50 Years of Growth, Innovation and Leadership

A Frost & Sullivan White Paper

Avni Rambhia, Senior Industry Analyst, Digital Media

Mukul Krishna, Global

Director, Digital Media

Dan Colquhoun, Senior Vice President, Customer Research

www.frost.com

Achieving Operational Freedom in Digital Media WorkflowsEfficiently Solving Business Challenges for Multi-Platform Content Delivery

Frost & Sullivan

CONTENTS

The Digital Media Explosion ................................................................................................. 3

Multi Platform Delivery 101 .................................................................................................. 4

Unmet Needs for Broadcasters, Service Providers and Studios ........................................ 6

Considerations in Scalability, Efficiency and Agility .......................................................... 7

Technology Comes of Age ..................................................................................................... 9

A Customer-Centric Approach to Innovation..................................................................... 11

Succeeding in Meeting the Multi-Screen Challenge .......................................................... 12

The Bottom Line .................................................................................................................... 12

Methodology ........................................................................................................................... 13

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“Every month, there is a new device we have to support.”

—Director,

Cable Operator

Unless service providers successfully embrace ongoing and irreversible changes in

consumers’ viewing behavior, they will

inevitably lose subscribers and fade.

THE DIGITAL MEDIA EXPLOSION

Video is everywhere. From smartphones to tablets to a growing variety of connected living room appliances, consumers expect to find their video where they want it, when they want it—and on any device. Each device model, in turn, has its own sweet spot combination of connection speed, supported file and compression formats, and access mechanisms. In three short years, the world of digital media has gone from a handful of online content providers streaming to PCs, to an explosion of rich media services on a vast array of video-enabled clients. From the early days of Blackberry and Nokia to Apple, then Google and now Amazon, the handheld device market has seen a plethora of market entrants, with new must-support platforms continuing to emerge and thrive. A similar multi-vendor, multi-model growth story can be told for each class of media-enabled devices.

The challenge this poses for all media organizations—including service providers, telcos, studios and broadcasters—is how to grapple with the ensuing nightmare of platform fragmentation and constantly changing workflows. Further complicating things is the need to deliver growing volumes of file-based and live content in an ever-changing, uncertain environment. Yet, meeting this challenge is critical for media companies to succeed in this extremely dynamic landscape. Unless service providers successfully embrace ongoing and irreversible changes in consumers’ viewing behavior, they will inevitably lose subscribers and fade. Ubiquitous video delivery has become a competitive must-have today, as consumers expect an anytime, anywhere content experience—and alternative offerings are just a mouse click away.

On the flip side, there are rich rewards for those who successfully navigate the content everywhere paradigm. From new geographic opportunities for content distribution, to broadening audience demographics and reaching new potential subscribers, multi-screen delivery represents perhaps the most exciting digital media growth opportunity since the early days of the industry. Now, as then, technology plays a key role in enabling new distribution scenarios. To date, companies have primarily focused on the transcoding aspect of the problem—deploying solutions that translate content into the required multitude of formats and bitrates to serve an ever-expanding demand and delivery matrix. However, as demand grows and business models begin to consolidate, the industry has matured past simply needing a Rosetta Stone for format translation toward requiring a broad operations-driven approach to enabling and serving the ubiquitous video ecosystem.

Media and entertainment (M&E) companies today need a scalable, agile and highly reliable media processing solution to efficiently yet economically keep pace with this explosion in digital media. The problem M&E companies need to solve has grown far beyond simply managing format incompatibilities—they need to do so efficiently to match the scale of these opportunities while managing costs. Companies need to optimize resources, maximize automation, and maximize efficiency in terms of resource utilization and throughput performance. Additionally, and perhaps most importantly, companies need to achieve agility in responding to new platforms and in implementing new business models. Intelligent automation is becoming increasingly critical to manage workflow volumes and the inevitable errors without undue impact on personnel resource requirements, computing infrastructure requirements, or final output quality.

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“[We need to] be able to more easily share content across our product line to have more effective workflow.”

