Tag Archives: Adobe

Everything you know about media is changing dramatically

I mean it. Everything. The media and entertainment industry as we have come to know it is being disrupted, and so is this blog, more on that later. Where to start? Because I did say everything is changing.

Broadcast is dead

Until I spent time this week wandering the exhibit hall and attending talks at INTX 2016 this week, broadcast’s obituary was going to be buried a little deeper in the post. I frontload so heavily because I know how long the average reader spends here. Although I am tempted to name my posts something like “20 things are changing in the media and you won’t flippin’ believe number 19” and then present it as a slide show, I respect your time enough to make but the important stuff first.

We’ve been declaring broadcasting has been braindead for years, but now it’s time to start harvesting the organs. Sports and regional news won’t cover the bill to keep the ventilator pumping indefinitely.

The spectrum currently used by digital television would be put to better use quenching consumers’ insatiable thirst for wireless bandwidth. To that end, the FCC has allowed broadcasters to opt into the Broadcast Incentive Auction. The idea here is simple. Give up spectrum so it can be licensed to wireless providers for 5G service and make some money. As a disincentive to hoarding and holding for a higher price, the first part of the auction is a reverse auction, so it pays to get in early.

As infuriating as it might be for a taxpayer to watch broadcasters profitably sell back to the public airwaves they lobbied so hard for and swore they could not live out, you have to feel a little bit sorry for the dinosaurs now that the asteroid is in sight. I’m partial to the EU’s approach of reallocating the spectrum over 700 MHz for wireless and simply assigning new VHF channels to broadcasters, but here in the US corporations are people too, so we just can’t act in the public’s interest for the sake of the public interest. We have to think of the lobbyists.

Variety had a great explainer on the auction in March. My favorite numbers gleaned are below.

info graphic

The final act of this play will be streamed

Once the video over IP’s latency problem with live events is solved broadcast will have completely outlived its usefulness. We will have reached a point where even the Super Bowl can’t save it. Currently IP network latency delays live events up to thirty seconds. As an MLB.TV fanatic, I have to put the mobile down to enjoy a game otherwise I’ll witness the Twittersphere lighting up before I even see the batter step into the box to crush the game winning home run. For sports to remain a communal activity in the age of social media, latency has get down to about two seconds.

That date is very near. Using a combination 4G LTE bonding and some really nifty video file wrapping tricks, the Israeli startup Zixi has reached that bar with image quality that rivals today’s Xfinity and FiOS pictures. It’s just a matter of adoption. I put it at 24 months for Zixi or a rival technology to make broadcasting over the air obsolete.

The passing of traditional broadcast is interesting enough. In fact, I could stop here and call it a post except that I said everything was changing. And, dammit, everything really is.

Move over Viacom, Fox, and Disney

Amazon, Netflix, Google, Apple, Netflix, Facebook, and Microsoft all want to steal your lunch money. Wall Street believes they will, and these things become self-fulfilling prophecies in short order. They all already own or aspire to own a significant portions of the entertainment value chain. Microsoft and Facebook are longer shots but somewhat more interesting because they are not just looking at the traditional media value chain, but are approaching M&E through significant investment in gaming and VR. For them it comes down to whether VR technology will be ready for primetime soon enough. If one of them wins, just read Ready Player One to see how the story ends. Google’s gotten into VR as well, but it gets lumped it with the others due to its ownership of the world’s most successful online video platform. And how many OVPs does the world really need? Hint: The answer is not greater than two. One rare bit of investment advice from this publication… short OVPs and go long on CDNs.

It going to come down to who can afford to front the large sums of money to create tent pole content, who can store and protect it throughout its lifecycle without losing it to theft or in a theme park fire, who can monetize it effectively, and who can deliver it efficiently. That’s what will determine the winners. Amazon with Elemental and Apple with all its video expertise are positioned for an epic battle. Apple has the edge in video smarts while Amazon has the edge in distribution, pricing, and packaging smarts. How will Apple compete against free two-day shipping for underwear and great programming for $99 a year? Whatever the tech giants come up with will certainly beat a $300 a month cable bill.

