“We think there are great market opportunities in the Middle East, and the industry will continue to develop”
STEVE NYLUND, CEO RED BEE MEDIA
In a wide ranging discussion, Red Bee Media CEO Steve Nylund talks about the latest media technology trends he noticed at the last month’s IBC show, the need for managed services and shared infrastructure, and his views on the state of the broadcast and media industry.
Steve Nylund begins our conversation by saying that there are not many service companies like Red Bee Media in the media technology industry. “Unlike most companies at IBC, we are a service provider, although we invest a lot in technology and all our services are enabled by technology.”
“That’s important because there are not that many service companies like us. We manage mission critical services and operations on behalf of broadcasters, content providers, and media companies.”
“Our job is to optimize the glass to glass flow – from camera glass to device screen. This he says, “Influences how we position ourselves and what we invest in.”
DS: What are the reasons to go for a managed service versus investing in the technology? Nylund:
There are several reasons why it makes sense to buy managed services. The first one is actually accountability because when you buy from us you get service level KPIs. We guarantee a very high level of availability, performance and quality of service which is a contractual obligation. We commit to the quality and availability of our services because we are very good at what we do. Second, we don’t look at optimizing individual siloed modules or functions only. We look at all the tasks in the end-toend service delivery flow and we optimize the totality of the flow. You can find many solutions out there from vendors and you will have to do that if you do it yourself. Even if you optimize one task it doesn’t mean you have optimized the whole flow. It depends on how it interacts with the rest of the tasks. As a managed services provider we can be very agnostic and use best of breed solutions and optimize the workflow continuously.
Third, because it’s our job to ensure a great media experience, we use the latest technology innovations and we integrate them into our workflow. If we can’t find something useful then we will develop it ourselves. We also develop the glue or interoperability between technologies for the best possibly integrations. Ultimately, we are trying to create the best media experience possible for our customer’s viewers. Buying a service means you will have access to the latest innovation and technology and you will benefit from greater agility, speed and a higher level of innovation.
Finally, there is of course the financial argument – as a standalone broadcaster you have to refresh technology every 5-10 years, which means a huge upfront capex investment, and then you have to drive and fund ongoing innovation and change investments. You will also need your own dedicated operational and engineering teams. Now scale that up to an industry level and clearly, it’s not very efficient as compared to sharing technology and operational capabilities between broadcasters and content providers. As a managed services provider we can act as a facilitator where we invest and share the fruit of the innovations with our many customers which is a more efficient investment and operational model.
DS: What trends did you notice at IBC? Did you notice any shifts in what customers are looking for? Nylund:
There are a few clear shifts. The main thing I noticed is customers are
looking for increased agility. In the old days, you either signed a contract with us for 10 years for a certain service – playout or media management for example, or you built it yourself, which means a long cycle to recoup the investment. What customers are looking for now is the ability to add new features and functionality, spin up or spin down new channels and content offerings quickly, or to change the scope of their services.
The industry is moving towards a more on-demand model, where you can quickly buy the services that you demand without having to commit to big investments. So, agility in terms of the commercial model and in terms of the technology service model. That’s why there currently is a lot of focus on virtualized and software defined workflows that can provide the flexibility that the industry is looking for.
DS: With IP workflows not yet ubiquitous, how long will broadcast continue to be in a hybrid phase? Nylund:
We will be in a hybrid world a little bit longer because the broadcast world has not come as far in terms of virtualising all functionality. We still use a lot of very broadcast centric and unique technology which has not been virtualised yet. But the industry will move towards IP based or rather software defined operational models.
As an example, during IBC 2018 Red Bee Media demonstrated a software defined playout deployment for uncompressed feeds, without the use of any single task hardware, which is something very difficult to do and no one has been able to do until now as far as I know. We feel we will be one of the parties that leads the industry towards IP based virtualisation. It will probably take a few more years before the technology is readily available for live and dynamic feeds. It’s easier to do that with compressed lower density feeds, such as on a VOD service. We want to be able to manage a fully softwaredefined playout flow capable of processing uncompressed hi-density live feeds for live sports or events such as the Olympics or World Cup. We have demonstrated how it can be done and soon enough, we
ON THE TECHNOLOGY SIDE, WHEN IT COMES TO QUALITY – THE DENSITY WITH WHICH YOU CAN SERVE VIDEO CONTENT, I THINK WILL JUST CONTINUE TO EVOLVE AND THAT IS DRIVEN BY CONSUMER DEMAND. AS DEVICES GET BETTER AND NETWORKS BECOME MORE CAPABLE, WE CAN CONTINUE TO IMPROVE DEFINITION STANDARDS AND WE SHOULD EXPECT THAT THAT HAPPENS.
will take it to market. Then you have the practical matter of transitioning from old to new technology, while maintaining services on air during transition. This must be a carefully planned and controlled process for which we have a great level of experience and expertise.
