The latest IBC webinar delivered insights aplenty with an expert panel dissecting a broad range of business models and technologies that touched on topics from FAST to AI. cloud-native applications to CPMs, reports Mark Mayne.
The conversation opened with a discussion around the economics of streaming, and the wider state of the market. Richard Kanee, Executive Director, Digital Strategy, CBC Canada opened with a robust defence of the streaming business model.
“I’m not so sure the economics are breaking down but more come down to earth. I think the entire industry jumped on a bit of a hype cycle with some unrealistic expectations around being driven by growth, primarily, rather than driven by profitability or a balanced business model.”
I think as inflation and interest rates pick up suddenly the market retrenched, looking for profit like a viable business. Then suddenly the idea of runaway spending and giving away your subscriptions next to nothing, all these decisions that [were designed to] drive growth and adoption are suddenly undermining new business objectives, which are to find a viable, sustainable, profitable business model. So I think that’s what we’re looking at right now - a rationalisation of some of the frenzy that we saw over the last five to 10 years”
Catch the full webinar, IBC2023 preview: Changing business models
Carlos Octavio, Director of Corporate Strategy & Architecture, Globo was keen to agree: “Yeah, I agree with Richard. I think the whole market has a real reality check now and is changing away from this aspect of growth towards more innovation. In other words, to balance the spending, content and revenue that they can get from users.
“Actually, I think the name of the game is increasing the average revenue per user. So what I think the markets are trying to do is not only basing it on subscriptions, but trying different models, like hybrid models like different two tiers that combine subscription plus advertising, so a cheaper world for the consumer, but also funded by adverts.”
Emerging business models behind FAST and AVOD
Shaun Keeble, VP of Digital, Banijay took up the baton to give a whistle-stop tour of the strategies and models driving growth in this highly topical area.
“It’s about yield and leveraging per hour title distribution, what is the incremental gain of looking at a FAST and AVOD window for that particular series. So and this is not so typical in a traditional distribution model where you’re going to get a fixed licence fee from the distributor or for from a broadcaster, but typically monetisation models in the FAST and AVOD space take either a revenue share basis [approach] with platforms where platforms would represent 100% of the advertising inventory, and then report back a share of the gross revenues back to distributors like ourselves.
“Alternatively the models of advertising inventory split shares where both the platform distribution represents their share of respective advertising inventory. I think when we think about challenges and also opportunities, those models do come with their benefits.”
Keeble pointed out that while in house advertising sales teams can maximise returns on inventory, there are costs associated with such teams.
“Should the distributor not have this team in place it might be easier to work with platforms on a revenue share basis, where the platform would be entitled to sell the inventory. The challenge will be return on investment - having ownership of advertising inventory allows you to really control your destiny. There are no givens in this FAST and AVOD space where you are paid in arrears, so you’re wearing the costs.”
He rounded out his comments by summarising some of the key variables and risks in the space: “Of course, from a commercial standpoint, how you enter and when you decide to editorially curate [has a big impact] and of course, if you’re entering a revenue share agreement with a platform who is going to represent 100% of your advertising, you’re then reliant on that platform to sell as close to 100% of that inventory as possible, and at the best possible advertising CPMs. I would suggest these are learnings to consider when entering the FAST and AVOD space.”
Cloud delivers hyperscale but challenges remain
Ian Hamilton CTO, Signiant was keen to highlight the changing value proposition of cloud, as well as some of the opportunities for the future: “Cloud is not a new technology anymore. We’ve had the hyperscale of the cloud around for a while. So it’s kind of a given and everybody is leveraging it to one extent or another as a tool in their toolkit, but I think it won’t surprise people that as an SAS vendor I’m saying this. I think SAS is really the best way to deliver the value proposition of the cloud. We have customers that tell us about attempts to take legacy systems and workflows with hyperscale cloud infrastructure, but they haven’t really delivered the value they expected.”
“In many cases, costs go up significantly, and they don’t get the increased agility that they expect. So SAS has the potential to make improvements there, if the SAS solution can take advantage of delivery of industry scale, and deliver improved economics, scalability, and availability, while providing visibility and a key element of visibility is being open and extensible. So where there’s a lot of effort that needs to go into building a system from scratch on an infrastructure, service providers SAS provide great, open interfaces that can easily be used. plug them in, like building blocks and others.”
Cloud and AI the new opportunity
Octavio responded to the cloud question, seeing considerable opportunity in live production:
“I think the media industry does see that there is some work that providers have to do to fully embrace cloud but I think they are doing a great job in the last I would say a year and a half.
“But there is a difference between what they claim cloud native applications and applications that are hosted in the cloud. Some of the traditional media providers took the fast route of just hosting them in the cloud, and are working now on optimising and making it really cloud native.
“Live production is a key ground for efficiency and opportunity. We are reaching the point of optimising the traditional workflow, and what I mean about that is not having the technology on the cloud, but using the opportunity to use the cloud from everywhere to optimise and redefine those production workflows.
“So streamlining the process, streamlining the resources needed to do that, we are seeing this as a huge opportunity for media companies to explore, but I would say I think the key benefits of Cloud is the speed, the agility to innovate, to test and learn. The new evolution of AI [for example] I think cloud is the playground for doing that and exploring it.”
Catch the full webinar, IBC2023 preview: Changing business models on demand now, and get the full range of insights from the expert panel. Alternatively, check out the full on-demand IBC webinar catalogue and/or register for any upcoming IBC 2023 webinar topics that appeal.
Read more IBC365’s 2023 webinar programme
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