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In the Middle of Digital Disruption

Looking at it from a partner perspective, three words are sufficient to sum up the potential of the Indian digitally disrupted media & entertainment industry: opportunity, opportunity, opportunity

By Amit Singh

The Indian media and entertainment (M&E) industry is a sunrise sector for the economy and is on the cusp of a strong phase of growth, backed by rising consumer demand and improving advertising revenues. The industry has been largely driven by increasing digitization and higher internet usage over the last decade.

The sector grew 11 percent to $20 billion in FY2016, according to a report by FICCI and Ernst & Young (EY). It is expected to touch $35 billion by FY2021.

The M&E sector is further driven by various government initiatives such as digitizing the cable distribution segment to attract greater institutional funding, increasing FDI limit from 74 percent to 100 percent in cable and DTH satellite platforms, and granting industry status to the film industry for easy access to institutional finance.

As per another study, over FY2016-21, the radio will likely grow at a CAGR of 16.1 percent, while digital advertising will grow at 30.8 percent. The largest segment, India’s television industry, is expected to grow at a CAGR of 14.7 percent, while print media is expected to grow at a CAGR of 7.3 percent.

Ashish Pherwani, Partner, Advisory, Media and Entertainment, EY

Ashish Pherwani, Partner, Advisory, Media and Entertainment, EY shares, “The Indian M&E sector is at a digital crossroads today. Every segment of the industry, including print, TV, radio, film, experiential marketing, and OTT, is being impacted by digitization and is showing growth, consolidation, and innovation. It presents an excellent opportunity for companies looking at establishing and expanding their presence in the country, and making the most of the India digital growth story.”

In fact, the next 5 years will see digital technologies increase their influence across the industry leading to a sea change in consumer behavior across all segments.

Digital disrupts M&E

Digital transformation has already disrupted the M&E sector, and consumers are driving the change. And while more than ever before, people are willing to pay for digital content, their expectations are high. Just having good content is no longer enough: It has to be personalized, accessible anywhere and anytime – while being fully integrated into other digital experiences.

Music segment was the first segment to be disrupted by digital revolution in the M&E sector, with consumers moving toward streaming and multiple consumption models.

Jehil Thakkar, Partner, Deloitte India

“Cheap 4G handsets and falling data prices led to a surge in data consumption on mobile devices in 2017, resulting in high user acquisitions for digital media and entertainment startups including video-streaming platforms and music-streaming apps. In fact, OTT (over-the-top) players like Amazon Prime Video, Netflix and Hotstar will only get bigger,” says Jehil Thakkar, Partner, Deloitte India.

Moreover, analysts and entrepreneurs attribute the spurt in users across digital platforms to the entry of Reliance Jio, which disrupted the telecom industry with cheaper access to high-speed data and forced other telecom companies to follow suit with similar offers.

“In addition, the rise of Hulu and Netflix has left many to cut the cord with traditional cable companies. Instead, users are going online to find just the content they want, be it YouTube videos, or original series on Netflix, Hulu, and even Amazon—and cable companies are replacing traditional offerings with smaller bundles and specialty packages,” says Ankit Garg, COO, Powerupcloud Technologies.

Further, with the increasing popularity of HD and UHD content, television organizations are investing heavily in state-of-the-art production facilities. Moreover, the digitization of content, the spread of the Internet, and mobile device proliferation for accessing content are necessitating robust IT infrastructure.

Adds Neel Shah, Director, Insight Business Machine, “Almost all channels have already gone HD, which requires content companies to upgrade their infrastructure. The need for high-performance computing and storage has also increased due to the increasing proliferation of live TV apps. This has led to channels overhauling their core networks from 10G to 40G, and many players have even upgraded to 100G.”

Cloud works wonders

Cloud is helping startups as well as established M&E players manage industry disruptions. It is enabling them to reinvent their business models, fuelling massive improvements in the delivery of high-quality digital content, and providing ample resources to collect, store and process big data to help segment and target the market better.

In fact, M&E companies that were early adopters of cloud computing are also the ones with major viewership and market share presently. Netflix, for instance, was 100 percent on the cloud in early 2012 and is among the largest customers of AWS. 20th Century Fox is another example: the media giant partnered with HP to make its supply chain cloud-enabled and migrated traditional IT infrastructure and computing to cloud platforms.

According to Frost & Sullivan, cloud solutions are offering an attractive solution to manage the explosion of digital media and consumer devices, as well as the spurt in video consumption.

Pronam Chatterjee, Founder and CEO, Blue Pi Consulting

“In the M&E sector, the user load is highly unpredictable. It may increase 50-100 times when a big story breaks online. To tackle these cases, the cloud offers a cost-effective and convenient solution, since it does not require any upfront investment and can be paid for according to usage or through a monthly/yearly subscription,” states Pronam Chatterjee, Founder and CEO, Blue Pi Consulting. “The constant pressure to decrease IT budgets and invest resources in generating high-quality, creative content instead is driving media companies to adopt cloud solutions.”

The company has prominent media companies like ABP News as customers. BluePi has made ABP News server-less over the last three years and has seen the cost of operations going down with increasing viewership. “When we moved ABP to AWS, the primary reasons were reliability and agility. The robustness of the solution has enabled to shrink the time required to make changes in the site design and framework,” adds Chatterjee.