Where’s Google in all this? I can’t help but feel that Google will mess it up. Media and entertainment is all about user experience. Google simply doesn’t value design and user experience enough. YouTube and Gmail are still ugly after all these years. While an email client can be ugly and a little clunky as long as it’s free and the user never loses anything, the presentation layer for the night’s entertainment should be inviting.

IaaS the big play

The real money in media then is infrastructure as a service. What Avid, Grass Valley, and the like have done in the past must now become exponentially bigger, more robust, and more open. Avid is right. The industry is crying for a platform. Unfortunately for Avid, it’s crying for a platform a mid-sized tech company doesn’t have the resources to provide. Amazon with Elemental is already closer to realizing Avid’s dream than Avid is. A lot of small players have the necessary pieces built to connect to a network, a larger company, not viewed as  a direct competitor by potential partners is better positioned to roll them up into a unified platform offering.

Simplifying it a bit, whoever can provide the storage, rights management, and monetization tools will win. Dell-EMC is extremely well positioned to contend in that space with its hardware, virtualization expertise, and storage smarts. It makes the servers and intelligent storage. It owns VMware and Virtustream, so it will be able to provision data centers like no one else. Dell-EMC should be able to take a commanding early lead repurposing hardware in real time as audience usage patterns change. Add an acquisition like Telestream or Harmonic, and we have a new media and entertainment powerhouse.

IBM is the cicada in all this. Once every few years IBM shows interest in M&E only to shift focus shortly thereafter. With the right timing, IBM could get lucky.

Over the next few years, the remaining media-specific tech companies will have to become more focused on their core competencies. Their customer bases are buying less, forcing them to compete in a race to the bottom in a shrinking pool. While all are moving as nimbly as they can to make the transition from signal-based to IP video, they are faced with R&D resource limits and the drag of legacy customers such as large state broadcasters moving more slowly to the future.  These legacy customers account for significant portions of media tech’s revenue stream and cannot be ignored until the business transformation is complete.

Acquisition and Post are about to be disrupted too

Camera evolution is the total wildcard that can change the whole production and post process dramatically. When light field cameras get high enough resolution and come down in cost, the cost of shooting will drop dramatically due to shorter set up time and the need for fewer cameras. Composition, focus, lighting, tracking and green screen will all be handled in post, much of it algorithmically. Editing becomes a smaller part of the post process with DPs, directors, and VFX taking on larger roles once shooting stops. As post production for the 2D display requires more 3D capabilities, look for the post solutions market to bifurcate with Adobe taking the lion’s share with a combination of Avid and Autodesk tools owning the extreme high end. Don’t be surprised to see Media Composer land at Autodesk, or Autodesk’s media and entertainment business go to Avid. A number of former (and extremely talented) Avid engineers are now in Autodesk’s media and entertainment development organization.

Adobe has a leg up in the light field world. These cameras have been in development for some time. Light field still image capture is already available to the market, and Adobe has tools under development to enable Photoshop, Lightroom, Premiere, and After Effects to thrive in this new world.

How media is created, distributed, and consumed is all changing. No career in media will be untouched. No company will be sheltered from the disruption. Be agile. Embrace the disruption.

Everything includes this little nook in the internet

I will follow my own advice by embracing disruption and becoming more agile. It will no longer be focused exclusively on media and entertainment technology. Instead I will draw upon my experience of the past fifteen years in technology design, development, and product management. I will adjust my gaze away from LA and put more focus closer to home in the technology hotbed of Boston.

The death of big broadcast iron

gearsIABM DC releaed its 2016 Global Market Valuation and Strategy Report February 24, and the news for media technology companies was not good. Overall spending for media technology products and services was down 4.3% year over year. The report also noted that product revenues have been in decline since 2012, but this is the first year since the report shows a decline in services spending as well.

