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Key Ways to Monetize your Video Content Assets Gaining efficiency, scalability, agility and intelligence in the new video marketplace

2 Introduction

Core model - 3 Subscription

Core Model - 5 Transactions

Core Model - 7 Advertising

9 Mixed models

10 Summary

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Introduction

Make no bones about it, the core of the video business revolves around This document describes some of the basic models that can help join monetization of content assets—how to turn art, information and the dots between content and revenue, giving some examples of services entertainment into streams of revenue. We are experiencing an epic series around the globe that effectively employ the different models. We also of changes in the marketplace for content that include the key players in the want to highlight the aspects of the current technology evolution that are value chain, the way we think about video, the content being created, and the important in driving the economics of each type video service, and what to technology that powers our experience. Change in these dimensions seems look for in the future. And, of course, no discussion on the monetization pervasive but, in many ways, the fundamental aspects of how that money is of content would be complete without acknowledgment of the threats to made—and the threats to the businesses—are largely recognizable over more the business of service operators and the appropriate security approach to than 25 years of digital video distribution. address those threats. The core models of video monetization were not invented alongside the technologies of Internet video service, but have existed almost since the dawn of broadcast TV itself. What has demonstrably changed over time is the range and scope of the options that exist to enable revenue generation strategies. The technologies now available massively increase the efficiency, scalability and reach of video services - and their tactical agility in response to a changing consumer landscape. And these shifts also enable new ideas about content consumption—time shifting, binge watching and enjoyment of a new freedom of device choice.

The technologies now available massively increase the efficiency, scalability and reach of video services - and their tactical agility in response to a changing consumer landscape.

Another thing that seems to have changed is the democratization of video creation and service delivery. The technology that powers both is now remarkably broadly available, requires little capital investment and is often stunningly easy to use. You don’t have to be a Hollywood mogul to start a video business anymore. If you have a creative idea, or see an unmet need, many new options exist that can support converting that idea into a stream of revenue.

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Core model - Subscription

The basic model of a subscription is almost universal—a regular payment and, more internationally, by companies like iflix, Spull and Britbox. gives time limited access to a tier of service where consumption is Indeed the economics of the subscription approach can favor smaller unlimited. In today’s video world, the pleasure of pure subscription players with niche offerings. is near uninterrupted enjoyment of the content itself with very few distractions - no commercials, no prompts for additional payment and There are a host of technical advances that have helped underpin the no costs to experiment with new and unfamiliar genres. Subscription growth of this type of service, reduce the investment hurdle and improve models are also an ideal fit for live content—typically marketed as a bouquet of branded channels—with optional DVR or catch-up The prime pure example of the subscription model for on- capability. Typically the subscription cost varies with the breath of the demand content is Internet giant Netflix, whose customer content offer - and with the desired quality level. It’s certain that 4K/ centric strategy is to provide an easy to navigate library of UHD/HDR delivery definitely commands a premium price point. exclusively licensed content, including their own productions. The economic driver for consumers that’s driven the rise in popularity of subscription services around the globe is cost effective, unfettered access to a reasonably deep and regularly updated selection of content options. To encourage a regular payment commitment the library needs to be well curated and/or the live channels must include a compelling series or regular events. For a service provider the content costs and the delivery costs are a function of how much content each paying subscriber actually watches. The pressure is always on to drive operational costs down while keeping quality and selection at a level that maintains the subscriber relationship and prevents churn. The prime pure example of the subscription model for on-demand content is Internet giant Netflix, whose customer centric strategy is to provide an easy to navigate library of exclusively licensed content, including their own productions. With no advertisers to please, the content can be free of most censorship, although special limited selections are curated for children. A leading live Internet service subscription is Sling—providing a credible and financially flexible alternative to a pay TV satellite service from the same company. A similar approach is taken by players such as HBO with their HBO Go service

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the balance of revenue and expenses. A big operational cost for content and scenes of different complexity require varying amounts subscription services is CDN bandwidth, so optimization of content of information in each video frame. QVBR is an encoding rate encoding profiles can result in significant benefits. Advanced codec control technique that automatically adjusts to these differences, to technology helps optimize video quality level at each tier of video create a stream that dynamically balances video quality with bitrate bandwidth, for delivery at low mobile resolutions all the way up to requirements over the full range of video complexity. QVBR eliminates premium 4K/UHD/HDR quality for both live and on-demand, and is a the guesswork and frustration of managing your “bits budget”: When continuously developing science. One of the most recent advances on video scenes are more complex, QVBR spends bits to maintain desired this front is Quality-Defined Variable Bitrate (QVBR). The information video quality levels. When video quality levels are reached, QVBR contained in encoded video is inherently variable over time - different reduces the bits used. In the process, QVBR saves significant costs for both CDN egress and storage. Access to premium quality, cost effective encoding power is a critical competitive advantage for Internet video service operators. When managing an on-demand library, the load on such a resource is fairly bursty so it’s a big advantage to be able to switch access on and off as required. This is, of course, one compelling advantage of pay as you go cloud resources.

Access to premium quality, cost effective encoding power is a critical competitive advantage for Internet video service operators.

