An unexpected twist came from our criticism of Ateme’s recent personalized TV research. Rather than agree with our assertions that the French compression vendor was loosely pushing the idea of cloud-based personalization to drive vested software encoding interests, it transpires Ateme is actually planning to power personalized TV first-hand.
“Now we are more than a video compression company. We serve only tier 1 media firms and our goal is to enable future trends like tailored TV line-ups for broadcasters to reduce churn and create these on the fly, with personalized ads,” Ateme’s excitable Chief Strategy Officer, Remi Beaudouin, told Faultline this week.
Before we get into the nitty-gritty, Beaudouin claims Ateme’s surprise exploration from compression to personalization can only be achieved because 50% of the company’s total 270-strong workforce are geared towards R&D.
“The reason we are growing revenues at 20% year on year is that we have been faster than all the incumbents, like Harmonic and MediaKind, at adapting our agile approach. Our rivals are less innovation-driven and we are winning the market with our new multi-year contract business model,” were just a couple of big claims from Beaudouin during our broad conversation. We’ll elaborate on the crucial last point about contracts a little later in this article.
While the vast majority of R&D involves the latest compression techniques driven by emerging codecs like AV1 and VVC (versatile video coding), Beaudouin mentioned Ateme’s recently released Titan Playout technology for virtual programming – prompting a Faultline intervention to voice our concern about entering a heavily commoditized market basically bereft of value.
“I agree that the playout market has decreased in value. The likes of Imagine and Green Valley were successful here, but it is the traditional linear 24/7 channels that are commoditized. We are enabling the creation of personalized channels, including splitting and stitching, in order to scale up,” said Beaudouin. We have attached a diagram to visualize Ateme’s Titan Playout product.
This trend is referred to as linear on-demand in other circles (see separate story on 3SS in this issue) with services such as Pluto TV bringing curated channels to set top environments. Now even the compression majors want in on the act.
So, how does Ateme plan to magically become a personalization software powerhouse? “We are not about to become an analytics company overnight, but we are not saying we won’t in a few years. For now, we are partnering with Conviva and Nice People at Work and have a major tier 1 deployment with a media group that operates across the US and Europe,” said Beaudouin.
Ateme has a solid two-year plan in place. It wants to dominate the video headend market and expand existing service providers to OTT delivery. Crucial to this is Ateme’s new strategy of engaging customers in multi-year contracts rather than a typical opex model (paying per title/minute/month). This puts Ateme in the driving seat.
The customer benefit of a lengthy commitment is guaranteeing that shifting to a new video compression vendor is futureproof, in that Ateme will power whatever app or service a customer plans to roll out in the coming years. The benefit to Ateme is that when these contracts are valued at $1 million to $2 million a year over 5 years, it gifts the vendor a revenue backlog predictability from where it can tee up new R&D projects. In turn, the customer can rest assured that it will get priority access to the latest codec developments and other innovations.
“This is R&D investment in a smarter way,” said Beaudouin, boastfully but not totally wrong.
We took issue with a point mentioned earlier about only serving tier 1s. “Okay, we don’t say no to tier 2 and 3 customers but we usually use an integrator like Accenture. The people who see the real value in R&D are the big guys,” underscored Beaudouin.
Maintaining two-way relationships is imperative and during our conversation Beaudouin was in the US meeting existing customers to discuss the trends Ateme is seeing in other regions. Ultimately, he admitted, this is all about adapting to the Netflix effect.
There is, however, a line Ateme will not cross. “We will not offer anything as-a-service. Say we offer an Ateme.com SaaS site, we will end up competing with our own customers, such as Eutelsat and Intelsat. The SaaS approach is excellent in many cases but is also overcrowded,” he explained.
As a reminder, this all came about after Ateme put out a bunch of survey results, including that 8 in 10 broadcasters risk falling further behind streaming services due to management indecision about migrating to cloud infrastructure, among other findings. Faultline probably wasn’t the only one scratching its head over Ateme appearing to veer off-piste, so the only logical explanation at the time seemed to lie in encouraging uptake of cloud infrastructure – public or private.
Now we are clear this is only half the story, Beaudouin was keen to highlight that from Ateme’s point of view, all the current trends point to a multi-cloud hybrid future – rather than increasing reliance on public cloud infrastructure from the AWS and Azure behemoths. “This is a gray area for the future. We will see a mix of on-prem and off-prem stuff; some private, some public. Even customers using 100% private cloud infrastructure will have back-ups with 2 or 3 public clouds,” he predicted.
It’s difficult to summarize such a multi-faceted chat, although we see the analytics aspect as most pressing. Ateme’s first step is to adjust its core compression business and then build on its partnerships with Conviva and NPAW. Then in 2020, the company will begin ramping up and making money.
“One angle we plan to make money from initially is ad insertion – through a combination of compression, origin server and manifest file manipulation technology,” confirmed Beaudouin.