View From the Top: Zixi | Navigating the Challenging Financial Landscape: The Strategic Importance of Total Cost of Ownership in Broadcasting and Streaming
The broadcast and streaming industry is currently navigating a challenging financial landscape, marked by economic uncertainties, intensified competition and shifting consumer behaviors. In this environment, understanding and optimizing Total Cost of Ownership (TCO) has become more critical than ever. TCO is not just a financial metric; it’s a strategic tool that helps organizations manage resources efficiently, maintain competitiveness and contribute to sustainability in a rapidly evolving market.
From CapEx to OpEx: Adapting to Cost Shifts in a Strained Media Industry
Traditionally, media companies have relied heavily on capital expenditures (CAPEX) for proprietary hardware and infrastructure. However, the current cost-conscious climate and the move to Cloud has shifted the focus towards operational expenditures (OPEX) through IP-based, cloud-driven solutions, reshaping the financial dynamics of the industry. This transition allows for more flexible, scalable operations, but it also requires a fresh understanding of how costs are distributed over time. The media industry, although with longstanding expertise, has been operating in a fixed and traditional manner for years, where new systems are evaluated through a rigid lens. TCO is rarely fully recognized, and infrastructure and related costs are often overlooked when considering hardware expenses. Cloud and IP-based solutions demand a broader perspective, as their reliance on infrastructure is significant. To truly unlock the potential of cloud and IP technologies, a more comprehensive approach is needed, including a more thorough analysis of TCO that accounts for all associated costs.
Zixi, the leader in enabling highly scalable, live broadcast-quality video reliably over any IP network, exemplifies how companies can achieve significant cost savings by adopting a software defined workflow, reducing the need for expensive hardware and enabling the pivot towards virtualized environments. Zixi’s 15+ years of expertise and its adoption by over 1400 large media companies demonstrate its ability to deliver proven hard cost savings in compute, egress, and personnel, outperforming any other IP solution. As organizational financial pressures mount, these savings are crucial for dramatic cost reduction and increasing profitability by allocating resources for the creation and monetization of content.
The Hidden Costs: Beyond the Surface of Initial Investments
While migrating to IP and cloud-based solutions offers cost reductions, hidden expenses can emerge. Ongoing costs such as egress bandwidth, compute, implementation, operational, maintenance, software updates, missed monetization, cybersecurity and energy consumption can significantly impact TCO. These factors, often overlooked during initial budgeting, can accumulate and strain already tight budgets far beyond the software license fees.
Some vendors in the industry promote their offerings as “free” or low-cost software, but they often downplay, or customers are unaware of the substantial hidden costs that quickly escalate. While these “free” solutions might involve smaller upfront charges, users end up paying a premium for commissioning, monitoring, excess bandwidth and compute resources, essential support, maintenance and software upgrades. For example, hidden costs related to downtime, inefficient workflows or the need and lack thereof additional essential features far outweigh the initial savings.
When analyzing the technology TCO, it’s evident that infrastructure accounts for over 40% of the total cost, while software contributes only a small fraction. Legacy infrastructure, which is CAPEX-heavy, demands significant upfront investments and is anything but agile while facilities like buildings, power systems, HVAC, satellite farms, dedicated fiber infrastructure and server farms not only come with huge capital costs but are also expensive to maintain and operate.
In contrast, cloud infrastructure significantly reduces these costs, but not without introducing its own set of expenses such as fees for egress bandwidth, compute resources and Internet Service Providers (ISPs). These cloud-based charges can accumulate rapidly, especially when inefficient processes are at play. For instance, poorly optimized compression algorithms in “free” or open-source protocols can substantially increase bandwidth usage and the associated egress costs. Transport streams often include «null packets» to maintain a constant bitrate, even as content bitrate fluctuates with complexity and encoder configurations. While these null packets serve a purpose, they are not required for transport, and failing to address them leads to significantly higher egress costs.
Zixi has developed advanced, video-aware algorithms that compress null packets during transmission, reducing unnecessary bandwidth usage. Upon reaching the receiver, the packets are uncompressed to deliver a lossless source stream, reducing egress bandwidth costs by 30-60% providing a substantial savings opportunity for companies dealing with hefty cloud provider fees for bandwidth usage, costs that are often underestimated in TCO calculations.
In addition to bandwidth costs, compute resources form another major component of cloud-based workflow expenses. Zixi has invested heavily to develop technologies that lower the compute requirements for delivering high-throughput streams. For example, the recent release of Zixi’s version 18 software includes DPDK high-throughput technology that allows for direct access to network ports, bypassing the operating system resulting in throughput rates 40 times higher than open-source protocols. This efficiency allows organizations to process more data with fewer compute resources, further lowering the cost of cloud infrastructure. Zixi also supports installation on ARM-based processors such as Graviton, which, as per AWS, can reduce compute costs by up to 40%. By leveraging these technological advancements, Zixi enables companies to maximize their cloud resources and minimize costs, significantly reducing the TCO.