—Corporate Manager,

Broadcast Company

To provide a deeper perspective and understanding of this evolving market, Frost & Sullivan conducted an extensive survey of M&E companies—including studios, broadcasters and service operators—in order to better understand their most urgent requirements, challenges and goals. In particular, we investigated the role that workflow technology is currently playing in their businesses, and how unmet needs are driving innovation and purchase decisions for the future.

Every one (100 percent) of the respondents considered next-generation workflow infrastructure as relevant to their business needs. More significantly, 89 percent of respondents said they are looking to change their workflow technology within the next one to two years. Factors driving this change are shown for the total group of respondents in figure 1 below.

Figure 1: Primary Driver for Adopting New Workflow Technologies

40%

25%

30%

35%

20%

15%

10%

5%

0%Delivery to

multiple platforms

Percentage of Respondents

Need for automationand greater efficiency

Changes in operations,including tapeless

workflow

Keeping up with newmedia formats

Within these responses, multi-platform distribution was an important goal across all types of companies and was a top-of-mind goal for 60 percent of respondents in corporate management roles. Networks and specialty TV stations, which are more challenged by the costs of new technology but still highly reliant on ubiquitous video outreach, were 65 percent more likely (at 38 percent of respondents) than the total group to change workflow solutions in order to achieve greater efficiencies through automation.

This paper presents a customer-centric view of the challenges, requirements and criteria for success that M&E companies face as they leverage technology to achieve success amid the unpredictable fluidity of the multi-platform content delivery ecosystem.

MULTI-PLATFORM DELIVERY 101

Much of the complexity in workflows for multi-platform delivery comes from the massive fragmentation in formats and streaming protocols supported by end devices. Different standards from competing vendors like Apple, Adobe, Google and Microsoft form one layer of complexity. Different resolutions and optimal over-the-top (OTT) streaming configurations

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“To deliver content with high QoE to

all target customers across multiple platforms and

connection speeds, service providers

today are forced to create a multitude of files for each title for

various devices and at various bit rates”

—Mukul Krishna, Global Director, Digital Media, Frost & Sullivan

for classes of devices like televisions, tablets, connected Blu-Ray players, PC and notebooks, game consoles and Internet TV boxes, with multiple bitrates to ensure QoE over-fluctuating bandwidths, add a further layer of fragmentation. In today’s global landscape, different audio tracks for different languages, subtitles, captions and related compliance considerations impose yet another multiplier on the total number of files and streams required per title to cover one’s target audience.

Frost & Sullivan estimates that, all things considered, M&E companies have to create anywhere between 50 and 250 files per title. In separate research, we forecasted global revenues for the post-production and multi-screen transcoding markets just north of $200 million in 2011, more than doubling to above $425 million by 2015. North America and Europe are the fastest growing markets in the short term, driven by rapid uptake of OTT video services and explosive growth in connected media devices.

Figure 2: Top Three Business Needs for Ubiquitous Video

100%

80%

60%

40%

20%

0%Gain efficiency in

multi-platform deliveryRespond quickly tomarket dynamics

Predict and controloperating costs

Extremely relevant Very Relevant or Relevant

34%51% 64%

28%38%

53%

As fragmentation issues mount, the biggest challenges that arise are those of efficiency and scale. M&E companies understand the urgency of adapting their businesses to fulfill this need. As shown in figure 2, just over half of respondents consider becoming more efficient at multi-platform content delivery an extremely relevant business priority, with an additional 34 percent considering it a very relevant or somewhat relevant priority. 89 percent of total respondents consider quickly responding to new market dynamics a relevant concern for their business, including 38 percent who consider this as an extremely relevant business priority. Predicting and controlling operating costs in the face of uncertain content volumes and unpredictable consumer behavior is also an important issue to 92 percent of respondents, with 77 percent considering it either an extremely relevant or a very relevant priority for their media business.

