If you believe some media industry pundits, you may have concluded traditional broadcasters are in big trouble. That’s mistaken.
To be sure, challenges abound in the broadcasting industry. New, so-called over-the-top (OTT) video providers, who are developing and rolling out new products quickly, are disrupting the distribution marketplace.
Subscriber rates among broadcast customers have been reaching saturation levels across Western markets, calling into question the availability of new audiences. Also, individual consumers have clearly shown their preference for more tailored, interactive and digitally enabled viewer experiences.
Amid these and other industry shifts, some claim traditional broadcasters are:
Not fast or agile enough to pursue new opportunities
Not positioned to make (or save) money in the years ahead
Not relevant enough to satisfy consumers’ current and future demands
Not so fast.
What’s often overlooked is the fact that broadcasters have enjoyed a long history of adaptation. Today, they have a powerful tool in their arsenal to help create the operating models, content and services they need to effectively compete. That tool is the cloud.
Consider speed and agility. In a world where consumers expect more choices and multi-device availability, the cloud makes it possible for broadcasters to make new content and services available in weeks or months, rather than years.
Equally important, cloud computing means it’s possible for broadcasters to carry out experiments and test different types of services to assess their potential, without risking a significant investment.
The UK’s BBC is one example of a broadcaster that followed the lead of Web companies and adopted a “fail fast” culture. That principle, supported by the cloud, led to the creation of iPlayer, an online TV and radio app that quickly became one of the BBC’s most successful on-demand services. Available on over 1,000 devices across mobile, tablet, computer and TV platforms, more than 10 billion programs have been requested since the service’s launch in 2007.1
In another example, British Telecom worked with Accenture to develop an end-to-end video solution spanning live streaming, video-on-demand, mobile app development and cloud services. The multi-platform, broadband-based “BT Sport” TV channel was launched in just six months.2
Next is financial stability and growth. Industry analysts are relatively bullish on broadcasters’ financial futures, predicting that broadcasting revenue growth rates will grow at 6.3 percent CAGR between now and 2018.3 Better macro-economic conditions, more accurate asset valuations and a rebound in ad spending are behind some of this optimism.
But to prove the market right, broadcasters will need to find new ways to generate revenues and save money. The cloud can help boost their chances of financial success—and not just by reducing their costs of physical hardware, servers and data center capacity. For example, cloud has enabled NBC Sports Live Extra—which makes NBC content available for live screening on mobile devices—to evolve its mobile advertising model.
Now, sponsored banner ads, created just for tablets, stream underneath the as-is, streamed live content.4 In the area of content development, cloud also has a role to play. There’s cloud-enabled crowdfunding, which has become a significant source of financing for the media industry, supporting more than 30,000 film, video, music and games projects through 2013 and raising over $350 million for the producers of these projects.5
Crowdsourcing for ideas has also taken hold. BBC News and CNN are already utilizing crowdsourcing and user-generated content to supplement their own offerings at low costs. Other broadcasters will certainly follow suit.
Finally, there is the issue of relevance. Broadcasters’ success will be increasingly linked to the creation and delivery of engaging customer experiences, particularly ones where the consumer can easily find and choose the content they want on the device of their choice.
The cloud was behind HBO’s foray into delivering seamless, multi-screen experiences. HBO GO is an online service that allows users to watch an HBO program on one device, then arrive home and launch the program via another, picking up where they left off.
Since its launch in 2010, HBO has made its HBO GO service available via more and more interfaces—from computer browsers to mobile apps to TV apps. In fact, since 2011, HBO GO has launched what amounts to eight new services, targeted to different users with different device requirements.6
These are just a few of the ways the cloud can help broadcasters achieve more agile, responsive and cost-effective ways of working. The opportunities are real. And the field is wide open.
Currently, only 27 percent of broadcasters are deploying cloud-based solutions7 , which means there’s plenty of room for forward thinkers to seize the initiative.
As they move to the cloud, broadcasters will, in all likelihood, need to retire their existing operating models. But this is not the “failure” of the broadcasting paradigm. It is, in fact, a confirmation of the sector’s resilience.
1. Metro, “Why the new iPlayer launch is important to the BBC’s future.” March 11, 2014. Retrieved from http://metro.co.uk/2014/03/11/why-the-new-iplayer-launch-is-important-to-the-bbcs-future-4527578/
2. BT. February 27, 2014. Retrieved from http://www.productsandservices.bt.com/products/tv
3. Accenture Research, PwC’s Global M&E Outlook, 2014-2018; SNL Kagan’s Multichannel Database
4. Sports Business Daily, App Review, “NBC Sports Live Extra For iPhone Loaded With VOD, But Heavy On Ads.” November 12, 2013. Retrieved from http://www.sportsbusinessdaily.com/Daily/Issues/2013/11/12/Media/App-Review
5. Tech Crunch, “Stats: Facebook Made $9.51 in Ad Revenue Per User Last Year In The U.S. and Canada.” May 3, 2012. Retrieved from https://www.kickstarter.com/help/stats
6 Huge, Inc. http://www.hugeinc.com/case-study/hbo
7. Devoncroft Big Broadcast Survey 2014