To support the business dimension of subscription services, what’s required is a security infrastructure based around DRM that protects the on-demand library and live channel line up and that entitles the right content selection for the consumers purchased tier of service. Apart from brute force attacks on DRM protected content, which is increasingly rare, a specific threat model exists for subscription services around credential sharing or theft, so service security features need to include limits on concurrent streams and/or devices used per subscriber account.

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Core Model - Transactions

Transactional payment approaches have a long history in and around the pay TV market including, for example, VOD offers and a large part of the DVD rental business. You can think of pay-per-view as the equivalent of a concert ticket or a night at the movies - at a much lower cost. This model is, however, now somewhat more specialized than the subscription payment offers and typically applies to content that is unique and often that is heavily promoted through other channels. In terms of Internet video service, due to the way that content is licensed on a time window basis, the transactional model is the only way to see premium movies close to their theatrical release date. In the context of live content, transactional payment is typical for premium sporting events, including, for example popular boxing matches.

You can think of pay-per-view as the equivalent of a concert ticket or a night at the movies - at a much lower cost.

Services such as Apple iTunes exemplify the transactional model by offering a broad library of movies and TV series with a pricing structure that offers both time limited rental and permanent access purchase models. As an example of live events monetization, the UFC Fight Pass offers premium, multi-device pay-per-view access to major contents together with a library of prior events and background profile content. WWE Network is also a transactional online event video streaming service offering WWE’s pay-per-view fights, with the additional incentive of access to thousands of hours of video on demand that includes a library of past pay events. All programming is viewable on a wide range of devices including TVs, game consoles, phones, tablets and desktops.

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In a rather unique twist on the model, the Cinépolis KLIC service is a between events. There is also the challenge of delivery to the widest companion to the ticket purchase for a night at the movie theater that range of devices while minimizing storage costs for different formats extends the value proposition with online movie access to customers of the same content. While advances in format standards, such as after their visit for all their connected devices. CMAF, hold great promise for unified service delivery in the future, today’s practical challenge requires service operators to reach a wide Part of the technical challenge for services monetized in this way is range of often technologically obsolescent device types that require access to scalable resources for live delivery that can be ramped up specific formats. One of the responses to this is the technology of ahead of time to meet the demand peaks during an event and retired Just in Time (JIT) packaging - where a common unencrypted base file format is packaged for delivery at time of request from a specific device type. The process often involves constructing a specific manifest file and processing each video segment to construct the correct format and add necessary DRM protection. The benefits of this approach are the reduced costs for content storage and reduced operational duplication of assets.

As an example of live events monetization, the UFC Fight Pass offers premium, multi-device pay-per-view access to major contents together with a library of prior events and background profile content.

Transaction based monetization is often associated with high priced and premium content, which is an attractive “honeypot” target for video pirates of various sorts. The implication of this is a greater emphasis on content security and the pay gateway implementation. An additional risk is content sharing of various sorts, which is a motivation for using the additional security layer of content watermarking to try and rapidly and precisely identify the source of illegitimate streams. The challenges of finding, identifying and shutting down these illegitimate streams is part of the security landscape for such a video enterprise.

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Core Model - Advertising

Advertising based revenue models are as old as video broadcast itself - For a Internet video service operator looking at the challenge of and have been at the heart of terrestrial, satellite and cable TV for many this type of monetization, the issue is one of achieving audience years. Their power of the model has always been the massive potential scale and understanding the demographic breakdown of viewers. reach of a broadcast medium, especially when paired with popular series These are the key variables that determine how much revenue can programming or a significant live event such as the Superbowl. Broadcast be made from available advertising slots. Of course the attraction to advertising is seen now as a relatively blunt instrument for reaching a consumer is that the content being made available comes without consumers - the one way nature of the network means limited feedback on subscription commitment or cost - if they are prepared to watch who might have seen what advertisement. The new capabilities of a two the advertisements along with the content they want to see. But the way network brought to bear by the Internet video service operator greatly corresponding challenge for the service provider is promoting the enhance the sophistication and effectiveness of the advertising approach. content and understanding the viewer population without the benefit This new power revolves primarily around ad targeting and attribution - of subscription account details. both of which act to multiply the value proposition of the service. Ad targeting - or personalized ad insertion - moves beyond the rigid regime of advertising thats married to the content itself and delivered to all viewers. Targeting attempts to insert advertising material in every viewing experience that is relevant to the demographics of that specific consumer and the campaign goals of that advertiser. When operating effectively, the targeting approach greatly enhances the impact of the advertisement and therefore the value of the advertising slot. Advertisers can tune the delivery to their desired demographic, as well as take into account other factors like time of day and viewing device type. Taking this one step further, attribution can connect the viewing of the advert to subsequent actions of the consumer, such as clicking to a web site or creating a bookmark. There are a large number of examples of advertising supported services, including the basic TV everywhere services offered by nearly all major existing broadcast networks. Fox, as one example, offers a streaming version of its live broadcast content in conjunction with on- demand access to recent episodes of its broadcast series, all supported by inserted advertising both before and during the content. A similar model is adopted in Europe by, for example, ZDF in Germany. Special