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Unmet Needs for Broadcasters, Service Providers and Studios

Figure 3: Leading Concerns of M&E Companies

100%

80%

60%

40%

20%

0%Content

Everywhere

Top Concern High or Medium Concern

40%

55%

Scalability

49%

45%

StreamliningWorkflows

64%

28%

CostReduction

60%

30%

Our survey identified a number of top-of-mind issues for M&E companies, all of which need to be simultaneously solved by their media processing platform in order to truly conquer the challenges of ubiquitous video delivery. Multi-platform and multi-screen delivery of digital content clearly emerge as the scenarios of most concern—from implementing VOD and the transition to HD on existing services today, to audience behavior changes, supporting upcoming standards and creating new services from existing content in the future.

Scalability is also a leading concern—content volumes can be unpredictable, and the tradeoff between peak load capacity and ROI on CAPEX is a difficult one. Cost reduction was also a strong issue of concern—reducing costs through improved automation was one key aspect of this. The high concern levels for both scalability and cost reduction together point towards a demonstrated need for managing total cost of ownership.

Workflow management rounds out the group of leading concerns. Streamlining workflows to gain operational efficiency is one key aspect of workflow management. The other key aspect is responding with agility to the emergence of new formats, standards and target devices. Often, it is necessary to experimentally deploy content to new platforms or to try out new business models, before committing to a complete production-grade operation. With existing solutions, deploying any new workflow—even at an experimental level—is a time-consuming and resource-intensive operation. This lack of agility hinders successful exploration of new opportunities and models for further content monetization. Media companies recognize that an agile approach to managing and streamlining workflows is necessary for them to innovate in discovering new revenues as well as achieving internal efficiencies.

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Figure 4: Areas of Lowest Perceived Advances in Workflow Solutions

Percentage of Respondents Seeing Significant Change in Features

Innovation in Workflow Process and Automation 16%

Lowering of operating costs and resources (OPEX) 6%

Move towards cloud computing solutions 6%

While most M&E respondents are looking to update their workflow architectures and there are significant unmet needs and challenges, the feature sets in current workflow solutions have not changed fast enough to meet the urgent needs of this market. As shown in figure 4, only 16 percent of respondents feel they are seeing innovation in process and automation aspects of workflow solutions. Perceived lack of innovation is even higher in areas like gaining cost and execution efficiencies and in harnessing the cloud for scalability, which correlate to solving the highest priority concerns of these customers.

Put together, it’s clear that a new approach to media processing is warranted. Existing workflow solutions, which predominantly use fixed data flow paradigms, are not effectively solving the multi-platform delivery problem. Additionally, the market isn’t seeing enough solutions that address the key concerns around scalability, agility and efficiency. In the balance, while 89 percent of respondents are expecting to overhaul their workflow systems within the next one to two years, 75 percent of respondents were not yet aware of a solution that would fully meet their needs and expectations. Efficiently delivering multi-platform content, for live and file-based media, remains an unsolved challenge.

Figure 5: Satisfaction Levels of M&E Companies with CurrentWorkflow Solutions and Awareness of Ideal Solution

Satisfied

Not Satisfied

Will replace withknown solution

Not aware of idealreplacement solution

11% 89% 14%75%

Considerations in Scalability, Efficiency and Agility

Scalability requirements in media processing are twofold:

• The need to scale to address diverse workflow requirements while overcoming complexity• To scale to content throughput requirements that arise as a consequence of both

complexity and number of titles and streams that are processed

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“I think cloud computing is changing everything we do [but] we are still figuring out how broad we want to go.”

—Director, TV/Film Studio

Scalability can be achieved through sheer brute-force by planning for peak load capacity, but that gets expensive and ROI on this high CAPEX is uncertain. The cloud offers a pay-by-use alternative, but is typically accompanied with concerns around latency and security. Predicting operational expenses (OPEX) and integrating OPEX into company financial policy are also concerns, with the end result that more than half of the respondents do not have plans to use OPEX models to fund workflow capacity. Hybrid approaches offer a best-of-breed compromise, with on-premise capacity built out for predictable loads and an offload to the cloud for overflow tasks, typically during peak load hours. Nonetheless, any external adoption of the cloud represents a disruptive change to workflow infrastructure and budget practices.

