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Pay-for-success model of cloud video


Transformation from traditional on-premise infrastructures to the cloud is now under way in all sectors of the video service industry, including legacy pay-TV operators, pure over-the-top (OTT) service providers and content owners/creators.

This transformation is reducing friction and cutting costs across the whole content supply chain. The cloud helps deliver a radically new economic model for the infrastructure itself, for both hardware and software sectors.

On the hardware side, video service providers can convert upfront capital costs into operating costs. By using commoditized hardware with virtualisation, public cloud providers can exploit economies of scale to deliver resources more cost-effectively than in-house data centres.

Amazon Web Services (AWS) is playing a pivotal role in this transformation by providing infrastructure including storage, video processing and encoding facilities, as well as security components.

Private virtualised clouds run by video service providers can also exploit similar factors to cut costs. The software-as-a-service (SaaS) model converts licences to ongoing service agreements in which operators pay just for what they use.

SaaS avoids having to provision for larger numbers of customers or viewing levels than might occur. Furthermore, the fact that the infrastructure is virtualised so that functionality is dissociated from location opens up the ecosystem to new operational benefits not previously possible.

Third-party ecosystems can be connected or accessed very easily just by relocating content using pointers.

Because of industry-wide cloud adoption, content owners, distributors and service providers are converging around a new content ecosystem connected by the cloud.

Thus, new revenue streams can be created by expanding this marketplace and reducing friction for trading within it.

The bottom line is this: the predictability, flexibility and scalability of a cloud platform enable a “pay-for-success” model that reduces the financial risk of launching new video services when operators do not have visibility into how many subscribers they will have on a month-by-month basis.

Oetegenn’s full article can be found in the June 2018 edition of APB.

Steve Oetegenn is president of Verimatrix

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