I joined the ranks of cord-cutters back in 2014. It was an easy decision. I don’t watch most network TV, rely on newspapers for my daily news and find televised sports a yawn. I am, in other words, a weirdo. But in the past six years, I have gained a lot of company.
The Motion Picture Association of America reported in 2018 that subscriptions to streaming services like Netflix and Amazon Prime surpassed cable subscriptions for the first time, reaching 613 million compared to the 556 million US cable subs. The lion’s share of revenue still comes from cable and satellite but the consultancy Informitv estimated in Q1 2019 that pay TV providers all together were losing 14,000 subscribers per day. And this was before the US FCC ordered 300 MHz of C-band spectrum to move from the “satellite” to the “mobile” column.
In its recent report, Finding Growth in Media Services, the World Teleport Association takes a hard look at the future of the business of media contribution and distribution, for which teleports and satellite operators have been the backbone for decades. Its conclusion is that media and entertainment companies will continue to have major needs that teleport operators can serve – they are just different needs than in the past.
Regional Differences
Those needs are not everywhere the same. No surprise: the conversion of network TV viewers into online viewers closely tracks the availability and cost of broadband, whether wired or wireless, as well as the country of origin for content.
What this chart tells you is that DTH will remain a core distribution platform for television content in the Asia-Pacific and Latin American regions for many years to come, and even more so in Eastern Europe, the Middle East and Africa. But the trends are similar. The appeal of content available when you want it, on any device you want, at an attractive monthly cost is so strong that resistance is – in the long term – futile.
That said, teleport operators are helping legacy programmers to continue extracting the maximum revenue and profit from their existing business of satellite contribution and distribution for homes, cable headends and network affiliates. They are helping broadcasters get greater transponder efficiency with higher order modulation and coding. They are employing more efficient IP encapsulation protocols over satellite DVB-S2 pipes, such as Generic Streaming Encapsulation, MPEG DASH and Adaptive Bit Rate. They are also helping customers take advantage of cloud capacity to introduce channels at lower risk and scale quickly in the event of success. The combination of efficiency and flexibility can put an extra spring into the step of broadcasters.
The Jump to Cyberspace
That said, today’s media customers want OTT to complement satellite distribution. That is, paradoxically, increasing the importance of the teleport in content acquisition and aggregation. Media customers are challenged to efficiently manage the ever-growing number of content acquisition sources, including traditional contribution as well as streaming channels, with metadata, formatting, transcoding, security and digital rights management (DRM).
In its 2018 report, The Over-the-Top Video Distribution Opportunity, WTA noted that most contributors reported that OTT services were not a significant revenue generator. This is no longer the case – and the gap is closing.
Teleports are in a prime position to provide OTT versions of linear programming content for which they are currently managing traditional playout. Success with an OTT strategy is about leveraging existing customer relationships, services and assets to invest in future customer solutions. For example, the objective is not to sell more downlink services and hope to add transcoding for streaming. It is to use the downlink capability as a differentiator in selling next-gen OTT services to new growth customers.
Other teleport operators are re-configuring their facilities into “on ramps” to the cloud and commercial CDNs. This kind of platform can host multiple customers’ content and apps on the same infrastructure, allowing scale efficiencies, and support larger traffic and revenue potential.
OTT video is consumed on many types of devices, which makes distribution far more complex than the traditional linear flow. Content is dynamically repurposed based on the user device, end-to-end bandwidth quality, DRM and more. Teleport operators have the opportunity to bring automation technology to the orchestration and management of all the operational and technical workflows for multiple customers on a shared management platform. If you can manage the complexities of workflow better than customers can do it themselves, you have a significant opportunity to deliver compelling services at a profit.
Any teleport providing playout for multiple OTT distributors has an even bigger value-added opportunity: the insertion of metadata, descriptive markers, and advertising. Media companies need help with regionalizing content, handling blackout requirements and replacing ads with local, national, or regional spots as required. Significant money is attached to each of these, whether in potential penalties for rights violations or in revenue. Teleport operators using the right technology solutions can provide high-quality management of these processes on the one hand and deliver OTT viewer analytics for advertisers on the other.
What’s in Store?
Most observers expect that satellite will remain essential for distribution to large, rural markets, which is why its future remains bright in the less-developed regions of the Asia-Pacific and Latin America. But for broadcast distribution to the primary urban and suburban markets in industrialized nations, a contributor to the report predicted that “there will be no satellite five year from now.”
Another contributor summed up both the peril and opportunity. “The future growth for us and the industry in general is about being flexible, adaptable, listening to clients’ requests, and being able to make quick zigs and zags as the market evolves. We see market consolidation with programmers, which can change facilities and requirements among customers. Teleports have a viable future, but only if they keep adapting in how they market, sell and deliver services.”
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Robert Bell is the executive director of the World Teleport Association (www.worldteleport.org), which conducts research into the teleport and satellite industry and offers a Teleport Certification program to service providers.He can be reached at: rbell@worldteleport.org
Finding Growth in Media Services s available for free to members and for sale to non-members at https://www.worldteleport.org/store/ViewProduct.aspx?id=16313838
