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February 9, 2017

The Economics of the Never Ending Video Library

 

In his now famous article in Wired Magazine, Chris Anderson identified a phenomena described by the 'long-tail' as he examined the impact of bookseller Amazon's large library and generalized it to other media such as video.  Chris described how 'low-friction' electronic purchasing systems can allow sellers to derive value from not just hit content but also niche content. He described how the digital entertainment economy was going to be different in the 21st century.  Petrichor Networks takes this principal to the next level for video service providers.

 

Digital entertainment escaped the bounds of a physical store allowing viewers to purchase entertainment from their homes. User interface design as well as "Big Data" techniques made it easier for viewers to discover interesting content.  Broadband connectivity allowed the content to be delivered in real-time to the viewer. Even with these adaptions the video service provider still struggled to deliver on the long-tail promise. To understand why we need to examine the figure below showing a histogram of revenue for each title in green.

 

As expected the revenue distribution between hits and niche content continued but the origination costs using traditional technical approaches (as shown in red) continued to be an obstacle. Some of the contributors included content duplication and parallel operations and support systems. How can video service providers tap into the opportunity offered by the long-tail? Petrichor Networks' breakthrough technology shifts the media connectivity economics making high quality long-tail content delivery affordable. Hundreds of content provider partners provide libraries with thousand of titles that can be aggregated. By bringing down the total cost of ownership per title (blue line), many more titles are delivered at a profit. Not only benefiting service provider revenues but also increasing customer satisfaction.

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