Much of the decline can be attributed to disruption from the bottom of the market. What were previously considered lower end tools, such as Adobe Premiere Pro in editing and Axle in asset management have matured a surprisingly brisk pace and have proven themselves ready for prime time.

Technology disruption also plays a part in the overall decline. As IP-video takes hold, the need for satellite links can be replaced by bonded 4G connectivity. “@Home” production of live sports is also lessening the demand for infrastructure. A sign of things to come is Boston-based NESN (MLB Red Sox and NHL Bruins) and LiveU’s announcement in December that portends the demise of the OB truck.

The network will utilize multiple cameras feeding back to NESN’s Boston-area studios via bonded cellular technology.

NESN plans to use multiple LU500 portable transmission units to pilot live “@Home Productions” on the majority of Red Sox home and road spring training Games in 2016 as part of a new innovation and business model for sports coverage. NESN and LiveU successfully developed and tested this new means of remote event coverage last spring during Red Sox Grapefruit League games in Florida and during the summer from minor league baseball AAA Red Sox games in Pawtucket, Rhode Island.

If the experiments continue to show progress by the 2018 season these major market franchises might be leaving the heavy iron in the garage. Be assured, sports broadcasters throughout North America are watching this closely as they begin their own cost-cutting efforts.

There’s a case to be made that the news is not as bad as it seems for the larger media tech players such as Avid, EVS, and Belden (Grass Valley). Budget pressures are spurring consolidation of independent broadcasters. These large station groups are likely to settle on a single vendor in each product category. Though the industry is notoriously conservative, all it takes is one disruptor to win a deal to get everybody looking at the new, more cost effective solution. Over the past year there has been a perceptible uptick interest in connecting the Adobe Creative Cloud tools to existing shared storage and asset management infrastructure.

Adobe Creative Cloud Market Size 2018 (projected)

Adobe’s estimated Creative Cloud 2018 revenue projections by segment ©2015 Adobe

Though it’s difficult to extrapolate media technology spend from Adobe’s reported growth in enterprise term licenses, Adobe has pinned much of the growth in Creative Cloud adoption of enterprise term license agreements (ETLAs). These licenses typically have a 36 month term with each customer, giving competitors a very small window once every three years to make a play to convert the enterprise to its solution. Adobe is projecting success in the enterprise, projecting $3.8 billion in recurring revenue from Creative Cloud for teams and enterprise by 2018.

Adobe has been well-rewarded for its brave decision to migrate all Creative Cloud customers to a subscription model, but it will run into some headwinds among some of the large station groups. As one station group executive told me, “Everyone thinks we’re eager to jump to OPEX from CAPEX with our technology spend, but that’s not true. We’re focused on keeping OPEX down.” In a consolidating industry, acquisitions are funded by stock transfers. Share price is tied to operating margins, hence the desire to keep OPEX down. Offering a choice between SaaS and perpetual license models, Avid should be able to maintain its current position, and perhaps grow it, in the station group segment.

Consolidation won’t last forever. There are a finite number of independent broadcast stations remaining ripe for purchase, and nobody is launching new ones. What we’re seeing is similar to the consolidation of newspapers during the 1990s in the early years of this century. As customer bases shrink and profits sink, cost cutting through consolidation takes hold throughout a market segment. No one was buying up newspapers for the long haul.

There is one significant difference between broadcasters and their newspaper cousins that makes a broadcast station a better long term investment. Spectrum, a finite resource. Its value will increase over time. Broadcasters aren’t in the broadcast business as much as they are in the spectrum investment business.

The place to be in media technology these days is IP-based video cloud-based SaaS offerings that multi-platform and OTT delivery. The days of big iron in broadcast, like the days of big iron in post are over.

