Content and the Cloud

How cloud computing will help the broadcast and entertainment industry innovate, adapt, and achieve high performance

There is a power shift occurring in broadcast and entertainment, as consumers now live in an on-demand world and content producers are stealing the spotlight from distributors. New device, delivery, and workflow technologies offer opportunities for high performance companies of all sizes to take the lead, and cloud computing is poised to make an impact by supporting the next round of breakthroughs.

The transformation currently underway in the media market is as profound and impactful as the reinvention of the music industry by Apple. In that scenario, a nontraditional player leveraged an innovative platform to drive incredible change. Apple’s iPod device and iTunes delivery system set a standard that captured consumers and completely altered the business model. The banking sector in the final decades of the 20th century stands as another example. In that industry, electronic capabilities brought new trading techniques on the business side, while ATMs and online access freed consumers to conduct transactions on their own schedule. The business model dramatically changed and continues to be built around that electronic platform.

From a broadcast perspective, similar changes accelerated by cloud computing may soon inspire the same type of disruption and open doors for fierce competition. The industry faces a number of intriguing challenges that can be addressed by cloud technologies:

Adapting to a new environment takes speed and innovation. Companies need more computing power to improve workflow, business analytics and to input customer feedback into sales and service cycles.

Viewers are consuming content through a wide variety of channels. Television, PC, mobile, tablet—the proliferation of devices demands a more flexible business model that can recoup revenue from a highly segmented audience. Because of the focus on consumer access, the digital value chain is being turned on its head. The power that used to lie with distributors is now owned by content producers, further disrupting the delivery model. Technical requirements are changing; content providers and distributors alike need scalable IT solutions to keep pace. With millions of users demanding an entirely new level of capacity, current IT infrastructure is simply not up to the task.

Cloud computing creates a platform on which companies of all sizes can compete on storage, distribution of digital content and computing capacity for business solutions. In the face of these new challenges, it enables companies to apply a new set of dynamics that can launch them into a leadership position. Just as important, sitting idle while others test the technology will leave companies on the sidelines as competitors capitalize on the tremendous potential offered by the cloud.

Content and the Cloud 1

The Power of the Cloud
Figure 1. In-house operation vs. Cloud operation

Customer’s risk & cost
In-house operated platform

Customer’s risk & cost

Cloud operated platform

Software Operating System, programs Hardware CPUs, storage, switches, cabling, memory Physical facility Electricity, cooling, floor space, security

In-house operated platform

Cloud operated platform

Software Operating System, programs

Hardware CPUs, storage, switches, cabling, memory Physical facility Electricity, cooling, floor space, security

At its most basic level, cloud computing allows users—from consumers to content providers to distributors—to obtain computing capabilities through the Internet, regardless of their physical location. Computing clouds are in essence online, supersized data centers containing tens of thousands of servers hosting web applications. Cloud services from raw infrastructure to complete business processes can be purchased through web interfaces and turned on and off as they are needed. Cloud computing is still in early stages but has the potential for rapid, widespread adoption as executives across all industries begin to understand its applications. The list of providers is also growing, with players like Amazon,

Google and Microsoft leading the field and other entrants like salesforce.com focusing on specific business functions. Using the cloud, computing resources can be acquired faster and less expensively than through traditional hardware procurement. The cloud can scale up and be put in play in mere minutes, as opposed to the months it takes to procure and configure hardware needed to process peak data loads. The availability of nearly unlimited infrastructure resources means that a digital supply chain can adapt much faster to changes in demand. In addition to low cost and ease of access, a cloud computing platform improves the customer experience

and workforce productivity; companies can focus on managing content and business operations and let the cloud provider handle hardware maintenance, upgrades and other issues that accompany running a data center. Workflow and analytics solutions also become more easily managed, as software and computing power can be supplied by the cloud, allowing workers to gain access to enterprise enabling software anywhere, anytime. This hides complexity from the customer, shifts the operational and risk burdens to the cloud provider and brings significant infrastructure savings made possible by scalable utilization of the cloud (See Figure 1).1

1 Not just blue-sky thinking: Cloud computing and the digital supply chain, C. David Wolf, Thomas Van de Velde, Ross Sonnabend, Accenture Point of View, 2009

2 Content and the Cloud

Content and the Cloud 3

Four reasons that cloud will make an impact on broadcast & entertainment
The 2009 Accenture Global Content Study surveyed industry executives who pointed to a common conclusion: future revenue growth in the multi-device world depends on delivering the right quality and genre of content to the right consumers over the right platform. This requires, firstly, deep customer insight to develop and target offerings across the relevant delivery channels; and secondly, the ability to serve those channels at low marginal cost.2 These two needs can be directly addressed in the cloud, giving companies a low cost option to achieve high performance goals. With this in mind, there are four key reasons that broadcast and entertainment will innovate and grow with cloud computing. Figure 2. Which is the most vulnerable distribution channel used by consumers to access content? (Choice ranked in top three.)
Traditional TV Print Retail 1st choice 2nd choice 43% 40% 3rd choice 52%

into an increase in IP usage that requires greater hardware access. In fact, as broadband connectivity at home becomes a standard for most U.S. households, consumers are calling for more flexibility in concurrent viewing options. People want content available on multiple platforms and through any device—watching television in one room, gaming in another, and listening to online radio in another demands a centralized system and an upgrade in IP-based processing that can only be efficiently achieved with cloud technology.

