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A European perspective on VOD

Video on demand (VOD) is not a new concept. Where available, customers tend to value the application highly, but penetration has been low to date primarily due to technical constraints. This situation is now changing very rapidly across Europe. Where VOD provides choice and freedom to the viewer, content/channel owners and their playout providers don't have the luxury to choose whether to deliver this functionality. VOD is becoming a must-offer product, and they need to rapidly get in shape to deliver.

The significant change in the media landscape in the past decade has not gone by unnoticed. Content is being accessed in different ways, new consumption patterns arise and new leaders such as YouTube and Facebook emerge. Content/channel owners have also expanded their activities into the new media space in the past years, but despite all efforts made, linear broadcast has remained the most important outlet for their content. Content/channel owners first of all still very much depend on operator payments and TV-driven advertising income to hit their revenue targets; no effective economic models have yet emerged in new media that could effectively replace this income stream. The TV is furthermore still the medium of choice for consumers to view video content, and this TV has remained quite traditional. Although experiences in advanced markets around the world have shown that consumers are very open to adopt new ways of accessing content on their TVs, like VOD, until recently, the technology and infrastructures were the limiting factor and TV was limited to transmitting linear broadcasts.

This situation is changing very rapidly, fueled by the digitization of worldwide TV markets. Operators have invested significantly to upgrade their networks to allow for two-way communication, and penetration of interactive set-top-boxes has grown exponentially. The rollout of VOD now has very high priority for operators, because VOD improves customer satisfaction and enables platforms to positively differentiate themselves from platforms that cannot (yet) offer such functionality. A strong content offering is required to drive VOD adoption, and operators are increasingly making delivery of VOD content a requirement for linear channel deals. Many content owners/channels have started to feel the pressure to deliver in the last year, but most agree this is only the start of a new structural requirement.

There are limited funds available to create the VOD product given that VOD is frequently delivered as a “service” to customers and no direct additional revenue is generated. Content owners and/or their playout providers, therefore, are asked to find solutions to deliver VOD at low costs, but unfortunately, efficient delivery of VOD is not (yet) that straightforward.

First of all, there is a complete lack of standards, and almost every platform has its own unique encoding specification. Every specification requires a new transcode, and volumes can become exceptionally high. Clarifying these specifications with individual operators furthermore requires a lot of time and expense. Secondly, no off-the-shelf systems exist that enable efficient delivery of content to multiple platforms, with different encoding, language and metadata requirements. Customized development and system integration is therefore required. Finally, new billing systems need to be implemented to support the variable billing on unit by unit basis.

To effectively address this challenge, fully automated digital workflows are required. The core of such a system is the storage of content in one high-resolution format in a central archive that can be used for all purposes (HD, SD playout and VOD). In addition, a system is required that can store standard profiles for content/channel and platform specifications detailing transcoding profile, delivery location and metadata requirements. Finally, workflows need to be defined that can accept orders and trigger an automatic workflow, which retrieves content from the archive, transcodes it into the required format, collects the metadata from the CMS, delivers the package to the required location and feeds the billing system with information.

Setting up such a system is not unachievable, but it requires a considerable investment of time and resources to establish, and this only pays back if a minimum volume of content is being processed. Many channel/content owners do not reach these volumes themselves, and rather than relying on costly manual processing in house, are considering outsourcing this task to external (playout) providers. Besides the financial benefit, higher quality of delivery can be achieved, because their content is processed using tried-and-tested systems and processes. Furthermore, these providers will have a good understanding of the requirements from both the content owner and platform perspective, which allows them to facilitate an efficient relationship. Finally, due to their scale, many operator configurations will have already been set up in the central systems, thereby avoiding a time-intensive step in the process.