media logistics platform market analysis by ovum

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A market whose time has come: the Media Logistics Platform WWW.OVUM.COM

A market whose time has come: the Media Logistics Platform

Why the complexities of multi-screen, mass personalized video services demand cloud platforms to manage newly complex content workflows and supply chains

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Defining The Media Logistics Market Published 03/2014

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Written by: Adrian Drury Published March 2014 © Ovum

EXECUTIVE SUMMARY

CATALYST

The multi-screen, web-connected consumer is forcing traditional media to evolve. The new market is a digital audience of one, where the consumer is in control and demands access to a personalized experience of mass media events across multiple, fragmented platforms.

Driven by the disruptive threat of new media players such as Google, Amazon, Apple, Netflix, and Spotify, many traditional media companies in the business of producing, packaging, and selling digital media have moved to create new personalized, multi-screen service experiences to test audience appetite. But the results of these early experiments are that this is what consumers want. The services are successful. The experiment is becoming the core business.

What this has left is a media logistics and supply chain challenge for premium media. The market is served by solutions that offer service delivery and service management for the multi-screen consumer, the now mature Online Video Platform (OVP) market that has reached a point in its development where there are a small number of market-leading players such as Ooyala, thePlatform, Brightcove, and Kaltura, as well as major vendors such as Ericsson and Cisco.

However, as the service platform market has matured, it has exposed both the need for and the immaturity of the vital intermediary solutions that provide both new-generation OTT content service providers and traditional broadcasters with hosted platforms for media management, content exchange, and workflow control. The success of multi-screen, personalized video services, growing platform fragmentation, and the competitive requirement to profitably deliver great end-user experience at scale hugely increases the complexity of the video supply chain. It is fundamentally non-linear. The commercial cost of getting this supply chain management wrong is also increased. In this context, traditional process and architectural models, engineered for predictable, linear schedule services, look unfit for purpose. This challenge is further compounded by a lack of file format standardization, and the challenge of legacy systems still largely engineered for a logistics model dictated by tape.

This has created the need for modular platforms and services to help media companies manage this complexity – to be that vital media management and staging platform for producers, aggregators, and service providers. This demand has created supply. A range of players in the media technology and services market have launched platform propositions in these otherwise undefined markets. These include Technicolor, Deluxe, Sony DADC, Aspera, Signiant, TDF’s Arkena subsidiary, and Ovum’s partner for this paper, Nativ.

Ovum defines this as the Media Logistics Platform market, and it is becoming a vital and highly strategic technology and B2B services segment of the premium media market. It is also set for rapid growth as premium media companies become increasingly mature in their approach to personalized multi-screen delivery, and look to invest in their media management and logistics



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processes to remove constraints on the growth of their multi-screen businesses and take out management cost.

Although the focus of many of these platforms today is on premium media companies, Ovum also notes that as first-party video channels become an increasingly important part of the marketing mix for consumer-facing brands, the media management and logistics requirements of these brands look identical to those of a traditional video publisher. Historically, video assets have been handled (poorly) by a brand’s media agency, but digitally aware brands now understand that these video assets are highly valuable building blocks for their digital customer experience, and they are therefore bringing the management of these assets in house. Brands looking to provide their own native video service propositions to their customers is creating demand for efficient logistics and management of their media assets. This is creating a new market, outside traditional media, for players with a Media Logistics Platform proposition.

KEY MESSAGES

• The media market is moving toward a model of mass personalization at scale, and this has driven investment in developing platforms to deliver personalized media services, as well as creating a market segment of hosted platforms to deliver these services, labeled the Online Video Platform (OVP) market.

• However, the growing maturity and audience volume of and revenue yields from these multi-screen services is exposing the failings of traditional systems and processes for media management and logistics, and these are becoming a choke point for the growth of multi-screen services as all parties in the media supply chain wrestle with the complexity of format and platform fragmentation.

Figure 1: The Media Logistics Platform supply chain



© Ovum.

• Traditional broadcasters are also searching for ways to further optimize and rationalize digital workflows and supply chains still largely designed for tape. Linear services face growing file fragmentation and metadata management challenges.

• The need for platforms to manage the logistics and staging of media before transfer to broadcasters and service platforms has created a new market segment that we define as the Media Logistics Platform (MLP).

• Just as the OVP market has seen rapid growth and an accelerated journey to maturity, so the MLP market is now set for growth, as premium media companies look to solve the media management and logistics challenges that are today acting as an impediment to growth.

• The core drivers of growth will be the growth of multi-screen media end markets, the increasing complexity of media management, and the increasing maturity of technology and platform strategy at media companies.

• Media companies are not the only applicable market for MLPs. As brands are increasingly becoming their own studios and content service providers, they too have a need for platforms to help them manage their own media.

• Ovum calculates the global Total Addressable Market for Media Logistics Platforms for the premium media segments (broadcast, studios, and music) in 2014 to be $109.9m, and to grow at a CAGR of 37.9% to reach $397.8m in 2018.

