The Media Industry: Technology Trends, Challenges and Insights 2015
There is absolutely no use in denying the pressure that the media sector has been under in recent years. As an IT company at the forefront of new cloud technologies, we know more than most the impact the sprawling dominance of the internet has had on traditional businesses across all sectors, and particularly those media firms competing directly with new cloud-based startups.
To explore the challenges facing the industry in greater depth, we recently hosted a roundtable with some of the most influential names in media, cloud computing and IT – Mark Brincat, Head of Architecture and Analysis at Telegraph Media Group, Bob Harris, founder of Ethereality Associates and former CTO at Channel 4, and Tom Ray, Head of Cloudreach US. The session was incredibly productive, and we’ve summarised the key takeaways for you here. If you fancy going into more depth, do check out the recorded webinar embedded at the bottom of this post.
Consumers have changed the model. Both the broadcasting and publishing industries have felt the direct impact of a very simple concept: the proliferation of new devices. Each business has been dependant on a very singular model for most of its history: in the case of broadcasting, live broadcast of scheduled television programming was the norm, and for publishing the output was consistently in the form of a daily printed newspaper. The distribution models were equally consistent, whether in the form of always-on analogue television stations or in broadly-distributed physical newspapers. Each of these models remains popular and relevant, but the emergence of mobile devices has brought with it a change in consumer behaviour. Rather than being passive receptors of a pre-designated media format, they have come to expect on-demand content available across a variety of fragmented platforms and through new channels such as social media. Media brands are therefore under huge pressure to respond, making content more accessible and increasingly relevant to their target audiences.
A new mindset is required. Just as consumer mindsets have changed, media companies have to change their entire way of thinking about their business. With the long history that brands like the Telegraph and Channel 4 have, there is an inevitable amount of baggage that come with that – old technologies and old processes are hard to break away from. Fresh competitors, with their startup mindset, have none of this baggage to deal with, and can therefore rapidly innovate and outpace their rivals. For instance, Hulu developed a mature online video delivery service long before more traditional broadcasters managed the same, and was able to grab a huge mindshare in the US. Similarly, in the case of news, The Huffington Post grew rapidly in popularity from its launch in 2005, offering live coverage of breaking news in a way a daily newspaper could not hope to compete with. IT is not, however, a simple case of emulation that is needed here – all media organisations must reconsider their deep-rooted approaches to business, and innovation in particular, in order to remain relevant.
The cloud can help. One thing that unites these lean, agile new competitors is a prodigious use of equally new technologies. An on-demand cloud service like Amazon Web Services (AWS) allows for a highly-responsive approach to IT. Streaming a high-profile sporting event like the 2014 World Cup to an audience of hundreds of thousands is a tough ask for even the most robust on-prem server, whereas with AWS you can automatically scale your instances to match demand and scale them back again as soon as demand drops off. Channel 4 has learned this, and learned it early, as it was an early adopter of the AWS cloud and now runs its massively popular 4OD streaming service from Amazon’s data centres. Just because a news organisation may not have the stress of providing streaming video as a primary service, it can still benefit from following its competitors into the cloud. The format of a newspaper remains popular, yet growing numbers of readers wish to consume the format through their own devices. The Telegraph has responded by offering an online subscription service, bypassing the complications of traditional print by hosting a digital newspaper in the cloud that can be accessed by subscribers anywhere in the world. AWS has therefore allowed the Telegraph to respond to its online competitors but also opened up new markets and streams of revenue.
Legacy is not always a bad thing. Yes, the weight of years of internal procedure and traditional IT can stifle growth and innovation, but with a long heritage comes a wealth of content that can be exploited through new platforms. Consider the example of Channel 4: the company launched back in 1982 and therefore has over thirty years of quality content in its archives. By hosting this content on AWS and serving it through the 4OD platform, Channel 4 has been able to monetise its past investment in a way that traditional broadcast channels could never allow. A similar situation can be seen at the Telegraph, particularly in the case of its quality arts journalism. By making past film and music reviews accessible to the public once again, it can drive traffic to its site with content that would have been a one-use proposition in the past. It is this sort of legacy that can differentiate media organisations from young startups, and when combined with the power of the cloud can give them a real edge in an increasingly competitive market.
Change isn’t going away. There is a temptation to draw a binary opposition between the ‘old’ and the ‘new’, between the ‘traditional’ and the ‘modern’, but the ‘new’ can only get newer. That means that the fragmentation of devices will continue apace, with the emergence of entirely new categories like the smartwatch, or at least the maturation of these markets. Demand for content through these new devices is inevitable, as are the complications that come with that – how do you protect your content from copyright theft when you’re using multiple delivery services? Other changes that were expected may not come about for quite some time. The death knell of ad-supported content was sounded years ago, with commentators predicting that paid services would soon be the only reliable way of ensuring revenue in a market flooded with free content. The subscription model is very much alive and kicking (just look at Netflix, which also happens to use AWS to serve millions of subscribers), but the shift from a product that is perceived to be free at the point of consumption to content that is directly paid for is a tough sell. There is still plenty of opportunity to avoid such a backlash by embracing cloud-based big data, using increasingly precise demographics to target advertising more effectively than ever before. Change is afoot, but not always as you might expect it – watch this space!