1. Consumers demand digital freedom
Consumer need is a clear driver for cloud adoption. Viewing habits are changing from month to month, and the delivery methods are constantly advancing to keep pace. With new distribution avenues forming the primary source of future revenue growth, business leaders believe the channels most threatened by change are traditional television, print and retail (see Figure 2). In contrast, online portals, streaming, social media and eCommerce are the least threatened.3 The assessment reflects tangible trends, as mobile devices and PCs become more ingrained in everyday—and everynight— use. This constant connectivity is a crucial area of evolution that underscores the need for cloud. People are more and more frequently accessing content via networks, which translates

same time, the task of reformatting content, whether from analog to digital or for a new digital distribution channel, is a time consuming manual task that could be automated with the right amount of on-demand computing power. Social networking and online events are yet another area that battles against bandwidth during processing and bandwidth peak usage. Online communities become active in waves around events such as Fantasy Sports drafts and Facebook holiday photo posting or, even more harrowing, an update in social network privacy setting options. When millions of people reconfigure specific settings in their online community, the changes touch their many contacts and the demand for computing power explodes exponentially. Cloud computing is uniquely suited to address these challenges, as its “pay for use” model allows clients to simply add or subtract server units from their account; in times of significant activity they need only to ramp up their cloud space to meet demand for computing power.

2. Businesses need the cloud physically to accommodate content demands
Broadcast and entertainment companies are well aware that consumers are now calling the shots. With digital demand that rises and falls in unpredictable cycles, distribution demands are surpassing realistic hardware capacity. This is particularly evident in the case of User Generated Content—especially video— whose storage requirements dwarf professionally produced content. At the

4 Content and the Cloud

2 This time, it’s personal: Engaging and interacting with consumers is the content industry’s new battleground, the Accenture Global Content Study 2009, Mark Vernocchi, David Wolf, James Scott, Ross Sonnabend. Accenture 2009 3 Ibid

Content and the Cloud 5

The business response to consumer demand is giving rise to a repositioning of the value chain. A chain that used to rely on giants of the industry to bring media from the cinema, to DVDs, to pay per view is now flipping around to emphasize on-demand access. Content providers that can use inexpensive means to provide viewers with real-time authorization and high-quality, fast delivery will ultimately gain the trust of the user community—and with that trust, a great deal of leverage to control market share.

3. Businesses need the cloud to compete on analytics
In addition to helping with storage and delivery, cloud computing opens a gateway to improved business intelligence and workflow. By providing more computing power as needed, the cloud enables companies to gather intelligence on the fly and adapt to findings just as quickly. This application should earn high consideration from marketing executives, as according to the 2009 Content Study, over 70 percent of interviewees believe that robust consumer data capabilities are an enabler of competitive advantage.4 Such deep customer insight will pave the way to a higher success rate in capturing and retaining viewers; tailoring advertising and content is a complex process made simpler in the cloud. Customers that can more easily locate what they want to watch translates into satisfied viewers who are likely to return to the distributor, presenting a win-win situation from the back end all the way through the viewing screen.

Analytics also play a critical and practical role in interacting with consumers in a real-time environment. Ratings and usage trends provided by consumers provide immediate direction for the relationship. For example, online radio leader Pandora has secured a devoted following in large part because of its ability to track user behavior and provide playlists that closely correlate with demonstrated musical tastes. This model is fully dependant on aggregating and analyzing user feedback, a task that calls for significant computing power supplied by the cloud. In a similar vein, Apple’s Genius feature for iTunes takes a snapshot of listener selections and sends the information to the cloud. The results return to the listener in the form of a specialized playlist that reflects the data. While these applications provide advanced functionality for listeners, they also provide the basis for accurate sales recommendations of songs and products.

At a minimum, the broadcast and entertainment industry is ripe for the move of current workflow applications to a software as a service (Saas) model, in which players large and small can access needed applications via the web as they need them. In a traditionally fragmented industry, using a shared resource is an ideal approach for large firms that have employees spread across the country and boutiques that are working on a limited budget. Using the additional freedoms opened up by cloud can also inspire innovation to create new software suites that provide competitive advantage. For example, demands on distributors are exploding with the development of devices on which consumers can view content. Adjusting content to meet widely varied formatting requirements calls for tremendous manual labor, but cloud computing boosts the development of new applications that can help automate the process and can be accessed from any online location. A world of possibility will be open to companies that capitalize on technology to complete tasks using a better, faster and cheaper solution. Looking to the future, cloud technologies will provide a forum for established companies and startups alike to engage in healthy competition for the “next big thing.” Remember, Apple was not in the music business before iTunes.

