Vertical Consolidation: Several New Distribution ‘Tails’

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This post shares a perspective on Next-gen Distribution and Control. Check out the Cisco D9800 Network Transport Receiver and PowerVu Network Controller at IBC. For Content owners, it’s the lastpoint of visibility & control inside their increasingly complex distribution landscape.

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Brian Ring, Gaurav Rishi, Jack Vickers, Jordi Sanders, Fabio Souza

FOR DECADES, the $64,000 question for TV & media business strategists was:

Who’s King in TV-land? Content? Or Distribution?

Over-simplified? Sure. But binary hypotheticals can be useful for strategic planning. We might’ve asked the question in 2011 when Comcast NBCUniversal was formed; with AT&T’s June 2018 close of the Time Warner deal, we have an answer: It’s both.

The media & TV ecosystem won’t be defined by any single event, but so-called ‘vertical integration‘ strategies are sailing full-tilt as the media industry consolidates. They’re being egged-on by the demonstrated power of web-scale streaming services, lovable mobile devices and surging demand for exclusive, genre-bending content on TV Apps.

But what does this vertical integration and consolidation mean for the business of TV technology? Specifically, how will distribution workflows change as the end-points change?

The waters are unchartered; the opportunity is ours to shape; but two logical themes emerge:

1) Large operators will have more flexibility to leverage ‘owned’ content to drive new features & services inside their footprint. They’ll have to build better technology to ingest, process & exploit it. Comcast leveraged NBCUniversal Olympics content to build impressive interactive Xfinity experiences. Netflix’s speedy global roll-out was girded by an ‘all-in’ approach to rights acquisition. And today’s sports TV business is predicated on managing complex rules between local ticket sales and broadcast Blackouts.

Distributors that own great content will no doubt exploit better ways to experience it — and fresh TV experiences will come with technical headaches to resolve. Driving scale-efficiencies will be essential.

2) Content makers of all sizes will need more flexibility, visibility, security and control with respect to all-other distribution endpoints. This is a large, far-flung & fragmented target that includes the fast-growing OTT market. Programmers operating inside the telecoms giants will still have to sell to mega-competitors under complex rules & regs; they’ll sell aggressively to the rest of the global TV market, including broadcast stations, local service providers and global telecoms players; and now, of course, they’ll need to sell and deliver in trackable ways to the rapidly growing OTT market, including both behemoth mobile & social platforms as well as skinny bundles and niche streaming services.

Indeed, Content entities will be encouraged by operator parents to compete even more vigorously with social, web and app platforms in the global streaming market. And they’ll be empowered with a better dataset to advance such strategies.

Both of these themes have something in common.

There’s a growing need to deploy sophisticated equipment that does more with less. Whereas today’s workflow efficiently divides-up Contribution, Primary Distribution and Secondary Distribution, fixed-lease satellite and capex-hungry fiber builds are difficult purchases in an industry shifting so quickly.

As content & distribution converge, device versatility is key. Tomorrow’s model needs more flexibility to support multiple value chains. Specifically, that means enabling downstream actions such as service-specific or geography-specific content restrictions and replacements, ad localization, and forensic watermarking.

Additional examples of how Content owners can use Next Gen Distribution and Control technology include:

Manage & execute more granularly defined content rights including both advertising and content replacement scenarios at the head-end;

Apply more robust, sophisticated forensic watermarking to encourage new slicing and dicing of rights;

Reliably execute content rights rules associated with complex contractual scenarios such as sports broadcast Blackout rights;

Manage content quality remotely, including providing the ability to remotely tweak streaming quality of experience (a.k.a. Streaming QoE) parameters specific to various downstream endpoints;

Enable scale-efficiencies, particularly at distribution endpoints such as broadcast station group O&Os where remote visibility into workflows can drive immediate synergies;

Additional insights and visibility into the distribution chain via new, two-way communication links as opposed to one-way satellite links common today. This will help operators monitor endpoint health and status.

All of these advantages of next-generation IRD products will grow in importance as vertically integrated firms are required to handle new, more complex workflows. In addition, as operators gain scale, they will also rationalize their infrastructure, demanding that head-ends “do more with less”.

In that world, device versatility becomes a critical watchword for multi-tailed content distribution.

What do you think? How does vertical consolidation change your tech strategy?

Weigh-in here, on LinkedIn, or on Twitter @CiscoSPVideo

End notes:

(1) The $64,000 question? This turn of phrase stems from the namesake quiz show of the 1950’s, which was ultimately embroiled in the quiz show scandals depicted in Robert Redford’s 1994 film, Quiz Show.

https://en.wikipedia.org/wiki/The_$64,000_Question

(2) Some hints about the relationship between programmers and their distributor owners can be inferred from an internal memo surfaced by Recode.