By Shaun Lim
As the world continues to grapple with the disruption brought about by the COVID-19 pandemic, broadcast and media companies have not been exempted from having to re-examine their business strategies and models as they attempt to pinpoint their future direction.
Due mainly to lockdowns implemented in many countries, content creation and production have been the most affected parts of the broadcast and media supply chain in 2020, Stan Moote, Chief Technology Officer of IABM (International Trade Association for Broadcast and Media Technology), told APB+.
Moote said, “By looking at the supplier side of the industry, IABM data shows that the negative impact on hardware has been more noticeable than the impact on software. The cancellation of live events coupled with the general shutdown in other content productions have been the major drivers of the decline in revenues as many had deprioritised hardware for content creation … unless absolutely needed for operational continuity.”
In April this year, IABM released a report that examined the key trends and activities in the content creation and production segments of the new industry model BaM Content Chain, with a focus on the state of the market in these segments, as well as business and technology drivers.
One key finding highlighted the acceleration in the transition to direct-to-consumer (DTC) as more consumers remain restricted to their home environments. This, in turn, is forcing a rationalisation of technology spending in this part of the content supply chain because of its effects on the business models supporting content, Moote observed.
He continued, “Remote production and the use of cloud dramatically drove new investment as media companies needed to adapt and accept new technologies out of necessity. Other strategic technology areas that have been key are data-driven graphics for live and automation.”
It is also the Asia-Pacific region (APAC) that is leading the way for forward-looking investment for remote production. Moote explained, “Real-time studio production and graphics investment is much reduced in APAC compared with the global figure, suggesting investment is moving into cloud operations.
“Given that APAC has been the fastest-growing region in the world for some time, this will continue to make it challenging for foreign firms to establish a presence without country-level local knowledge, investment and partners.”
As a result of the pandemic, non-live productions have also increased in the second half of 2020. Within APAC, this has been dependent on local governments’ assessment of the pandemic situation. The introduction of “production bubbles” for instance, means that production staff and talent have had to remain within the vicinity of the studio environment, thus compressing usual production timescales.
To address the uncertainty and vulnerability the pandemic has brought to production, content creators with a global production footprint could increasingly shift their investment to safe hubs in APAC, Moote suggested.
Netflix, for instance, opened two new production hubs in South Korea at the end of 2020, with more Netflix productions reportedly taking place in APAC than in the US. The aforementioned transition to DTC is also continuing to drive original content budgets, with Netflix’s content budget reportedly reaching USD$17 billion in 2020; and set to increase to $19 billion in 2021.
Disney announced that it would spend more than $8 billion on original content for Disney+ by 2021, while at the beginning of 2021, Sky in the UK announced a 50% increase in original content investment with the goal to double original programming by 2024.
Figure 1 – APAC echoes the global technology investment in cloud, however lowest for security. (Source: IABM)
With millions of fans around the world riveted by the ongoing action at the Euro 2020 football championship, the appeal of sports during the pandemic also cannot be underestimated, as Moote highlighted, “Even with no or minimum stadium ticket holders, sporting events made a major comeback in the second half of 2020, and have dramatically affected business models that are a delicate balance between high revenues and high sports rights fees.
“In sports, digital business models cannot replicate the returns of linear. With the rise in streaming consumption in 2020, this has forced sports broadcasters to rationalise spending and we expect as more sports models move to streaming, budgets will be squeezed and focused on strategic investments such as remote productions and AR graphics.”
As these developments gain pace, cloud and virtualisation will emerge as strong investment drivers, according to Moote. He cited the example of ViacomCBS, which migrated its entire broadcast infrastructure to Amazon Web Services, including 425 linear TV channels and 40 global data and media centres.
With global investment in cloud on the rise, including in APAC, there is a pressing concern that needs to be addressed immediately, Moote cautioned.
Based on surveys by IABM, almost no tech vendors in APAC ranked security among their tech priorities, compared to 21% among other regions combined. “With the reported cost of just piracy predicted to rise to more than $50 billion in 2022, along with the rapidly rising occurrence of crippling ransomware attacks around the world, security must become a priority,” Moote emphasised.
What does the future hold?
As broadcast and media organisations continue to plan their transition to a future beyond the pandemic, the general sentimentality is one that is largely encouraging and forward-looking.
Based on the IABM survey, half of organisations indicated a positive outlook, whereas about a third were neutral. When it comes to the allocation of resources, from both a technology and staffing perspective, the future of production is hybrid, Moote suggested.
He advised, “To be successful working in a hybrid environment, connectivity is definitely number one. This being said, it is important to weigh in the fact that purchasing priorities within APAC have total cost of ownership as number one. Hence, it is essential to consider this while making technology decisions.”
Evaluating how cloud was “swiftly adopted” around the world in 2020, Moote pointed out, “The downfall was accessing the cloud. Remote productions definitely took advantage of cloud processes for switching, mixing, processing, editing and graphics. However, if the end-game is to be hybrid, in some instances, this may be simply getting camera and audio feeds back to a central control point.
“This is where IP transport comes in, whether it is on fibre, 5G, satellite or using solid techniques that use the Internet. Investment may come in the form of rental-hires, pay-per use or as a purchase. The same goes for getting into the cloud directly, which can incur very high costs. There are specific technology solutions, hybrid on-prem/off-prem options that can mitigate these costs, so do look out for these solutions.”
He also urged broadcast and media companies to look out for any technology tool that can speed up content creation. With the sheer amount of investment that has been put into creating original content, automated tools that use artificial intelligence (AI) and machine learning (ML) techniques, as well as companies that can accelerate productions to completion, regionalisation and distribution preparation will gain increasing prominence, Moote added.
He, however, was quick to point out that content producers are currently experiencing a major business and technology transformation to pivot to cloud-based models, a development taking place against the backdrop of media convergence offering both an opportunity for growth, and a threat to spending in legacy offerings.
“This has put the suppliers of content production technology into a state of flux as they enable the effective deployment of cloud-based remote production models, with a hybrid allocation of resources.
“The vendors to look out for are the ones that you can partner with on projects to meet your objectives in a timely manner,” Moote concluded.
Stan Moote has worked worldwide in the industry for over three decades and is the CTO at IABM, the independent, international organisation that connects and supports the entire MediaTech ecosystem. Stan has a clear understanding of technology, combined with a solid business twist. You can see many of Stan’s articles at theIABM.org.