Figure 6: Market Acceptance of Purchasing WorkflowCapacity Using an OPEX Model

Don’t know

No, with no plans to

No, but planning to

Yes, currently purchasethrough OPEX

13%51%

8%28%

However, most media companies already have underused or sub-optimally used computing resources internally, often because they were deployed for fixed purposes and cannot be leveraged for other purposes without significant re-provisioning effort. Ideally, customers would have a way to dynamically leverage such resources toward workflow execution, thus beginning to harness the benefits of the cloud without actually deploying it. This model can address the investment and total ownership cost concerns of expansion, while enabling resources to be allocated and provisioned dynamically in quick response to demand.

As with any big data application, efficiency is another key consideration of media processing—particularly in terms of throughput efficiency. Since no single vendor covers all necessary components in a best-of-breed fashion today, M&E companies typically assemble solutions using multiple providers. A direct consequence of stitched-together workflow architectures is data thrashing between these separate, though connected, solutions. This, in turn, causes network traffic overhead, increases storage requirements and lowers throughput speed.

A classic scenario for this problem is quality control. Quality checks need to occur at multiple points in the workflow and should ideally occur after each major workflow step. However, doing so typically requires moving the complete content file to and from a separate quality control application each time. Integrating quality control inline within a workflow exemplifies how reducing the number of non-integrated steps can significantly streamline the process and improve efficiency. Streamlining is particularly critical when cloud or distributed computing models are used for media processing to minimize both latency and cost.

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Automation, particularly intelligent automation, is a closely related consideration. When workflows require manual intervention to resolve faults or errors, performance drops and costs rise quickly. Solutions that not only automate the workflow from end to end but that can automatically identify and resolve potential issues go a long way in improving both efficiency and scalability. Transparency in workflow execution, and visibility into operations and status, offer additional ability to fine-tune and optimize efficiency.

Adapting quickly to new formats and standards with agility is the final critical ability that this paper discusses. Agility is perhaps the hardest of these emerging requirements to fulfill, but is arguably the most important in the long run. For existing software solutions, adding new workflow elements or reconfiguring set workflows can be time-consuming and challenging, to say the least. This makes it harder and more complex to experiment with new delivery models. Nonetheless, such experimentation, with the ability to scale up quickly if such a trial gains mainstream traction and repurpose resources if it does not, is a key ability to finding content-everywhere success. A more intuitive and visual approach to workflow construction and adjustment is desirable for companies seeking to build out a profitable, successful content-everywhere offering.

TECHNOLOGY COMES OF AGE

Kayak, an innovative solution developed by Digital Rapids in response to demonstrated market needs discussed in this paper, is a comprehensive media processing platform that allows M&E customers to design, deploy and manage workflows. Kayak’s innovation is rooted in its novel approach to workflow implementations, with a philosophy of enabling flexible processes and workflow models rather than enforcing any particular process or paradigm.

Figure 7: Three Steps of Workflow Implementation

2. Design

1. Design• Catalog of workflow elements• Simplified design interface• Open, extensible architecture

2. Deploy• Unified processing environment maximizes throughput• Scalable on-premise and/or to cloud• Intelligent automation

3. Manage• Complete visibility into operations• Continuous analysis• Run-time or offline reconfiguring

The solution goes beyond a focus on transcoding and workflows toward taking a holistic approach to media processing enablement. Equally applicable to studios producing feature content, broadcasters and cable operators bringing live and on-demand content to new devices, and to online and over-the-top video applications, the platform is designed to eliminate the disruption and upfront capacity gambles involved with workflows today, while providing a strong leap forward in efficiency and automation.

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To visualize the platform, conceptually break up your current workflow into all of its core functionality: capture, encoding, packaging, file operations, processing, and so on. These components form a catalog from which building blocks can be selected at the design stage. These blocks can be combined in an interactive environment, so that new workflows can be tested at proof-of-concept or pilot deployment levels before committing to actual production. Workflow elements can range from media-specific technologies like encoding, multiplexing and processing to business-oriented functionality, such as reporting and decision branching. Components can be provided by Digital Rapids, sourced from best-of-breed third-party vendors, or custom-developed.

An important aspect of component-based design is reduction in the number of steps necessary to perform workflow tasks. Kayak allows rules to be defined within workflows to intelligently bypass any unnecessary steps. Additionally, since all components execute in a single framework, wasteful data transfer and write-to-disk operations are eliminated.

Once design is complete, the corresponding workflow is immediately enabled at the scale necessary. Running instances of the workflows are deployed dynamically on the fly on available system resources. Up-to-date versions of workflow components are pulled from the catalog at run time, ensuring workflows are updated each time they are used. Since the typical hurdles of installation, upgrades and testing/validation are largely eliminated, more effort can go into actual production use. Since all operations are executed within the context of the Kayak platform, workflow execution is highly streamlined and the number of processing steps minimized.

From a management perspective, resources can be grouped, scheduled and managed virtually, optimizing resource utilization based on job requirements and availability. This allows customers to leverage cloud-style task allocation of technologies on local systems. This effectively combines virtualization with a new level of dynamics by elastically spinning up new software resources as needed, simply via a lightweight Kayak agent that is pre-installed on existing underutilized infrastructure. This in-house model can address the investment and total ownership cost concerns of expansion, while enabling resources to be allocated and deployed dynamically in quick response to demand. Kayak also provides complete visibility into workflow and operational execution, allowing bottlenecks to be easily identified, optimizing efficiency and resource allocation, and addressing customers’ earlier-mentioned business priority of being able to predict and control operating costs.

In the Frost & Sullivan survey, a majority of respondents (84 percent) found this type of solution unique, as shown in Figure 8. The open nature of the platform, which allowed plug-and-play interaction of best-of-breed components in a unified, scalable execution environment, was perceived to be a particularly unique feature.

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“I would like to see a Swiss army knife of

video conversion that could take audio and

video from any source, live stream or file, and

seamlessly talk and play well with other

destinations…”

—Manager, Production Studio

Figure 8: Perceived Uniqueness of the Kayak Platform

Consider it unique

Believe other solutionsoffer similar capability

84%

16%

A Customer-Centric Approach to Innovation

The features of Kayak mirror the needs and preferences of our survey respondents. Figure 9 shows the top five attributes for media processing workflow technologies, where respondents were asked to rate an attribute’s importance on a scale of one to five.

Figure 9: Top Five Attributes for Media Processing Technology

Very important Somewhat important Neither Somewhat unimportant Not at all important

Is scalable according to your business needs

Is upgradeable to new standards as theyemerge and develop

Fits into an automated workflow

Is easy to integrate with other legacy technology

Can be easily configured according to thecontent and delivery

75% 15% 8% 2%

66% 23% 8% 2%2%

55% 25% 15% 6%

51% 32% 8% 9%

43% 47% 8% 2%

The ability to leverage the Kayak platform to scale operations according to business needs has been discussed above. Kayak’s catalog-based approach to workflow elements allows simpler, faster and more cost-effective access to new and emerging technologies. Since Kayak is an open development platform with a rich partner ecosystem of best-of-breed technology providers, customers can choose components that best meet their particular business and technical needs. Kayak also enables customers to innovate themselves by building their own components in Kayak’s rich, multi-language development environment. The easy-to-use interface makes it simple to integrate new components into legacy workflows and scale production according to business needs. By standardizing the platform and making workflow design (and re-configuration) lightweight and agile, Kayak enables broadcasters, service operators and studios to embrace the full potential of multi-screen and multi-platform opportunities. Because the interfaces are intuitive in nature, the need for staff training is minimized.

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Succeeding in Meeting the Multi-Screen Challenge

Figure 10: Relevance of Ubiquitous Video BusinessIssues for M&E Companies

Extremely relevant Very relevant Somewhat relevant Not very relevant Not at all relevant

Become more efficient in multi-platformvideo delivery

Respond quicker to changing market dynamics

Better ability to predict and control running costs

Reduce operating costs through automationand scalability

53% 23% 11% 9% 4%

38% 32% 19% 9% 2%

28% 49% 15% 8%

25% 42% 26% 6% 2%

The benefits of Kayak correspond to the most relevant issues identified by survey respondents, as shown above. Through a lightweight design process and integrated, streamlined workflow approach, customers can become more efficient in developing and deploying automated workflows that address the burgeoning complexity and volumes of multi-platform content delivery. The ability to quickly deploy trial workflows and scale up or down easily as business needs evolve, as well as the ability to quickly adapt and fine-tune workflows, directly enables M&E companies to respond more quickly to changing market dynamics. It also significantly lowers the risk and expense involved in such innovation, allowing M&E companies to innovate more aggressively in their new media offerings.

Through continuous, unified visibility into workflow execution, as well as by enabling a variety of on-premise and cloud-based architectures, Kayak allows customers to predict and control running costs on an ongoing basis. By quickly enabling companies to harness under-utilized computing capacity within the enterprise, and lowering resource requirements through streamlining and automation, Kayak further empowers media companies to overcome their challenges around efficiency and cost reduction.

At the end of the day, Kayak allows companies to finally take their infrastructure for granted. Companies can stop focusing on setting up functional workflows and start focusing on enabling their business models, consolidating their brand, and growing their subscribers and revenues.

THE BOTTOM LINE

The digital content experience revolution is here to say, and the level of fragmentation in both live and file-based content will get a lot worse before it starts to get better. Consumers are demanding access to their content anytime, anywhere and on any device—and service providers who do not consistently and innovatively meet the growing demands of ubiquitous video will fade and perish.

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“I think [Kayak] is right on the mark

and [includes] what we generally look

for in a progressive technology.”

—Director, TV Studio

The predictable days of standardized formats and dependable roll-out schedules are past. Customers are driving the ecosystem, and new devices, new formats and new delivery models can be relied upon to pop up with relentless, yet unpredictable, frequency. Content volumes are simultaneously skyrocketing, driven by growing consumption and increasing globalization. In this challenging yet highly lucrative landscape, an M&E company requires its media processing platform to be automated, scalable, and agile in order to generate the media their customers want, and deliver it in a way their customers want it, in a competitive yet profitable way.

The great news is that there is a proactive vendor community, as seen by the example of Digital Rapids, which is stepping up to the plate to deliver an enabling solution to meet market challenges. The company has innovated to deliver Kayak—an open media processing platform that is designed to keep pace with the uncertainty of formats, volume and technology. To date, most M&E companies have been focused on simply staying ahead of the technology curve. Kayak solves urgent and unmet workflow needs for these companies. By removing risk and uncertainty of deployment through reliable operation and intelligent automation, Kayak enables broadcasters, service operators and studios to focus instead on their core business—content.

METHODOLOGY

The data in this report was gathered through telephone interviews conducted by Frost & Sullivan. Respondents hold managerial-level or higher positions, and are involved in their organization’s decisions for media processing products and services. Organizations included in the survey are tier-1 or tier-2 media and entertainment companies. All interviews were conducted between February and March 2012. The chart below shows the distribution of respondents by the type of organization they represent.

Figure 11: Surveyed Organizations by Type

TV or Film Studio

Cable Operator/MSO

Network

Video Production

Specialty TV

23%42%

9%

15%11%

877.GoFrost • myfrost@frost.comhttp://www.frost.com

ABOUT FROST & SULLIVAN

Frost & Sullivan, the Growth Partnership Company, partners with clients to accelerate their growth. The company’s TEAM Research, Growth Consulting, and Growth Team Membership™ empower clients to create a growth-focused culture that generates, evaluates, and implements effective growth strategies. Frost & Sullivan employs over 50 years of experience in partnering with Global 1000 companies, emerging businesses, and the investment community from more than 40 offices on six continents. For more information about Frost & Sullivan’s Growth Partnership Services, visit http://www.frost.com.

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