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Omdia’s Asia Pacific OTT TV & video forecast 2019/20 highlight that the segment will reach U$30.4bn, with CAGR of 15% in the next 5 years (2020-2024). Although, China is stipulated to control half of the regional revenues, India will be the fastest growing market with CAGR of 30% by 2024.
Also, as regional OTT TV & video segment matures; lowering churn, delivering premium quality of service (QoS) to safeguard average revenue per user (ARPU), reduce media distribution total cost of ownership (TCO), and exploiting newer monetization avenues are top business priorities for more than one-third (36%).
Furthermore, as tier-1 and tier-2 premium content owners accelerate their spending on niche time-bound project repositories (local sports, news, live events) to differentiate market positioning, and improve reach in highly fragmented regional multi-screen TV & video space.
Almost half of Asia Pacific population today is under lockdown resulting into exponential tsunami of in-home online TV & video consumption of news, user generated content (UGC), gaming, and video on demand entertainment catalogue. Although, this has resulted into traffic surge on majority of regional CDN providers by more than 20% (month on month basis), but due to discontinuation of live events (sports, and other entertainment), and declining TV & video advertising spend (no new launches in consumer goods and automotive markets); enhancing cost synergies to reduce cashflow margin risks is fast becoming the norm on short-term basis.
In today’s multi-screen TV & video services era, media distribution workflow roughly accounts for 32-35% of content supply chain TCO. Therefore, utilizing multi-CDN strategy to lower cost per GB, along with disruptive pricing negotiation are been witnessed in the past 3-4 months across most of the markets in Asia Pacific especially Australia, South East Asia, and South Korea.
Historically, majority of premium content owners have leveraged their in-house routing capabilities woven around round robin, and geo-location framework. As, premium QoS/QoE slowly became the core tangible benefit, dynamic routing based on performance (KPI’s such as re-buffer rates, average time spent, rate of fluctuation, average bitrate, and quality distribution) is slowly witnessing strong adoption especially across tier-1 and tier-2 pure play OTT TV & video live services.
OTT TV & video services with large video on demand repository still prefer routing to CDN provider with lower price per GB. In Asia Pacific, tier-1 broadcasters were the early adopters of third-party dynamic routing technology providers to enable higher cache efficiency ratio.
Finally, as investments in local live (2L) repositories increase in the next 2-3 years across the Asia Pacific OTT TV & video services market, real-time analytics from each digital user devices everywhere is essential along with historical intelligence to streamline both client and server side CDN switching.
Furthermore, as these enterprises not only acquire premium (live TV & video) but non-premium (local, regional), and user generated content (UGC) repositories building a cost-volume-profit (CVP) framework for this secondary traffic ROI is also crucial.
Also, historically, switching approaches have leveraged either media distribution (CDN performance) or engagement (digital user device) KPI’s resulting into inefficient, and insufficient unoptimized switching dynamics.
Therefore, as investments into both premium and non-premium content repositories surge (including associated data, metadata), Omdia believes that both media distribution (hardware, CDN, last mile), and engagement (availability, start-up time, bitrate, re-buffering) should be embedded to lower CDN switching complexities. This will enable premium content owners to monitor and exploit newer monetization avenues with real-time convergence of operational (CDN), and business (digital user) value propositions and justify third party routing, and switching technology, and multi-CDN investments on the long run.
Building a scalable, optimized and orchestrated multi-CDN strategy to meet not just business needs for today but also tomorrow is vital to enhance the yield (ROI) beyond legacy costs and traffic load balancing advantages. Therefore, in tomorrows connected digital services landscape creating highly localized entertainment offering will be insufficient. Thus, paving way for moving these services both TV & video along with other digital avenues such as e-learning, e-health, gaming, e-commerce, and fitness to a more geographically diversified audience base to strengthen competitive advantage on the long-run.
A good example is niche OTT TV & video service providers in India are able to provide premium QoS at scale with a multi-CDN strategy encompassing two to three vendors as of today. This short-tail framework of focusing on home market will be inefficient in tomorrow’s fragmented and competitive global connected media space.
Finally, a multi-faceted long-tail CDN switching approach to not only meet business KPI’s (such as engagement rates, ARPU etc) but also new age demand centric to end point, anti-virus security along with operating system upgrades will be crucial differentiator for tomorrow’s premium content owners in the Asia Pacific market.
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