January 6, 2020

It's Show Time for the Media and Entertainment Industry

CSPs and Media/Entertainment Companies still have room to align themselves to create feature rich and profitable services that leverage next generation OSS and BSS

Media and entertainment (M&E) is a two trillion dollar industry that is being disrupted by new business models, technologies and consumer demands. For years, the industry has undergone considerable consolidation while streaming services spearheaded by companies like Netflix, Amazon and Hulu have continued to transform how people receive media. These services enable multiscreen viewing, heralding new usage patterns such as binge watching. In addition, smartphone video consumption is seeing tremendous growth and driving demand for premium short-form and user generated content. In 2019, Disney, WarnerMedia (an AT&T company) and Apple launched streaming services of their own with more likely to follow suit as streaming demand continues to grow at the expense of traditional linear services.

But streaming services have tremendous bandwidth and content management demands that bring Communication Service Providers (CSP) and Content Delivery Networks (CDN) to the fore. In addition, network latency will gain future importance to enable immersive video services that the M&E industry is expected to adopt. Already high definition 4K video is commonplace, and within the next five years, we expect that higher resolution 8K video will surpass 4K in new television technology. Innovative companies like Rakuten and NTT have already launched these 8K services in targeted markets.

M&E players will need to contend with declining demand for linear television and bring economic viability to their streaming services. Industry heavyweights, including Disney’s CEO Bob Iger, acknowledge that the monetization models for streaming services are still nascent. Disney doesn’t even expect its Disney+ streaming service to be profitable before the end of 2024. AT&T’s CEO Randall Stephenson has also stressed the importance of advertising revenues, for which AT&T promotes its Xandr platform.  Advertising revenues are shifting from traditional M&E to online platforms such as Facebook and Google, however, with digital solutions such as streaming, we believe that the M&E industry will be well positioned turn the tides in its favor.

CSPs currently have varied strategies to address the M&E market. For example, AT&T acquired Time Warner to enable a vertically integrated M&E platform that combines WarnerMedia with AT&T’s network assets. Other CSPs are partnering with content creators and distributors like Disney, WarnerMedia and Netflix, with varying degrees of consumer engagement. However, we believe that this is the tip of the iceberg for CSPs, particularly as service bandwidth and latency demands increase, thanks to new business models that capitalize on personalized, immersive services.

As CSPs upgrade their networks with high bandwidth fiber, virtualized infrastructure, 5G and edge computing, they are placing important building blocks for current and future M&E services. 5G delivers high bandwidth and low latency capabilities to mobile devices, and in some cases for fixed wireless access (FWA). Edge computing brings content and intelligence closer to end users to alleviate network bandwidth demands, secure media content, enable personalized and immersive service capabilities, and support targeted advertising. Edge computing can also reduce the footprint requirements for end-point devices as service complexity increases. In addition to network and edge computing infrastructure, CSPs will depend on other capabilities including:

  • Sophisticated orchestration to efficiently manage M&E services across heterogeneous network and compute infrastructure and address personalized user demands in multi-screen environments
  • Network slicing to optimize service performance and customer experience as the diversity of M&E use-cases proliferate
  • Sophisticated analytics to enable service personalization and targeted advertising capabilities that rival Facebook and Google
  • And next generation rating and charging capabilities to support the diversity and agility of future products and services.

As the M&E industry transforms, there is a lot at stake. Industry players must have the necessary building blocks to capitalize on key innovations as they emerge. If these companies don’t, they risk becoming yet another name only found in the history books.

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