Digital Video Value Chain 2017: Workflow to Monetization: CDN, IPTV Software, Desktop, Mobile and Cross-Channel Adtech

  • ID: 4005438
  • Report
  • 190 pages
  • AccuStream iMedia Research
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Study Shows Digital Video Value Chain Sectors Drive a Thriving Tech Vendor Business Worth $26.6 Billion in 2016; 53% in U.S

FEATURED COMPANIES

  • AdRoll
  • Brightcove
  • Elemental Technologies
  • Level 3Highwinds
  • MobileFuse
  • SundaySky
  • MORE

Digital video tech vendors, IPTV sales and services, enterprise-grade modules-to-workflow suites, adtech platforms, integrators, media processing specialists and CDNs grew their businesses by 28.7% in 2016, booking $68.7 billion in revenue.

That figure includes Google's DoubleClick cross-channel adtech business, Facebook, Twitter, Amazon Web Services (AWS) and marketing platform Conversant Media (now owned by Alliance Data), following a 38.3% rate of expansion in 2015.

Growth is currently pegged at 26.5% for 2017 across all sectors associated with the digital video economy online. For comparison, in 2006, digital video value chain sectors generated $733.5 million in revenue. The U.S. and North America represent 53% of the global total in 2016.

This research volume, The Digital Video Value Chain 2017, is designed to inform investment decisions large and small flowing through a vast network of solutions vendors, public and private.

VCs, equity analysts, publishers, agencies, tech vendors, investors, system integrators, global media organizations and networking firms can gain valuable insight into the financial and product positioning enabling value chain operations, including pricing, business models, participation ranges and marginal performance.

Including audience platforms Facebook and Twitter, an $86 billion alignment of digital video value chain vendors and platforms is forecast for 2017

Mobile and cross-channel adtech segments, animated by Google/AdMob, Twitter and Facebook framed a $26.6 billion slice of the total market in 2016. CDN, including AWS and Level 3, churned out a $23.3 billion piece of the combined market.

CDNs offer delivery, reliability, security and quality first and foremost, and forecast to capture 33.7% of the total market sphere in 2017.

However, as video file sizes increase, bit rates rise, security and rights management on a global scale a prerequisite for effective monetization, CDN businesses provide much more than bandwidth (i.e.; value added services are a fast growing component to CDN topline).

While CDN is the most mature value chain sector, Century Link's acquisition of Level 3 for $25 billion indicates those core facilities assets and delivery expertise remain highly prized in today's video rich IP ecosystem.

Similarly, desktop adtech is a more consolidated sector than mobile counterparts; though deals continue to take place for high-end multiples (i.e., Adobe's acquisition of TubeMogul for $540 million).

IPTV modules and integrated workflow vendors (both consumer-facing and enterprise-focused) occupy essential market positions straddling supply and demand, providing media platforms, processing, players, monetization support, security and custom (i.e.; white label) content management and networking solutions.

This rich media structure is populated with a mix of rapidly innovating, technologies, modules, services and solutions that continually evolve through organic R & D, acquisition and 3rd party integrations.

Vendors and platforms alike target emerging digital video operators, broadcasters (linear and on-demand), programmers (linear and on-demand), OTT services, VOD services, Live-to-VOD services, network DVR and more.

As the cord cutting phenomenon (phone and TV) continues, mobile adtech/audience platforms have consistently gained value chain share, and have led the market forward since 2014.

AccuStream Research expects video utilization trends will continue, with mobile audience platforms increasing share slightly over the next few years as the broadcast industry more closely integrates linear and non-linear video operations.

And the software sector (encoding to syndicated players) will benefit from content library expansion, while residing closer to the network edge (i.e.; the end user).

Further, as network operators deploy more video, they require integration expertise, bandwidth capacity or throughput, along with sophisticated interactive client and audience platforms, workflow and modular content management suites.

This research includes publicly traded companies, private or venture funded firms, those that have been acquired and folded into larger entities though continue to offer services to a wider set of clients, and acquired entrants still operating.