DS: There is a lot of talk about moving from capex to opex
operating models. Is the move to IP workflows all about saving money? Nylund:
I actually don’t think saving money is the main driver – yes, ultimately customers expect to save money, but it is not and should not be the primary driver for transitioning to agile and IP based workflows. It’s not necessarily that much cheaper if you look at the investment you need to do and the cost of running it with computing and storage capacity, at least not just yet.
The main driver to go towards a software defined IP tech stack: With traditional broadcast centric and dedicated technology, if you want to add a channel it can take anything from 3-12 months to make it happen. You have to design the solution, procure and add the technology, install, integrate and test the technology and so forth.
When the platform and workflow become software defined, then rather than adding dedicated broadcast tech, you will define and spin up the new channel based on software configuration only. What we are doing is converting the workflow functionality into software defined virtualised functionality and then we run that on a hybrid cloud infrastructure. We are cloudifying the infrastructure which means you can scale the capacity as the customer demands and that’s really the main reason why there is a move towards end-to-end IP infrastructure – it’s really about the agility it provides.
When you are operating on a unified software defined functionality then you can also move into globally viable operational models. You can have teams sitting remotely and servicing customers globally. To deploy a new customer to your platform becomes much more agile. You can also have a more flexible commercial model because now you can charge a customer only for the incremental capacity they use. We are moving to on-demand pricing where you can have a standard rate card for certain services, for ex. if you want to add a channel or manage content.
When every broadcaster has their dedicated infrastructure, usually the average utilization is quite low, if it is only used by one broadcaster. When you move into IP based models and outsource it to service providers like us, then we can improve utilization of the technology and the workforce.
DS: Speaking of interoperability among vendors – is the industry where it needs to be?
The industry is not very interoperable today actually, so there are still remaining challenges. Today we address these challenges by creating interoperability between process steps in our workflows. We found as we are integrating different modules into our platform there are numerous interoperability issues which we then work around, integrating modules so they speak to each other and handle the content flow. There is a lack of standardization generally for interoperability needs so that’s something we as an industry can work on to set standards like other industries have done. In the meantime, we will continue to mitigate by making sure we use the best of modules in our workflow.
We work with industry bodies such as EBU or IBR and through those bodies, we try to drive standardization together with the industry, so we can agree on standards for information architecture and for interoperability definitions. Another thing that needs to be driven in terms of interoperability is security because when you have a lack of interoperability there are also more security risk exposures. Different systems have different security maturity levels, so that’s another good reason to drive interoperability, so we can manage security issues.
IF EVERY BROADCASTER INVESTS IN THE SAME NEW TECHNOLOGY EVERY 10 YEARS, IT’S NOT VERY EFFICIENT AS COMPARED TO SHARING TECHNOLOGY BETWEEN BROADCASTERS AND CONTENT PROVIDERS. AS A MANAGED SERVICES PROVIDER WE CAN ACT AS A FACILITATOR WHERE WE INVEST AND SHARE THE FRUITS OF INNOVATION WITH OUR CUSTOMERS.
DS: The industry seems to be getting more fragmented in terms of standards and platforms?
If you look at the service provider or technology provider segments we continue to see consolidation. There has been some consolidation in recent years and it will continue. If you look at our customers, the media companies, then there is clearly consolidation there as well. Media companies are buying smaller players because they want content and their subscriber bases. Then you also see distributor consolidation with telco operators investing and migrating into the media vertical because they want to offer content and not be confined to being just a bit-pipe for data, they want to offer and control their own content. So that will continue to drive consolidation.
If you look at what Ericsson has done in the last few years in building Red Bee Media, it made a few acquisitions, it acquired Technicolor’s business, then bought Red Bee Media from the Macquarie group and then bought a business in the US with FYI television. So, we have also been driving consolidation. The main reason for why we will see more consolidation is that it makes financial sense. When you advance technology innovation, scale matters. When you invest in innovation and spread that investment across multiple customers, the more efficient it becomes.
On the technology side, the quality and the density with which you can deliver video content is increasing and is driven by consumer demand. As devices get better and as the networks become more capable we can and will continue to improve definition standards.
There will be more and more types of
ultra hi-definition formats which drives complexity in the work streams, and we have to prepare content and deliver in all of these formats. It’s also a reason why you will see consolidation, because to manage the technology complexity requires a certain level of investment, skill and scale and if you’re too small you won’t have enough muscle to keep up. For us complexity is a good thing. We are good at managing complexity and we thrive on streamlining, integrating and simplifying it as much as possible. When operations and technology become increasingly complex, it is another good reason why customers should outsource services to providers like us. We love to manage technology complexity!
DS: With the introduction of the OTT players, is there a shift in opinion of how content owners can go direct to consumers?
Nylund: FAANGS or the OTT aggregators have clearly disrupted the market for traditional broadcasters and content providers, as competition for content, viewers, subscribers and share of wallet has increased significantly.