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events can be the fulcrum for very specific advertising efforts such as together different streams and, as a result, provides a seamless viewer recently seen around matches from the major World Cup soccer event. experience that can’t be disrupted by ad blocking software. This very popular content was streamed by many Latin American operators in 4K/UHD in a major promotional effort for the advanced For larger maximum flexibility, an appropriate approach may be use of a format with the majority of these services being advertising supported. hybrid CSAI/SSAI approach that combines the advantages of a server- side solution with an extensive client-side experience. A hybrid approach How is ad targeting achieved? Simply put, the workflow of the video offers interactive ad capabilities and a rich user interface (UI), as well service interacts with an ad targeting ecosystem to deliver the right as dynamic server-side ad insertion and seamless playback. A Hybrid ad choice at the right time during the stream delivery. Advertising CSAI/SSAI approach also enables advertisers to develop custom ads to content selection is often made by reference to an ad insertion engine be delivered across a wide variety of video playback devices. service - which attempts to match the time, location and interests of the viewer to available campaigns and tracks where and when the insertions were successful. How is ad targeting achieved? Simply put, the workflow of The first attempts to provide personalized ad insertion at scale focused the video service interacts with an ad targeting ecosystem on technology embedded within the consumers’ video player - so called to deliver the right ad choice at the right time during the Client-Side Ad Insertion (CSAI). CSAI relies on separate and independent stream delivery. deliveries of content and advertising segments to each video device. The advert segment is selected using the demographics of the consumer as seen through the video player - and the content has embedded marker signals that tell the player when to switch away from normal playback to display the advert. The use of client side player logic for ad insertion gives this scenario a great deal of scalability, but it doesn’t always result in the best viewer experience. Long advert loading times can cause stuttering or stalling and, if the ad is not at the same resolution or in the same format as the main content the visual effect can be disrupted. From a business standpoint, there is also an increasing threat to correct ad insertion from blocker software installed by consumers. Server-Side Ad Insertion (SSAI) is a more recent development that attempts to address some of these challenges by providing a continuous personal video stream to each and every consumer where the ads are combined with the content before delivery. This approach eliminates the dependency on the local player and any device side logic to stitch

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Mixed models

Each business model discussed is rarely implemented in a completely pure state on a given service. Amazon Prime is a clear example of mixed deployment, where the Prime subscription for on-demand and brokerage of live service bouquet subscriptions from major branded channels is blended with a premium movie rental and purchase service that includes download and offline playback options. Increasingly Amazon Prime is also used as a platform for live events such as US Thursday night football. As a major US broadcaster, CBS has also taken a different approach with its All Access service, where a subscription payment enables a reduced or eliminated advertising load to the content and availability of add-on packages for live streaming channels with cloud based DVR. A similar approach can be seen at Hulu, which has transitioned from full advertising supported streaming service to a subscription/advertising approach with a premium option to remove all advertising. fuboTV has similarly explored various approaches to the subscription/advertising model mix. New market entrants have often pioneered new approaches, but have typically remained agile in their approach to maximize penetration. The combination and permutations of options seen will likely continue to evolve as competition intensifies and consumer preferences change. On a more advanced topic, its becoming ever more critical to instrument whatever solution is chosen and gather detailed information on how consumers interact with the service. I’ts especially critical to gather audience knowledge regarding preferences as this is key to both immediate presentation of recommendations and navigation enhancement, but also provides that can drive long term content acquisition. Because of these needs, analytics collection and big data management is a key ancillary technology to that of service delivery.

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Summary

It’s often quoted that “content is king”—and this has never been truer From a conceptual point of view, the business approaches that are whatever flavor the business approach takes on. We are living in a being adopted by streaming video services are certainly rooted in new age of content optimism where a plethora of service options has the longer history of the video business. But from an implementation encouraged the blossoming of new and exciting productions at an standpoint, the technology that powers these new businesses has evolved unprecedentedly high level of quality. And the technology of content dramatically. Let’s highlight again some of those advances identified preparation and delivery is moving forward to complement the new above and offer pointers for further exploration of related AWS business opportunity this creates. Elemental offerings: • Codecs and encoder optimization is a key determinant of both service quality and delivery bandwidth usage. AWS Elemental MediaConvert and AWS Elemental MediaLive provide the core encoders offering in a serverless computing model. • JIT delivery technology enables a bridge between different device types, delivery formats and protection technologies that will likely persist for some time to come. The latest generation of this technology comes as a part of the AWS Elemental MediaPackage service • SSAI is a technique that’s of growing importance to the tuning of advertising based revenue models, especially when it can be deployed at scale. Explore the leading edge of this technology with AWS Elemental MediaTailor The cost and complexity of building a high quality video delivery service is certainly tumbling every year. Media solutions today, using some or all of the techniques discussed here, can be architected to help content providers build faster, work smarter, increase efficiency, and scale globally. In a following paper, we look forward to discussing in greater depth some additional advanced video technologies and strategies that can further enhance content related revenue streams and extend competitive advantage. l

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