• Ovum calculates the global Total Addressable Market for Media Logistics Platforms for the brand segment (retail, FMCG, auto, pharma, and financial services) in 2014 to be $177.6m, and to grow at a CAGR of 30.0% to reach $507.2m in 2018.

THE KEY ATTRIBUTES AND CAPABILITIES OF THE CLOUD MEDIA

LOGISTICS PLATFORM

An analysis of the features and capabilities of the MLP offerings in the market demonstrate that there are a common set of features and capabilities of the MLP that reflect the media management challenges faced by media companies. These represent the core proposition of the MLP.

INGEST MANAGEMENT FOR AUDIO AND VIDEO CONTENT

Content service providers need to ingest increasingly large files, in an increasingly large number of formats, from a growing range of sources, before they can be packaged into services. Effective ingest management requires accelerated file transfer capability, the ability to pause and restart transfer if a connection is lost without having to start the transfer session again from the beginning, and effective check-in and check-out, business-rules-driven assurance, and metadata preservation. At a minimum, ingest management tool needs to integrate directly with common content production tools such as Apple Final Cut and Adobe Premiere.

ASSET MANAGEMENT



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An MLP has to be more than just a faster digital content pipe and a control gate. It has to be a Media Asset Management (MAM) platform in its own right. An inefficiency of the systems architecture of many media companies today is that multiple content repositories make it difficult to track and retrieve content, create loss of metadata between systems, and inhibit the successful exploitation of content for new services. The MLP needs to offer a pathway to a single hosted Media Asset Management system that enables media to flow into and be warehoused in one common system. Ovum understands that the transformation and consolidation of MAM systems is not, and never should be, a sudden process. It has to be carefully phased, so an MLP needs to offer a capability roadmap to enable a phased program.

METADATA

Metadata is the building block for the personalized digital experience and next-generation workflows, but a lack of taxonomy standardization means that from creation to consumption, much valuable metadata is lost between each stage of the supply chain. A core requirement of an MLP is the ability to translate and preserve metadata, manage taxonomies, and validate exchange formats. Broad extensibility and compatibility with common data models such as XMP should be standard.

DELIVERY

The need to increase the revenue yield on content acquired or produced is common to all media companies. Hence an MLP needs to facilitate the packaging and delivery of content to a broad library of common third-party publishers, as well as intermediary delivery infrastructure such as content delivery networks. This delivery enablement will enable profitable exploitation of new outlets.

CLOUD, OF COURSE

The advantages of a cloud infrastructure model for a premium video logistics platform cannot be ignored.

First, it enables a media company to more effectively scale its capacity usage of an MLP as the volume of media managed and stored by such a platform grows during the transition to this centralized logistics management model.

Second, it enables an MLP to offer a roadmap of new features and capabilities that enables its customers to manage the common changes and challenges facing all premium media companies, such as new file formats.

Third, it enables an MLP to directly reach production staff, service managers, and producers who need new tools to manage their media and, potentially, are not being appropriately served by internal IT or broadcast engineering – or both. It enables the advantages of the Shadow IT model.

COLLABORATION

A cloud model also enables new and more flexible models and tools for collaboration. The increasing complexity of the supply chain is driving the need for greater collaboration between all parties in the media ecosystem. The model also enables more efficient remote access by increasingly nomadic operators working across multiple screens. In a market where even the



© Ovum.

workhorse PC, the Mac Pro, is effectively a portable device, anytime and anywhere access to a cloud platform is highly valuable.

AUTOMATION

The initial promise of the file-based workflows was automation. But rapid evolution of service models and the steady need to adapt workflows accordingly has slowed the advance of automation. However, MLP promises to enable the automation of these dynamic workflows and provide a content pathway into the ultimate Big Data promise of the OVP: programmatic service creation.

CONTENT AND WORKFLOW ANALYTICS

Successful workflow and content management requires analytics to enable content and finance operations to understand content performance at an asset level and help manage all content touch points for assets, from ingest to delivery or publish. Just as service delivery platforms are increasingly arming content service providers with new data to enable management of their businesses through new APIs.

MODULARITY AND CONFIGURABILITY

Greenfield opportunities in premium media are very rare. The norm is legacy systems, idiosyncratic workflows, and file format diversity. Hence it is vital that MLPs are highly modular and highly configurable for existing legacy systems and process.

WHAT MLP IS NOT

It might seem strange to define a market segment by what it is not, but MLP bears this clarification. MLP is not a content hub or exchange. There have been a range of attempts at content hub and exchange models from the very first networked, file-based workflow projects. However, the enduring truth of this strategy is that it relies on the acceptance of all parties in a highly structured and fiercely protected rights ecosystem of a new player in the value chain with the potential to unbundle packaged output deals. No project aiming to create a digital marketplace for premium, high-value media has succeeded for exactly this reason. Premium media is an oligopolistic market, with a supply dominated by a small number of major and mini-major studios. The MLP is not a marketplace.



© Ovum.

