Satellite Companies Face Advent of Shorter Commitments From Media Companies, Say Media Executives
NEW YORK -- The changing video landscape is affecting the media industry’s reliance on satellite capacity and resulting in shorter commitments, media executives said Wednesday at SATCON. Many of the factors that drove TV networks and distributors to use satellites are changing, said Robert Zitter, former HBO chief technology officer. About 60 percent of the global transponder capacity is used by TV, he said. “What happens in the satellite industry relates a lot to what’s happening with television.” The growth of cable networks and newer distribution methods led media companies to make long-term commitments with satellite companies for capacity a few years before the satellite is manufactured, he said. “All of that is changing.”
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Satellite is relevant to the media industry due to cost, reliability and coverage, said Mike Alosi, Viacom vice president-distribution technology, satellite & affiliate services. Alternative delivery technologies, like terrestrial fiber, have become a challenge to satellite, he said.
High-bandwidth throughput capacity is more efficient, said Ziv Mor, RR Media chief technology officer. For broadcast applications, there's difficulty with thousands of legacy boxes that are deployed and different head ends around the different territories, he said. Replacing them might not be cost-effective for all types of applications, he said. There will likely be more hybrid solutions, he said. “If we can squeeze more channels within the same transponders in which we already have applications, we’ll do that.” As the market grows, there will still be areas that will continue to be best-served by satellites because of the economics, said Rich Gibson, Level 3 senior director-Vyvx operations.
Point-to-multipoint communication is extremely efficient on satellites, said Bill Tillson, Encompass Digital Media CEO. But “we’re doing it much less,” he said. Satellites are defensively moving toward new generation constellations that provide more flexibility to compete with point-to-point communication, he said.
Satellite operators must work toward handling the changing commitments from broadcasters for capacity, panelists said. Broadcast companies request a stream or content and much higher data rates than before, said Zitter. “That is probably going to move from satellite to terrestrial distribution.” As 4K gets rolled out with high efficiency video coding, most major media companies will need to use less satellite capacity in the future, he said. “With the change in technology and the change in the business models, there’s a question ... as to the wisdom of making a 17-year commitment,” instead of a shorter satellite capacity commitment to retain flexibility, he added.
Satellite carriers have a “huge dilemma,” said Tillson: Long commitments aren’t going to happen. The days of long-lease lifetime commitments are over, Mor agreed: There's a change in technology and uncertainty in the air for media companies and the cost of their business model, he said: “There will be more demand for more flexible contracts” and for more access points.
Companies entering into the over-the-top market also will have an impact on how satellite distributes content, the executives said. There will be significant growth in OTT services, but “that’s both linear and non-linear,” said Tillson. “We’ve launched five linear streamed networks for A&E in the last eight weeks.” The sustainable base of traditional distribution will remain in the future as OTT grows, he said. The architecture will change, Tillson added.