The traditional value chain was that you first had companies who produced and owned content, like the studios and production houses or content owners like sports leagues etc. They sell the rights to packagers in the form of broadcasting networks and then you had the distribution layer of satellite, terrestrial and cable TV operators. This value chain was disrupted by OTT aggregators who acquired content rights and then they bypassed the TV networks, packagers and distribution guys, straight to consumers. What’s happening now is that the content rights owners are disrupting the market again by going direct to consumers, bypassing not just TV packagers and distributors but also third-party OTT aggregators – they are going direct to their end users.
I expect that trend to continue, at least among larger players, as exemplified with companies like Disney who own great content and are buying more media companies who own content. They are expected to pull their content from OTT aggregators like Netflix. Which tells you the importance of content ownership – and this is also why OTT aggregators have started to invest heavily in original content because they know they cannot rely solely on other content owners as that would put them at risk of being bypassed in the value chain.
The DTC (Direct to Consumer) trend will continue, as will the OTT aggregation trend and as Red Bee Media we therefore need to make sure our service capabilities are as relevant as ever, not only to the more traditional TV broadcasters but also to the content owners and OTT players. One of our strengths is that for many decades, we’ve managed the most complex and demanding live dynamic feeds there are. We have provided managed services for customers broadcasting and streaming high profile live events in sport and music, including the FIFA World Cup and some of the biggest dance and music festivals in the world. We have done that for leading broadcasters like the BBC and ITV Channel 4 in the UK, TV 4 in Sweden, MTV in Finland and NPO/NOS in Holland.
As our customers, both traditional broadcasters and emerging content providers, invest in their new offerings, what you will find is that they will need to focus on unique and live content. That’s where our service capabilities come into play and so we focus on continuing to
be the leader when it comes to live and dynamic content.
One of the main challenges for the OTT players is providing quality feeds and streams. There have been several recent examples of OTT content providers buying rights to live content that was then provided to the audience in less than desirable quality. As these pure OTT providers start investing in live content, they also will need to secure broadcast grade capabilities for live dynamic content which is something they don’t have today.
It’s much more difficult to provide a quality media experience for high quality live content than it is for prepackaged, simple and compressed non-live feeds. We as viewers now expect to get the content in the highest quality possible. In broadcasting and streaming live you also have to add reliability as a key factor – the feeds need to be up and stay up. These are the main challenges and Red Bee Media has the required experience and skills to both supply image quality and reliability in a live context.
All our platforms have been built with the view they have to manage high definition dynamic live feeds and as well the simple non-live feed, so flexibility is key. We are product agnostic in the sense that we use the best technologies we can find, and we run on scalable infrastructure. We can onboard new channels very quickly and we can do that with broadcast grade capability, so that you get the quality of output you expect as an end-user.
It’s more and more important for all content providers to have a professional high-quality OTT offering. OTT is also important because it runs on a transaction platform where you can get much more data and valuable analytics which allows you to become smarter in terms of viewer preferences, and you can become more personalized and relevant to the viewer.
DS: How was Red Bee Media’s experience at IBC, and what is your outlook for the Middle East? Nylund:
We had a very successful IBC where we for the first time in many years came as Red Bee Media following our rebranding in late 2017. We attracted a lot of interest with four times more visitors than in past years. Our stand was very crowded, and we were all exhausted but very happy after being on our feet 24/7 during IBC! We managed to attract a lot of attention around the things that we demoed, including the first uncompressed HD feed through a software only defined playout deployment. We demoed a live visual radio studio to showcase how our live remote production works, with real-time feeds in HD quality. Feeds of all the Interviews onsite at IBC were sent back to our MCR in Hilversum (Holland) where they were distributed over our managed OTT platform. We demoed our media management platform called Nucleus which also generated a lot of interest. Another demo that gained a lot of interest was our live automatic subtitling platform which will enable unregulated content to be captioned with near broadcast quality, a solution we have developed together with Speechmatic. So, it seems there is a lot of interest for our innovations and we are very pleased with that. In the Middle East we are honoured and proud to service Fox Middle East which is our primary customer there and we continue to service that relationship. We think there are great market opportunities In the Middle East and the industry will continue to develop. Broadcasters, telecom operators and content providers will continue to seek new capabilities. We think we have a lot of value to add in terms of experience, innovation and also more efficient operational models and services.
The larger broadcasters have been working in the traditional model for some time with bespoke broadcast technology and they are quite naturally now in the phase where they have to either invest in and refresh technology, or outsource operations, as they face challenges around modernizing and the need to increase capabilities. As they look to transform their services, many of them are now evaluating different options – how they can become more efficient and evolve to create new revenue opportunities.
We look forward to taking part of and supporting the evolution of the industry in the Middle East. The region shows a lot of interest in developing the media industry and in Abu Dhabi and Dubai for example companies are investing in media zones. We can see a common interest from both an industry and government point of view, in evolving the market for the benefit of the consumer.