TUNING INTO OTT 2.0 MAKING DIGITAL VIDEO AS GOOD AS TV. Orchestrating an effective live and OTT Video Strategy with a Platform-as-a-Service Solution
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1 TUNING INTO OTT 2.0 MAKING DIGITAL VIDEO AS GOOD AS TV Orhestrating an effetive live and OTT Video Strategy with a Platform-as-a-Servie Solution Vidya S Nath, Researh Diretor Swetha R Krishnamoorthi, Senior Researh Analyst
2 INTRODUCTION Over-the-top (OTT) video distribution - live streaming and on-demand- has beome vital for ontent rights owners and distributors. What was one just an additional avenue for garnering eyeballs is now ritial business for media ompanies. Aording to Frost & Sullivan, there were 1.2 billion OTT viewers in the world in 2017 and will likely grow to over 2 billion by Revenue from OTT servies will inrease from US $22.5 billion in 2017 to $36 billion in 2021 globally. The market landsape has grown to thousands of OTT servie providers offering a variety of ontent aross multiple regions. Therefore snags in digital ontent delivery today have serious outomes- they an hamper viewership trends, ause hurn, and result in loss of revenue. Viewers are less forgiving with lateny issues in live streaming, espeially that of sports, as against distribution of on-demand ontent. Even in ountries suh as the USA, UK, Germany, among others where the average broadband speeds are over 10 Mbps, several onsumers omplain of sub-optimal viewing experiene. Despite having aess to the best tehnologies for video ompression, storage, management, and delivery, video servies rumble under the pressure of large traffi. 1 Forbes, The Hindu
3 Hene a servie provider has to invest not only in ontent, but also in tehnology and infrastruture that enhanes the quality of experiene (QoE) for the end user in both live and on-demand streaming. Servie providers need an agile and flexible approah that stithes together the supply hain of video aquisition to delivery and monetization. In this whitepaper, Frost & Sullivan elaborates upon the opportunities of OTT video distribution in viewership in revenue; the ommon hallenges and onsiderations by media ompanies for OTT delivery; and the ritial elements of an OTT eosystem whih they an explore with a platform-as-a-servie to indue flexibility and salability in their operations. OVER THE TOP (OTT) VIEWERSHIP AND BUSINESS REACH CRITICAL MASS YouTube has over a billion unique viewers 2 ; Netflix subsriptions reahed 118 million; and Amazon Prime Video inreased its base to over 36 million. Even as these OTT giants boast ontinued tration for their servies internationally, market opportunities abound for an inreasing number of regional OTT servie providers as well. Hundreds of OTT servie providers today have more than a million viewers eah. For instane, Maxdome (Germany) has grown to 14 million subsribers; Wuaki TV (Spain) and Knippr (Netherlands) eah has 4 million subsribers; Hotstar (India) has over 100 million viewers; MBC Shahid (MENA) has 10 million; Chili (Europe) has 1 million subsribers, and so on 3. Aross all regions, the gap between digital and traditional TV viewership is quikly narrowing. It is expeted to be almost equal by 2020 in EMEA and APAC, while in LATAM, digital will likely surpass traditional TV. T tweet this! Mobile video aounts for 50% 4 of overall OTT video viewership and is projeted to grow at a CAGR of 14.8% by Aording to a survey by Netflix, in India, 44% of viewers onsider OTT ontent as one of the top travel essentials and lose to 67% of Netflix viewers binge-wath TV shows on their handheld devies while traveling 6. However, the USA and Europe have an inreasing number of OTT viewers on onneted TV sets. For instane, 28% of US broadband households in 2017 used smart TV as a streaming devie. T tweet this! Frost & Sullivan s Analysis of the Europe, MENA, and India OTT Video Servies Market 4 Ooyala Global Video Index, Q Ciso VNI 6 Netflix Survey
4 USA HOURS OF VIEWERSHIP (IN BILLIONS) NORTH AMERICA APAC LATAM EMEA OTT Video Revenue Grows Rapidly, in Contrast to the Mature TV Industry, while omprising less than 15% of total market. Total Revenue: OTT Video vs Traditional * Video, Global, OTT Tradi onal
5 As more and more onsumers flok to digital platforms for their daily entertainment fix, online advertising market is on the rise as well, reording 23% YoY growth in T tweet this! In parallel the demand for high-quality experiene and unlimited aess to premium and exlusive ontent has driven the growth of subsription- and transation-based monetization. The preferene for a partiular monetization strategy depends on several fators - suh as market responsiveness, ompetition, ontent library, frequeny of ontent publishing, and payment infrastruture. The hallenge is that revenue growth from digital platforms while growing rapidly still omprises less than one fifth of television (advertising and pay TV). Hene investment deisions for OTT ontent marketing and delivery is an important, but an inremental value proposition for many traditional servie providers. Most leading networks inluding Fox Networks, HBO, among sores of others, ontinue to have a different department foused on OTT ontent delivery espeially related to rights aquisition, management, tehnology workflow, distribution and sales. DEALING WITH THE CHALLENGES OF A FRAGMENTED OTT VIDEO MANDATE Even today, several media ompanies struggle to hart out a holisti strategy that aptures essential elements to monetize the servie. The primary hallenges that a media ompany CIO seeks answers to while onsidering IT hoies for OTT are:
6 1. Quality of Experiene (QoE): Eliminate Lateny and Delay QoE on a digital platform today still hinges primarily on the viewing experiene: onsistent high resolution, uninterrupted streaming, and zero delays in video delivery. A lag of 2 seonds an lead to a 9% inrease in ustomer dissatisfation 8,9. T tweet this! But even today, most ontent distributors have a delayed webast of more than 30 seonds ompared to satellite television. When the Super Bowl was streamed aross multiple OTT platforms, delay between live feeds and online streams ranged from 40 seonds up to 2 minutes 10. Amazon s Fire TV was 20+ seonds behind, and the NBC App on the ipad took 15+ seonds to start up. Sony s live streaming servie PlayStation Vue was known to pose major problems, keeping many from being able to wath the Super Bowl. Suh user experiene reates immense dissatisfation, and it an be damaging for a genre suh as live sports whih thrives on audiene instant gratifiation. While digital viewership is still a fration of that of TV, broadast networks annot dismiss it as seondary, as there are millions of dediated digital viewers for any popular sport, and many of them are OTT paid subsribers. 63% of sports fanatis in US are skeptial of signing up for OTT live streaming while almost 34% anel their existing subsriptions 7. T tweet this! The reason for suh delays is often the media distributor s lak of ontrol over the entire supply hain of video from ingest to delivery. Compared to satellite, ontribution and distribution over IP is hallenging and needs an effetive integrated solution that an drive video transport from the stadium to the studio to a headend, to a streaming server and finally through a ontent delivery network to the end devie. There are few servie providers in the market who offer solutions through this entire value hain. 2. Taking Live Streaming Diret to Consumer- Ramp Up Implementation Although adding ontent to an existing OTT servie or distributing through YouTube is by far the quikest way to launh a digital servie, it is not always a profitable proposition for media ompanies. As digital urreny for advertising keeps growing, and subsription based business inreases, media distributors find it more attrative to monetize their ontent on OTT platforms without revenue-sharing partnerships. Therefore every medium and large broadasting ontent rights owner-- HBO, AXN, Fox Networks, BBC, among sores of others-- has an individual OTT platform through whih they an reah their onsumer diretly. Even though there are more software-based solutions and servies today that an enable the launh of an OTT video servie than before, the related omplexity has deepened. In some ases, the distributor needs to ombine multiple business models- advertising, subsription, and transational; offer a hybrid multiplatform servie that synhronizes television and digital delivery; and provide live as well as on demand video servies on digital platforms. Suh requirements an take up to 2 years to be set up, but media ompanies look for solutions that an be modular, yet salable and help launh a servie within three to six months. T tweet this! 8 Akamai Biometri Survey 9 Netflix Survey 10
7 Prouring the entire set of infrastruture omponents aross the value hain suh as ingest, transoding, or pakaging an inrease both ost and time to market signifiantly. On the other hand, using ommerial-off-the-shelf (COTS) or plug-and-play solutions an redue time to market but do not work in the long term when the servie reahes ritial mass or expands globally. Distributors need a balaned and omprehensive approah that lets them launh quikly while being salable for a multi-hannel global distribution. 3. Sale as you Need Many OTT servies depend on ommerial-offthe-shelf (COTS) solutions for various needs of video proessing and delivery. However some of these solutions are limited in their ability to sale up to support delivery of video to ritial mass of viewers. In turn, saling up implies having to upgrade their workflows with additional investment in solutions they may not use optimally throughout the year. This hallenge is highly pertinent for sports, where seasonal events draw viewership whih is many times more than usual traffi on sites. The inability to manage suh unpreditable demand is one of the reasons that restrain several ontent rights owners from launhing and managing a diret-toonsumer OTT servie. Managing an OTT servie needs salability in geographial reah, traffi, loalization, and ustomization. Further, ontent owners need to differentiate their servies from their other ontent partners suh as broadasters and Pay TV distributors. Some sports franhises are