Murali Nemani (Cisco) on content value, new business models, and how the network becomes the platform

Last week, from march 22nd till march 24th, the IP&TV World Forum 2011 was organized in London. One of the speaker was Murali Nemani, Director of Video Solutions at Cisco, and part of the Cisco Videoscape team

Consumer electronics and service provicers

In his presentation (watch it here) he talks about the big actors that are active within this trillion dollar business: consumer electronic companies, service providers, over the top players and portals, and media companies. He notes that in the last couple of year getting access to content has been the biggest issue for many actors in the field, especially consumer electronic producers (e.g. Samsung) and distribution companies and platforms (e.g. Hulu and Netflix).

The consumer electronics market is changing. Many consumer electronics companies create a consumer device, and say ‘connect it to a broadband connection, and you can get any content you want’. They face two challenges, how do I get this infinite amount of sources of content to the consumer, and how do they break out the ecosystem since consumers do not live in an ‘all Apple’ or ‘all Google’ environment. People are using a Samsung television, an Android phone, an iPad and Mac laptop, and a Windows based desktop. So the value proposition cannot be restricted to an unique device.

New business models

The media ecosystem is changing as media companies are trying new business models to preserve the value of their content by changing their business proposals as for example with the recent (hyped) Warner Bros and Facebook collaboration (watch The Dark Knight on Facebook). These new business models create revenue implications for entertainment and content service providers since there is a shift in content value. As an example, Murali Nemani talks how Netflix pays 15 dollar cent per subscriber to Starz Entertainment, versus 2 dollar per subscriber for traditional cable companies (although part of this difference is based on quality and rights beyond syndication).

After this he talks how device and platform companies struggle to get all the relevant content to their product and support this with an economic valid business model. Steve Jobs initial plan with the iPad and with Apple TV for example, was to bundle all the content into one device. However, NBC and CBS argue that the 99 cent model that Apple is proposing is actually destroying the value of their content. Media companies are worried about these new models are decreasing content value and therefore revenue opposed to the higher returns on content by traditional distribution channels such as cable.

More flexibility and mobility of the content

However, consumers demand more flexibility and mobility of the content and so these new business models are developing. As is the case with the 200 million dollar deal between CBS and Netflix in which CBS is offering their long-tail and out of syndication content, but the prime-time content and key shows, that is a major part of the revenue income for CBS, is still maintained within CBS’s broadcasting and syndication channels. We saw the same with Viacom who backed out of Hulu since the free advertisement based model was destroying the value of their content, but joined back in when Hulu introduced the subscription based version HuluPlus (a $7.99 subscribtion based service). We can see how these models are developing towards a multiple distribution strategy in which content is not free, but the value is diversified. There are still going to be premium channels and premium content deliveries, while at the same time a pursuit for new online content strategies in which subscription and pay-per-view options generate the revenue. Distribution platform can reinforce the value of subscription based models by being able to aggregate content from many different places, while at the same time, media companies can preserve the carriage fee models that provides an important part of their income.

Content Delivery Networks (CDN’s)

Murali Nemani is seeing a big chance for content delivery networks (CDN’s) in providing the infrastructure that is needed to deliver content to many different IP enabled devices; for example the process of encoding content, delivering content to different platforms, provide subscription based opportunities, and providing security measures. This is especially important when bringing the different content options together under one experience. The fragmented experience needs to become a consistent experience and be delivered across platforms. Consumers must have the ability to take their television experience with them. In 2014 there will be 12 billion video enabled IP-connections, many of them are smartphones, game consoles, connected tv’s, or tablets. Content service providers should attempt to capitalize on all those devices by expanding in-screen monetization opportunities.  The end screen functionality is not only to deliver the video or television content across different devices, but actually map the business and advertisement models to it.

Murali Nemani talked at New TeeVee

One and a half year ago Murali Nemani talked at the NewTeeVee event in San Fransisco about these developments where he noted how fragmentation of video content (multiple players and platforms, both online and offline) poses new challenges, and how pay TV, online content, and on demand services will converge together to be delivered over an optimized media rich network to different devices. He sees IP video as the ‘third wave’ of content distribution, as a development on the first wave of proprietary cable television, and the second wave of IP-TV allowing interactive services in a proprietary manner. This third wave is characterized by CDN (content delivery network) architectures, network intelligence for applications development, command and control functions adopting open web protocols, a client focused strategy instead of a device strategy (device independent), and delivery on unmanaged network instead of dedicated managed networks (beyond territorial networks of e.g. Comcast, Bell South, and AT&T U-Verse). Most interestingly he notes how the network becomes the platform for service and business model innovation to deliver content and applications.

About the author:

Geert Faber graduated with a Master of Science degree in Business Administration from the Free University in Amsterdam and is currently graduating as a Bachelor of Arts in Media & Culture specializing in New Media and Television studies, writing his graduate thesis about the convergence of new media and television. Beside graduating he works as an E-business and Social Media consultant and blogs for new media conferences.

Find more about me


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