Further, the cloud is enabling M&E sector incumbents to compete with agile OTT competitors. “The cloud solutions enable them with the ability to collect, store and conduct analytics on vast amounts of data, generating insights to drive personalization, service development, customer experience and one-to-one relationships. In fact, integration of Microsoft Kaizala with Azure offers an excellent example to drive operational excellence and viewer engagement powered by the cloud,” explains Garg of Powerupcloud.

Although North America is presently the biggest market for M&E solutions on the cloud, the Asia-Pacific region is expected to open up the most opportunities for solution providers over the next five years, as per Frost & Sullivan. According to the analyst firm, the cloud market for M&E sector will grow nearly nine-fold by 2020.

AI to be the next big thing

With videos, images, and audio playing a big role in the Internet space, market experts see a significant impact from artificial intelligence (AI)/ machine learning (ML) technologies.

AI is helping creators to match content more effectively with audiences. Algorithms based on neural networks learn and classify a user’s preferences—from movies streamed on Netflix, music listened to on Saavn or products purchased on Amazon. Providers can then recommend content tailored to a specific user.

Pawan Khurana, CEO, QuantM Net Technologies

AI aids production itself by performing tasks that are too difficult for humans. In advertising, it is being used to contextualize social-media conversations to understand how consumers feel about products and to detect fraudulent ad impressions. “Services such as Amper or Jukedeck compose music with AI, enabling small-scale creators to use high-quality music for their podcasts, videos, and games at low cost. Automated mastering software such as Landr provides near-studio-quality processing and rendering for between $50 and $300 a year,” says Pawan Khurana, CEO, QuantM Net Technologies.

In addition, AI that generates text is used by few publishers to expand the range of offerings. The Associated Press has used AI to free up around 20 percent of reporters’ time while increasing output tenfold. The Washington Post developed its own tool, Heliograf, to cover sports and political news. In its first year, it generated about 70 articles a month, mostly stories it would not have dedicated staff.

In India, however, AI in M&E sector is at a nascent stage with only a few of the large enterprises running pilot projects. “While most of the M&E organizations are leveraging BI and analytics to capture market intelligence, the next stage of transformation will definitely include AI technologies in a big way,” shares Khurana of QuantM.

DAM gets smart

Digital asset management (DAM) systems ideally help organizations track material in their archives and locate content throughout a facility. In recent times, as the magnitude of media files have increased and there was a need for sophisticated archiving, broadcasters demanded applications that enabled management, authoring, and editing, deep indexing, meta tagging, retrieving, annotation and display, and repurposing of digital media assets. All this has resulted in an increasing demand for smart DAM solutions.

Manish Tandon, MD, Questa Software

“In addition, over the last few years, India has reaffirmed its position as an efficient and high-quality outsourcing destination which led to corresponding growth for the animation, VFX and post-production business. This has, in turn, increased the necessity of an efficient DAM solution,” says Manish Tandon, MD, Questa Software.

In fact, solution providers are offering innovative solutions to streamline asset management with analytics, scalable website and push notification capabilities. The Gurugram-based cloud solutions provider, BluePi Consulting, has developed an innovative solution, PiStats, which incorporates DAM with the analytics engine. “The analytics engine on top of the DAM solution enables to capture and analyze demographic and behavioral data of the users. This enables us to present the content in a personalized manner as per the historical analysis of the user behavior and preferences,” explains Chatterjee of BluePi.

Further, AWS recently announced a new class of apps that exhibit human-like intelligence, including Amazon Rekognition Video, a deep learning powered video analysis service that tracks people, detects activities, and recognizes objects, celebrities, and inappropriate content.

The media and entertainment industry generates a huge volume of videos that are stored in different digital asset management solutions. Amazon Rekognition Video tags and marks the video by scene, by actors, by location, even facial expressions, and so on.

Additionally, online business management in M&E is a big opportunity as media houses and online entertainment companies have a large focus on the customer experience to drive traffic to their websites and generate revenue through online ads and paid content.

Notes Khurana of QuantM, “Companies like Book My Show and PVR Cinemas spend heavily on their online business and DAM; purchases include server, storage, payment gateway, SEO as well as BI tools. An online business set-up project may cost about Rs 55-70 lakh.”

Security becomes a priority

M&E sector has been on the receiving end of a slew of cyber attacks, which has resulted in the theft of proprietary information, including some upcoming programs. Recently, unreleased episodes of HBO’s most premium property, Game of Thrones, were leaked online.

A recent report found that 28 percent of media organizations admit to having experienced a cyber attack of some type or another.

Hence, media houses are taking the information security seriously, which has translated into a great opportunity for security solution providers for solutions including DLP and information rights management (IRM).

Vishal Bindra, CEO, ACPL Systems

“Publishing houses and channels are serious about availability solutions to keep their websites up and running. In-house they are using DLP and IRM solutions to restrict access to confidential information,” explains Vishal Bindra, CEO, ACPL Systems.

He added that ethics and professionalism at the lower ranks is a concern. “This seems to be more of a people problem rather than a technology problem. In a lot of leaks, cyber threats exploit insiders. They give in because of greed, or do not follow the process, or are targeted for their access,” he said. “In the majority of cases, employees were the weak link.”

Sector Snapshot

Industry size:     $20 billion

Growth prospects:  To reach $35 billion by FY2021

Industry data:    7000+ media companies

Demographics: Pan-India

IT spend:  0.5-1.2 percent of annual revenue

Opportunities: BI and analytics, mobility solutions, app development, digital asset management, high-performance computing, storage, networking, archival, backup and retrieval, post production applications, information security, video conferencing, web solutions

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