Industry Perspectives: System Integrators Help Digital Media Companies Combat the Recession

[Editor's Note: Industry Perspectives is a regular feature in which vendors and analysts in the streaming media space explore issues and trends on which they can shed unique perspective. The articles reflect the opinions of the authors only, and we print them as a means of starting discussion.]

At the NAB show in Las Vegas last month, we saw an overtly converged attempt (pun unintended) by the vendors and presenters to market positive growth trends, highlight the attractive future, and possibly drive up business, even as conversations echoing concerns over the flattening and receding revenue curves continue on the sidelines.

Digital and converged media platforms are currently important highlights for the industry. Media and entertainment companies have been aggressively driving efforts for adopting and dispensing digital media-based services since 2004. As the consumer started gaining access to digital content over multiple media it has accelerated the need for content creators, aggregators, and distributors to ramp up their workflow to allow ingest to management to distribution of digital video—all that too, over multiple media.

However, the media and entertainment markets have not been insulated from the effects of the global recession. So if on one hand there is rising need to catalyze the growth of digital media, on the other there has been a freeze on several initiatives by media companies and service providers including telcos around the world.

In such a situation, system integrators are enabling customers to focus on where their priorities lie—cost-saving and content optimization to generate revenues.

While there is no siloed definition, generically, the role of a system integrator is to provide services to identify products and solutions for a particular need of a service provider and enable setting it up.

In the information and communication technologies (ICT) market, many system integrators are vendors themselves who offer a piece of the puzzle while they dive into their pool of technology and solution partners for the other product requirements. These system integrators have to be extremely competitive with their ability to customize, understand the customer’s operational and business needs, and work to glue the entire ecosystem.

Digital video system integration materializes at several levels. System integrators have been working closely with broadcasters, film studios, content providers and post houses to digitize their workflows and adopt high definition; they have also enabled driving several cable, satellite and telco providers to create digital pay TV avenues. Over the last three to four years, the increasing onslaught of consumption of media over the internet and wireless networks has required customers to expand themselves for capitalizing these avenues.

"In reality, the way the media business is shaping, there is competition between different media value chains and not just competition between individual companies," says Marco Vernocchi, Managing Director, Accenture media & entertainment. He observes that large companies have to move out of their respective niches—content creator, aggregator, or distributor—and become more cross-functional, thus requiring specialized system integrator services to speedily execute multimedia content distribution.

Putting the Brakes on Spending
The years from 2004 to 2008 saw a spree in digital media investments. Government mandates world over for digitization were driving the need by broadcasters to digitize, as well as the increasing demand for HD content by consumers. Video web portals opened the doors of internet video; consumer devices such as personal media players and smart phones offering an engaging video and audio experience increased in penetration; and many telcos started IPTV initiatives.

Besides Western Europe and North America, emerging markets such as India, China, and Latin America have also been driving pursuits at several levels to adopt and distribute digital media. Media companies in these regions have been raising capital for their efforts.

However, by mid-2008, the global slowdown started to affect most of these ventures globally. Customers have been forced to become tight-fisted about their capital expenditures; many have put new initiatives on hold and even restrained their budgets on product replacements. Lengthening sales cycles and limited spending has gradually sent tremors through the vendor chain and prodded system integrators to revisit their approach towards the market.

"With such challenges, system integrators are enabling broadcasters and service providers to change their focus a bit and optimize digitization," observes Ed Altman, head the media and entertainment division for global IT services company HCL Technologies, "For now, the initiative in the digital media space is around questions like how do you automate, how do you cut costs, and how do you streamline processes? Revenue generation comes after this list."

Customers need professional services to architect their workflows to not only match the needs of the dynamic future, but also create synergies between existing and new systems. For the next 12 months, there will be higher attention paid towards workflow consolidation, reducing redundancies of data and creating seamless workflow integration through the ecosystem; followed by converged delivery of content.

Evolving Media Market Demands
Despite the cutbacks, media convergence is playing to the gallery, and media companies are seeking solutions that can enable them to streamline their ecosystem and tie in the various bits to provide newer media services alongside traditional content delivery.

This involves huge challenges—an average media customer needs to synchronize various divisions and enable content sharing. Many media organizations have multiple divisions focusing on different distribution channels including internet and wireless platforms and thereby create multiple copies of data with limited means to access existing content.