All big advancements in broadcast technology have thrown up sharp adopters and those mired in reluctance writes George Jarrett. The cloud continues to affirm this adage, but not for too much longer because the market is moving fast towards the new Valhalla of OPEX and subscription. And Software as a Service (SaaS) is already at a professional market value of $75 billion a year.
Google, which already has about 140 cloud software tools, tells us that the open source database market is growing fast and that 70% of new apps will run on open source database management systems. Another stat to consider is that 80% of apps will be SaaS by 2020. Adobe already offers 50+ SaaS products and Microsoft has 100+ cloud products.
The current top 10 SaaS companies include non-media names like Mail Chimp, Math World, Hub Sport and Know B4, as well as the three media giants above.
To identify where we are, we start with inputs from two stalwarts from everybody’s idea of the broadcast market – Sony and the IABM. For a company that has been in the front line of change to SaaS and the cloud, and with many surprising new entrants into the content game, we talked to Blackbird. Then to get a picture of broadcast in the world of many industries using the same type of software, we spoke to Sunir Shah, president of the Cloud Software Association, and CEO of the SaaS retailing specialist AppBind.com. Sunir is a gatekeeper to multiple industries and his organisation has 2000 members.
Using somebody else’s accommodation
Stuart Almond, the head of Sony IMS, includes Sony Ci cloud services in his remit. Asked if subscription and OPEX is the new mantra, he said: “We have seen this really big acceleration of services in the cloud. You can use tools, services or micro services that can really transform businesses without the need for big CAPEX investment or big bang projects, where we are looking at transforming a big company over a number of years.
“This is the sweet shop analogy where people now use cloud and the apps available from open providers. This is the real definition of what becomes best of breed, and users see it as using somebody else’s accommodation. It takes the worry away, cost away, and it allows them more capability,” he added.
Somebody else’s kit, somebody else’s accommodation, and somebody else’s capabilities: to enable you to grow or shrink quite fast, as you desire?
“Your mindset when you used to think about buying storage up front took you through a CAPEX process with maybe a five-year cycle. You then bought as much storage as you thought you might need in five years, only to find you were not even using 50% of that capability, and that you had sunk all your money in that infrastructure from the start,” said Almond. “Use cloud services, and when you want to scale it is literally the flick of a switch to enjoy more computing power and more storage space. That kind of costing becomes a lot more agile for your business and means you can think about your core mission, which is probably making great content and distributing it.
“We have this blended market now where we have broadcasters and dozens of other companies saying they can make the next movie, or launch a channel to engage a specific audience. Content has become the key piece that is bringing all the industries together,” he added.
AI is a big driver to the adoption of cloud
Lorenzo Zanni is the head of insight and analysis at the IABM. Asked what his recent cloud studies had revealed, he said: “In terms of research into the cloud, we are trying to track adoption. The outward stage adoption means the cloud in different parts of the broadcast and media industry, so recently we have tried to expand the research into different parts of the content chain – content creation and production, management, and all the way to distribution.
“In terms of adoption the cloud is at almost 40% according to our tracker and use cases,” he added. “In terms of preferences buyers still prefer hybrid cloud deployments. They want to mix and match depending on the use case and the type of workflow, and the preference for only public cloud is still very low. Another point which came from our latest survey is that the use of machine learning and AI is a big driver behind cloud adoption.”
When it comes to challenges that prevent users from moving to the cloud, the IABM researcher found a big surprise.
“The top challenge is still security concern among some technology users, which is odd given the huge level of investment that the cloud service providers have put into security,” said Zanni. “The other important challenge is the costs of moving content in and out of the cloud.”
This is also a surprise. “There has been so much development in creating workflows in the cloud at different stages of the content chain, and then there are the companies providing services on top of the cloud for content production, management, storage, and other use cases,” said Zanni.
“Some people are way ahead, and when we talk to end users from broadcast and media companies we find there is a big divide, and maybe it is a cultural thing,” he added.
So we have companies who love the cloud and others that are less sure. The IABM financial model also threw up another challenge. Some companies are talking about the impact of OPEX on the traditional way of dealing with investors, but a growing number of people see OPEX and subscription as the new Valhalla. The nagging stat is the IABM 40% uptake figure.
“It is a mixture. What we hear from end users is always about flexibility, and we think the industry is going the way of OPEX and subscription,” said Zanni. “A software perspective has its own challenges, with all the fast flow transition that entails. The economic situation with SaaS will be discussed at an IABM event, where we will share some data on that as well. This data will also feature at IBC.
“Moving to subscription as a service model is a big move especially for some vendors. They have to restructure everything from marketing, to accounting, and sales: everything changes in the subscription model,” he added.
Public cloud sets the pace
Blackbird, through its cloud-based codec (which is web browser hosted) and two editing packages, is a rapidly growing SaaS player that has created a market defining customer base. Oliver Parker, VP of commercial, and CEO Ian McDonough sat down to talk Peloton and bicycle clips, New York Nicks, and to crow a bit.
Does the great move to the cloud and virtualised production mean the world is catching up?
“We have been doing video in the cloud for a long time, and the world is starting to catch up with that,” said Parker. “It is only in the last year or two that we have seen significant adoption of the cloud in the bigger corporations, and a lot of that change is to do with the public cloud.
“Amazon Web Services, Google Cloud, and Microsoft Azure are giving the kind of infrastructure and security that those companies need to move their content around, and to move their services and their processes to the cloud,” he added. “We are there and ready. Our technology is totally unique because we have a method of accessing video and manipulating and editing video in a web browser that does not exist elsewhere. You need to jog and shuttle through content properly as a basic, and there is a problem with existing streaming technology.”
