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Cutting costs or cloudy vision?: The dilemma of media companies’ data centres

When done right, gradually moving media operations from on-premises deployments to the cloud can bring efficiencies and savings, writes Dan Goman, founder and CEO, Ateliere

Mergers, acquisitions or the great consolidation, call it what you wish, but business dynamics in the media and entertainment industry keeps shifting in front of our very eyes. These measures are often designed to stay competitive, avoid subscriber churn or justify a dwindling streaming service. 

Such radical, often sudden, strategy shifts come with major technology and financial pitfalls, particularly in the media industry, where delivering complex products to highly fragmented consumers is the order of the day. 

Merged and acquired companies each come with their own media supply chain (even multiple chains!) and technology baggage. How these can be efficiently unified for cost-savings remains a difficult challenge to streaming success. 

The broken media supply chain

As it’s become obvious from recent financial announcements, the cost of operating streaming services, often alongside linear broadcast or cable TV offerings, is extremely high. Media companies are being asked to deliver more content to more outlets with the same traditional tools and processes. Streaming has broken the current production and distribution media supply chain. 

And when streaming companies need to efficiently integrate a business acquisition, media supply chains are often the last priority in boardroom’s discussions. Yet, each media organidation comes with thousands of large files, fragmented metadata, siloed departments and aging data centres. How to efficiently integrate content and workflows into a unified infrastructure that serves the purposes of the newly-formed business? This is an expensive puzzle to solve. 

The missed cloud opportunity

Although the media industry has been slow in adopting cloud infrastructure, moving media operations from on-premises deployments to the cloud can bring efficiencies and savings – when done right!

This is particularly true when streaming services are looking to combine their offerings, as is the case with the recent Paramount Plus and Showtime bundling initiative. A global media supply chain in the cloud makes significant business sense as it helps centralise content libraries, simplify workflows and localise content. 

With sustainability becoming high in most media companies’ agenda, running on-premises data centres is a considerable environmental concern, especially if the alternative can deliver cost savings. Plus, if your core business is not technology, it is difficult to justify in-house investments to keep up with the rapid cloud innovation from the major cloud service providers.

Sadly, it’s not all rainbows and butterflies in the cloud. One of the primary blockers to a wholesale migration of the M&E industry to the cloud is what I call the “file movement tax” or egress costs. Our industry works with large files, and the simple need of moving content around remains prohibitive. Our clients have concocted impractical deployments with wacky configurations to avoid this tax. 

Egress cost is one of the main reasons why media companies are still justifying having their on-premises deployments and data centres. Hard to argue with when you’d be talking about millions of dollars in cloud egress costs alone. 

This is where cloud services providers are missing a huge business opportunity. They should be looking for ways to make it more attractive to move on-premises data centres to the public cloud. Enough said. 

Doing it right

In our experience working with hundreds of media companies, it is possible to succeed in the race to turn a profit by streamlining operations into the cloud. Businesses need to future-proof their technology in order to handle petabytes of new content, increase their subscriber base, distribute globally, and integrate all their legacy systems.

We see four key areas to focus on:

  • Implement a unified content supply chain in the cloud: It’s not always possible to do a wholesale move to the cloud, especially for large enterprises. Start with a cloud layer that connects fragmented systems together and enables a gradual transition from on-premises operations. This may mean that you operate in a hybrid mode during the transition period.
  • Evaluate infrastructure and system redundancies: Consider what to keep, what to eliminate, and what to move to the cloud.
  • Mergers and acquisition integration using the “layer approach”: Get your media supply chains talking to each other quickly by layering the cloud media supply chain platform on top of your existing platforms and systems. This gives you time to run a proper systems integration process, while avoiding hiccups in your monetisation workflows.
  • Localisation is key: Implement a future-proof foundation by adopting a component-based workflow that enables highly efficient packaging of content for global distribution. This will enable the business to generate revenue and compete in the streaming world.

Over the coming years, content will remain king in determining success or failure for streaming services, with the best shows drawing significant amounts of subscribers. I also believe that the streaming wars will be won or lost in international markets, so having the right tools for localisation is essential.

A well thought-out, global content supply chain in the cloud that delivers the right content to the right viewers quickly and efficiently should be part of every media company’s streaming arsenal.