Adobe releases DRM for Flash

In case you have any doubt Adobe is serious about dominating the web video space, this from StreamingMedia.com:

Adobe today announced the availability of its Flash Media Rights Management Server, a product that runs on Windows Server 2003 and Red Hat Linux and offers content protection and business rules for playback and repurposing of offline content.

The Rights Management Server is designed to sit alongside the Flash Media Streaming Server or Flash Media Interactive Server and protect streaming content. The company is positioning Adobe Flash Media Rights Management Server as a way to “protect and controls media content downloaded in FLV (Spark or VP6 codec) or MPEG4 (H.264 codec) format and played back on local desktop.

The full press release from Adobe is here. DRM for offline content isn’t new. Apple implements it with every music purchase, but Adobe’s approach gives the content holder more options. The DRM can be as restrictive as the content owner wants. Maybe reports of DRM’s demise are premature.

After Effects CS3 8.0.2 update available

After Effects logoThe awaited 8.02 update for Adobe After Effects is now available for download for Mac OS X and Windows, and through the Adobe Update Manager. It’s been my experience that the process goes a lot faster with the manual download.Support for direct P2 import into After Effects has been added. Mac users get Leopard compatibility.Originally the update was going to address issues with QuickTime 7.4, but the update was released without the QT fix. Adobe continues to recommend CS 3 users do not update to QuickTime 7.4. Known issues include failure to render files that take longer than 10 minutes to render.Some work arounds include rendering still image sequences and then piecing them back together in QuickTime Pro, or downgrading (just like the PCs do in those ads) to QuickTime 7.3 using Pacifist.No word on when a QuickTime 7.4 fix will be released.

ADDED January 25:

Cringley’s wedding bells: Apple and Adobe

Cringley’s always a good read, often a good chuckle. Today he posits Apple will buy Adobe. Great headline, but not likely. Cringley likes to write about Steve and Bill, and his other schoolyard chums, but those guys still have to answer to their boards. And why would Apple’s board want Adobe?

Adobe’s stock has been flat for two years. It’s quite possible its core content creation market is near saturation. The margins on software upgrades are nothing like the margins on new licenses.

Adobe’s a smart company. It will do fine as it reinvents itself. That’s why Adobe’s going into the IP video space (Adobe Media Player) and software over the web space (Buzzword) with such energy.

So let’s go to the charts. It’s apparent that Apple is on a roll, and that if it had $20+ billion in spare change, that it would likely want to buy the next big thing, rather than the last big thing. I’m not saying that Adobe’s best days are necessarily behind it, but Apple could surely find something cheaper with as much upside potential.

Cringley doesn’t make his case well with the old “the Mac is the dongle” argument.

Some readers may know what a dongle is. For those who don’t, a dongle is a sort of electronic key that plugs into a PC to enable the use of some expensive software application like AutoCAD. Each copy of the app comes with a single dongle so you can put the software on as many computers as you like but only one — the one with the dongle installed — can function at a time. Dongles, which are rarely used today, were an early and quite effective form of copy protection. Apple uses a variation of the dongle technique for its professional applications, but in Apple’s case the dongle IS the computer. Yes, the software is a good value but you have to buy a computer from Apple — a dongle — to run it on. So Apple runs its professional application business effectively at breakeven, making its profit on the associated hardware.

If that’s all Apple is doing with ProApps, running it at break even, then why the rumors that Apple was entertaining bids for the unit? Apple doesn’t think of itself as a computer company any more. It’s a consumer electronics and media distribution company these days (that happens to make a hell of a personal computer). iPods and iTunes sell way more Macs than Final Cut Pro. So that argument is a little thin.

In a perfect world, Apple would love to control Photoshop, Illustrator, InDesign, After Effects, and Flash. But it’s highly unlikely it will pay all that money to do so. Does it really want to support all those enterprise clients with Acrobat?Interesting read, but I’m confident Adobe will remain independent for some time to come. I think it’s more likely Adobe would buy ProApps.

%d bloggers like this: