Federated Digital Content Services by Infosys Limited

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Federated Digital Content Services Partners, no longer Competitors Rajesh Sridharan

Abstract The convergence of telecommunication and media industries has offered opportunities to service providers globally to venture into digital content monetization and provide end consumers with a variety of Value Added Services (VAS). Many service providers are already capitalizing on this opportunity by setting up media stores to build stronger relationships with their customers.

This paper discusses a new content business model wherein service providers can form partnerships with their competitors to complement each other on providing content services and creating new revenue channels. Providing greater choice, flexibility and ease of access to content will improve the customer experience and enhance consumer retention. Openness in partnerships to expand content offerings will help digital content retailers to attract a wider segment of customers across multiple service providers.

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Executive Summary Service providers around the world are continuing to explore how Value Added Services can help increase revenue and profitability. Globally, major players have moved away from being providers of just voicebased services to retail customers to include the media space by launching video services (broadcast and video-on-demand) or setting up digital media business units to offer a variety of digital content offerings across multiple delivery channels. Likewise, television service providers are continuing to expand their portfolio of service offerings by providing voice, data and wireless services and content offerings through media industry partnerships thereby making premium content available to consumers. Additionally, media stores and application stores set up by service providers are targeting consumers across platforms with the latest applications, games, music, wallpapers and videos. Service providers are thus adopting service convergence to generate revenue from value added services.

The three key drivers for service providers to launch value added services are a) Revenue Improvement (average revenue per user) b) Customer Churn Reduction and c) Customer Base Expansion. This paper discusses the possibility of a new business model driven by co-opetition between different digital content retailers in order to leverage each other’s strengths rather than competing head on with each other. Such a partnership would pave way to create an open platform for sharing content metadata, thereby enriching the consumer content discovery experience across multiple digital content stores. It would, in turn, help in meeting the three objectives mentioned above. For the purpose of this paper the term “digital content retailer” refers to the service provider offering Value Added Services (VAS) in the form of a media store. Other forms of digital content retailers such as media creators or media aggregators are not considered in this business model, since it is intended for service providers tapping into media-based revenue generation. This model, however, would require adequate due diligence to fully understand the business risks and challenges involved. Like any new business model, the associated risks need to be carefully thought through and weighed up.

Content is still King Consumers are increasingly looking for a variety of digital content across different delivery channels. Across geographies, there are many trends which clearly convey customer preferences. In North America, cable service providers and triple play telecom providers are already providing content across multiple devices on demand. Service providers in Japan and South Korea have been promoting mobile video offerings for years. The rapid growth of data and content necessitates an extremely simple user experience to discover, purchase and consume content. Strong competition amongst service providers and declining share of basic services have led to digital content retailers setting up media stores independently, in a bid to differentiate themselves from their competitors. Many enhancements are being added to the media offerings to attract and retain consumers such as:

1. Procuring rights for Premium content (television, movies, music) 2. Creating access to digital content across multiple devices (PC, smartphones, tablets, television, etc) 3. Exceptional user experience in the media store to enable seamless discovery, purchase and consumption of content 4. A personalized user experience with targeted recommendations on content and location-based offerings/services Digital content retailers require a simple-to-use media store which is accessible through the web and a multitude of mobile devices to create stronger linkage and ease of use for the end consumer. There is a strong correlation between the loyalty of a digital consumer and the agility demonstrated by the digital content retailer in providing consumers with a rich service experience. Unfortunately, the traditional business models that are being adopted to deliver digital services to consumers have limitations in this area. Consumers are restricted to a finite set of content services from the service provider and this applies to broadcast channels, Video-On-Demand (VOD), applications and music. This leads to consumers not finding the content of their choice in the media store of the respective service provider.

Diagram 1.0 illustrates the “current” situation wherein media content is made available and served in silos, the consumer therefore has limited access to content, as it is specific to each service provider media store.

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Diagram 1.0 Traditional digital content monetization in silos

Digital Media

Consumer (CSP 1)

Consumer (CSP 2)

Consumer (CSP n)

Multichannel

Media Store

Service provider-hosted media content

CSP-1’s Network

CSP-2’s Network

Service provider-hosted media content CSP-n’s Network

Introducing federated discovery What if there were to be a feature in the media store of a particular service provider which enables exposing digital content metadata from the service provider’s partner media stores? It would open a completely new dimension to content discovery. The consumer will now be able to find what he/she wants irrespective of which digital content retailer has the content rights. The more intuitive and accessible the content navigation is for a customer the greater the likelihood of the customer accessing the relevant goods and services and a higher conversion rate of search to sale will result. Federated discovery can be an essential tool to provide this form of differentiated digital content retailing.

