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30 July 2020

Peacock is major step up for Amagi, but being early to cloud was bigger

Claiming to be one of the first companies to build a cloud playout service, undertaking the task nearly 8 years ago in the face of many concerns about the scalability and reliability of the cloud, Amagi is starting to get cocky. But when we look at cloud-based uptake in the video market this year, with migrations directly accelerated by the pandemic, Amagi has a right to be.

“What people once thought impossible to do is now a necessity,” Amagi’s CEO and Co-founder, Srinivasan KA (aka Srini), told Faultline this week.

Faultline probed as to whether cloud playout deals with niche linear channels – such as the one Amagi inked with Tastemade to launch the channel to Peacock earlier this month – were of much value. Apparently, they are. With all Amagi’s cloud playout deals, the company operates on a SaaS revenue model, charging a monthly fee for channels to use the distribution service. So long as platforms keep the channels, the money keeps coming in.

Cloudport is Amagi’s cloud-based channel creation platform, described by Srini as “an automation playout platform”. It allows OTT services to program a 24/7 schedule and organize playout, allowing for a mix of library channels and live feeds.

Srini said that working on Peacock was a pleasant experience, although Peacock was technically a step up from previous projects. “Peacock requires a more broadcast-grade quality stream,” he explained. “The parameters Peacock expects are different from other CTV platforms we’ve worked with.”

Amagi creates live linear channels for a range of clients, including content owners, studios, broadcasters, and sports rights owners. It then distributes these channels on both linear broadcast and OTT, providing dynamic ad insertion services for the latter.

“A few years back, everyone thought linear would be dead, but we have seen that people are creatures of habit,” he told us. “People do not want a lean forward experience all the time. Many still want a curated experience which allows them to serendipitously discover content with ease.”

Aside from the end user, Srini argued that retaining linear delivery makes business sense for content owners and broadcasters, as it significantly reduces their marketing expenses.

“If I’m in OTT, I have to promote every show from ground zero,” he argued. “On the other hand, networks have recall and brand loyalty. They can introduce shows much more effectively, and viewers expect a certain level of quality.”

He told us that Amagi has seen “linear making a big comeback” in its own business, working with the likes of Pluto, Xumo, Rebox and Plex to make linear-like TV experiences. All these platforms provide a mix of VoD and linear.

Srini estimated that around 70% of viewers on such mixed platforms were watching the linear channels, while the other 30% were watching VoD.

Amagi’s client list shows that cloud-playout has moved into the mainstream. Cloudport now hosts nearly every major network in the US, including NBCU, Discovery, A&E and PBS.

While cloud-based playout has often been snubbed by broadcasters for its recurring costs, Srini explained how Amagi reduces its operational costs by using Spot Instances within AWS – reserving unsold server space for short periods of time at a reduced price. Amagi also alters the server size for a client depending on demand, scaling up to larger computers at primetime, for example. Srini assured us none of this impacts SLAs for the clients.

For OTT services, Amagi provides a dashboard for analytics on viewership which can be split according to region or platform. “It’s all based on real data, unlike something like Nielsen,” he argued. Amagi also provides real time analytics for linear services.

Covid-19 saw Amagi lose a large chunk of business in the live sports sector, but Srini seemed hopeful that ultimately the pandemic would benefit business in the long term as more turn to the cloud. “It gave broadcasters a chance to pause and look at infrastructure,” he said. “People are going back to rework the flows and bring everything to the cloud.”

Amagi also provides server-side ad insertion for many of its OTT clients in the form of its Thunderstorm platform. The company receives a performance-based fee, measured in a similar way to CPM. Established three years ago, Thunderstorm serves platforms such as Samsung TV+ and Roku.

Cloud services still make up the majority of Amagi’s business – around 75% of revenue – but Srini told us that Thunderstorm is growing much faster. He acknowledged that CPM was hit by the pandemic, but in the last month it has come beyond pre-pandemic levels.

Around two thirds of Amagi’s business is in the US, while the parent company remains in India. We first covered Amagi at IBC back in 2012 when it was billing itself as the largest company reselling advertising. Founded in 2008, it would buy ad spots in national Indian TV channels, and then resell them regionally, getting paid many times over for each national ad slot, because it used an addressable advertising system of its own devising.

Expansion to the US was accelerated by demonetization in India, which greatly reduced domestic advertising demand. “We then decided to pivot into being a tech company, where we provided the platform, but no longer acted as the broker,” Srini explained.

He also revealed that Amagi is in the process of building an analytics platform to provide content owners with programming insights, utilizing AI and machine learning. “We already process a lot of data, but we are hoping to provide insights ourselves,” he explained.

Amagi is also looking to unify data collection for TV networks, as linear and OTT data is often stored separately. “We are doing it for a couple of customers already but want to present it as a package offering for everyone in the future,” Srini added.