Blog | Bill Calton, Executive Director, Finance
March 25, 2015

CE trends drive market demand for outsourcing video origination

It doesn’t seem that long ago that creating video content and originating it were closely intertwined, with few processes standing between a TV show and its transmission via broadcast or satellite to viewers. Today, things are far from as simple or straightforward and there are no signs that they will become less complex any time soon.

These complexities and challenges are leading many content providers to invest more of their limited resources into future-proofing their video libraries and then outsourcing the origination of their video programming to industry suppliers.

Here is a look at the market trends driving those decisions:

Video formatting –Market researchers, like Strategy Analytics, are projecting that as many as 50% of U.S. TV households will own 4K “UltraHD” TV sets within in the next five years.* A growing number of content providers are already sourcing their content in 4K as a way to future-proof their libraries.

Of course, because it will take at least five years to get to 50% penetration of UltraHD, we will need to support HD and lower resolutions well into the next decade. By outsourcing video content origination, content creators can manage all of their assets in one “native” format which is then handed off to a fully equipped origination services supplier, helping to ensure the HD, IP and other “derivative” formats of the original video asset will have the highest level of video quality.

TVE and multi-platform content delivery –Content providers must also grapple with the need to reach audiences across a widening range of content delivery networks and viewing devices. According to Nielsen’s latest cross-platform report, the average American consumes nearly 60 hours of content each week across platforms including TV, radio, online, and mobile. A deeper dive into those numbers shows that TV users skew older while smart phone video users skew younger and richer. Overall, the amount of time American adults spent using smart phones in the fourth quarter nearly doubled from a year ago, but remained a small fraction of the hours per day they spent watching live television, Nielsen reported.**

As this data helps to illustrate, a TV Everywhere (TVE) approach toward content delivery is becoming increasingly important in order to realize subscription video and advertising revenue goals. This is particularly true when we consider the fact that while the viewing device can change between age groups, their interest in content doesn’t vary all that much. For example, a recent study by the CEA and NATPE found TV shows remain popular with all age demographics, but older Americans watch them on linear TV, Gen Xers prefer using time-shifting tools like VOD and DVRs, and Millennials will stream many of the same TV shows to their smart phones.***

The accelerating pace of technology obsolescence – Another factor driving the value of industry-based solutions for video content origination is the rapid pace with which a technology investment can become obsolete. We can see it reflected in such technology decisions as which type of video encoders or content servers to purchase as well as in transmission gear expenditures.

Keeping up with the accelerated pace of technology can drain a content company’s limited financial and human resources without a “future-proof” guarantee. In contrast, taking a “lease-versus buy” approach toward technology investments, particularly the ones that don’t directly build value for the enterprise, helps to optimize the value of those purchases.

Content origination facilities allow clients to pool their individual technology investments into a shared services solution that can absorb technology upgrades with greater cost efficiency than if they were operating their own facilities.

In the past, this was particularly valuable to content providers during their startup phase, before they built out their distributor base. In today’s video technology environment, it is becoming a valuable tool for content organizations of all sizes as a means of limiting their risk of purchasing technology that may have a shorter-than-expected shelf life.

Finally, it is also important for an organization to seek out a supplier that can meet all of their content origination needs, including QA and DR/business continuity, from one facility. Delivering your content to multiple platforms shouldn’t require multiple (origination) facilities. In addition to being a more cost-effective decision, a full-service solution will help to assure you are giving today’s media-savvy video audience the quality of experience that deserves their loyalty.