Assume the “content discovery store” as the store that exposes a partner’s content assets and the term “content delivery store” refers to the partner’s infrastructure which enables entitlement, delivery and security of content across devices. If CSP-1 partners with CSP-2 and enables discovery of content rights-owned by CSP-2, then the content discovery store would be the media store of CSP-1 that provides federated content discovery. When a consumer of CSP-1 using CSP-1’s media store prefers to consume content for which CSP-2 has the rights, CSP-1’s media store would essentially need to route the consumer to CSP-2’s media store for completion of the online user journey and associated consumption of content. In other words, CSP-2 offers “media as a service” and adds a revenue channel for its digital content portfolio. This scenario has been shown below in Table 1.0.

Table 1.0. An illustrative view of federated content discovery

SCENARIO

CSP-1 acquires premium rights for certain categories of digital content, say sports.

CSP-2 does not acquire rights for the sports content but partners with a popular studio for movie content.

TRADITIONAL “SILO” MODEL

A customer of CSP-1 discovers content and finds sports content of his/her choice but does not find movie content of his/her choice.

A customer of CSP-2 finds movie content of his/her choice but does not find sports content of his/her choice.

Outcome: Customer is partially satisfied.

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Now let us assume that CSP-1 and CSP-2 enter into a digital content partnership thereby enabling each other’s media store to federate content metadata across networks.

NEW PARTNERSHIP MODEL

A customer of CSP-1 uses CSP-1’s federated digital content store and finds both sports content and movie content of his/her choice and is able to seamlessly purchase and consume content.

A customer of CSP-2 uses CSP-2’s federated digital content store and finds both sports content and movie content of his/her choice and is able to seamlessly purchase and consume content.

Outcome: Customer locked down and satisfied providing additional revenues

Owing to contractual agreements between the digital content retailer and the content owner (or content aggregator), there is an assumption made that content discovery would be enabled through the federated media store hosted by the primary service provider whereas content delivery would be enabled by the digital content retailer that has procured rights to the content. Diagram 1.1 illustrates the federation of content metadata across media stores to enhance choice, customer experience and revenue.

Diagram 1.1 Federated content metadata across partner media stores

Digital Media

Consumer (CSP 1)

Consumer (CSP 2)

Consumer (CSP n)

Multichannel Federated

Multichannel

Media Store

Service provider-hosted media content CSP-1’s Network

Service provider-hosted media content CSP-2’s Network

Service provider-hosted media content CSP-n’s Network

To deliver this type of business model there will be some important business and technical considerations that need to be addressed.

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Business Considerations The model necessitates that a competitor in digital content retailing works as a partner to provide a variety of content offerings to each other’s digital media consumers. The business case is not likely to be very positive if the service providers were to expand their content offerings independently. Following are the key factors that could make a digital content retailer seriously consider partnerships. 1. Cost Costs for providing services need to be in balance with potential revenue that can be generated. In digital media space, there are multiple cost factors such as Content rights, network infrastructure, purchasing spectrum and IT solution costs etc. Service providers are trying hard to “do more with less”. For instance, service providers in India are already optimizing infrastructure costs by sharing telecom towers. In July 2011, three service providers in India formed a partnership to share their network infrastructure for providing 3G services. Likewise, cable service providers in USA have agreements to share WiFi hotspots for the benefit of consumers. Extending such partnerships in the area of digital content can be considered as building on the foundation that has already been laid out on the infrastructure side.

2. Consumption pattern As smartphone device costs continue to decrease, adoption continues to go up across all geographies. Percentage adoption among the younger generation is higher compared to other age groups. The growing need for variety of applications, music and video content can be fulfilled by digital content retailers by leveraging partnerships. 3. Attracting customers Service providers forming partnerships will be able to attract customers from other service providers in the region who prefer to remain in the traditional “silo” model offering lesser variety of content choices.

