broadcast & media technology transformation: facts & figures · pier silvio berlusconi,...
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Broadcast & Media Technology Transformation:
Facts & FiguresLorenzo Zanni, Head of Insight & Analysis, IABMLorenzo Zanni, Head of Insight & Analysis, IABM
IABM Copyright 2019@THEIABM www.theiabm.org
Contents
Drivers of Change
Drivers of Change
Supply Business
Transformation
Supply Business
Transformation
Sources: IABM, Variety, Seeking Alpha
Drivers of Change
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3 Drivers of Change – The 3 Faces of Digital
#1 Digital Warfare: Traditional and new media companies continue to launch streaming offerings to attract digital eyeballs. Welcome to the new media battlefield.
#2 Digital Inflation: As the number of digital outlets increases and investment in content skyrockets, only a few will keep up with the giants while others rise to appeal to niche audiences.
#3 Digital Speed: Everything is quicker in the brave new digital world as consumers’ expectations reach new levels. Media companies are responding to this shift by streamlining their operations.
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Digital WarfareConflict Escalation
Sources: IABM, Digital TV Research
• Disney launched ESPN+ in 2018 and set to launch Disney+ this year
• Apple set to launch streaming service this year after 1$bn investment in 2018
• WarnerMedia to launch a streaming service this year
• BBC and ITV to launch joint UK streaming service this year
• BBC and Discovery to launch joint streaming service focused on wildlife programming
• TF1, Télévisions and M6 removing content from Netflix and Amazon after 2018 streaming launch
More Media Companies Go Direct!More Media Companies Go Direct!
2017 2018 20190
200
400
600
800
1000
1200
Pay-TV SVOD
Mill
ion
Su
bs
Global Subs: Pay-TV vs. SVODGlobal Subs: Pay-TV vs. SVOD
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Digital WarfareWorldwide Battle
• Disney launched ESPN+ in 2018 and set to launch Disney+ this year. Planning to expand Hulu and Disney+ internationally
• Apple to launch a global SVOD service
• WarnerMedia to launch a global streaming service this year
• Comcast plotting a global streaming service after Sky’s acquisition
• BBC and Discovery to launch joint global streaming service focused on wildlife programming
• Discovery to launch global streaming service focused on golf
More Media Companies Go Global!More Media Companies Go Global!
Sources: IABM
ImplicationsImplications
TV Exports RiseData from the UK, France and even emerging content markets like Turkey points to double digit growth
TV Exports RiseData from the UK, France and even emerging content markets like Turkey points to double digit growth
Scale & ComplexityScale needed for global services. Added complexity in making it work, from content localization to rights management
Scale & ComplexityScale needed for global services. Added complexity in making it work, from content localization to rights management
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Digital WarfareData Snippets
Sales & Profits – Broadcast vs. FAANGsSales & Profits – Broadcast vs. FAANGs
Broadcast FAANGs-5%
0%
5%
10%
15%
20%
25%
30%
Sales ChangeProfit Change
Broadcast FAANGs0
500,000,000
1,000,000,000
1,500,000,000
2,000,000,000
2,500,000,000
3,000,000,000
Th
ou
san
ds
USD
Current Market CapitalizationCurrent Market Capitalization
Sources: IABM
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Digital WarfareAlliances
OTTMany joint DTC initiatives in Europe – France (Salto), UK (Britbox), Spain (LOVEStv), Germany (Joyn). Broadcasters also vouching to collaborate on streaming tech
OTTMany joint DTC initiatives in Europe – France (Salto), UK (Britbox), Spain (LOVEStv), Germany (Joyn). Broadcasters also vouching to collaborate on streaming tech
AdvertisingRise in number of collaborative initiatives to increase audience size and improve addressability (European Broadcast Exchange, Blockchain Insight Platform, Sky/Virgin partnership, Project OAR, RTL/Prosieben partnership)
AdvertisingRise in number of collaborative initiatives to increase audience size and improve addressability (European Broadcast Exchange, Blockchain Insight Platform, Sky/Virgin partnership, Project OAR, RTL/Prosieben partnership)
Alliances Focus on Revenue-Generating ActivitiesAlliances Focus on Revenue-Generating Activities Investment in Tech Suppliers Following Similar PatternInvestment in Tech Suppliers Following Similar Pattern
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Digital WarfareAlliances
Pier Silvio Berlusconi, Mediaset Deputy Chairman & CEO
May 2019
European media companies like us need to join forces if
we are to continue to compete, or even just resist,
in terms of our European cultural identity, eventual
attacks by the global giants
European media companies like us need to join forces if
we are to continue to compete, or even just resist,
in terms of our European cultural identity, eventual
attacks by the global giants
Is More Consolidation Coming to Europe?Is More Consolidation Coming to Europe?