CDN analytics include Akamai Technologies, Limelight Networks, Mirror Image, AWS, Level 3, Highwinds, TaTa Communications and many others.

Digital video adtech includes Rubicon Project, AdRoll, Collective, SundaySky, Videology, Cinema6, Visible Measures, YuMe Inc., Inform (formerly NDN), AudienceScience, Exponential Interactive, TubeMogul and dozens more.

IPTV software and platform analyses include Anvato, Beamr, AllDigital Brevity, Brightcove, Clipstream, Syndicaster, Conviva, RAMP, Panopto, DaCast, Elemental Technologies, Encoding.com, Kaltura, Ooyala and many more.

Mobile and cross-channel adtech research includes BuzzCity, UpSight (Formerly Kontagent, InMobi, Jana Mobile, MediaBrix, MediaMath, MobileFuse, Mobile Posse, Twitter/MoPub, Motive Interactive, PubMatic, Madhouse and many more.

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FEATURED COMPANIES

  • AdRoll
  • Brightcove
  • Elemental Technologies
  • Level 3Highwinds
  • MobileFuse
  • SundaySky
  • MORE

SECTION ONE OVERVIEW: THE DIGITAL VIDEO VALUE CHAIN'S ANNUAL PERFORMANCE 2006 - 2016

DIGITAL VIDEO TECHNOLOGY MARKETPLACES: THE 360 VALUE CHAIN 2017 AND BEYOND

CDN, DESKTOP/MOBILE AND CROSS-CHANNEL ADTECH, MEDIA PROCESSING SOFTWARE AND IPTV MODULES TO INTEGRATED WORKFLOW VENDOR REVENUE ANALYSIS

    Reading the topline tea leaves: Trends in digital video technology sector revenue performance 2006 - 2018
    Tracking performance: Digital video tech market sectors combine for double-digit growth 2006 - 2016, and again projected through 2018
    Consolidation/M & A continues at a steady pace through 2016 across all sectors, with billions in additional take-out value on the table
    CDN is the most mature sector; however, Century Link's acquisition of Level 3 for $25 billion indicates those facilities assets and delivery expertise remain highly prized
    Desktop adtech is more consolidated sector than mobile counterparts; though deals continue to take place for high-end multiples (i.e., Adobe's acquisition of TubeMogul)
    IPTV modules and integrated workflow vendors (both consumer-facing and enterprise-focused) occupy essential market positions straddling supply and demand, providing media processing, players, monetization, security and custom (i.e.; white label) content management and networking solutions
    Including audience platforms Facebook and Twitter, an $86 billion grouping of digital video value chain market sectors is forecast in 2017
    Digital video value chain market sectors are growing at double-digit rates through 2018 at a declining rate
    2016 Digital Video Tech Revenue Share Breakout: The Mobile adtech/audience platform vertical market share at 38.7% in 2016
    The U.S. and North America represent 53% of the global total digital video value chain market total in 2016

DIGITAL VIDEO ADTECH AND MEDIA PLATFORM MARKET SECTORS HAVE REALIGNED

CONSOLIDATION THROUGH REORGANIZATION, RECAPITALIZATION AND A STREAM OF M & A TRANSACTIONS

    Software platform M & A totals $7.3 billion initiated when Comcast bought thePlatform in 2006
    Rovi takes out Tivo for $1.1 billion in 2016

DIGITAL VIDEO AND MOBILE ADTECH DRIVES PAST $18.2 BILLION IN CUMULATIVE M & A

ADOBE BOUGHT TUBEMOGUL FOR $540 MILLION IN 4TH Q. 2016 AT A MARKET PREMIUM

    $1.3 billion in 2016 M & A as adtech market places continue to consolidate

SECTION TWO: CDN SALES AND SERVICES MARKET OVERVIEW

CDNs 2007 - 2018: DIGITAL VIDEO AUDIENCE MIGRATION TESTS NETWORK AVAILABILITY, SECURITY, QUALITY AND SCALE

    CDN Revenue calculations explained: Analysis includes IP networking, Co-location and data center contributions to topline revenue
    CDNs do much more than strictly moving bits and bytes in 2016 - 2018
    Bandwidth provisioning (retail and wholesale) and delivery are forecast to remain a central component to CDN services and revenue for the foreseeable future
    End-to-end media management solutions built into CDN platforms through acquisition or partnership

