Thoughts from Streaming Media West - Part 2
Dec 15, 2015
DRM: Beyond Management to Monetization
OTT monetization was one of the most salient industry challenges being discussed at Streaming Media West this year. OTT services, as much as they are growing, still continue to struggle with monetization and profitability. Advertising is certainly a key problem, including unsolved facets such as inventory, targeting, quality of experience, and metrics. Another key problem, however, is cost-efficient yet secure porting of DRM-enabled players for use cases such as OTT extensions of Pay TV services, subscription-based streaming services, and multi-device pay-per-view. The costs of secure player development are compounded by intense and growing fragmentation in target devices. Not only are there a growing number of types of devices, but there is growing choice of browsers within those devices. Furthermore, as content resolutions rise past SD towards HD and UltraHD, there will be growing need for players to leverage hardware anchors and components for their DRM cores. This brings in an additional layer of complexity, as the specifics of operating system and chipset support vary from device to device and model to model. In the absence of any sort of standardization, it would have been financially impossible for all but a select few content providers to build secure players for every salient device that their customers might choose.
Fortunately, the Digital Rights Management (DRM) is in the midst of a renaissance driven by these critical pain points. The advent of the common encryption scheme (CENC), and the encrypted media extensions (EME) specification within HTML5 and DASH have allowed major strides forward in unifying bit formats and streaming protocols, as well as simplifying the implementation of cores on CE devices (including tablets, set top boxes and gaming consoles). It is important to realize, however, that a successful DRM solution must account for more than secure content decryption and link protection of output content. DRM should be viewed as a full-fledged monetization enabling solution, critical to the consistency and quality of end user experience across various devices as well as to the revenue and profitability of the content service. There is a misconception, born of optimism, that the current family of standards would allow standard HTML5 to be leveraged to consistently deliver secure playback across any web browser, so long as a finite set of DRM servers were installed by the content service provider. It is not quite that simple, as I discussed at length in my recent talk at Streaming Media West. Those slides and added commentary are provided here.
Another aspect to the significant changes underway in the DRM market is the emergence, in earnest, of multi-rights DRM players. It is difficult for most content owners to keep pace with individual new devices and the security primitives and native DRM characteristics of each. Furthermore, it is nearly always impractical for most content owners to grapple with the complexities of consistently delivering content to these various configurations, within the context of a full-fledged, richly featured multimedia player, in a financially feasible manner. Well-crafted multi-rights DRM solutions abstract out the underlying complexity, and can amortize development costs across all their customers - while providing content companies with unified consistent interfaces and workflows.
The emergence of the perception of "free DRM" is the third aspect that is reshaping the industry today. As our updated research on the DRM market shows (here), actual revenues earned by DRM vendors are only a fraction of the full value that can be ascribed to DRM technology. Widevine, which is bundled natively with the massively popular Android operating system and is available at no licensing cost, has led the charge in this aspect. However it is important for content companies to realize that much of the cost of DRM-enabled players lies in the development, and maintenance, of secure players and backend licensing services for content across all target devices, platforms and networks. Many DRM vendors treat their core technology as a cost center to achieve the broader goals of monetization via ads and analytics, and ensure access to quality content from their devices and/or browsers. Value added resellers are filling the gap between the basic DRM cores and full-fledged secure player ports, even as online video platform providers emerge as an important new customer group in the DRM market.
While the market is led today by Microsoft, Google, Adobe and Verimatrix, there are a number of niche vendors who continue to play in the market or who have begun to newly enter it. The race is now on, not only to protect content and gain in device footprint, but to capture and deliver usage data in the critical last inch of the content delivery pipeline. DRM systems are uniquely positioned to enable advanced analytics and improved monetization of content. You'll find a comprehensive discussion of growth opportunities, competitive analysis and demand analysis trends (including connected device forecasts) in our DRM study here.
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