• Canal+ bought Pay-TV operator M7 for $1.1bn at the end of May 2019
• Mediaset bought 9.6% in ProSiebenSat.1 for $380m at the end of May 2019
• Market is very fragmented, more could happen as European broadcasters search for scale
• Consolidation and collaboration aim to address cost of competing with FAANGs on ad revenues, streaming and content…
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Digital InflationContent Bonanza
Sources: IABM, Variety, MSCI, Statista
Given the success of Hulu so far in terms of subscriber
growth and the relative brand strength and other things too like demographics, we think
there’s an opportunity to increase investment in Hulu notably on the programming
side
Given the success of Hulu so far in terms of subscriber
growth and the relative brand strength and other things too like demographics, we think
there’s an opportunity to increase investment in Hulu notably on the programming
sideBob Iger, Disney CEO
Nov. 2018
2009 2010 2011 2012 2013 2014 2015 2016 2017 20180
50
100
150
200
250
300
350
400
450
500
Number Of Original Scripted Series In The USNumber Of Original Scripted Series In The USThe FAANGs Double Down on MediaThe FAANGs Double Down on Media
Investment up
by over 40%Investment up
by over 40%
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Digital SpeedVelocity
Multi-Platform Content Deli...
4K/UHD Production/Deli...
File-Based Workf...
IP infrastruc...
Social Media Broadcas...
Cloud-Compu...
Remote Produc...
Cyber Secu...
Next-Gen Wireless Technologies ...
Big Data Analytics ...
Upgrading Operations to ...
Next-Gen DTT Standard (ATSC 3.0 ...
VR Production/Deli...
Programmatic adverti...
Blockc...
0% 10% 20% 30% 40% 50% 60% 70%
Top Media Tech PrioritiesTop Media Tech Priorities
Sources: IABM, Financial Times
[The iPlayer] is the way people will consume the BBC in the future. We
need more content there and for longer. This is no longer a
catch-up service… it’s a destination
[The iPlayer] is the way people will consume the BBC in the future. We
need more content there and for longer. This is no longer a
catch-up service… it’s a destinationTony Hall, Director General, BBC
Dec. 2018
Supply Business Transformation
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Supply Business TransformationBuying Trends - Media Factory
Sources: IABM
Makes us more effic...
Total cost of owner...
Makes us more a...
Cutting-edge techno...
ROI
Installation sup...
Interoperable with other prod...
After sales services & sup...
Reputation of ve...
Vendor roa...
Understanding of our specific n...
Personal relationship with ve...
Availability of trai...
0% 10% 20% 30% 40% 50% 60% 70%
Top Factors Influencing Technology PurchaseTop Factors Influencing Technology Purchase Top 3 Priorities in Content Chain ManagementTop 3 Priorities in Content Chain Management
OptimizeResource utilization and avoid effort duplication
OptimizeResource utilization and avoid effort duplication
PredictUnknown variables and events
PredictUnknown variables and events
GatherData on content, rights, operations, audiences
GatherData on content, rights, operations, audiences
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Supply Business TransformationBuying Trends – The Rise of BIY and Partnerships
Sources: IABM,
Digital SpeedNeed to do things
quickly and effectively in multi-
platform world
Digital SpeedNeed to do things
quickly and effectively in multi-
platform world
BIYThrough acquisitions and
internal SW development
BIYThrough acquisitions and
internal SW development
PartnershipsThrough increased collaboration with
suppliers
PartnershipsThrough increased collaboration with
suppliers
We are not looking for products anymore, we
are looking for partnerships where
product development is driven by our requirements
We are not looking for products anymore, we
are looking for partnerships where
product development is driven by our requirementsEuropean broadcaster
responding to our Buying Trends Survey
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Create Produce Manage Publish Monetize Consume Connect Support Store0%
10%
20%
30%
40%
50%
60%
70%
80%
Positive Business Sentiment Reliance on Hardware
Supply Business TransformationInvestment is Shifting – Rise of DTC Models & Software
Sources: IABM
Suppliers’ Business SentimentSuppliers’ Business Sentiment
Monetize & ConsumeBroadcasters investing more in Monetize & Consume as they move direct-to-consumer. This is to establish relationships with consumers and monetize them effectively
