Streaming 'Round the Globe

This article first appeared in the October/November issue of Streaming Media magazine. Click here for your free subscription.

A quick appraisal of the current internet universe makes it clear that there is a tremendous opportunity for growth in international streaming. When that opportunity will actually become a reality is a very complex question. Here is a snapshot of the current internet landscape:
• There are about 1 billion people on the internet today.
• Half of them live in North America or Western Europe.
• The other half lives "everywhere else."
• North America and Western Europe represent less than 1 billion people.
• "Everywhere else" represents more than 5 billion people.
• North America and Western Europe have close to 70% broadband penetration.
• "Everywhere else" combined has less than 10% broadband penetration, but it’s growing rapidly.

So if the international growth opportunities are so obvious, why are media companies confining their digital efforts to certain geographic areas? Several factors contribute to both the growth of opportunity in emerging markets and the delay of streaming media expansion into these markets. This article asks the experts to share their knowledge of global digital media as well as the challenges companies will face trying to enter new markets.

Indicators
Most of the experts we spoke to agree that the main indicator of future opportunity for streaming media is the exploding broadband growth rates in emerging and developing markets.

Arne Rees, VP of international development for ESPN, tells us that "South America is about two to three years behind the U.S., Europe is on par with us, and Japan and Korea are way ahead of us."

Ben Borakas, head of ad operations for JumpTV, adds that "while overall penetration in emerging markets might be small, year-over-year growth is huge and exciting. Video is going to be a huge driver in these markets."

Streaming media adoption generally correlates with broadband penetration. According to Fred Boxa of the Interactive Broadband Consulting Group (IBB), streaming media adoption is "highest in North America, then in Europe, then in the Pacific Rim."

While we’re seeing some growth in emerging markets, very few media companies have established digital businesses overseas because overall penetration doesn’t justify the investment. Nick Rockwell, SVP and chief technology officer of digital media at MTV, tells us that "international is still small for MTV Networks’ digital businesses, with the exception of Korea and Germany."

Content delivery networks (CDNs) like Limelight Networks are carefully entering emerging markets based on broadband penetration growth. Limelight’s chief strategy officer and co-founder Mike Gordon says that "the uptake of broadband access is plannable and fundable, and is therefore the main driver of international growth for Limelight."

Opportunities
While media companies and technology companies are focused on North America and Western Europe, they have a close eye on emerging markets and are strategically planning the next few years of expansion.ESPN’s Rees categorizes the global streaming opportunity into three buckets:
1. Free-to-air, rights-cleared, short-form content
2. The extension of cable content and relationships to the digital space
3. Specialty content for niche audiences that are price-insensitive or are displaced

The first bucket—free-to-air—represents a convenient solution to global distribution. If you have rights-clearned content that is to be distributed across geographic boundaries, you can leverage the internet to reach audiences worldwide. As Robert Petty, ROO Group’s CEO, says, the internet has become a global broadcasting platform that is only getting bigger.

The second and third buckets—cable content and specialty content—require much more local effort and attention and usually don’t scale as well as traditional media. The internet, however, offers a new type of opportunity that can scale and is not limited to geographic boundaries. Valerio Zingarelli, CEO of internet TV network Babelgum, refers to the internet as "a global platform for communication" and describes his company as "a global personal media company" that is programming content based not on geographic boundaries but rather on language and cultural "passion verticals."Valerio says that English-speaking populations currently have the highest penetration on the internet, with Chinese- and Spanish-speaking populations close behind.

Limelight’s Gordon attributes the growing penetration rates to three factors:
1. Rapid technology change in terms of access and devices for both fixed and mobile platforms in emerging markets
2. A generational change that is swooping across younger generations around the world
3. The global point of view taken by these younger generations