Red Bee Media: The outsource code

Posted on Feb 12, 2021 by FEED Staff

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Outsourcing elements of media infrastructure used to be an easy decision. Now, making the right choices takes good planning and good partnerships

If there was one watchword for the entire business world over the past year, it would be ‘transformation.’ The challenges that Covid-19 has posed have taken centre stage, but those challenges have often revealed other issues that, in truth, businesses have delayed addressing.

It’s becoming clear that few companies can manage these essential transformations alone. It’s just not realistic for a company to build and manage its own infrastructure, troubleshoot all its own tech issues and still be able to focus effectively on its content output. A new report from Red Bee, Redefining Outsourcing in Media, looks at the opportunities these harried companies have to outsource their technology infrastructure to specialists, freeing up capacity to solve the real business problems that lie ahead.

“A major impact that Covid-19 has had on our customers is the acceleration of digital transformation,” observes Red Bee’s chief marketing officer, Margaret Davies. “For many companies, it has confirmed what their technology strategy needs to be, but it has also required executives to do wholesale reviews of their strategies, so they can re-baseline their business and recover, whether it’s dropped ad revenues, or the revised economics as we head into 2021. And outsourcing is a real business enabler.”

According to Red Bee’s report, outsourcing media services is no longer isolated to big broadcasters that have handed over playout deployment, media management and access services to a managed services provider. There are new entrants in the video space that have little or no expertise in media technology or operations. They need to keep their focus on their audiences and monetising content. There are also still commercial and public service broadcasters across the world that, until now, have little or no experience – or even interest in – outsourcing parts of their operations.

Rights owners may want to monetise content bygoing directly to consumers and setting up their own streaming platforms. For these non-traditional media companies, outsourcing allows them to rely on a dependable, flexible and innovative supplier to support them as they tackle new opportunities or experiment with new business models. This diversification of broadcasting and media calls for a redefinition of what outsourcing means.

“The age-old struggle people have had with outsourcing is cost saving versus relinquishing control,” says Davies. “Traditionally, the cost-saving benefits of outsourcing were seen largely up front. Those same cost savings aren’t as big now as outsourcing has evolved. It’s still relevant as a business enabler, but the debate now questions: how far should it go? How narrow or how wide? How should a cost-benefit analysis be carried out, depending on the needs of an organisation?” The first generation of broadcast industry outsourcing came about as a means to reduce costs while increasing workflow efficiency and ensuring operational standards with a five nines guarantee through SLA’s.

Outsourcing isn't always where you save costs

As broadcasters started to release their hold on in-house operations, their cost savings from outsourcing might have been as high as 20-25%. Now, with infrastructures already tending towards the diverse, the savings are more subtle. Whereas it used to be a no-brainer, outsourcing now requires some brains to make the most of it.

Businesses need to be looking at how outsourcing partners are going to help them get to market faster, including how to spin up infrastructure to get content to consumers. They should also ensure that an outsourced environment has the same levels of agility, flexibility and adaptibiliy that they feel when they do things independently. And, of course, there is cost.

“You need to look at your outlay on a total cost of ownership basis,” states Davies. “It’s looking atthe entire supply chain. What can you rationalise in-house, so you have an effective outsource relationship? Often, the piece you’re outsourcing isn’t always where you save costs. It’s the pieces in-house that you have to streamline, clarify and simplify, in order for you to effectively engage with your outsourced partners.”

The Red Bee report underlines two points that the industry should consider for a better outsourcing experience. First, service providers need to be able to demonstrate the benefits of outsourcing and enable frictionless onboarding experiences to cloud-based platforms. Market demands for efficiency and agility should be met with plug-and-play solutions, so clients can get started quickly.

Second, commercial models need to be redefined with an emphasis on agile pricing models, offering more short-term contracts, in order to lower entry barriers. With technology and consumer behaviours developing at very high speed, long term contracts only serve to impede customers and suppliers, hindering the very agility and flexibility that outsourcing as a concept hopes to bring.

Read the report here.