Steve Reynolds, president of Imagine Communications, explains how decisions about technical infrastructure and topology must align with operating cost requirements, and why he expects SMPTE ST 2110 continue to establish itself as the global standard for live production in the coming months.
What industry trends have particularly stood out for you in 2023, and why?
One of the most significant trends of 2023 has been the transformation that has taken place in connected television (CTV). While the success of streaming services was initially centred on subscription video on demand (SVoD), there’s been a notable shift towards an ad-supported model for monetising content. And consumers are onboard — there’s been a huge uptick in the number of viewers engaging with ad-supported content and a shift in consumer preference towards the same.
Part of this can be attributed to the state of the economy in 2023; money is tight these days, so people are understandably drawn to free services. But it also reflects a degree of subscription fatigue, a hot topic among industry analysts. Today’s consumers are seeking a broader array of content, and the emergence of free ad-supported television (FAST) and ad-supported video-on-demand (AVoD) platforms has given them access to more extensive libraries, original content, and live broadcasts, such as sporting events.
As consumers are increasingly embracing these services, content owners are beginning to view CTV as an integral component of their business operations. In the early stages of CTV, a variety of silos were established for streaming, FAST channels, and direct-to-consumer offerings. This fragmentation occurred because media companies had small groups tasked with quickly launching these services with lightweight solutions that weren’t necessarily suited to a more mature business model. Integration with other aspects of their operations was challenging, but this was less of a concern when the primary objective was to get streams live and attract viewers quickly.
These silos started to dissolve in 2023 as media companies began to consider how to incorporate CTV into their core business. This involves unifying their operations, reducing operational costs across multiple platforms, and reaggregating advertising inventory across the full range of services. Essentially, the CTV industry is maturing, transitioning from its initial gold rush phase to a more sustainable, long-term approach focused on maximising scale and profitability from CTV services.
What impact are you seeing those trends having on the media and entertainment industry?
The impact of CTV has been quite significant in a lot of ways. Creating and distributing content now requires a versatile approach capable of spanning multiple platforms – from linear, to streaming, to on-demand and direct-to-consumer. There is a growing realisation that there is no one-size-fits-all operational model. Instead, a mix of models is needed, as has always been the case in our industry.
For example, pay-TV and free-to-air broadcast coexisted for decades, with each serving a valuable role and enjoying profitability among diverse consumer groups. This pattern is likely to continue in the future. We will begin to see the emergence of hybrid monetisation models, combining the strengths of linear television — such as broad audience reach and sponsorship opportunities — with the precision and addressability offered by newer, more targeted platforms. For media companies, the key to future success lies in this hybrid approach.
How do you see those trends developing further in 2024?
Over the past few months, there has been considerable debate regarding the role of the cloud in optimising costs, and I expect that conversation to continue throughout 2024.
Many media companies have come to recognise that running certain operations in the cloud may not always be the most cost-effective solution ― particularly for continuous, round-the-clock activities. In situations where companies already have a facility, studio, or broadcast centre in operation, running origination from these premises can make financial sense, as they’re already investing in personnel, power, cooling, and rack space. In addition, costs related to data ingress and egress, computing resources, and storage all add up.
However, there are situations when the cloud is unquestionably the better choice, like in occasional-use scenarios or to test a new service offering. Here, it makes more sense to leverage the cloud’s scalability and variable cost model than to invest heavily in on-premises infrastructure that will largely remain idle. Furthermore, it’s essential to consider content distribution across the cloud. If a company’s audience primarily accesses content through connected TVs or devices like iPads, the content needs to reside in the cloud anyway.
So, decisions about technical infrastructure and topology must align with operating cost requirements, while also factoring in the location of the consumer and their content consumption preferences. The industry is evolving and becoming more adept at assessing and deciding when to adopt each approach.
Do you expect to see any new trends within the industry in 2024, and what will they be?
The key trend that I believe we’ll see in 2024 is a focus on profitability and efficiency across the media industry. As I’ve touched on already, growth was the key focus for the past several years ― growth in subscribers, growth in viewership, growth in library size or hours of live sports. A lot of that growth came at a cost that is just not sustainable. So now, we are seeing the pivot back towards more rational and scalable business models. It’s well understood that the TV economy is powered by two sources: sell the content or sell the audience watching that content. The early CTV services focused on subscription; they are now seeing that audience monetisation through advertising is just as important to raise average revenue per user (ARPU) to levels required to justify the high content spend.
That’s going to lead into what I feel will be one of the key questions our industry faces in 2024, which is how we blend the advertising models of TV and digital to create a new, optimised ad model for CTV. In many ways, CTV inventory is better than linear TV because it has the capabilities to be addressable and measurable. But if you treat CTV inventory like digital inventory, you erode its value by taking away the premium aspects of TV such as brand safety, mass simultaneous reach, or fixed placements for sponsorship. CTV is clearly over-indexed towards digital at the moment, which is why you see the imbalance between supply and demand driving CPMs down. In 2024, we need to find the formula that moves CTV back towards premium rates and fixing the viewer experience to make CTV advertising more valuable.
In conjunction with this, I also expect to see an increase in regulations in 2024, particularly concerning CTV services. In 2023, Ofcom in the UK announced its intention to apply the same content and advertising regulations to CTV that have long been applied to traditional broadcast TV. This is likely to become a global trend in 2024, with other jurisdictions following suit. And the same applies to privacy regulations. The GDPR has established a baseline for European countries, and the CCPA in California is a notable example of similar developments in the US. These consumer privacy regulations will affect how we personalise content and target advertising and present a challenge in leveraging technology within their constraints. Ultimately, we will find solutions to these challenges, but they introduce a new set of obstacles that we must navigate to continue advancing in our industry.
Looking at a purely technical trend, I think we’ll see a more pragmatic view of artificial intelligence (AI). While this technology may have been somewhat overhyped in its early stages, it’s a valuable tool that will continue to weave its way into our industry. Generative AI, for instance, can be brought back into the industry in the same way that earlier technologies like machine learning and pattern recognition have been. For example, Imagine’s Care Group is looking at how they can respond more efficiently to customer questions on our software and systems. They are doing this by building a knowledge base leveraging our extensive ticket system data and then training AI on it. So, the advancements in AI are tangible, but it’s crucial to approach them realistically and practically, understanding that they are tools to solve problems rather than magic wands.
In 2024, we’ll also see SMPTE ST 2110 continue to establish itself as the global standard for live production ― a progression that underscores the growing significance of IP technology within our industry. Organisations like the VSF, through their ground-to-cloud and cloud-to-ground initiatives, have played a pivotal role in this shift. And while ST 2110 has previously been reserved for major events, we’re seeing that change as the technology matures and becomes more suitable for more everyday use and routine events. The standard’s growing popularity stems from its cost-effectiveness and flexibility, particularly when coupled with software control and network orchestration. In addition, the ratification of JPEG XS has been a pivotal moment in enabling live, low-latency, high-quality contribution to the cloud, further accelerating the adoption of IP technology.
Finally, in 2024 I expect to see an increased focus on green initiatives in terms of power consumption and e-waste. This was a hot topic at IBC2023 and one that needs to continue being discussed. While ST 2110 and IP-based production is inherently more environmentally friendly compared to older SDI solutions, regulatory changes in the EU and other regions may mandate that carbon footprints become a standard consideration when making technology decisions. And when it comes to reducing e-waste, COTS equipment offers a longer lifespan and greater versatility than older modular equipment. As infrastructure transitions to ST 2110, COTS equipment can be repurposed — rather than rendered obsolete — an approach that not only reduces e-waste, but also represents a proactive decision to invest in sustainable technology solutions.
