Video content has already moved to smart phones and sharing content across different platforms, in real time, is going to be the next big thing that everyone is going to bet on. This means that Over-The-Top (OTT) television, which would mean using mobile networks and cloud technology, rather than satellites, to distribute content to smart devices will significantly change the business models of content distribution and video ad-networks. The OTT TV's advantage is clear, not to mention the billions of dollars saved in hiring a satellite service every time a channel wants to launch in a new region.
To simplify it, imagine a box that could manage the content insertion over the cloud and then serve it across devices. Each year media houses and broadcasters spend Rs 2 crore per channel per satellite when beaming over one region. The cost of beaming across regions and using multiple satellites goes up drastically. Using the cloud to distribute content to Smart TV and smart phones, this cost could drop by half. This technology could also democratize content distribution by allowing media houses or channels to directly connect with customers rather than multiple satellite companies and broadcasters. Amagi Media Labs, a startup which builds cloud-based ad-insertion technology for television networks, is at the centre of this change. "Story telling is going to different platforms and with it advertising is becoming highly local. Our technology will help large broadcaster monetize content over the internet," says Baskar Subramanian, co-founder of Amagi Media Labs.
The whole world is poised to accept user generated content (UGCs) and multi-channel networks or video aggregators (MCNs). There are 48,000 broadcasters in the world who will evolve a new distribution strategy if this technology gains acceptance. The company has raised $25 million from Nadathur Investments, Mayfield Fund and Premji Invest. The company is now looking to raise a large round for their R&D platform because to compete with the like of ComCast and Verizon when it goes global. The company is yet to report profits as it is investing heavily in building the product.
Recently Verizon bought AOL exactly for this reason and will begin to build strong OTT platforms. In the USA alone, according to Nielsen, the market is $400 billion market. The game is in monetizing and delivering of video content along with personalised ads that can allow advertisers to understand their target audience better. "Cloud has offered scale and has already seen adoption globally. In India its adoption still in its infancy with large corporates," says Sanchit Vir Gogia, CEO of Greyhound Research.
According to a report by global auditing and consulting firm PWC, these MCNs generate bulk of their revenues through facilitating and brokering advertising for the properties in their networks. Most MCNs focus on niche markets such as gaming, music or comedy, while a few are generalists aiming to garner as many eyeballs as possible. The largest MCNs typically follow both strategies (niche viewership or advertising), while the smaller and emerging MCNs will generally pursue one strategy until they achieve scale. Some MCNs also assist content creators in areas ranging from funding to production to digital rights management, and guide SMEs and corporates through the complexities of getting their content and messages out on YouTube-a focus that can bring them into competition with advertising agencies, producers and buyers.
Sadly, this technology and form of content distribution is yet to take off in India. However there are several small media houses (who compete with a large organisation like Businessworld) that have already started taking this step and are investing heavily on video over Smart TV and Smart Phone apps. Amagi has a couple of patents pending for the technology which distributes this content over the cloud. However managing OTT is just one part of Amagi's big revenue churning operation. It still runs its geo-targeted advertising business - where it uses technology to insert local ads for national TV. It also claims to own and deliver a million ad-seconds a month.
Over the last two years it has built a second line of business, where it helps broadcasters use the cloud, over a single satellite feed, to deliver content across the globe after meeting the regulatory broadcast requirements of each country. From its single console network-operating -centre (NOC) in Bangalore, Amagi is currently managing over 30 TV channels and their content distribution across the globe. The technology called "StormIRD" is already being used by NDTV in India and at the centre of this is Amagi, which takes ad-content, generated in India, and generates the content to the cable head-end at a global location."Amagi saved us a lot of costs for us by delivering content and managing it over the cloud for the Middle East region with just one satellite. Otherwise we would have incurred extra costs for setting up satellite feeds in other regions," says Dinesh Singh, CTO of NDTV. Amagi has 4 patents pending for this technology.
A product company from India is a rarity. If delivering content over the cloud gains global acceptance and if it paves the way for a change in content distribution then the likes of global giants like NTT Docomo and Echostar have reason to worry because the broadcasters will not use multiple satellites. That said, the valuation of this startup can grow manifold if its technology is worth its salt.
