Rise of providers such as Netflix are redefining what it means to ‘watch TV’, argues Keith Tilley of Sungard AS.
Read any technology trends piece and you’d be forgiven for thinking that all roads lead to the cloud. Be it email, gaming, word processing or photo storage, it seems that we’re rapidly moving to an economy based on services, not commodities. Television seems the next logical step and although the market is still relatively immature, the path is already littered with numerous stories of success and failure.
With modern viewers beginning to drift away from the traditional TV format and look for new ways to consume content, most providers have started to look outside the current set-up. Sky Go, 4OD and BBC iPlayer represent a cautious move into a TV Everywhere approach (often referred to as ‘video on-demand’), a new model in which providers offer customers access to their content through a number of devices via the internet.
However, it is the growth of over-the-top content providers such as Netflix, Hulu and NowTV, that is causing the greatest stir. The continued rise of this technology has helped to redefine what it means to ‘watch TV’; the Netflix service, for example, now reaches over 50 million members across nearly 50 countries.
It is not such a happy story for others players in the market: the US Supreme Court’s decision to rule Aereo’s internet TV service as illegal back in June 2014 has had serious implications for the industry – not only placing limits on the use of technology, but also on the viewer’s freedom to consume programming in a manner which suits their lifestyle.
Clearly the move towards Cloud TV is not as straight-forward as many seem to suggest. There are a number of different factors which work to create a significant challenge for any prospective providers.
Challenge One: Over-Hyping the Influence of the Cloud
Cloud is just a technology, not a silver bullet – building your service on the cloud will no more lead to innovation than investing in pen and paper will lead to the creation of a best-selling novel.
As a foundation for your organisation’s infrastructure, the flexibility and low CapEx implications of cloud computing can enable business to take advantage of new working models which were simply unavailable in previous years. In fact we recently conducted research which showed that 64 per cent of businesses were enjoying increased agility thanks to the cloud, with 53 per cent experiencing cost reductions.
However, it’s important to understand that using cloud is not in itself innovative – real innovation comes from using the model in different, unique ways. Netflix is a great example of this: the company has used the cloud to give it a fast and low risk ability to scale the business on demand. The flexibility of its infrastructure has allowed Netflix to continue improving its platform and shorten the time to market for new ideas – all without the cost associated with buying their own broadcast hardware.
Challenge Two: Frustration Thanks to Legislation
Distribution rights represent the key to winning the Cloud TV market – and while technology has moved on dramatically since the 1970s, the law’s stance on TV copyright has not.
Part of the benefit of a cloud model is the ability to reach across any number of regions with very little difficultly. But while prospective Cloud TV providers may have the capability to reach audiences across the globe, they may not have the rights! Each market has their own content rights and breaking these restrictions can lead to real difficulties – Aereo being a prime example.
So what’s the best solution? Realistically, any Cloud TV offering will need to employ high levels of automation and authentication in order to streamline the process and ensure the right content reaches the right audience. The automation must be highly reliable or providers could find themselves slapped with serious lawsuits based on geographical rights.
Challenge Three: Keeping Consumers Fed, No Matter What
The traditional model of TV distribution has been built and adapted over a number of decades. We’ve moved from the sometimes intermittent experience of the test card to the continuous 24/7 and largely uninterrupted world we take for granted. The challenge for any cloud TV business is to be able to replicate this ‘always-on’ all-time experience.
This means being prepared for spikes and troughs in infrastructure demand – not only caused by the viewing habits of your current audience but also being able to react to an influx of new subscribers as your content evolves. The cloud could help TV providers keep up with the demand.
Our research also highlighted that the cloud, when used correctly, has helped 44 per cent of UK businesses keep up with the demands of their customers and the market. So when it comes to making sure your IT estate can keep up with the latest technology developments – 4K Ultra HD TV perhaps – cloud computing might just be the difference.
Ultimately, it doesn’t matter what content you can provide, if you can’t maintain the exceptionally high levels of availability the modern audience is accustomed to then they will simply default to the usual TV model.
Challenge Four: Delivering, Whenever and Wherever
As we’ve discussed, consumers now demand near constant access to TV. It doesn’t matter what device or network is being used, if they can’t access the service they will vote with their feet. Providers will need to work closely with organisations all along the chain – from media companies and device manufacturers to network, datacentre and content delivery providers – in order to offer a high quality and seamless experience which is not only available, but also reliable and flexible to the demands of the market.
Keith Tilley is EVP of Global Sales & Customer Services Management at Sungard Availability Services