On the eve of the annual Cable and Satellite Broadcast Association of Asia (CASBAA) Convention in Hong Kong, I thought it worth bringing a media flavor to this technology-focused blog. As a member of CASBAA's regulatory committee for the last two years, I feel a sense of deja vu permeating the anticipated discussion themes that will be flying round the halls, salons, meeting rooms, and coffee shops at the Grand Hyatt next week.
Key themes that continue to come up this year include piracy, OTT (over-the-top) models and "dis-intermediation" (or "cutting the cable") of cable players and set-top boxes, India, monetizing digital offerings, regulatory differences across Asian territories, branded content, and advertising models.
For the last couple of years, these seem to have been the pervasive themes of concern across the entire ecosystem, with some players clearly more concerned or interested as an issue affects their business model to a greater or lesser extent.
So it might be worthwhile briefly examining a couple of these in this blog post, with the others to be covered as a follow up post-CASBAA, although, as a disclaimer, I'm afraid I will do no issue justice and those who hope to see a solution for any of the above can stop reading now!
Addressing the problem of piracy
To an extent, this is self-explanatory, but increasing broadband penetration, smartphones and broadband speeds, coupled with occasionally reticent government intervention, are only exacerbating the problem. Add to that the "black box" aggregators that offer legitimate-looking hardware for sale to the public at shopping malls Asia-wide (which, effectively, simply connect a user to the Internet and a packed bouquet of stolen content), and you arrive at serious concerns.
One interesting approach to "taking out" the online technology pirates has been to go to the source of their financing and try to encourage advertisers to limit their online coverage to exclude support for such sites. This perhaps deserves any more explanation as most often advertising appear on pirate sites without the knowledge of companies or brands.
Online advertising at its very simplest replicates the "analogue" world of television and print media advertising, and payment is driven by the number of people who might view a relevant advertisement. In other words, popular sites earn more money as they have more visitors, and advertisers pay more for advertising space on such site as their likely ROI (returns on investment) on that advertisement are greater for the brand or company which product is advertised.
How then is an advertisement placed across millions of websites on offer? Although we are now venturing into the murky world controlled by ad agencies and, increasingly, adtech players (demand-and-sell side exchanges or advertising trading exchanges--your space for my product at a market determined price--as you could view them), the heart of most of such activities is driven by algorithms.
On a tech blog forum like this I'm sure there's no need to elaborate, but what this means at its core is a computer program that is asked in mathematical terms to: "Find me a place to put my advertisement which has the most users/views/clicks from the demographic which I am interested in targeting. Please." For each view or click or user, the site on which the advertisement is placed is paid money automatically.
As you can see, companies and brands can easily end up funding popular pirate sites without their intention or knowledge. Hence, the emergence the recent trends of approaching companies, brands, and advertising agencies with evidence of their unwitting support for illegal activities and encouraging them to introduce an "ethical filter" to the algorithm or agency-targeting campaign.
In other words, they're urged to amend the algorithm to read: "Find me a place to put my advertisement which has the most users/views/clicks from the demographic which I am interested in targeting. But, not one operating in breach of copyright law, or containing the words 'pirate' and 'bay'. Please."
In the absence of consistent government intervention, it is my humble view that this may well be the single most effective method to tackle the online problem.
A look at OTT models
By these, we mean the delivery of content to a viewer directly over the Internet.
An Olswang Asia/CASBAA study last year showed there were plenty of alternative, legitimate ways consumers in Singapore can access online content versus pirate sites, and the same is likely to hold true in other developed countries. However, the issue has been about promoting these legitimate methods and monetizing the offering.
A classic paradox has arisen (although all industry players will, I'm sure, hope the original Greek meaning of the word is not applied accurately here so there is in fact a logical way out of the circularity) whereby a consumer wants more ability to access content on-the-go online, but doesn't want to pay more on top of their cable or satellite or Internet bill.
There is no room here to examine this topic in the detail it deserves. In short, as a cable or DTH (satellite distribution) operator--namely the delivery platform--is struggling to get more money from consumers, it finds it hard to invest in the delivery model or technology a consumer wants (i.e. the ability to access content online securely, but an unwillingness to pay more to the content owner to obtain the digital rights to the relevant content).
What does this mean? Content owners and pure technology players such as Google, Microsoft, and Amazon are increasingly looking at ways of bypassing or "dis-intermediating" the platform and delivering content directly to the consumer.
So, coming back to the delivery platform, although there is no direct financial incentive for operators to invest in new delivery technology, this "bypassing" trend is pushing them to conclude they need to invest in order to retain consumer subscription revenue, win new subscribers, and retain advertising dollars.
These are all very complicated but likely to be good for the consumer in terms of the breadth of options, or at least in the aggregate amount they pay (as they may well end up with a number of providers of content), and certainly not likely to be good for the balance sheets of any platform or content industry player in the short term.
Add into this melee, recent self-developed programming by folks like Netflix and LoveFilm--which goes to show the power of attraction implicit in this "direct-to-consumer" relationship model for technology players--poses a threat to content owners which might otherwise be seen to benefit from the consumer-instigated ailment afflicting the platform, and you end up with a very complicated situation.
It may not be a classic Greek paradox but it certainly carries the complexity and inter-relationship of threat and opportunity that characterizes a Greek play...or tragedy.
As a discerning reader will no doubt have gathered, there is a reason these issues have been, and will continue to be for some time to come, the primary discussion items in gatherings of television industry and related-technology industry players.
That reason is comprised of three parts:
- the innate complexity and threat to traditional monetization models across the industry posed by piracy and online content distribution;
- the inter-relationship between the two issues: more digital content, and more piracy; and
- the lack of cohesion that is applied to piracy across the region, and the lack of unanimous interest across the industry in terms of OTT (i.e. no longer are all parties aligned on how to make money from content distribution).