Media Companies Reassess Their Identities as Expectations Change
For publishers, 2014 was the year of TV technology. With the increased production and distribution of 4K content and greater awareness of 4K in the consumer marketplace, the buzz was all about more pixels, bigger displays, and new hardware. This year, with the introduction of Dish TV’s streaming service, Sling TV, as well as the recent news of standalone streaming options from HBO, CBS, and others, the focus for publishers has become about content and programming.
We are hearing the same message repeated from executives from both the technology and the business sides of the house—a message that we heard from multiple global publishers during the last half of 2014: Publishers are increasingly acknowledging that they are “content companies” rather than “technology companies.”
This is a nuanced but significant distinction. While technology has always been an enabler of how publishers access, manipulate, and distribute their content, with the transition to digital-centric workflows and the focus on direct-to-consumer distribution and a multi-screen audience, many of these companies made massive investments in growing teams, standing up infrastructure to support on-premises solutions, and building consumer-facing experiences. They watched their budgets expand as they raced against companies that were “born digital” or had pivoted to a technology-first mentality. For example, one could argue that while Netflix had focused its energies on optimizing its physical supply chain, it made a digital pivot—almost 8 years ago—to focus on a long-term investment to build a digital supply chain, with hundreds of engineers focused on individual—but critical—features like recommendations.
For publishers, they emphasized how they need to ask themselves, "How do I maximize my value to the consumer—is it by delivering great content experiences or is it by building and owning and operating technology?" These companies have started to examine their entire technology stack and evaluate which are mission-critical, such that they must retain close control and ownership from an intellectual property and operational perspective versus which systems and process can be moved to cloud services or to external vendors. One of the most common areas of discussion was transcoding. As many companies had made multi-million dollar TCO investments in on-premises encoding (hardware, software, personnel), they are faced with the need for a refresh in the near future. With the maturation of cloud services for this specific capability, encoding has become a common consideration to move externally and to the cloud.
As the landscape of television continues to change—evolving business models, increasing consumer expectations. and legal challenges that have required the intervention of SCOTUS—it’s clear that the technology landscape continues to be a healthy mix of innovation and fragmentation. These companies at CES expressed their changing perspective that in-house technical capabilities are no longer the core value that will set them apart from their peers and competitors. Ostensibly, content is the focus for these companies, but over the years many have made significant investments in building and owning technology, and the recent shifts in thinking have been reflected in the press, with the announcement of technology partners enabling high profile OTT initiatives and departures of senior technology executives from numerous companies.
Consumer expectations have been a driving force behind this shift. The quantity and availability of content is drastically more expansive than it was just a few years ago. On-demand streaming series like Netflix’s House of Cards have changed the model and have put a new dimension of content selection and consumption into the hands of the consumer. Consumers no longer believe that watching a program from their mobile device or through a similar streaming device (even to their television) at the time of their own choosing is a luxury—it’s expected.
The balance of great content enabled by great technology is the recipe to maximize the ability for publishers to deliver engaging video experiences. Consumers are satisfied with neither ubiquitous and high-quality access to uninspiring content nor access to a great show but only on specific devices at specific windows while dealing with buffering and un-optimized bitrate quality. It’s the quality and originality of the content presented in compelling consumer experiences that will engage the audience, initiate the physical and virtual water cooler chatter. and reinforce brand loyalty and consumption, which all fuel the engine of monetization.
The shift to digital has created a sense of urgency among publishers as they reassess how technology fits into their content strategy. For many companies, this has come to a head. While it’s not a black-and-white decision, the pace of change in consumer expectations and in market competition hasn’t slowed, and they are trying to determine if they need to build and own technology or if they are ready and willing to look outside to an ecosystem of vendors and cloud-based services.
For some publishers, they will decide that the status quo is sufficient and that patience and more of the same will help them weather the storm. For others, they’ve already started to make changes to reinvent themselves (again, in some cases), acknowledging that television was just the beginning of an evolution to being one screen among many for a global audience.
[This is a contributed article. Streaming Media accepts contributed articles from vendors based solely on their value to our readers.]
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