Playout and uplinking are key functions that allow channels to be delivered from the broadcaster to the end user across different types of audiences, devices, platforms and other distribution channels. Broadcasters in developed markets have often investigated outsourcing certain distribution-related processes such as playout and uplinking of their channels so as to focus on their core activities. This concept of outsourcing these services is fairly nascent in India, but is of relevance to broadcasters. This article examines the benefits of outsourcing for broadcasters, and considers the market situation in India and elsewhere.
The benefits of outsourcing for broadcasters include cost optimisation and faster time to market
Specialised service providers have emerged that provide broadcasters with the option to outsource playout and uplinking and still ensure high-quality transmission with guaranteed service level agreements (SLAs). The main benefits and opportunities for broadcasters of outsourcing these functions include the following.
- Cost optimisation: Outsourcing playout and uplinking allows broadcasters to reduce capex and convert it into opex. In an outsourced scenario, management of investments in real estate, playout centres, transponders and technology upgrades is provided as a solution by the service provider. This is very relevant to smaller broadcasters with a portfolio of between one and three channels. As an example of cost optimisation, deploying an in-house playout system can cost as much as USD1.6–1.7 million, whereas outsourcing to a service provider in India costs around USD10 000 per month.1
- Managing complexity and technology upgrades: Managing end-to-end complexity from production to publishing is a challenge for broadcasters. Broadcasters need to consider multiple formats (SD/HD/4K, for example), platforms and multiple devices; customised workflow management; and specific requirements such as live ingest, graphics, branding and quality control. Addressing these complexities is more relevant for larger broadcasters. Service providers are building in-house capabilities to manage such complexities for broadcasters. Figure 1 below shows the complexity involved in creating customised workflows for broadcasters.
- Faster time to market: Exponential growth in the number of channels, driven by digitisation and growth in local regional channels is expected in India. Service providers offer the ability to reduce the time to market significantly as well as offer access to bandwidth.
- Allowing broadcasters to focus on core activities, such as content creation and monetisation. Broadcasters are in an increasingly competitive market with low ARPU levels and therefore need to focus on their core revenue-generating activities.
Figure 1: Workflow process for one song video being played in three different shows throughout the day [Source: Analysys Mason, 2014]
Levels of outsourcing are expected to increase in India as service providers’ capabilities improve
Levels of outsourcing are currently far higher in developed Western European markets than emerging Asian markets, given that these markets are more mature in terms of technologies, broadband, content and competence of service providers.
- In Western European markets playout and uplinking outsourcing started primarily when public service broadcasters (PSBs) were facing commercial pressures as well as increased competition from the new satellite players. In the UK market there is currently almost complete outsourcing of uplinking and a high share of outsourcing of playout operations. In Spain, 90–100% of channels outsource uplinking. Most international channels outsource playout to local service providers.
- In the developed Asia region, Hong Kong and Singapore have been the outsourcing hubs for international broadcasters beaming into various Asian markets. This is driven by the need to localise content relevant to individual markets that have specific language, regulatory, censorship or programming requirements. Hong Kong and Singapore also offer reliable infrastructure.
- In India, the share of outsourcing of uplinking is fairly high, at approximately 50% of channels. This is expected to further increase as a number of small regional channels come into the market. Playout outsourcing is still low, but is expected to pick up fast as service providers improve their capabilities.
The capabilities of service providers is another important factor determining the extent to which broadcasters outsource playout services. In Asian hubs such as Hong Kong and Singapore, worldwide players in this space such as Encompass and Globecast have increased their presence organically and inorganically. These service providers can customise workflow processes for large broadcasters and provide them with the latest technologies and infrastructure. The Indian market is still fairly nascent as local players are slowly building scale, but they are focusing more on uplinking than playout. The main players include companies such as Bharti, Essel Shyam, Indiasign, NSTPL and Tata.
The Indian playout and uplinking space provides opportunities for both broadcasters and investors. Both strategic and financial investors are interested in this space, given the huge opportunity for growth as well as the fact that the market is at an early stage.
As part of Analysys Mason’s media portfolio, we have worked extensively with both financial and strategic investors looking at this specialised space.
1 Costs are based on a high-level range provided by industry sources and can vary depending on number of channels to be played out and the level of complexity.
Source: Analysys Mason