SIZING THE MLP MARKET FOR PREMIUM MEDIA ENTERPRISES

The underlying driver of the MLP market is the universal growth of non-linear services and the media management complexity that this creates. But the base data for this analysis is the IT and content services spend by media enterprise by markets, the size of the geographic media markets, growth dynamics for multi-screen services and attitudes, and investment timing intelligence on the shift to cloud infrastructure and service models.

Ovum has brought together its primary research assets across these attributes to define a Total Addressable Market forecast model for MLP. The objective of this analysis is to articulate the real-world constraints on the size of the market today, but also the growth that this segment is set to see as the premium media market transitions to a personalized service model.

KEY DRIVERS OF THE VALUE OF THE PREMIUM MEDIA MLP MARKET

The primary factor set to drive the growth of the MLP market is the growth of personalized multi-screen services. In 2013, Ovum polled 300 senior studio, channel programmer, and service provider executives across North America and Western Europe, and asked what share of audience hours they thought would be distributed via the Web by 2017, on the basis that the industry average in the US today is circa 4%. Half of the respondents believed that the share

Figure 2: MLP Total Addressable Market Methodology



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will be over 20% by 2017, and over a quarter of respondents believe that it will rise to over 30% in the same time frame.

This rapid growth in the size of the multi-screen market will drive investment not only in rights and service platforms, but also in solutions to the media logistics challenge of how to manage the growing complexity of the media supply chain.

Ovum calculates the global Total Addressable Market for Media Logistics Platforms for the premium media segments (broadcast, studios, and music) in 2014 to be $109.9m, and to grow at a CAGR of 37.9% to reach $397.8m in 2018.

SIZING THE MLP MARKET FOR BRANDS

The premium media enterprise market of broadcasters, channel programmers, studios, and other premium content producers is only one of two major addressable segments for MLP. The other key segment is consumer-facing brands that are increasingly becoming their own content producers and service providers.

Major brand-led enterprises from Nike and BMW to Proctor & Gamble are understanding that video is an increasingly important building block for their digital customer experience, and that taking control of their video assets in house, rather than leaving them to management by an agency, is a way to take greater control of the video experience, narrative, and the social community that it engenders. It also enables them to increase the return on assets produced and rights acquired. This growth in enterprise consumer-facing video has driven the growth of OVPs such as Brightcove and Kaltura, and now these enterprises are starting to face the same workflow, logistics, and media management challenges as those faced by premium media organizations.

Figure 3: Total Addressable Market, premium media, 2014–2018



© Ovum.

This is expanding the market for providers of MLP solutions in a way that is directly analogous to the market expansion for OVPs. While this segment lags, and premium media enterprises continue to define the state of the art for media management and hence the right feature roadmap strategy for these new cloud platforms, the real opportunity in this market is scale. The consumer-facing brand market creates the opportunity for MLP players to sell into financial services, FMCG, automotive, fashion, transport… the list goes on.

DRIVERS FOR THE MLP BRAND MARKET

The primary drivers for non-media enterprises to invest in MLP are:

• the growing share of marketing budgets allocated to first- and third-party video marketing

• the growth in the share of enterprises with their own video channel

• the growing share of enterprises bringing media management in house to make video part of their digital customer experience.

Ovum calculates the global Total Addressable Market for Media Logistics Platforms for the brand segment (retail, FMCG, auto, pharma, and financial services) in 2014 to be $177.6m, and to grow at a CAGR of 30.0% to reach $507.2m in 2018.

Figure 4: Total Addressable Market, consumer brand enterprise, 2014–2018



© Ovum.

SUMMARY

• Ovum calculates the global Total Addressable Market for Media Logistics Platforms for the premium media segments (broadcast, studios, and music) in 2014 to be $109.9m, and to grow at a CAGR of 37.9% to reach $397.8m in 2018.

• Ovum calculates the global Total Addressable Market for Media Logistics Platforms for the brand segment (retail, FMCG, auto, pharma, and financial services) in 2014 to be $177.6m, and to grow at a CAGR of 30.0% to reach $507.2m in 2018.

• The media market is moving toward a model of mass personalization at scale, and this has driven investment in developing platforms to deliver personalized media services, as well as creating a market segment of hosted platforms to deliver these services, labeled the Online Video Platform (OVP) market.

• However, the growing maturity and audience volume of and revenue yields from these multi-screen services are exposing the failings of traditional systems and processes for media management and logistics, and these are becoming a choke point for the growth of multi-screen services as all parties in the media supply chain wrestle with the complexity of format and platform fragmentation.

• The need for platforms to manage the logistics and staging of media before transfer to service platforms has created a new market segment that we define as the Media Logistics Platform (MLP).

• Just as the OVP market has seen rapid growth and an accelerated journey to maturity, so the MLP market is now set for growth, as premium media companies look to solve the media management and logistics challenges that are today acting as an impediment to growth.

• The core drivers of growth will be the growth of multi-screen media end markets, the increasing complexity of media management, and the increasing maturity of technology and platform strategy at media companies.

• Media companies are not the only applicable market for MLPs. As brands are increasingly becoming their own studios and content service providers, they too have a need for platforms to help them manage their own media.



© Ovum.

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