In 2020, global cloud market spending reached $142 billion, according to Canalys. Cloud acceleration is happening in every industry around the world, and it’s especially prevalent in the video market. In fact, it has been documented that over the past year, 57% of media companies already operating in the cloud or planning to move there soon.
Several key factors are driving the video industry’s cloud transformation. First, during the global COVID-19 health crisis, the cloud has emerged as an exceptionally resilient infrastructure compared to traditional broadcast facilities impacted by lockdowns. Second, the cloud infrastructure is also scalable and flexible, giving streaming services a fundamental tool for large-scale delivery and introducing new features like targeted advertising and personalized content.
Cloud adoption will continue to grow rapidly for the foreseeable future, and major players in the video industry are choosing the cloud for a variety of reasons.
The cloud is perfect for video streaming
In the world of professional video and pay-TV services, streaming has become the dominant mode of video consumption. Early adopters moved to the cloud because the variable nature of streaming and its IP-based nature was a perfect fit for cloud infrastructure.
The cloud was also a good fit commercially with its pay-as-you-go business model that only pays for what is consumed without having to predetermine capacity, which is ideal for emerging streaming services.
The cloud enables live streaming to the masses
While the roots of video streaming lie in subscription VOD (SVOD) services, there has been a recent explosion in live streaming events. This increase is linked to the advantages of the cloud.
The on-premises infrastructure has limitations and one of those constraints is the need to pre-estimate peak usage in order to deploy the right amount of compute and storage in the facility. The cloud made this prerequisite immaterial and as such enabled its use to serve high viewership streaming services. Being inherently flexible and scalable, the cloud allows content owners to efficiently deliver an infinite number of live events and channels, without having to predict viewership. If the audience skyrockets, the cloud can adapt, using scaling technologies, in real time, helping to meet growing demand.
The cloud is home to targeted advertising
Another reason for the video industry‘s push to the cloud is targeted advertising, which is powered by Dynamic Ad Insertion (DAI) technology. Targeted advertising will be a fundamental part of the streaming media business model in the future and is already a multi-billion dollar market today. eMarketer research shows ad spend on connected TVs in 2021 is expected to top $11 billion in the US alone.
This growing ecosystem for targeted advertising resides in the cloud. By leveraging the power of cloud computing technology, machine learning and AI, as well as vast amounts of storage, content owners can collect and process huge amounts of consumer data and determine the best advertisement for each individual viewer, increasing the overall monetization potential.
Content personalization is not possible without the cloud
By offering personalized content, such as local and regionalized sports or creating channel variations for different demographics, video services can reach wider audiences and increase overall watch time. Content personalization requires the use of analytics, data, and AI, which in turn relies on a massive amount of storage and compute. This provides yet another reason why video workflows are headed to the cloud.
The cloud is reliable
Early in cloud adoption, it was assumed that the cloud would not be as reliable as traditional broadcast facilities. This notion was proven wrong by two key events. The first is the success and proven reliability of large-scale streaming platforms such as Netflix and Amazon Prime that run primarily on the cloud, and the second was the pandemic, which confirmed that clouds are not only reliable, but can grow to meet explosive demands while maintaining a high level of reliability.
Today, we see further steps being taken by applying cloud-specific designs previously not possible in traditional architectures, which bring even higher levels of reliability. One such example is the use of geo-redundant clouds that are synchronized and ensure that downstream subscribers pull content from one or the other seamlessly. This not only provides high reliability, but also a basis for easier maintenance and upgrades.
The total cost of ownership is equivalent
When choosing between on-premises and cloud for video delivery, a total cost of ownership (TCO) analysis is often performed. This involves weighing the direct and indirect benefits of on-premises versus cloud infrastructure with price. Recent comparisons have repeatedly proven that the total cost of ownership is quite favorable in a pure cost analysis.
But when looking at the big picture, it’s obvious that by using the cloud, it’s possible to free up talented engineers from focusing on the infrastructure to focus on the application level itself. and, therefore, to bring greater value to the service as a whole.
The global COVID-19 health crisis has accelerated the growth of video streaming and led to rapid adoption of cloud-based infrastructure. With the cloud, video service providers are able to deliver more, deliver personalized content, generate new revenue through targeted advertising, and increase the efficiency of a range of video workflows.
The video industry‘s pivot to a cloud environment will have lasting effects on the evolution of video. This will result in new and improved viewing experiences and more lucrative business models for content owners and streaming providers.
Shahar Bar is Senior Vice President, Video Products and Corporate Development at www.harmonicinc.com