BELLWETHER INDICATOR OF CDN SERVICES SHIFT: AKAMAI REVENUE BY PROVISIONING SEGMENT 2015 - 2016

    CDN business models have evolved far beyond bit and byte transfer 2014 - 2016
    Value added services support (i.e.; applications acceleration etc.) now at parity with byte/bit delivery in 2016
    What the market is buying in 2017
    Retail and backhaul bandwidth pricing is stabilizing
    Where the market is buying: The U.S. and North America are top CDN revenue generating geographies
    Managing the margins: The importance of COGS
    Bandwidth and co-location fees can become COGS hogs
    Akamai Technologies and Limelight Networks analysis
    Selling In: More applications support, more sales opportunities beyond point solutions
    Paying for simplicity and capability
    AWS has emerged as a prominent infrastructure and services vendor
    Revenue growth of 25% forecast for 2017, when including AWS
    Growth estimated at 15% excluding AWS
    CDN market revenue analysis with and without AWS
    Competitive currents: 2017 - 2018
    Operations and account focus 2017 - 2018
    Account Acquisition
    Retail and transit bandwidth pricing indicators: 2016 - 2018
    Video formats and adoption trends
    International markets, competition and account wins
    CAP Ex investment remained steady in 2015 as CDNs worked to utilize unused capacity
    CDNs CAPEX investment balanced against account additions 2006 - 2015

CDN ANNUAL PERFORMANCE METRICS BY COMPANY: 2003 - 2015

CDN Terminology / Definitions:

SECTION THREE: DIGITAL VIDEO TECH SOFTWARE PLATFORM SECTOR OVERVIEW

MODULES, TRANSCODING, PLAYERS AND WORKFLOW INTEGRATION 2007 - 2018

DIGITAL VIDEO TECH SOFTWARE SECTOR: MODULES TO WORKFLOW: BUYERS BUYING CUSTOMIZED SOLUTIONS AT COMMERCIALIZED PRICES

    The digital video publishing picture: Selling tech software solutions in 2017 blends white glove and white label/self-serve/automation
    Account verticals range from legacy broadcast to internet pureplay, ad-supported, subscription, for profit, non-profit, consumer-facing and on-premises
    Transforming the video business across all publisher verticals, viewing channels and device platforms requires flexible business models
    The co-mingling of linear and non-linear video systems and software now part of sales pitches
    Pure-play digital publishers appear to be better end-to-end sell in prospects through 2017
    Video publishers with legacy businesses in broadcast continue to layer in module-based solutions
    Module sell-in addresses the fragmented nature of 1st or 2nd generation digital video systems
    SaaS business models predominate across the consumer facing segment
    Digital video tech reality check: Rating the viewing experience and status of video formats, media players and OS devices
    iOS devices/HLS perform well across devices and apps
    Must have digital video Tech: Transcoding and media processing demand seen across all content/publishing/distribution verticals
    Digital video tech: New media adapts to legacy business models ported to fragmented device universe
    Digital video tech recommendation engines: Increasing engagement and measuring ROI
    Financial Fundamentals: Solution expansion sell-in strategy foundation for double-digit growth
    Publishers look to cloud services, module integration for cost savings
    Vendors look for multi-module/workflow sell-in, international expansion to fuel growth
    Workflow vendors capture the majority of digital video revenue; media processing and player sectors exhibit highest CAGR through 2018

