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Piecing together a fragmented digital video industry


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Piecing together a fragmented digital video industry

Opinions expressed inthis piece are solely those of the author and do not represent the views of SNLKagan.

How do you solve a problem like all this freaking content?

The video entertainment business is as fragmented as aPicasso painting, and that is the biggest problem in video programming today,several experts said during last week's Digital Hollywood conference.Traditional TV offered a range of programming all in one place, streamed over acable line, searchable with a dedicated guide. The programming problems ofyesterday seem quaint by today's standards.

"We used to joke about 500 channels and nothing on. Nowit's not 500 apps; it's 2,000 apps and nothing on," said Robin Wilson,vice president of business development at NAGRA, a multiplatform videosolutions provider.

Wilson's comment came after a panel moderator asked if theindustry will ever find "the nirvana of a unified program guide" forthe world's content, the legion of shows, series, specials and shorts thatviewers can now stream on their smart TVs, tablets and phones.

That question came up often during the week of events gearedtoward the digital side of the video entertainment business, as it has often inthe past few years of Digital Hollywood's biannual show.

However, this year prognosticators have reason to believethat answers to the fragmentation problem may be forthcoming. Signs ofunprecedented partnerships are popping up across the industry.

The reason content is so fragmented today — delivered andconsumed on different platforms, apps and devices — is not because of technicalissues. A group of panelists agreed that the problems could be easily fixedwith a simple agreement to adhere to a standard of specifications acrossplatforms. Then each bit of video content could carry a packet of metadata thatallowed the easy organization of that video into a searchable library ofcontent that spanned every participating platform. There would be no limit tohow many platforms could agree to the standard and be included, and it would bea boon for data aggregators, marketers and consumers alike.

So the problem isn't a technical one. Rather, it is aproblem of business relations, the panelists argued.

Basically, the operators of all the disparate platforms andthe creators of all the disparate pieces of content can't seem to agree.

"Old money follows old habits," said Mike Earle,CEO of OTT solutions provider aioTV. "These are long entrenched businessmodels that people just don't want to let go of yet. This is not a technicalchallenge for anybody up here. This is easy to solve … if we could just getover the old entrenched models."

But that is no small ask. Content creators like and as well as distributorslike Comcast Corp.and AT&T Inc.remain hotly competitive, keeping their delivery and data solutions behindtheir own proprietary curtains.

"It's like the major leagues of sports. You're notgoing to see these guys play nice together," Kanaan Jemili, CEO of videotechnology company NeuLion, said during a panel.

Still, there are some signs the ice is thawing. It wasrecently reported that HuluLLC is developing a new service that would allow users tostream shows from broadcast and cable TV networks, and is reportedly close tolicensing deals with Walt DisneyCo. and 21st CenturyFox Inc. Further, Alphabet Inc.'s YouTube is working on a similar service,according to reports, and it has been in meetings with , , 21st Century Foxand CBS Corp.

These come on top of Apple Inc.'s longstanding efforts to unite the contentindustry behind a video service of its own.

Even though these developments are still in theirpreliminary stages and are only being reported by third parties, a year prior,Earle said, Digital Hollywood's panelists never would have expected deals likethis between these parties.

"It's starting to move right now," he said."It's changing."

So what is the incentive? Why would these companies begin towork with each other to create a better experience for the viewer?

On the one hand, some panelists acknowledged the obviousfact that, if done correctly, the parties that participate in a revolutionary,agnostic, streamlined video service could win a lot of eyeballs, advertisers,subscriptions and whatever other measures of success would apply. But takingthe steps and striking the partnerships to implement a universaldiscoverability platform is still an unproven strategy.

Another solution would be to create a technical standard forvideo tagging and sharing and incentivize companies to join the standard on avoluntary basis. The process could be managed by an existing industry interestgroup like the National Association of Broadcasters or CableLabs.

However, the problem there is coming to an agreement onstandards and methods at a time when digital video is largely in its testingphases. Part of the prevailing fragmentation is a result of the fact that thereare so many different solutions to over-the-top and streaming video, and thereare so many new solutions under development, that it may be too soon to get theindustry to come together around one specific standard.

Then there is the problem of monetization. How flexiblewould the new standard be for different business models?

Illustrating this problem as well as the problem ofentrenched, perhaps inadequate business models, Wilson at NAGRA pointed to theadvertising model.

"There are so many attempts to rescue a brokenad-supported model. In OTT, it's just horrible," he argued. "Ads are justinserted in offensive ways, in the wrong place at the wrong time, repeated overand over. The inventory is all mixed up. That's so negative, I think."

The industry still is not quite sure how to best monetizeits content, and shoehorning existing methods into the digital cleat may not bethe best method.

"There's got to be in the middle. We don't know whereit's going to be," Jemili said.

Perhaps that workable middle ground will come out of a newHulu or YouTube service. Perhaps it will be some years before a standard isdefined and adhered to. But one thing has not changed during this year'sDigital Hollywood from recent years: The belief that a solution will come.

The feasibility and appeal of a broad, agnosticdiscoverability platform is just too obvious to be dispensed with. The marketwill adapt to the need, eventually.

"I think the next major emergence we're going to see,once a few of the media companies realize a walled garden is not necessarilytheir best friend long term … are going to be applications that do a reallygood job of aggregating across all of these applications," Earle said."Individual apps won't necessarily go away, but consumers should have achoice of 20 different services going through a wizard."

Here's hoping.