Milan, Italy – December 1, 2023:
With profitability as a primary business objective for streamers, the innovation of technology and associated financial models is the latest hot subject. The viewer experience remains paramount to ensure popularity of the streaming service, which returns best possible revenues. But financial models for buying technology should change to give economies of scale, particularly for services that are scaling rapidly with the growth of streaming. What should profitability-focused media businesses look for from their technology partners?
Picture this: a future where video streaming offers impeccable delivery quality, does so at an economically scalable cost, and safeguards our planet. Sound too good to be true? With the power of the “AND”, we’re not just daydreaming. We’re plotting a course to redefine the video streaming industry.
Unleashing the Power of AND: Quality, Cost, and Sustainability in Streaming
1. Quality Matters, Always
At the heart of any successful video streaming venture is the undying quest for top-tier delivery quality. This ensures viewers remain glued to their screens, boosting top-line revenue. Delivery quality, measured by the consistency of low-latency video delivery at the desired bitrate, is paramount. Any interruption, like rebuffering, isn’t merely annoying. It directly affects viewer engagement. Just consider these two facts: a 1% reduction in rebuffering leads to a 1% surge in viewing time (source: MainStreaming customer), and at Roland Garros 2023 there was a –0.91 correlation between buffering ratio and play-time (source: Conviva). More viewing means more retention and more revenue, both for ad-supported and for paid subscription platforms.
But, achieving stellar quality when viewer numbers peak is a technical Everest. It’s about ultra-low-latency throughout, ensuring video segments get to the last mile ASAP. This isn’t just about raw network speed; it’s about the intelligent use of resources, speed of processing, and an infrastructure specifically tuned for video delivery, especially at the edge of networks.
Ultra-low latency inter-server video transfers performed in milliseconds to sustain best delivery quality to all viewers simultaneously
2. Cost-Effective Scaling: An Imperative
Quality is undeniably a crucial aspect of streaming services, but it is just one side of the coin. The flip side? Economic scalability. In a world where viewers have diverging habits and consume varied amounts of content, the costs associated with streaming based on volume can quickly become unsustainable. To put it into perspective, consider two viewers: one who indulges in a streaming spree for two hours and another who logs off after just 30 minutes. Based on the traditional model of paying for delivery by data volume, the former’s delivery bill will be a staggering four times that of the latter. That might sound logical, but it’s not sustainable for streaming services. There is a better way to manage these costs, and that’s where innovative approaches like capacity-based delivery models come into play.
Capacity-based delivery models represent a shift from the old paradigm of volume-based pricing to a model that offers predictable costs. Instead of paying per byte of data delivered, streaming services can subscribe to a fixed monthly cost that covers a substantial portion of their routine streaming delivery. The model works by providing a certain amount of data delivery capacity per month, and streaming services can use it as needed. Any data delivery beyond this capacity is typically billed at a variable rate, providing flexibility for occasional peaks in demand. This capacity-based model has several advantages over the traditional volume-based model.
Economic scalability derived from a capacity-based cost model where a single viewer can watch as much as they wish for no incremental delivery cost
The most significant advantage is cost predictability. Streaming services can budget their monthly expenses with much greater accuracy, as they know what their data delivery costs will be upfront. This predictability is music to a CFO’s ears, as it helps with financial planning and ensures that the company does not face unexpected expenses. Furthermore, the capacity-based model can result in significant cost savings over time, as streaming services are no longer penalised for delivering more data. Instead, they pay a fixed amount for a predetermined capacity, regardless of how much data they deliver within that limit. This model can lead to lower unit costs for data delivery, especially for streaming services that have a consistent volume of data delivery.
Another advantage of the capacity-based model is its ability to incentivise streaming services to optimise their data delivery. Under the volume-based model, streaming services might be tempted to lower their delivery quality to reduce costs. However, under the capacity-based model, streaming services are incentivised to maximise their data delivery within the predetermined capacity. This can lead to a focus on optimising delivery quality, improving viewer experience, and ultimately driving revenue growth.
In conclusion, capacity-based delivery models represent a much-needed shift in the way streaming services manage their data delivery costs. By providing predictable costs, incentivising quality optimisation, and potentially leading to cost savings, these models are poised to improve the streaming industry.
3. Beyond Business: Embracing Environmental Responsibility
The call for environmental sustainability isn’t just a trendy slogan; it’s a dire necessity. As video accounts for the lion’s share of internet data, it’s imperative to harness video-tuned delivery infrastructures. Contrary to the notion of a wasteful, idle single-use platform, today’s technology offers eco-smart solutions. Video-focused architectures efficiently cut down on energy use, at peak viewing times and during idle hours, and can serve multiple video-centric tasks. Furthermore, deploying such architectures means a significant drop in total energy consumption. And as we look towards a future where traditional video delivery morphs into OTT streaming, scaling should be about amplifying efficiency, not mere volume. New architectures that transform our energy consumption are required.
Environmental sustainability is supported by flattening and distributing the delivery architecture, with deployment closer to the consumer, this approach is pivotal to simultaneously achieving delivery quality and economic scalability and environmental sustainability
4. Looking Ahead: Infrastructure of Tomorrow
The expansion of Points of Presence (PoPs) in content delivery networks (CDNs) from the current 2-10 to hundreds per country is crucial as we transition to OTT streaming and advanced broadband networks. With UltraHD video becoming increasingly popular, sustaining high video bitrate is of utmost importance to deliver crisp, high-quality visuals. The rise of Virtual Reality (VR) further emphasises the need for eliminating re-buffering, as any interruption severely disrupts the immersive experience.
Recognising these critical PoPs as national entities ensures their maintenance and protection at the highest standards, safeguarding our increasing digital reliance. The expansion of PoPs is an essential evolution, paving the way for improved delivery quality, scalability, and efficiency in video streaming services, particularly as UltraHD and VR experiences gain traction.
The Era of AND is Here
The tidal wave of streaming’s growth beckons an era of innovation in media technology and financial models. As media companies strive to maximise their streaming profitability, the “AND” isn’t just a conjunction; it’s a call to action. We don’t have to choose between quality, cost, or sustainability. With the right strategies, we can – and should – achieve all three. Welcome to the revolution!