Monetize & ConsumeBroadcasters investing more in Monetize & Consume as they move direct-to-consumer. This is to establish relationships with consumers and monetize them effectively
PublishIn Publish, 67% of suppliers saying that they customers are focusing investment on internet distribution
PublishIn Publish, 67% of suppliers saying that they customers are focusing investment on internet distribution
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Supply Business TransformationInvestment is Shifting – Software/Hardware Divide
Sources: IABM
Demand DriversDemand Drivers Demand in last 6 monthsDemand in last 6 months
SDI to IP
Tra
nsition
Work
flow A
utom
ation
Asset O
ptimiza
tion
Remote
Pro
duction
Multi
-Pla
tform C
ontent D
elivery
Adoption of A
I/Mach
ine Le
arnin
g
Cloud/V
irtualiz
ation
Upgrade to
Imm
ersive
Form
ats
Progra
mm
atic/Targ
eted A
dverti
sing
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
Hardware revenues Software revenues
Increased in the last six months Stayed the same in the last six months
Reduced in the last six months0%
10%
20%
30%
40%
50%
60%
70%
Hardware revenues Software revenues
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Supply Business TransformationInvestment is Shifting - Software/Hardware Divide
Sources: IABM
Average R&D Spending as % of SalesAverage R&D Spending as % of Sales R&D FocusR&D Focus
Cloud/V
irtualiz
ation
Advance
d Analyti
cs/A
I/Mach
ine Le
arnin
g
IP T
echnolo
gy
UHD (inclu
ding 4
K, 8K, H
DR, HFR, W
CG)
Advance
d Adve
rtisin
g Tech
nology
Block
chain
VR/AR
0%
10%
20%
30%
40%
50%
60%
70%
80%
Hardware suppliers Software suppliersH2 2016 H1 2017 H2 2017 H1 2018 H2 20180%
5%
10%
15%
20%
25%
30%
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Supply Business TransformationSuppliers Move to New Business Models – Revenue Shift
Sources: IABM
H1 2016 H2 2016 H1 2017 H2 2017 H1 2018 H2 20180%
10%
20%
30%
40%
50%
60%
70%
Software revenues (permanent licences) Software revenues (subscriptions/on-demand)
H1 2016 H2 2016 H1 2017 H2 2017 H1 2018 H2 2018
-10%
0%
10%
20%
30%
40%
50%
60%
70%
Hardware revenues Software revenues Service revenues
Primary Sources of Revenues – All Suppliers
Primary Sources of Revenues – All Suppliers
Licences Vs Subscriptions/On-Demand– Software Suppliers
Licences Vs Subscriptions/On-Demand– Software Suppliers
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Supply TransformationSuppliers Move to New Business Models - Revenue Shift
Sources: IABM
Hardware revenues
Software on-demand
Software permanent licences
Software subscriptions
0%10%
20%30%
40%50%
60%70%
80%90%
100%Growing Stable Decreasing
Revenue Sources, Outlook – All SuppliersRevenue Sources, Outlook – All Suppliers
Software permanent licences
Hardware products
Software on-demand
Software subscriptions
0% 20% 40% 60% 80% 100% 120%Growing Stable Declining
Buyers’ Investment, Outlook – All BuyersBuyers’ Investment, Outlook – All Buyers
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Supply Business TransformationSuppliers Move to New Business Models – Financial Transition
Sources: IABM
Not surprisingly, our SaaS deal pipeline has grown substantially. While this is good news from a strategic point of view, growing SaaS deal pipeline also creates a short-term booking and revenue headwind, evidenced in the first
quarter, as we're finding the SaaS sales cycle is taking longer as the industry is still climbing the SaaS
learning curve
Not surprisingly, our SaaS deal pipeline has grown substantially. While this is good news from a strategic point of view, growing SaaS deal pipeline also creates a short-term booking and revenue headwind, evidenced in the first
quarter, as we're finding the SaaS sales cycle is taking longer as the industry is still climbing the SaaS
learning curvePatrick Harshman, Harmonic CEOQ1 2019 Earnings Call 2010 2011 2012 2013 2014 2015 2016 2017 2018
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Media Technology Cash Flow/Revenue Index
Media Technology Cash Flow/Revenue Index
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Supply Business TransformationSuppliers Move to New Business Models – Financial Transition
Sources: IABM
Now we believe our performance in Q1 shows how we're
successfully increasing our focus on delivering a more predictable
financial model built on more recurring revenues from growth in
our software subscriptions and through long-term agreements.
