A $50 Billion Market Dominated By Software Companies

One of the IBC Partners, the IABM has over 500 members of which about 70% will be exhibiting at IBC.

IABM membership has grown at 30% per annum for the past three years, and it is now truly global as served by regional directors and regional councils for both vendor and broadcaster groups.

By talking to CEO Peter White and CTO Stan Moote we get to hear what is planned for the Future Trends Theatre at IBC in terms of key technologies, and enjoy a wider set of market views related to the big trends.

Having been a big part of the IP Showcase as it has appeared successfully at both IBC and NAB, White explained why the IABM decided not to help finance it with the usual suspects this time round.

"We believe the job is not 100% done, but after the publication of SMPTE ST 2110 the IP Showcase has become more mainstream rather than a new initiative. Much of the anticipated change has taken place," said White. "AIMS' mission has substantially been completed, and so we moved over to the Future Trends Theatre because we want to keep the IABM more at the leading edge."

Having set up seven tracks to run over four days, Moote is a man with a mission. He said: "We are keeping it all a little bit lighter, not getting into deep dives on things. If you go way too deep then people don't get an overview of what's going on."

Predictable and regular income
White started by discussing how new IABM members had influenced his thinking. He said: "Some are larger companies of the global IP kind of size, like CISCO, and then some are exciting and small agile businesses that have glue services, microservices, or things like programmatic advertising.

"This kind of stuff is so much in the OTT world and very much about supplying software and services across all platforms," he added. "They are very different to the traditional style members we have, so we did an exercise recently to establish an identity for all the members we have."

What this showed is that veteran niche manufacturers of hardware sit alongside the big IT people who supply the platforms for all the virtualisation now happening, and the software and service newcomers. How has this impacted on the IABM sizing of the industry at $50 billion?

"Our latest report shows it to be around $50 billion again, but with a different mix – more virtual cloud businesses, more software as a service revenues," said White. "The market looks static as a top line, but consider that there are less big CAPEX installations happening with the move to subscriber-based revenues.

"The underlying numbers in terms of the margins will be better because software businesses tend to carry a higher margin than hardware businesses," he added. "The market has completely changed in its make up, and continues to change."

White was surely talking about the demise of CAPEX thinking and the rise of an OPEX mentality.

He said: "I guess that's the case, but the transition to OPEX is a painful process for any vendor because they no longer see the big chunky income they re-invested in R&D. But once you get through that you have predictable and regular income and you do not suffer famine or feast."

It takes time for the OPEX transition to work, and R&D might suffer while the cash flow is managed. One vendor alert is the IABM discovery of a huge trend towards build-it-yourself amongst broadcasters.

"The last percentage we had was that 37% of broadcasters say they build some of the systems or products themselves, using suppliers to help them do that, but not going for an end-to-end solution with one manufacturer," said White. "It is almost back to the days when everything was bespoke."

Doing things in isolation
Does this have an impact on the number of vendors in the form of consolidation?

"I believe there will be a reduction in the number of vendors in terms of traditional broadcast equipment and systems and the Belden kind of consolidation will potentially continue, but there is a big number of new vendors and suppliers popping up with new products, and they are probably on the increase," said White.

"Facebook, Apple, Netflix, Amazon, Google, and Disney (going OTT) have caused massive change at the broadcast end, and it has forced them to invest in agility. Then there is the proliferation of viewing options driven by the consumer, which have driven a very dynamic market marked by a lot of competition and a lot of commercial and monetisation pressure," he added.

In the great pushes for agility and good margins the IABM has a great stat to report at IBC.

"The margins of the new entrants compared to the average growth of a traditional linear broadcaster are massively higher," said White. "Re-investment going on for different reasons, and with different business models, is causing this change."

The drivers are agile software and the IP driven transition, and this has driven incredible levels of collaboration at every level of the industry.

"This is absolutely right: globally it will be collaboration on the development of standards, specs and concepts for open platform broadcast. The broadcasters are saying do not come to me with your bag of products, and just don't give me a sales pitch because your will not get an audience," said White. "What they want is someone who understands the pressures they are under, and the changes in the market that have to be managed. They want people to help with that change, and they have to collaborate.

"Collaboration is the word we all hear a lot, and it is one of the reasons we set up an endorsement program for industry collaboration groups last year. And this year we created industry advisory boards with broadcasters so our members can collaborate and work together," he added.

The IABM collaborated with several other bodies on the IP Showcase and has arrangements with SMPTE, AMWA and others.

"We do not believe that it is worthwhile having lots of different associations doing things in isolation," said White. "The industry had a massive kick up the backside when Netflix and Amazon came on board, and now we have this massive platform rush.

"5G will be a game changer too and it is just going to keep accelerating. So it is no good standing there in isolation. Anybody who sits still and thinks they are going to control things end-to-end is living in cloud cuckoo land. It is all about collaboration," he added. "Light bulbs are coming on all round the industry."

The one thing that does not change is content
The IABM had enormous success with the NAB launch of its new Broadcast Media Content Chain, or BaM. It replaces the broadcast industry model the IABM introduced 12 years back.

