NEW YORK, USA: Consumer demand is driving service providers to develop multiplatform video services for the consumer's "three screens," but the revenue model for this service remains uncertain, according to a major new report from Heavy Reading.
"Service providers are bullish about their prospects in the multiplatform video space, and are looking at ways to extend their pay TV services to additional platforms," says Aditya Kishore, Senior Analyst with Heavy Reading and author of the report. "But they also face their share of challenges, because on both a technology and business front, the specifics of multiplatform video distribution remain unclear."
Most troublingly, there is no clear revenue model for monetizing multiplatform video. Kishore continues: "Some providers are exploring different models, including a straight incremental charge for multiscreen access, but no clear picture has emerged yet on how providers can monetize this capability. Most efforts today seem to be experimental in nature, or designed to add customer value and differentiate the provider. This means that there will be no return on the investment made for deploying multiscreen capabilities, at least for the moment."
Key findings of Multiplatform Video: Overcoming Technology & Revenue Challenges include the following:
Service providers worldwide are interested in multiplatform video. In our proprietary survey, 76 percent of respondents agreed that multiplatform video would be an important requirement for their business within the next five years. Of these, 38 percent strongly agreed. When asked what would make them prioritize multiplatform video more, 25 percent said it was already a top priority.
Consumer demand was the primary driver for service providers looking at multiplatform video. The growth of video on the Internet – and increasingly on mobile devices – has familiarized consumers with the idea of video consumption beyond the TV. Service providers feel they must cater to this demand. Interestingly, direct competition from online video distributors was not seen as much of a concern, though competition from other providers was. This is particularly true of larger service providers, with annual revenue of $1 billion or more.
A robust content management system will likely be required for multiplatform distribution. Managing various video formats and versions, tracking delivery and enforcing various windows and expiry rules, navigating varying metadata requirements and formats, etc. will pose a significant challenge for operators. At some stage, service providers offering three-screen solutions will need a robust content management system capable of supporting these complex requirements.
Middleware operators, VoD management systems, and online video publishing platform vendors are all battling for this role. The content management system will be the brains of the video operation, and the vendor that owns it will be the best positioned. As a result, many players are targeting this space. We believe that on-demand or specialized multiplatform content management systems are probably the best positioned worldwide.