4. Workplace and consumer innovators are seeking an accelerant in the clouds
One of the most intriguing benefits of cloud computing is the incredible flexibility it offers to players of any size. Early users will surely center on storage issues, but this could quickly evolve into a hybrid model that enables experimentation with limited risk and reduced time to market. For companies that are more interested in pioneering new business strategies, the cloud provides a platform to invent, test and roll out innovation to the marketplace.

4 This time, it’s personal: Engaging and interacting with consumers is the content industry’s new battleground, the Accenture Global Content Study 2009, Mark Vernocchi, David Wolf, James Scott, Ross Sonnabend. Accenture 2009

6 Content and the Cloud

Content and the Cloud 7

Taking steps towards cloud computing
Companies are already feeling the pull of cloud computing, but recognize that an immediate wholesale shift is unlikely. Business leaders should take a few steps to be certain that cloud is the right fit: difficulty of migration and associated investments. Selecting the right processes to test in the cloud requires an internal check to identify non-core processes that are ripe for technical automation and can be run in the cloud. Keeping data private and secure is a key issue and should be given strong consideration during the selection process. Protecting assets that are uploaded to the cloud is the single more pressing concern for broadcast and entertainment executives know the consequences of poor security; lost or pirated content translates into a significant loss of revenue. Users must sort out what level of control they have over assets that enter the cloud. Some vendors provide reasonable assurances and use internationally accepted practices for holding data. However, organizations should still engage in “threat modeling” to determine the real versus perceived risks. For example, a company that takes on sole responsibility for protecting assets should ensure its cloud provider accepts some level of liability while data is in its control. companies can then extrapolate the results to gauge the impact on other systems and active business periods. For example, the ABC television show Extreme Makeover, Home Edition, experienced sizable spikes in website visitation for each of its unique episode pages. Sites regularly crashed and the bandwidth required over 100 servers during peak periods and 50 to 60 updates per day to prevent prolonged outages. When cloud computing was implemented, services automatically scaled to accommodate the peaks and valleys of demand, eradicating the need to dedicate significant manpower and energy to future spikes.5 The broadcast and entertainment revolution shows no signs of slowing—Apple’s release of the iPad, a Netflix deal with Nintendo to stream video through home consoles and the rapid advances of mobile technology all typify the rapid release of new options. Industry shifts that address the rapid evolutionary pace are already apparent, as evidenced by the recent inclusion of Content Delivery Networks (CDNs) by major cloud providers. CDNs allow for a faster, front end delivery of high bandwidth items such as professionally produced content. By adding this feature, companies like Amazon (with CloudFront) and Microsoft ( with Azure) are improving their ability to offer their cloud clients the ability to deliver high quality content quickly, while delivering content accessed less frequently in less expensive, large scale areas of their cloud data centers. Staying agile amidst these changes is critical for large or traditional distributors, while the even playing field provided by cloud computing presents tremendous opportunities for young innovators. For every pocket of the industry and for the customers it serves, the cloud has the potential to support a new era of content and distribution.

Appoint a cloud leadership team
Driving change across an organization requires a concerted, coordinated effort that should be led by a team of both business and IT leaders. The team should be fully briefed on the objectives of testing or implementing cloud, the scope of the process, the benefits expected and clear deadlines. Once in a position to take action, communication can be aggressively pushed to individual stakeholders and the broader organization to ensure complete buy-in.

Understand the “size of the prize” and the immediate priorities
Cloud computing has potential to disrupt the industry and individual businesses, both positively and negatively. The team should develop a position on how the technology will impact business. From a strategic standpoint, that means considering how cloud can create new business opportunities, new competitive rivalries, new channels to market and how the technology can accelerate existing needs. On the tactics side, companies should assess where the cost savings will be gained, how business processes will be enhanced and how technology will be streamlined and standardized.

Analyze demand cycles
With the business operation identified, companies can then profile how their operations change during peaks and valleys of consumption. For example, the year-end holiday season may bring more media distribution demand, providing an opportunity to expand use of cloud computing instead of overbuying hardware to service that narrow window. When putting together a business case, cloud technology should be able to significantly improve the operation in terms of manpower, hardware and ease of use.

Identify candidate processes
There may be too much change associated with a move to cloud computing to contemplate making a wholesale shift. Companies need to understand which changes are going to have the most profound impact and prioritize isolated initiatives based on business benefits,
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Test at peak times
Leaders should tap into the high-demand period to test a minor operation with a cloud provider. From a cost perspective,

5 TV Web Site Opts For Cloud Servers, Information Week, October 30, 2009

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Copyright © 2010 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.

About Accenture
Accenture is a global management consulting, technology services and outsourcing company, with more than 181,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$21.58 billion for the fiscal year ended Aug. 31, 2009. Its home page is www.accenture.com.

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