January is only just coming to an end, but anticipation is already building for the next IBC, which as usual will take place at the Amsterdam RAI in September. In the meantime, Content Everywhere companies are polishing their crystal balls and making predictions about what might lie ahead for the video services industry in the next twelve months.
While there is much to look forward to, there is little doubt that 2023 will be a challenging year for a number of reasons. For example, although the COVID-19 pandemic has receded in many countries, it has not gone away. At the same time, the war in Ukraine shows little sign of ending and economies remain firmly in the grip of a cost-of-living crisis.
Indeed, Michael Lantz, CEO of Accedo, notes that while we have seen a return to some level of normality, the video industry is more volatile and uncertain than ever before. “It will be impacted for some time by inflation, interest rate increases, geopolitical uncertainties, as well as mergers and cost-cutting programmes from the large video services,” he says.
James Arnold, CEO of Red Bee Media, has a similar message: “Broadcasters, streaming services, and content providers of diverse shapes and sizes are facing real business challenges amid increasing costs, inflationary pressures, and an uncertain macro-economic climate in 2023. As a result, media organisations are increasingly focused on the core parts of their business, looking to maximise operational efficiencies and secure sustainable commercial growth.”
New approaches to monetisation models as belts tighten
Bill McLaughlin, chief product officer of Ai-Media, warns that broadcasters and streaming content creators “will need agility to successfully navigate 2023” in this difficult environment.
“In 2022 investments and upgrades continued at a good clip, but 2023 could be a different story. This year, expect more narratives from the broadcast and streaming buyer base that budgets are tightening. If you’re a vendor, you usually don’t want to hear that customers are tightening their belts. However, vendors offering solutions that enable cost savings will have an advantage in this market,” McLaughlin says.
Bob Lyons, CEO of Edgio, also says streaming companies may need to find ways to reduce costs and increase revenue to stay competitive as the number of streaming services increases and the market becomes more saturated.
“One way to do this is to optimise workflows, such as streamlining content production and distribution processes, automating tasks, implementing more efficient technologies, and reducing the need for human intervention. By doing so, companies can increase operational scale, reduce costs, and increase revenue, allowing them to compete better in the market and improve profitability,” Lyons says.
According to Accedo’s Lantz, as we move into 2023, “we will initially see rapidly increasing experimentation with new business models, which may involve some D2C video services combining existing set-ups with more traditional business models. We may see them monetising content via other distribution methods, such as creating FAST channels for some of their content. I also believe that in the short term we will see a lot more cross-service content licensing deals,” he observes.
He also expects to see a renewed push for OTT video service launches. While video services may not have the huge budgets they once did, “lower cost to entry makes it possible to quickly launch a service. With lower content budgets, however, attracting and retaining subscribers will come down to delivering the right user experience and embracing innovation,” he says.
Bart Lozia, CEO of Better Software Group (BSG), agrees that there will likely be a “continued evolution of monetisation strategies in 2023. As companies seek to increase revenue and reach their audiences, AVOD, dynamic product placement, and contextual targeting are all set to be hot topics.”
In the opinion of Christof Haslauer, CEO of NativeWaves, demand by viewers for personalisation and audience interaction with live events is growing, and broadcasters are being forced to look beyond their “one to many” business model they have had for decades.
“Media consumption habits are changing and there is a growing demand for features such as instant action replays, additional data feeds, different camera angles or even in-programme betting. 2023 will see broadcasters offering viewers the opportunity to personalise their viewing experiences by providing easy access to content relevant to viewers, enabling them to consume the content where they want, when they want and from their own perspectives,” Haslauer says.
Edgio’s Lyons adds that more streaming companies will be operating multiple models simultaneously to help mitigate the risk of relying on a single source of income. “For example, a subscription-based service that becomes less popular can still generate revenue from advertising or transactional sales. This approach attracts different types of customers and reaches a broader audience.”
Mathieu Planche, CEO of Witbe, nevertheless cautions that new video streaming services hoping to take the market by storm in 2023 will need to deliver both excellent content and spectacular performance.
“Customers stay loyal to the services that deliver the best viewing quality of experience across all devices and networks. To remain at the forefront, existing market leaders need to maintain their strong QoE. New streamers and emerging FAST services, on the other hand, have a high-performance bar to clear in order to make a positive impression with viewers,” he says.
As indicated above, free ad-supported streaming television (FAST) services proved to be a key trend in 2022 and currently show little sign of disappearing from the market.
Venugopal Iyengar, deputy COO, Digital, at Planetcast International, says pioneering cloud playout workflows and ad tech innovation will fuel the global FAST market in 2023, “driving new monetisation streams and bringing more exciting content experiences to digital audiences. For FAST to really take off this year and deliver improved ROI for media brands, providers need to create tailored, relevant and unique content propositions to draw in the right audiences at the required scale.”
Red Bee Media’s Arnold also notes that media brands are finding ways to differentiate themselves from fierce competition and engage digital audiences with high-quality programming. “Building on rapid market expansion over the past year, we’ll see an explosion of FAST channel launches in 2023, enabling content owners to deliver more personalised and tailored viewing experiences,” he says.
