Written by Gideon Gilboa, Director of Marketing, Service Provider Video
There’s been a lot of noise recently about the impact of cloud on the pay TV business.
If you attended IBC in Amsterdam last week, you will no doubt have heard buzz words like cloud, SaaS, DevOps and virtualization from all vendors. But let’s go beyond the hype for a moment and ask ourselves a candid question:
Is ‘the cloud’, and all the technologies, consumption models and applications associated with it, really the key to future business success for video service providers?
Everyone would answer with an enthusiastic “Yes! But can they really explain how they know that?
Let me share with you how I know.
Over the last six months, we have teamed with an independent financial research firm to answer that exact question. We wanted to get an in-depth understanding of the levers that drive our customers’ balance sheets so that we can determine if “cloud video” really is the answer.
They interviewed more than 25 service providers, as well as programmers, vendors and other new entrants. Six thousand rows of Excel later, and we had in our hands the most detailed financial model I have ever seen, covering the current business and balance sheets of video service providers (SPs).
Looking at the model was, at first, a satisfying moment. But once we started running the numbers, we discovered the following painful reality: With the current mode of operation—that includes fragmented operational environments (for delivering broadcast, on-demand, TVE services), increasing costs and saturated markets—the video SPs operating margin is, and will continue to decline over the next 10 years to the single digit range.
That’s why, at IBC this year, we unveiled Infinite Video Platform – our cloud services platform that helps operators and broadcasters to process, secure, distribute and, most importantly, monetize video on any consumer device.
We literally took everything we know about this platform from current customer deployments, and we overlaid this data on our original financial model.
And here’s the big news…
There was a change in trend from a declining operating margin to an increasing operating margin. A 15% reduction in per subscriber costs, per month.
So how did we do it?
We combined cloud video processing with our world class SaaS operations to reduce operating expense significantly and almost eliminated it for regional head-ends.
We significantly cut development costs by maintaining a proactive roadmap, implementing flat licensing, and continuously delivering new features with no or low impact on the live system.
We enabled more consumer devices and services with our Infinite Video Platform to significantly reduce CPE cost while opening up new revenue streams.
Finally, there was our ability to integrate Infinite Video Platform into an existing system, making it live in harmony with the legacy environment and serve both IP and broadcast devices.
That really made the difference.
So YES, deploying a cloud video services platform, such as our own Infinite Video Platform, can make video SPs more competitive than before. It helps them make their operating model for video more profitable while delivering the best video experience to consumers.
But cloud hype isn’t enough.
One needs to truly understand the service provider’s specific pain points and then design the platform around them. That’s what we do with the Infinite Video Platform.
If you want more details about our detailed research and the Infinite Video Platform, don’t hesitate to contact us.
You have brought an interesting question. There are many ways to answer it, but depends how knowledgeable is the one who answer it. The general people is enthusiastic and tends to give a quick yes. But those who belongs to this field, do what you did, joining forces between your team and an independent financial research firm that you rely on. And, of course all the data, market research study already gathered, will give a true understanding of the specific customers, is without any doubt the way to go, and then get the right response, that will give the real services or solutions that fits their particular needs. And, as you finally established,…’One needs to truly understand the service provider’s specific pain points and then design the platform around them, to offer the appropriate platform design’. So finally, will be affirmative that ‘the cloud’, and all the technologies, consumption models and applications associated with it, really the key to future business success for video service providers, and far beyond.