Where does Blackbird see people moving to the cloud, and other technologies in the industry moving to the cloud?
“That generally revolves around hosting existing applications, or moving the infrastructure as a whole to the cloud,” said Parker. “This can be expensive, and generally involves moving a lot of content around. It gets complicated because of the type of content you are trying to shift around. We sit on to of existing content supply chains, we don’t need any of that infrastructure, we do not need to run virtualised applications, and we do not need to move source material anywhere.”
Running natively in a browser is the trick, minus any plug-ins. And the scaling is a big plus, with any number of users logging in. Blackbird has two editing packages, one fully featured and the other designed for non-technical users who want to cut stuff fast and publish fast. Accessing video is truly cloud native.
“A key value to our users is around the speed of turn around. It can be editing and publishing in seconds behind a live feed. This can be on premise or in the cloud,” said Parker. “What the SaaS model allows us to do is be flexible, and to scale, and that is absolutely critical to cloud solutions.”
Selling access to a platform give users the option to pay for what they want. McDonough agrees that the subscription model is doing for CAPEX quickly.
“We pride ourselves on being a SaaS model: 90% of the time it works for us extremely well, but you will find the occasional organisation that is more CAPEX driven, and would look to us to be more flexible in how we charge for our software,” he said. “This is the exception because most people are very happy with an OPEX model because they can see economies of scale.”
TV channel at a gym membership price
Users can look at paying on a project basis, or buying an annual contract. But the values improve when contracts are extended out.
“Our latest contract with A+E for instance is a three-year deal, and the company finds that very workable within its OPEX budget,” said McDonough. “Our software solves a lot of the issues that people have stumbled across when they say they need to move over to the cloud.
“We have widened our client base over the last year dramatically, one example being Peloton which has taken the gym into the home. You buy a spin bike for your home and then you subscribe to a TV channel, which is a lot of live streaming or on-demand content. For this network it charges around 4X what Netflix charges, but you are effectively buying a gym subscription for the family,” he added.
“There has been a proliferation of content, and another example is Madison Square Garden Networks. It has its broadcast channels plus a large range of other digital outlets where subscribers can access content. What it calls MSG.com is effectively a prescription VOD service where an MSGN user can access the New York Nicks, the New York Rangers, and any of the NY sports games that happen in the greater NY area,” he continued. “We provide the editing software for content that has to be very fast turnaround but with a degree of professionalism on the output.”
This content also has to have closed captions. The SaaS model has taken Blackbird into a deal with Colgate in the USA, and deals across e-sports, education and health.
“We are focussed on sports mainly at the moment because that’s where the most valuable and time relevant content sits currently,” said McDonough.
Hiring the company behind the software
Sunir Shah said that moving to a subscription base was “a bit of a head shift”. Looking back in time to when software was sold as products akin to hardware, he said: “What has happened now is that software is a service, and services are not products; they are processes that go through time. What is has turned into is you are also hiring the company behind that software to provide services to you.”
These could include support, customer success, account management, ongoing development, and integration.
“The software is nearly always up to date, so you are always using the latest and greatest,” said Shah. “You only have accounts, you don’t ever have the software. In fact that is the true with 90% of use cases right now but there are some exceptions.”
One exception is big organisations around banking and healthcare, which want a copy of the software for reasons of sensitivity around control.
“The more interesting thing is why people are being compelled both in a forceful way and also an enticing way to adopt cloud in preference to the software on their own computers. It has everything to do with the network,” said Shah. “The one thing that SaaS has as a clear advantage over software as a product is that it is attached to the network – the Internet. And with that you get a lot more functionality.
“This is critical and useful, and not easy to do on your own computer. A lot of business is done now through the Internet, and the software that has grown the quickest is the tool sets that are specifically around managing Internet business processes, Internet marketing, sales and accounting,” he added. “All these things have entire mountains of Internet apps around them, because it is about maximising market presence.”
The expectation with Internet software is that it integrates, and this is where the Cloud Software Association came into being, to meet each other as integration marketing managers. The great gain is around data integration.
Replacing big data
“There is a reason why it is much more compelling to move data from Internet software to Internet software, and that is because they are all connected on the same network. And secondly, because there is only one copy of the software really it is much easier to build and maintain data integrations,” said Shah. “The third thing is very exciting; we had big data but now because you are pooling not only the software on you network but you also pool the users on the network, all the data is centralised.”
Huge data sets are built across many users, and those data sets are joinable with other data sets on the network.
“Then you have enough data, and machine learning and AI have enough training to come up with interesting results. This is where machine learning does really well – at integrating, combining, analysing large masses of multi-point data, and producing new insights,” said Shah. “This has been the new and exciting thing.”
On the matter of the size and value of SaaS as it currently stands, Shah believes the $72 billion figure widely quoted is accurate.
“I would say it is a bit hilarious because the Microsoft revenue last year was in the order of $100 billion, much bigger than the entire global B-to-B SaaS market. It is an indication of how much more work there is to be done,” he said.
SaaS has its advantages, led by being on the Internet, but it has issues that need to be resolved.
“SaaS cannot be distributed easily. There is no easy route to market because of subscription. What the future for SaaS has to be if it is going to survive is a channel I have conceived and developed,” said Shah. “We need to build value added resellers, marketing agencies, consultants, distributors, and system integrators. The whole market around that needs to develop fast, but there is a huge opportunity.”
The Cloud Software Association talks a lot about this issue, and AppBind is all about agencies and consultants.
“I believe the future is opening up the channel around SaaS, and I think the whole association is trying to figure this thing out around getting re-selling and distribution working,” said Shah. “There are some great services offering SaaS review ratings.”