Shifts to cloud and IP
Looking at trends in content production this year, NativeWaves’ Haslauer believes that production in the cloud will become the norm this year as the adoption of hybrid and IP-based production workflows gather speed.
“Broadcasters and production companies are looking at ways to deliver a lot more content, more efficiently, and at lower cost and this focus will lead to a massive increase in cloud-based production,” Haslauer says.
Rick Young, SVP, head of global products at LTN, agrees that the “inevitable shift” towards remote production workflows has accelerated over the past couple of years, “with continued innovation and proven use cases” driving acceptance of cloud and software-defined technologies.
“Leading broadcasters are harnessing real-time centralised remote cloud-based production for high-value content every day around the world. We’re no longer in the just ‘experimentation’ phase,” Young says.
He adds that media organisations are also making more strategic decisions about the shift to IP in 2023, as they look for cost-effective, future-ready alternatives to satellite distribution: “IP transport provides media companies with more efficient and flexible ways of acquiring and delivering content worldwide at scale. Regionalisation and customisation are vital to meeting growing consumer demand while achieving efficient revenue growth. With an IP-first approach, media companies will bring more tailored viewing experiences to global audiences while maximising monetisation potential this year.”
Planetcast’s Iyengar also predicts that 2023 will see accelerated cloud adoption as traditional media companies embrace models “that harness the flexibility of cloud and the security of on-premise systems. These include cloud playout solutions that couple the feature-rich robustness of on-prem, custom, broadcast grade playout with the agility and scalability of the cloud.”
He also points to the fact that cloud technology is re-shaping Media Asset Management (MAM) systems, “with major media brands opting for more flexible and cost-effective cloud-based MAM systems with artificial intelligence (AI)-powered media sourcing and production functionality for tasks such as highlights creation, and advanced customisation potential to fit diverse customer requirements.”
Indeed, Iyengar notes that AI technology is being increasingly deployed across OTT workflows to enhance user experience and content personalisation, “alongside driving efficiencies in post-production, such as AI-driven tech checks, quality checks, compliance and subtitling.”
Lozia from BSG agrees that the development of AI in the OTT space “will be exciting to see. I look forward to the advancements that will be made [with AI] … from improved algorithms to supporting the process of content creation and delivery.”
McLaughlin says that broadcasters and streaming content creators are also exploring the potential role that AI, machine learning (ML) and automation could play in saving staffing costs.
“The sudden flurry of attention around the ChatGPT AI-powered chatbot may be a mainstream media story, but it has industry implications. On a perception level, if engineering executives can believe that AI can impersonate a human conversation or write an article, then they’ll almost certainly accept that it can accurately caption video content, for example. Potential applications of AI/ML abound elsewhere in the production workflow,” McLaughlin remarks.
Meanwhile, Planche from Witbe expects to see content recommendations benefiting from the application of AI.
“Ever feel like there are too many streaming options to choose from? To address this issue, personalised content suggestions and recommendations are essential for streaming services. In 2023, we can expect to see them integrated with AI and new conversational interfaces. Compared to the algorithms currently in place, this approach will allow service providers to better match content with viewers,” he says.
5G, sports — and sustainability
So what else lies ahead for 2023?
Haslauer says the growth of 5G, especially in stadia, will spawn a whole new range of experiences that will be offered to fans at events.
“From instant replays, immediate access to data analytics on the game to additional e-commerce opportunities, Venue owners will use the power of 5G to explore new revenue opportunities and enhance the fans experience in stadia,” he says.
Young believes that 2023 will see continued investment in sports rights and live events from non-traditional media players like Apple and Amazon, “competing against long-established broadcasting leaders, media companies and OTT sports streamers. Technology giants are identifying high profile live sports as a golden ticket for acquiring and retaining subscribers on digital-only platforms, fuelling increased competition and platform fragmentation.”
Planche, meanwhile, points to the fact that streaming video is no longer only confined to Netflix or YouTube; “it’s now a major part of Facebook, Twitter, Instagram, and most other social media platforms. TikTok’s dominance and popularity has created a landscape for casually scrolling through short-form videos, and in 2023 we will continue to see existing social media giants pivot to try and emulate TikTok’s success.”
One of the biggest challenges this year will be meeting environmental targets. Indeed, BSG’s Lozia expects sustainability to be one of the key trends for 2023, “given climate change’s pressing concerns. Major OTT players are already implementing energy-efficient technologies and methodologies, and I hope more companies will follow the trend this year.”
Red Bee Media’s Arnold says that technology companies and media organisations are driving efforts to advance environmental sustainability in our industry.
“We’re laser-focused on meeting our sustainability targets. Our customers are demanding assurances around responsible energy practices, and we demand the same from our vendor partners. As global demand for media consumption continues to accelerate, the ‘greening of streaming’ is more critical than ever,” Arnold concludes.