How to Handle the Unstoppable Rise of Digital Video

Interconnection is essential as media and entertainment companies explore new revenue models

The way people consume video is in the middle of a radical and lengthy evolution that the media and entertainment industry still isn’t sure how to handle.

It’s not that people are abandoning their video screens – far from it. Instead, consumers are increasingly turning to digital channels, and more often watching content on devices they can put in their pockets or pocketbooks. Millennials are driving this change, meaning the switch is permanent, accelerating and forcing companies to reconsider traditional business models.

As they sort things out, a few things are clear. Getting close to users and partner ecosystems is critical to guarantee superior content delivery. On-demand viewing doesn’t work, for instance, when distance introduces high latency and delays. Proximity to partners is also essential for video production, which must accelerate to meet an insatiable demand for more content to stream and binge. In short, interconnection is needed.

Digital video rising fast

The annual National Association of Broadcasters (NAB) Show, which starts Saturday in Las Vegas, is a showcase for content and digital media technology and a gathering for industry thought leaders, including our own chief product officer, Brian Lillie, who will be speaking Tuesday. The viewing trends in the backdrop of this year’s meeting illustrate the continuing move to digital. Consider:

  • eMarketer says that in 2015, U.S. adults watched five hours and 11 minutes of video per day, roughly the same amount they’ll be watching by 2019 (5:13 hours). But by 2019, they’ll watching an average of an hour and 26 minutes of it on digital devices – 25 more minutes than in 2015.
  • Cisco says it would take an individual 5 million years to watch the amount of video that will cross global IP networks each month in 2021.
  • BI Intelligence projects a 21.9% compound annual growth rate (CAGR) for ad revenues from digital video between 2015 and 2020. The projected CAGR for ad revenues from traditional TV is 0.9%

Stats like these can be alarming for companies that have long relied on traditional revenue streams, which, due to increased competition, now need to be replaced or augmented. At the same time, there’s clear opportunity in this huge content demand for both new entrants and established firms – if they can adjust to become as agile as the consumers they need to serve.

What consumers want and companies need

What are some characteristics of the emerging digital video consumer? Well, they want customization –  content that fits their schedules and interests. They want it whenever and wherever they are, without choppiness or service interruptions. And they want endless options. Companies need to deliver all this, and they need to do it affordably, all while incorporating trends like big data, artificial intelligence and augmented reality/virtual reality (AR/VR) that will be essential to better target or satisfy viewers as expectations evolve.

Interconnection – direct, private data exchange between businesses – is going to be critical to satisfy these consumers, and the industry seems to know this. According to the Global Interconnection Index, a study published by Equinix, content and digital media companies will see a 36% compound annual growth rate (CAGR) to 2020 in Interconnection Bandwidth, which is the capacity to deliver interconnection.

One reason interconnection has become crucial is that a basic requirement for meeting consumer expectations is the ability to get close to partners and users at the digital edge, where all the content is being consumed. Companies can’t be stuck in centralized, siloed IT architectures and still provide real-time responsiveness to their customers. And getting closer to customers calls for a shift to a distributed IT model built around interconnection hubs that can provide services at the digital edge globally.

Robust partnerships are also essential. These relationships could be with the teams that shoot and edit new content, the network and cloud services needed to actually distribute it, or analytics firms that can process big data to mine insights about viewers that can be used by advertisers in real-time. The bottom line? Access to a variety of rich industry ecosystems is critical for innovation and growth.

Equinix’s global interconnection platform, Platform Equinix™, is a one-stop shop for the global reach, partner ecosystems and superior connectivity media and entertainment companies are after. Our platform spans 190+ data centers in 48 markets on five continents. There are 9,500 companies on it, including 850 content and digital media companies. And our customers are linked to all these potential partners worldwide by the Equinix Cloud Exchange Fabric (ECX Fabric), which enables customers on Platform Equinix to dynamically interconnect on demand globally.

Platform Equinix is designed to support an interconnection-first approach called an Interconnection Oriented Architecture™ (IOA™) strategy. The IOA framework provides design blueprints that media and entertainment companies will increasingly rely on to succeed at the digital edge.

Here are a couple quick examples of how digital media companies have used Platform Equinix and an IOA strategy to thrive amid the ongoing industry disruption:

  • A major U.S.-based on-demand and streaming OTT operator needed secure and reliable facilities with high network and cloud density to deliver its video storage and playback service to its subscribers. Equinix Data Hub™ enabled the company to safely store and transfer the huge volumes of data required to meet the individual needs of millions of subscribers. Equinix Performance Hub™ provided global access to network and cloud providers wherever the company needed to be, while the ECX Fabric enabled the on-demand interconnection worldwide required to provide high-performance streaming and playback services.
  • Avid Technology Inc., a global Software-as-a-Service (SaaS) media production solution provider, needed to facilitate real-time collaboration across creative teams during the production process without sacrificing security or performance. Avid interconnected with multiple cloud service and network service providers on Platform Equinix, which allowed teams globally to access its SaaS platform and collaborate using high-quality video with superior reliability, resiliency, security and throughput.

Read more about how to implement an interconnection-first strategy by checking out the IOA Playbook.

And if you’re at NAB this year, please check out Brian Lillie’s presentation. He’ll be speaking about programmatic advertising for over-the-top (OTT) video operators and the benefits of communities like our Ad-IX ecosystem, which connects ad exchanges and ad markets for more efficient and timely delivery of digital advertising.

 

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