of their OTT platform Hotstar. The app has already generated more than 4 million downloads during the two weeks following its launch and has caught the attention of advertisers targeting premium audiences. With tournaments such as the World Cup and Indian Premier League (IPL) being streamed live on the app the popularity of the OTT platform is expected to grow even higher. Starsports.com had managed to get a reach of 30 million viewers for IPL last year. With the Hotstar app offering viewers live coverage of the IPL free, it is expected to increase the reach twofold.
One of India’s first OTT platforms, Ditto TV under ZEEL network, has been increasing its investment in marketing. Zee also plans to produce two hours a day of exclusive content for its digital platforms and subsequently pull out all its content from YouTube. Many other broadcasters are expected to follow suit. The digital advertising market size in India was around Rs.3,575 crore in the last fiscal and is expected to grow by 30 per cent this fiscal according Digital Advertising in India report by IAMAI and IMRB International. However, YouTube has the maximum share of the online video advertising revenues while OTT platforms occupy a small portion of this pie. TV broadcasters however expect revenues from digital platforms to grow to 10-15% in a few years chiefly due to mobile advertising.
Advertisers have taken interest in the organized quality content available which is watched by sizeable audience in the market and have made ample investments in them. FMCG brands such as Unilever and others are now said to be building 400-500 videos of branded content every year. This is said to be over and above the spends on online video advertising. The report also sees a bigger role played by telecom operators apart from higher internet data packages and speeds offered at lower prices. Mobile operators will be seen partnering with OTT services. For instance Airtel has partnered with Singtel and will be launching a video based OTT services. Other major telecom players might choose to partner with existing OTT players to gain synergies.
The road ahead
Satellite has always facilitated the dependable transport and distribution of broadcast-quality content and has successfully adapted its business models to meet media customers’ evolving requirements. Examples of this flexibility include transitions from SD to UHD to 4K. New, high-throughput satellite systems promise greatly increased bandwidth efficiency and far greater capacity in orbit compared to a few years ago.
Having a direct, transactional relationship with viewers for the first time requires an end-to-end solution. Video management, commerce, subscriber management, and application development partners will be required as the video industry’s relationship with viewers continues to evolve.
Fragmentation persists. Diversity is usually a good thing, but when it comes to developing OTT applications, the variety of platforms, SDKs, and certification processes can be daunting. Not only do broadcasters and content owners require a strategy to cost-effectively roll out to as many platforms as possible, they will need tools to manage their multi-platform portfolio for the life of their service. Besides the usual web/mobile/smart TV/game console universe to contend with, OTT distributors now need to consider whole new categories of devices – wearables, smart home, and even virtual reality.
The rise in online video consumption strongly suggests that the traditional TV business model, predicated on captive viewing, may not be sustainable. To remain relevant, incumbent broadcasters and communications companies must prepare for entering and succeeding in the OTT-TV market. They can start by making a deeper commitment to the resources and content needed to create compelling value propositions for customers who now demand a seamless experience across multiple devices.
Often, major considerations such as monetization have fallen by the wayside in the race toward getting an OTT offering to market. But concerns over monetization, while valid, need not continue to hamper broadcasters’ efforts to build OTT-TV capabilities in an increasingly digital world. The OTT-TV market globally will most likely create a win-win situation for all stakeholders – from broadcasters and M&E companies to handset manufacturers to consumers in the coming three to five years.
But considering the present scenario in India, the OTT market is still in its infancy and is expected to see limited progress in the short term. Although it has the potential to be a game changer in the longer run, much of its achievement in India will .depend on the growth in usage of connected devices and high speed broadband penetration.