MAPPING THE DIGITAL VIDEO SOFTWARE TECH AND SERVICES MARKETPLACE: VENDOR REVENUE ANALYSIS 2007 - 2018

    Enterprise-facing video tech solutions are steady performers: Product, price, position and promotion evolution 2007 - 2018
    Social media a product adoption driver for corporate outreach
    IPTV video tech vendor segment solutions alignment and revenue analysis 2007 - 2018
    IPTV video tech: Price, positioning, product, promotion and evolution 2015 - 2018
    $1.7 billion in 2016; Volume pricing delivers more revenue, on a sliding scale
    Encoding/Transcoding/Processing and CRM: Products, price, positioning, promotion and evolution 2007 - 2018
    Encode pricing for on-demand content by the gigabyte of output
    Encode pricing for "live" by the hour
    Digital video discovery, social engagement, search, navigation, recommendation tools and technology
    Addressing needs for improved navigation, better program information, all inclusive metrics and audience reach and social networking
    A highly consolidated $1 billion tech software business segment
    Digital video media players and solutions benefit from market complexity
    A $200 million segment of the business growing at 2x the total marketplace

TERMS AND DEFINITIONS

SECTION FOUR: THE DIGITAL VIDEO ADTECH OVERVIEW 2007 - 2018

POWERING MONETIZATION: VENDORS ARE OPTIMIZING AGAINST AUDIENCES, PLATFORMS, SCREENS AND OS DEVICES

IMPRESSION TRANSPARENCY: ESSENTIAL KEY TO UNLOCK MEDIA SPEND BUDGETS BEYOND THE LINEAR CLOCK

    Inventory management, trafficking and media clearing marketplace fundamentals: Enabling a business bottom line from digital video publishing
    Industry adoption drives net platform revenue growth by 25.6% in 2016
    A $14 billion vendor and audience platform business in topline revenue in 2016
    Technology unifies monetization efforts across all levels of audience engagement
    Varied approach to managing supply and demand: direct client relationships predominate, but automated buying and selling through licensed technologies gains traction
    Digital video adtech: A highly integrated alignment of markets and vendor specializations
    Where the $ goes: Tracking media spend through the vendor ecosystem
    The digital video adtech marketplace supports a wide array of impression formats and platform solutions
    CPMs by video format
    The fluid state of video ad technology adoption: Make, buy, license or outsource
    The desktop is the most mature, and monetized at a higher rate than other platforms
    Why the $ flows where it goes: YouTube channel analysis illustrates the market's preference for desktop inventory
    YouTube mobile/tablet insertion frequency doubled to 12.4% in 2016 over 2015 comparable figures
    Video spend economics and GRP economies: Screen depth creates more views, greater reach and in-stream inventory
    Vendor predictive analytics solutions, combined with data-enhanced audience/impression analytics provide brand advertisers greater confidence, but the user experience remains uneven
    Content and advertising play seamlessly on the least expensive television set; the advantage for vendors is that it's clearly not the case in digital
    Audience panel rates the digital content/ad experience: There remains a lot of work to do
    The desktop is monetized at a higher rate (and CPM) compared to mobile
    Demand is consistent: Digital video advertising is a priority for brands and marketers, providing sell-in leverage for vendors
    Automated trading: The state of programmatic digital video ad clearing 2017 - 2018
    Programmatic trading doesn't necessarily mean instantaneous trading on-demand, but it does mean a SaaS fee or CPM participation share for tech licensing vendors
    Non-guaranteed inventory (premium and otherwise) may wind up in programmatic systems (public and private), and that's a win for DSPs and SSPs
    Site serving is a large part of the digital video monetization marketplace, though 3rd party trafficking is increasing
    Digital video CPMs: Pricing consistency prevails on a per unit basis, though cross-channel campaigns can result in lower blended CPMs
    Business operations and topline revenue recognition; Calculating how vendors are paid
    Tech, network, audience platform revenue post publisher payout, or "net platform" revenue is the most important performance metric
    Topline revenue minus COGS is the operating margin, and the rate at which vendors participate
    Digital video adtech vendor marketplace alignment: Elaborate layers of modular, integrated and one-stop solutions 2016 - 2018
    Marginal performance: Billing models and participation share percentages
    Digital video adtech vendors 2017: The monetization marketplace pays for removing layers of cross platform complexity
    Digital video adtech: Inventory share by device, global reach, domestic and international exposure by vendor 2015 - 2016
    Independent digital video adtech firms and revenue 2016 - 2018: M & A potential
    Total revenue in 2017 of $5 billion for independent video adtech vendors