attempting initiatives where they an offer a servie to their fans diretly. For example, in a proof of onept, Formula One provided a 360 degree video feed from two ameras during the 2017 Singapore Grand Prix, allowing fans to experiene a virtual reality-like environment through the F1 App. Suh extent of ustomization requires a flexible and end-to-end solution that is well entrenhed in every aspet of the video value hain. 4. Multivendor Implementation: Ease the Pain There are at least 12 omponents in the video supply hain for an OTT servie- inluding ingest, ompression, storage, management, pakaging, meta data, ontent protetion, delivery, monitoring, ad-insertion, billing management system, and analytis. Adopting a modular approah to weave together a solution set offers a strategi and operational flexibility in tehnology, design, and implementation, but it also implies high osts, risks, and omplexity of multivendor OTT implementation. Liaising with numerous vendors for individual omponents in the value hain means an OTT servie provider has to deal with many supplierpartner relationships and manage the overall projet responsibilities. The onus for proof of onepts, testing, and support and systems integration also rests with the servie provider. Situations suh as missed timelines or unattributed bugs ould lead to implementation delays and inflated ost of investment.
8 WEAVING TOGETHER OTT ESSENTIALS WITH A END-TO-END PAAS MODEL For suessful OTT ontent distribution, the software and systems for eah of the steps in the value hain has to be seamlessly integrated and should align with the objetives of the servie provider. A OTT servie provider an either hoose speialized vendors that provide infrastruture solutions for one or more of these proesses or outsoure to a managed servie vendor that an provide an end-to-end platformas-a-servie (PaaS). The table below lists some of the ritial seletion onsiderations and best praties to be followed while hoosing a solution for eah step in the value hain. Step Funtion Solution Seletion Considerations Best Praties Ingest Content from live feeds or from a file is uploaded into the media proessing system Mode of Video Capture Support for multiple enoders Cloud ompatibility Bulk video upload and FTP upload support Metadata indexing and organizing Cloud-based ingestion Ingest ontent at multiple data enters for added redundany Enoding / Transoding Conversion of file formats for either storage or transmission Multi-format, multi devie support Support for multiple bitrates Hosting options (Cloud / On-premise) Bitrate optimized to pixel width Implement Content Aware Enoding Avoid Up saling Media Asset Management Managing of media assets, metadata, and workflows Metadata input methods Seamless integration with other omponents Degree of system ustomization Easy searh Taxonomy Phased deployment Automation of workflows Content Protetion & Rights Management Protetion of ontent through aess ontrol, authentiation, seure storing and delivery Existing workflow support Internal & External user support Salable liense delivery Holisti digital ontent protetion Use ombination of two or more systems to get holisti protetion Pakaging & Publishing Pakaging into different formats, losed aptioning, ad insertion and so on Multi-devie & Multi-platform support Integration with CMS systems Live streaming support Use of Open standards Video SEO to enhane ontent exposure Delivery Delivery of ontent through ahing at CDN nodes to enable faster throughput Lateny Speed & Throughput Costs Flexible upload Geographial proximity Content migration automation UI / UX Management Enhanement of viewer experiene at the front end through various platforms Cross platform UI/UX design KPI / Metris traking Alerts & Reommendations apabilities Soial media integration Highly interative & engaging views Analytis Colletion of viewership data and using algorithms to understand patterns and make reommendations Real time dashboards Ease of use and GUI Effiient memory utilization High proessing speed Monitor behavior regularly and periodially Go beyond views and impressions to have a 360 view of business and viewer
9 The merits of investing in a PaaS partnership are manifold. First and foremost, it enables an OTT servie provider to not be onstrained by its existing tehnial infrastruture beause this leverages the wide range of apabilities and expertise of the solution provider. Additionally, there is inreased agility in terms of strategi and operational deisions and proess implementations. Most importantly, in a PaaS strategy, the servie provider an fous on its ore ativities, suh as ontent reation and distribution, ustomer aquisition, and monetization without being onerned about the lak of in-house tehnial expertise. Additionally, ontent distributors have the benefit of developing an OTT servie whih is salable, ost-effiient, and an Go-To-Market (GTM) within a short timeframe while being dynami and agile. A PaaS vendor also usually has a partnership with downstream vendors suh as teleom operators and software servie providers, whih an OTT distributor an leverage to ahieve eonomies of