We will continue to focus on moving to higher-margin software
and SaaS offerings for sure
Now we believe our performance in Q1 shows how we're
successfully increasing our focus on delivering a more predictable
financial model built on more recurring revenues from growth in
our software subscriptions and through long-term agreements.
We will continue to focus on moving to higher-margin software
and SaaS offerings for sure Jeff Rosica, Avid CEOQ1 2019 Earnings Call
H1 2014
H2 2014
H1 2015
H2 2015
H1 2016
H2 2016
H1 2017
H2 2017
H1 2018
H2 2018
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
Sales Growth Profit Growth
Media Technology Revenues & ProfitsMedia Technology Revenues & Profits
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Supply Business TransformationSuppliers Move to New Business Models – Cultural Transition
Sources: IABM
We moved from a very small percentage of our business being recurring to 90%. When you sell a
box, you ship the box. Your customer opens the box, and
starts using the product, and you have very little further visibility into what they’re doing. You don’t see
the full customer experience because the biggest (and most
hidden) part is their usage
We moved from a very small percentage of our business being recurring to 90%. When you sell a
box, you ship the box. Your customer opens the box, and
starts using the product, and you have very little further visibility into what they’re doing. You don’t see
the full customer experience because the biggest (and most
hidden) part is their usageRob Giglio, Adobe SVP Sales 2019 Imagine Conference
2009 2010 2011 2012 2013 2014 2015 2016 2017 20180%
5%
10%
15%
20%
25%
30%
35%
Adobe’s Cash Flow/Revenue RatioAdobe’s Cash Flow/Revenue Ratio
Adobe Launches Creative Cloud
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Supply Business TransformationThe Cloud Move – A New Ecosystem
Sources: IABM
H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 H2 2017 H1 2018 H2 20180%
5%
10%
15%
20%
25%
30%
35%
AWS Growth Broadcast Tech Growth
AWS & B&M Technology GrowthAWS & B&M Technology Growth
Not at all likely Unlikely Somewhat likely
Very likely We are already doing it today
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
39%
Cloud – Adoption TrackerCloud – Adoption Tracker
UP from 37% UP from 37%
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Supply Business TransformationThe Cloud Move – A New Ecosystem
Sources: IABM
Cloud – Preferred Deployment ModelCloud – Preferred Deployment Model
Hybrid...
Private cloud (off-pr...
Public...
Private cloud (on-pr...
Oth
0% 5% 10% 15% 20% 25% 30% 35%
PartnershipsRise of partnerships between suppliers and cloud service providers
PartnershipsRise of partnerships between suppliers and cloud service providers
Multi-CloudMulti-cloud challenges to be addressed to meet users’ requirements
Multi-CloudMulti-cloud challenges to be addressed to meet users’ requirements
Business ModelsNew business models of cloud economy, revolution from marketing to accounting
Business ModelsNew business models of cloud economy, revolution from marketing to accounting
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Supply Business TransformationThe Cloud Move - AI driving Cloud Adoption
Sources: IABM
Leverage cloud service provider's AI capabi...
Leverage specific AI functionalities in vendor's so...
Internal deployment/recru...
Specialist AI pl...
Oth
0% 10% 20% 30% 40% 50% 60%
NASCAR moves 500,000 hours of content archive (18-petabyte)
in the cloud
NASCAR moves 500,000 hours of content archive (18-petabyte)
in the cloud
AI – Preferred Deployment ModelAI – Preferred Deployment Model
We started to digitize six or seven years ago. We are
jumping into machine learning to automate processes and add
metadata
We started to digitize six or seven years ago. We are
jumping into machine learning to automate processes and add
metadataSteve Stum, NASCAR VP Operations and Tech ProductionJune 2019
Thank you!Lorenzo Zanni, Head of Insight & Analysis, IABMLorenzo Zanni, Head of Insight & Analysis, IABM