Consolidation, Consternation
Reprinted from: IBE
March, 2007
As the industries of telecoms, IT and broadcast continue to collide, there is not always compatibility in consolidation. MD of MSA Focus, Mark Evans, looks at the impact of bringing systems together that cannot be integrated.
Look to almost any sector in the broadcast industry and you'll see that consolidation is increasingly rife. Even beyond the broadcast arena, other industries once considered far removed are now becoming integral to its ongoing development.
Telecoms operators such as BT now seek a share in the video on demand (VOD) space. The rise of multi-service operators (MSOs) such as Comcast in the USA and now Virgin Media in the UK indicates increasing uptake of the on-demand offering. Channel 4 was one of the first big broadcasters to make all its commissioned content available on demand on its website, called 4OD. BT launched its long-awaited BT Vision at the end of 2006.
The recently-merged Telewest and NTL services (now marketed under the Virgin Media banner), can now deliver on-demand programming to two thirds of the three million digital TV households in the UK.
However, in forging ahead with new servicces, there are often back-end technical considerations. For example, Virgin Media services were launched separately before NTL and Telewest merged and ther remain some technical differences and incompatibilities between them. Both used the Filmflex joint-venture with On Demand Group to supply Hollywood movies so support could continue for the NTL-developed Front Row VOD movie service. However Telewest had its own Flextech content division that provided viewers 'catch-up' service and received a greater volume of free content from the BBC.
Telewest also provided subscription-based services to top-tier subscrubers to differentiate itself from satellit-based rival BSkyB. Meanwhile NTL placed greater emphasis on music and VOD, and offered pay services on a pay-per-title basis rather thatn by subscription.
Telewest further differentiated its service from that of NTL by launching HDTV on-demand, TV Drive, using high-end PVR-enabled MPEG-2 set-tops from Scientific Atlanta. Telewest has also now added broadcast content, including World Cup coverage from the BBC and ITV, to the on-demand offering.
The company is now planning to alighn it services across the different networks. Subscription VOD will be introduced on NTL franchises.
In the USA, the time-spans required for consolidation adda further layer of challenges. It can take so lons- sometimes decades - for newly merged companies to become completely integrated that, by the time they do, the technology is obsolete. For example. interactive TV never reached its full stateside potential because of the need to re-encode content. Ultimately, its use was negated by the arrival of IPTV, which can reach audiences using standart networking technology.
In other regions too, the advent of choice of viewing platforams can cause consternation for accounts departments of broadcasters. Where advertisers used to the only upstream source, they are now joined by programme and event sponsors, website and banner advertisers, and sponsors of secondary events, such as logos. Now of course, there are also downstream revenues from viewers themselves with opportunities in PPV, iPPV, NVOD, subscriptions, iTV and SMS services.
Consequently, sales and marketing temas face the mammoth task of latering their targeting techniques and keeping on top of an increased number of accounts.
Meanwhile, other servie providers are experimenting with payment models. In addition to it mainstream pay-TV package, Spanish cable company Ono, for example, offers 'micro-payments' whereby viewers buy only the content they want in a 'mini-basic' package. Using this model, phone and/or broadband customers receive free TV channels and VOD services for 3 per month.
Another challenge is that TV content is refreshed more quickly than movies on a video server. Keeping everything up to date and tracking the location of ever-greater quantities of content requires sophisticated management systems.
It is clear that in consolidating anything, be it services, technology, platforms or corporations, there needs to be a means of keeping track of the back-end function such as the rights on these proliferating platforms, scheduling, advertising reconciliation and monies owed. There are significant challenges to VOD, particularly as it means making a traditionally unicast service a multicast one. For example, when a viewer pauses live TV, they are switching from a unicast, perhaps live, transmission to a multicast service.
Not only must the broadcaster have the transmission technology to enable this realtime switch in the service provision, they must also have a business management system that can keep track of each viewer's use patterns.
Amajor concern around consolidation for both broadcasters and content providers is revenue loss, particularly as viewers increasingly use VOD as a means to skip as breaks. Corporations are therefore pushed to trial more sophisticatedd advertising systems which in turn require a new and separate means of accounting for slots filled, audience figures and the amount owed by advertisers.
Service providers now need to be able to insert and refresh ads on content that is stored on a server that is to be able to add a separate layer of advertising over content recorded on a server for VOD services. These 'dynamic ad replacement' opportunities enable advertisers to target their messages more precisely. It also promises increased revenues for broadcasters - if they can track it and account for it as cost-effectively as they have done for unicasting.
Broadcasters in the US, where uptake of VOD services depends upon the availability of free content (ie paid for by advertisers), have already expressed interest in investing in such advertising systems as have Virgin Media and Ono in Europe. However, European VOD advertising deployments are highly distributed, which present a hurdle to operators wanting to make everything on-demand. Having to reresh vast amounts of content regularly creates a lot of content chum with files often propogated to various servers and storage locations.
Yet the challenge of keeping trakc of multiple revenue streams with varying business models continues. Despite technological expansion at the front end to accomodate new models, it is rare that back-office functions, like the accounts office, recieve any extra resources. This means that such departments receive an increased workload without the additional staff to deal with it. These departements tend to be already overstretched with their increased responsibilites. A more cost-effective approach to help them keep up with the increase in traffic is to implement more efficient back-end asset mangement practices.
Processors such as ad schedulin and playout, sales traffic and billing and account management are all no less essential to business than transmission of programmes. Consequently, demand is growing for automation of these workflows in ad-sales, transmission, data-gathering and marketing departments.
Automating processes such as billing and accounts also produces real-time reports of money received and owing. This also helps ensure that broadcasters and content providers receive the revenues they anticipate as and when they are due and that advertisers, sponsors and viewers pay the appropriate fees.
So, we see that consumer demand is there doe on-demand services. Screen Digest, the medi market and research anaysis group, expects the film download market to be lucrative in a few years time. It predicts th market in the UK to be worth £2.6 million in 2007, more than six times 2006's £400,000, before accelerating to £8.4 million in 2008 and £28.9 million in 2009.
In response, a growing number of media groups have seized the opportunity to exploit their back catalogues and provide an extra service to viewers.
Aside from driving to take-up, a challenge lies in finding a way of monetising on-demand platforms.
The phenomenon of 'clunky consolidation' adds complexity to back-end functions, including scheduling, billing and accounting for revenue streams from multiple sources. To help the VOD market reach its potential, this is where broadcasters and content providers must focus their streamlining efforts.