"It basically re-maps the industry as it is today, with a complete re-categorisation of where everything fits and where all the new stuff comes into play. It is based around content creation through to consumption, plus all the stages in between by putting them in a logical sequence," said White. "I was amazed how successful it has been. It is all about the content and you have to operate in a much more modern, focused way centred on what you are good at."

Asked if there was one concern that has nagged him during 2018, White said: "It's almost a corollary of what I said so far.

"Some organisations have shown a startling lack of appreciation with regard to what is happening so radically to the market. I have had instances of talking to people who have been quite King Canute, and that was quite shocking because you have to change to survive or you are not going to be here next year."

The dynamic tensions between those who want to run and those who want to stick are negated by the fact that (apart from lenses and cameras) the broadcast industry is now using the same IT and IP kit, and clouds, as many other industries. Are people aware of this?

"Not as many as should be," said White. "That is one of the reasons we created the new content chain. We recognise that the one thing that does not change is the content. The thing that does change is the platform on which it is created and delivered.

"You still need a good piece of glass to capture a good image, and in general the creation of content is not going to change," he added. "The delivery platform is going to keep on changing, and since we went digital we are now a generic platform that everyone uses. Broadcast though represents a tiny fraction of cloud usage."

Company mentality
Moote's seven tracks cover AI and machine learning; personalisation, Ecommerce and targeted advertising; revamp versus Greenfield; the power of immersive media; social media and branding; block chain – friend or foe; and, production innovation.

On his way to identifying some of the key issues to be aired he said: "We are not trying to compete with the main IBC conference, and that's obviously a key thing."

Think of Moote as Mary Berry with hundreds of ingredients in the form of top users and top purveyors. To cover the values of hybrid cloud for instance he turned to WGBH, one of America's largest public broadcasters.

"It does tons and tons of programs, so it put together a hybrid cloud/storage system and I thought it would be really interesting for people to understand what they are doing and how they manage it," he said. "It is focused on object storage and has got tons and tons of metadata."

One of the bees in Moote's bonnet is cyber security. He said: "I always like to call it 'you drag the old hag from out of the closet and put her right in front of everybody'. Cyber security is a serious corporate mentality issue everybody has to embrace and understand how to deal with.

"It has to be dealt with right in the company mentality, and if somebody wants to hack into your TV station and take it offline it has nothing to do with going IP. They will hack into your air conditioning system, and you are offline in no time without air conditioning in your equipment room," he added.

Our business will always be unique
Dennis Onouha of Arqiva (Cyber Threat Hunting Using ML and AI) was Moote's next plug. "I have him speaking on a little different way of looking at cyber security, and this is how to use machine learning and AI," he said.

"That is one of the key things we can use when it comes to understanding how your networks are working. When you see anything that is out of the normal you tag it," he added. "In the broadcast business we have stuff out of the norm all of the time but that's where machine learning comes into its own."

So thinking about things going suddenly crazy, and you know you have a cyber security hit underway, AI and machine learning are the way to go. How does Moote see the fall out of CAPEX thinking losing out to OPEX logic?

"It all comes down to hybrid, and understanding what goes on. I saw a stat a year ago that said 40% of the people who moved into the cloud came back, and then I started talking to our industry and the conclusion I came to is that our people are not stupid when it comes to understanding cloud costs, because they have been dealing with huge amounts of archive for years.

"They understand the cost of getting assets into the cloud, and of getting them from the cloud, and the cost of storage. In our business they are not in the situation where they suddenly move everything over to cloud storage. They went 'the cost is far too much. I need to move it back' because they understand the fine line. I repeat - the key word is hybrid."

Moote will not be trying to duplicate anything happening in the IP Showcase, but his key sessions include one on practical IP rollout, plus Andy Rayner of Nevion talking about Broadcast Virtualisation – The Technical Roadmap.

"When you go IP, the other strong aspect is virtualisation, and you need to understand where that is going," said Moote.

Asked about the broadcast, VOD and OTT businesses using the same core technologies as other industries, Moote said: "We are using off-the-shelf components but our business will always be slightly unique from the other larger industries, and that is where IABM members come in, understanding how to write appropriate software to run on these devices. They offer appropriate services that will always be slightly different.

"They are creating a unique environment, exactly what we need for broadcast," he added. "This is why I have speakers talking about new age content supply chains and how they are automated, and about why software-based cloud production presents the most obvious new business model."

On the chances of public cloud and private off premise cloud eventually dominating and killing off private on premise and hybrid set-ups Moote was certain.

"I do not see them (private on premise) slipping away. When people have built their own data centre, their own private clouds. I see no reason why they should slip away. People still want their content on site. They say, 'I want to know where it is and have it backed up somewhere'. They do not want to lose control," he said.

The big subject in Moote's tracks will probably be the tangible ways AI is important.

"One is the security aspect, but another strong one is machine learning for media QC – automatic verification compliance. It delves into not only the video and audio quality and those tech specs being good, but it starts to detect things like nudity and violence, right down to language. This is key when you digitise your archive."

Author: George Jarrett

This article is also available in the September edition of Broadcast Film & Video. Here.