sale and bring down operational osts. Engaging in an OPEX model helps ensure usage-based spends rather than massive infrastrutural investments that go obsolete after a few years. Some managed servie providers offer the option of engaging in a risk-reward ommerial relationship that an ensure aligned vision and superior performane standards. TATA COMMUNICATIONS LIMITED: SOLUTION BRIEF As a managed servie provider, Tata Communiations Limited has fused its ore apability in video delivery with hosted data enter servies, building a media eosystem whih ingests, stores, manages, and repakages ontent. As one of the large infrastruture players in the OTT eosystem, Tata Communiations ombines its strength in the infrastruture spae with a preformed, pre-integrated set of software pakages and delivers its ustomers an OTT PaaS offering. It leverages over 500,000 km of subsea and terrestrial fibre bakbone to deliver low lateny and high redundany to the world s global media hotspots. Its fully managed loud-based OTT platform supports multi-devie multi-platform delivery of all formats of ontent, be it VOD or live, without the high-stakes risk. Its ustomers get the benefit of faster time to market while being globally salable enabling the distributor to build new revenue streams and monetize ontent using different business models.
10 1 Multi-devie and TVE experiene Pre-templated appliations for the major OTT platforms. These are highly funtional and integrated with the bak-end API servies. Compliant with the major devie platforms. Flexible look and feel based on ustomer branding 2 Content preparation and workflow Media Logistis to aquire, store, repurpose and protet live, linear and file-based ontent CDN/HTTP streaming Bak-end servies for Content Management as well Orhestration/API management Appliation [media suite] Digital ommere/ business models Analytis and reporting [integrated] as personalisation of experiene based on individual users. Registration and subsription servies. Soial media integration. Comprehensive billing and payment management toolset. Fine-toothed analytis portal for ontent, users and business needs 6 Targeted DAI integration for ad-based monetisation. advertising In partiular, for live events, the Live OTT servie from Tata Communiations synhronizes feeds in real time with absolutely no delay, irrespetive of the loation or devie. Consequently, the fully managed, loud-based live VDN solution enhanes user engagement by making it possible to add a ompanion sreen that enables the audiene to share opinions or plae bets or wath another sreen. Furthermore, the ompany has partnered with software servie providers for its software suite that enables ontent to be distributed and monetized with a whole suite of apps needed to launh a branded OTT servie. This partnership also allows Tata ommuniations to leverage its depth of its software development expertise and apply it to ustomers in different sets of use ases. With its own in-house network and data enters, the ompany is able to offer end-to-end dediated servie and a flexible priing model that fits business needs. On top of the twie-aslarge expertise in getting the logistis of the video on time, in the right format and at the right plae, alongside a software stak that makes it easy for its ustomers to monetize ontent through subsription, pay-per-view or subsription models this arrangement offers the added advantage of seuring a single servie relationship for all proesses in the value hain.
11 CALL TO ACTION? Frost & Sullivan has put together a list of questions that an help a servie provider evaluate its OTT distribution strategy. If you answer yes to any of the questions below, you need to onsider a highly salable, quik to launh and market, as well as zero-failure managed servie provider. Do you have plans of launhing an OTT servie or expanding your urrent servie in the near future for more than half a million viewers? Yes No Are you looking for a ready to launh platform for your OTT hannel? Is your urrent OTT delivery model needs to sale to ater to growing global demand? Does your organization lak in-house tehnologial expertise? Do you offer live streaming of sports or events? Do you have other infrastruture needs around digital hannels Cloud storage, Playout, Workflow management et.? Vidya S Nath Diretor - Digital Transformation Frost & Sullivan P: C: E: vnath@frost.om Frost & Sullivan, the Growth Partnership Company, works in ollaboration with lients to leverage visionary innovation that ddresses the global hallenges and related growth opportunities that will make orbreak today s market partiipants. For more than 50 years, we have been developing growth strategies for the Global 1000, emerging businesses, the publi setor and the investment ommunity. Is your organization prepared for the next profound wave of industry onvergene, disruptive tehnologies, inreasingompetitive intensity, Mega Trends, breakthrough best praties, hanging ustomer dynamis and emerging eonomies? For information regarding Frost & Sullivan's whitepaper, please ontat info@frost.om
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