So, what are the key benefits for the different stakeholders?

Benefits for

Digital Content Retailers

Benefits for

Digital Consumers

• The digital content retailer that provides media as a service will add a new revenue channel to market their premium content and an opportunity to share revenue. • Increased data traffic in the primary service provider’s network could result in increased data revenue. • The digital content retailer enabling federated discovery significantly increases the probability of the customer finding the content of his/her choice and thereby reducing customer churn. • Consumers of the digital content retailer that provides a federated content store will have access to wider variety of content than a silo-typed media store. • In some cases, both the digital content retailer and its partner may have rights to a particular digital content item (for example, a movie or a music album). In such cases, the federated media store enables the digital content retailer to provide attractive offers, like discounts, on such content to differentiate from its partner. This could provide pricing superiority and or value add to the consumer for the selection of content while using the federated content store.

Key business challenges Any new business model brings with it associated set of risks and challenges in implementation and operations such as: 1. The digital media business division within the service provider organization needs to have the appetite to generate revenue by leveraging partnerships. Developing an open mindset to engage in business model discussions to collaborate with a partner of tomorrow but competitor as of today is not easy. 2. There could also be potential challenges in reaching an agreement on point of sale. While the media store from a service provider may enable federated content discovery, the owner of the digital rights of the content may prefer to own the order management work flow. A business framework would be required to simplify the process of agreeing with relevant stakeholders when new partnerships are brought in.

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Technology Considerations The complexity in establishing a technology platform that would enable a federated business model is very common to many organizations that are involved in Business-to-Business (B2B) partnerships. Fortunately, best practices are already available to address the complexity involved in integration. The following technological capabilities are crucial for establishing the federated digital content services platform.

Enhanced

Discovery

Enhanced

Analytics

Network

Capacity Considerations

Digital content retailers which have formed partnerships need to expose content metadata and media as services accessible by partner systems. The media store that provides federated discovery needs to periodically retrieve content metadata from the partner media store, index and augment it to facilitate rich discovery through browsing and search tools.

The efficiency of content procurement, discovery and marketing can be measured by enhancing analytical reports to include additional metrics based on web analytics as well as B2B partner integration metrics. Capturing different kinds of raw metrics will be important to facilitate revenue reconciliation between different digital content retailing partners.

Premium content could attract large numbers of customers across geographies if made available through a federated media store. The digital content retailer owning the rights to distribute such content should carefully plan for adequate capacity of media streaming servers, as well as its own network which will cater for its consumers. A cloud-based streaming solution may be an optimal solution to address the ambiguity and agility in scaling up the solution to meet the number of consumers who may seek content from external retailing channels.

Key technology challenges While digital media consumption through a media store is proven within the boundaries of one service provider, either through IPTV-based medium or through a cable network, mobile service delivery or through web-based service delivery, there are a few challenges for IT service providers that need to be addressed. 1. Federation of content metadata across different partners can be accelerated by the definition of a common technology framework for sharing and publication of metadata, product offers and recommendations with relevant partners. Metadata shared could include promotional offers and entitlement, in addition to basic content metadata sourced from content owners. Industry groups can be leveraged to facilitate creation of standardized frameworks for enabling B2B interactions between the digital content partners.

2. Heterogeneity in delivery channels is likely to be prevalent in the foreseeable future. The evolution of HTML5 as a technology for rendering digital media on mobile devices and TV STBs may help in reducing the complexity of digital media service delivery. 3. Managing digital rights and copy protection will also be a key challenge. Content security and ownership, in some cases may derail the business case for such innovative service offerings, if due consideration is not given at the time of reaching an agreement on the Terms and Conditions of the partnership.

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Conclusion It is an old adage that content is indeed king and this would remain true for a compelling federated digital content offering. For service providers that also play the role of a digital content retailer, a rich media store compelling the consumer to visit again and again is a key driver to accelerate revenue generation through Value Added Services (VAS). Digital content retailers creating an ecosystem of competitors as media partners could see a Winx3 scenario emerging i.e. a win for the digital content retailer, its partner and the consumer.

About the Author Rajesh Sridharan is a Senior Architect at Infosys focused on building digital content services, advertising and mobility solutions to enable service providers across the globe generate revenue through Value Added Services. He can be reached at rajesh_sridharan01@infosys.com.

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