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1 August 2019

Blockchain creeps into broadcast ecosystem

Advocates of blockchain in broadcasting have had little to cheer about over the last year except for one significant development, the commitment by Comcast to the technology with the launch of its Blockgraph advanced advertising platform in December 2018. At the time of the launch we commented that blockchain was much better suited for TV advertising than some of the other proposed use cases in video services, such as token-based payment mechanisms for subscription OTT services, and we have seen little to change that view since.

In other areas too, including use of blockchain for ultra-local P2P sharing of content to alleviate consumption of CDN capacity and bandwidth in core networks, the technology is still largely on the drawing board or at best trial stage, with little real progress. Another area still really in the incubation stage is resource sharing, even though we did report six weeks ago on the start-up Livepeer raising $8 million in Series A funding. That firm claims to have identified a crucial gap in the market – the encode compute opportunity targeting cryptocurrency miners which have acquired substantial numbers of GPUs to power their mining activities. The firm – and its backers – believe this has created a processing void where the genuine video encoding on these chips takes place. The resulting encode opportunity is just one component of Livepeer’s platform-as-a-service for developers that want to add live or on-demand content to projects. The idea is a good one but in its infancy is unlikely to make much immediate impact on video distribution.

Then there are content platforms that use blockchain technology, some taking payments in conventional currency and others in a cryptocurrency. An example of the latter is UK-based film and TV streaming service LiveTree, which launched in December 2018 with library titles from the British Film Institute, Warp Films and Kaleidoscope Film Distribution. The service is offering subscribers the chance to bankroll and have a stake in prospective film and TV projects through crypto-currency known as Seed tokens, where the transactions are made through blockchain technology.

Such ventures are replicating the proven advantages of blockchain in the cryptocurrency world, where it enables transparency, efficiency and security in the movement of funds. But again, such ventures are small beer at the moment, even if they are establishing the concept of blockchain for managing distribution and payments for content.

The problem with blockchain is that it has been pitched as a panacea for a number of problems where it is just one of various solutions and often not the best one. It is referred to as a ledger but is really a distributed database with a robust commit mechanism ensuring that all transactions are accurate, immutable, transparent to all participants and recorded.

As such, it is indeed a panacea for cryptocurrencies because it has the essential property of avoiding need for any centralized authority or third party. Unlike a centralized database the data is held by all peers so that there is a committal mechanism to ensure that changes are replicated faithfully everywhere. This has the advantage of correcting errors that occur in any peer by sheer weight of numbers. That said, blockchain is just as susceptible to the “garbage in garbage out” principle as any centralized database.

The established capability of blockchain for running decentralized transactions securely does have potential in the video industry not so much for trading content directly but as the infrastructure for transmitting data used in analytics. This has most obvious appeal in advertising as we noted and brings us back to Comcast’s major commitment to blockchain through its ad technology subsidiary FreeWheel. Sister company NBCUniversal has been testing the technology this year but Comcast has wider ambitions, as it has done for some of its other technological creations, such as the RDK platform, with the aim of creating an open industry standard for sharing data and insights.

The ambition is to help not just Comcast, but other traditional content houses and operators compete with the digital giants in delivery of large-scale data-driven advertising. The hope is that use of blockchain will provide an edge by enabling exchange of audience insights while complying with privacy regulations such as the EU’s GDPR. Accordingly, both Viacom and Spectrum Reach, the advertising sales arm of Charter Communications’ Spectrum TV brand, have been recruited as partners.

The key then is to facilitate data sharing on a bilateral or multilateral basis between parties, which is critical for successful targeted advertising where the aim may not be to address individuals but audience segments relevant for a given product or promotion based on gender, age, lifestyles, interests, attributes and preferences. A company selling upmarket adventure holidays for the elderly might want to know data on age, wealth, health and lifestyle preferences for example.

Data is also required to measure success of an ad or campaign, which might involve combining set top data about viewing of an ad, with follow up actions like accessing a web site, visiting a show room, conducting an online search or even placing an order. This involves bilateral data transactions without resort to a third party, for which blockchain is ideally suited.

So, unlike some blockchain initiatives in broadcasting, Comcast’s Blockgraph has not fizzled out into oblivion hardly to be mentioned again. Far from it, investment has increased, and Comcast’s commitment was underlined by the hiring in May 2019 of former DoubleClick engineering executive Utpal Kalita as CTO and VP of engineering for Blockgraph.

Since then Jason Manningham, GM of the Blockgraph initiative, has ramped up the rhetoric by touting blockchain as the solution to the problem of matching the ever-growing number of original scripted TV series, about 500 in 2018, with proliferating distribution channels. This makes around 100,000 possible pairs, fueling Comcast’s own prediction that the amount of data media and entertainment companies will be dealing with will increase by five and a half times between 2018 and 2025. “More data begets more data because these services have become more valuable,” said Manningham.

He also contended that nearly 80% of ad executives cite privacy compliance as their top priority, with two out of three concerned over consumer backlash around their data. The corollary is that being seen to be secure could help win the trust of consumers and ensure access to that critical data. That again is where blockchain comes in.

In the face of such sterling commitment from Comcast we should modify our skepticism over blockchain in broadcasting and admit that it looks like playing a growing role in the emerging advanced advertising ecosystem.