  •         SSPs
  •         DSPs
  •         Tech/Networks
  •         Audience/marketing platforms
  •         Audience platforms
  •         Serving
  •         Key Technologies

   Including Facebook and Twitter, the market is significantly consolidated

TERMINOLOGY AND DEFINITIONS

SECTION FIVE MOBILE ADTECH OVERVIEW 2009 - 2018

THE MOBILE VENDOR MARKETPLACE IS GLOBAL, POWERFUL AND PROFITABLE

ECONOMIC RENTS: MAPPING MARKETER BUDGETS THROUGH TO MOBILE ADTECH VENDOR TOPLINE

HOW THE INDUSTRY ALLOCATES REVENUES AND PAYMENTS

    Mobile media revenue and payments allocation constructed in similar fashion to desktop/cross-channel counterparts

MOBILE ADTECH VENDOR REVENUE: BEYOND TALKING POINTS AND ECHO CHAMBER CHATTER, HERE'S HOW THE BUSINESS REALLY WORKS

    The role of agencies and trading desks
    Brands are bringing technology in-house

BUSINESS MODEL VIABILITY: VENDOR VERTICAL ALIGNMENT, PARTICIPATION SHARE, SERVICES RENDERED AND GETTING PAID 2017

    Mobile AdTech 101: Getting paid means staying relevant: The keys to creating a sustainable market position 2017
    Monetizing R & D: Managing growth/overhead and delivering products and services the market is actually buying
    Mobile adtech is price competitive, global and requires a business model that scales with volume

PROFITING FROM VOLATILITY: THE INDEPENDENT/PUBLICLY TRADED MARKETPLACE IS FORECAST TO PRINT $8.6 BILLION IN 2017 TOPLINE

    Independent vendor analysis excludes Facebook
    Independent/Publicly traded analysis includes audience platform Twitter
    Mobile adtech is high risk, high reward, and publicly traded companies aren't valued at the level of private M & A dealings
    There is more unsold inventory on the mobile platform (when compared to the desktop), and cleared at a lower CPM
    Excess inventory challenge: More mobile inventory is made available to adtech vendors, but the market remains extremely competitive
    The independent segment of the market is forecast at 27.5% growth in 2017

INCLUDING FACEBOOK, THE MOBILE VENDOR MARKETPLACE IS HURLING TOWARD A 34.7 BILLION MARKETPLACE IN 2017

    Audience platform Facebook to capture 59% of mobile adtech revenue in 2017

THE BUSINESS MODELS: HOW VENDORS STRUCTURE BILLING MODELS

    Billing models by vendor 2017
    Mobile adtech business models can be designed in multiple layers, often utilizing well-established billing norms
    The mobile adtech vendor marketplace averages margins between 15% - 35%
    Margins are post publisher payout, if applicable

AUDIENCE SEGMENTATION, PROFILING, AND DEMOGRAPHIC TARGETING IS A FUNCTION OF REACH

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  • AWS
  • AdRoll
  • Akamai Technologies
  • AllDigital Brevity
  • Anvato
  • AudienceScience
  • Beamr
  • Brightcove
  • BuzzCity
  • Cinema6
  • Clipstream
  • Collective
  • Conviva
  • DaCast
  • Elemental Technologies
  • Encoding.com
  • Exponential Interactive
  • InMobi
  • Inform (formerly NDN)
  • Jana Mobile
  • Kaltura
  • Level 3Highwinds
  • Limelight Networks
  • Madhouse
  • MediaBrix
  • MediaMath
  • Mirror Image
  • Mobile Posse
  • MobileFuse
  • Motive Interactive
  • Ooyala
  • Panopto
  • PubMatic
  • RAMP
  • Rubicon Project
  • SundaySky
  • Syndicaster
  • TaTa Communications
  • TubeMogul
  • Twitter/MoPub
  • UpSight (Formerly Kontagent
  • Videology
  • Visible Measures
  • YuMe Inc.
Note: Product cover images may vary from those shown
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Note: Product cover images may vary from those shown
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