Zixi’s Software Defined Video Platform (SDVP®) provides the lowest TCO in the industry while still delivering state of the art innovation such as Dynamic Latency and Dynamic FEC which adjust the system latency based on network performance resulting in optimal user experience. Zixi significantly reduces total cost of ownership by implementing these bandwidth and compute-saving techniques, alongside workflow automation and advanced tools for incident prediction and rapid resolution. Combined with comprehensive support and maintenance included in the package, this approach minimizes operational expenditures and safeguards against unexpected financial burdens. This model effectively manages costs and protects companies from unforeseen expenses that could threaten their financial stability.
The example above illustrates a typical satellite distribution workflow, highlighting the infrastructure cost savings achieved by replacing traditional delivery with IP-based solutions. It highlights the results of Zixis’ technical advancements, such as lossless null compression for reducing egress bandwidth and DPDK for high-performance networking, which minimize compute resource requirements and associated costs. Additionally, the support of Market Switching ESNI and ESAM servers is essential for realizing these cost reductions.
Strategic TCO Analysis: A Necessity in Today’s Market
In this financially constrained environment, TCO analysis is not just about cost management—it’s about making informed strategic decisions that ensure long-term sustainability. A comprehensive TCO analysis enables media companies to evaluate the full scope of their investments, considering both direct and indirect costs.
When migrating to cloud-based solutions, companies must balance the benefits of scalability and flexibility against the risks of vendor lock-in and integration challenges. Informed decisions based on thorough TCO analysis help organizations navigate these complexities, ensuring they choose paths that align with both their financial goals and operational needs.
For example, we can look at the TCO of Zixi through the lens of both hard and subjective savings. Looking at subjective savings, the ZEN Master control plane offers a comprehensive suite of benefits that can revolutionize workflow management in the broadcast industry. Its ability to abstract workflow complexity enables rapid implementation, resulting in faster deployment and reduced costs. The platform’s unparalleled visibility into end-to-end workflows allows customers to optimize their operations, to do more with far fewer resources.
While Root Cause Analysis (RCA) can cost as much as $500K per annum for broadcast channels, Zixi’s AI and ML powered Intelligent Data Platform (IDP) reduces this cost by implementing Multi Object Correlation Analysis (MOCA) that significantly improves incident resolution performance. Security meanwhile has been a paramount aspect of ZEN Master’s design. In addition to SOC 2 controls and content encryption, Zixi has implemented DPDK technology, which bypasses the operating system entirely, further enhancing the platform’s security measures.
Elsewhere, the ZEN Zixi Enabled Network facilitates seamless content exchange among its network of 1400 customers and 400 partners, creating a robust ecosystem for content distribution and collaboration.
Lastly, ZEN Master provides deep insights into the actual cost of each workflow, enabling effective public cloud cost management. This feature allows users to optimize their cloud usage and expenditure, ensuring maximum efficiency and cost-effectiveness in their operations.
If anything, the hard savings are even more compelling. Where Zixi Hitless Failover is not required, the Zixi Protocol allows hot/warm redundancy with fast failover. The Zixi platform monitors other streams, and in seconds fails over, leading to an egress cost half that of a hot/hot redundancy architecture. In addition, by utilizing Zixi’s ESNI and ESAM Servers, broadcasters can automate their traditional workflows and reduce transport stream volume by up to 20x. This is directly linked to compute and egress costs, which therefore benefit by a matched incremental 20x cost reduction. This integration empowers content creators with enhanced opportunities to monetize their offerings by providing more granular control over distribution, blackout restrictions, and contract management for rights holders. By utilizing Zixi's ESNI/ESAM support creators can optimize revenue streams, tailor content accessibility, and ensure that contractual obligations are met more efficiently, ultimately maximizing the value of their content. Zixi can also transcode disparate video formats utilizing NETINT’s VPUs, reducing the risk of reliance on currently short-supplied Nvidia GPUs and reducing the associated costs by 50%.
Leveraging Automation and AI to Optimize TCO
Automation and AI have emerged as powerful tools to optimize TCO in broadcast and the streaming industry. By automating routine tasks—such as content distribution, quality control, and audience analytics—companies can drastically reduce labor costs and minimize errors, contributing to lower overall operational costs. Additionally, AI-driven analytics provide insights into usage patterns and system performance, enabling more efficient resource allocation and reducing waste.
The integration of AI into media workflows not only cuts costs but also enhances content personalization and monetization strategies, crucial for maximizing revenue opportunities while controlling expenses. However, the costs associated with implementing and maintaining AI systems must also be factored into the TCO equation.
AI-driven solutions can also significantly enhance sustainability efforts by optimizing energy usage and reducing the need for physical infrastructure, further reinforcing the connection between cost management and environmental responsibility.
Sustainability as a Core Component of TCO
Sustainability, once a secondary consideration, has become central to cost management. Media companies face increasing pressure to reduce their carbon footprints, making energy efficiency a key element in TCO and are more likely to make environmentally friendly decisions when they are accompanied by specific cost savings that help the bottom line. Solutions like the SDVP not only offer cost-effectiveness but also enhance sustainability by optimizing resource usage and lowering energy costs. By integrating sustainable practices into TCO analysis, companies can manage costs while contributing positively to environmental goals, positioning themselves as responsible industry leaders.
The Future of TCO in a Challenged Industry
Looking ahead, TCO will continue to evolve as the media industry faces new financial and technological challenges. The increasing reliance on cloud services, the rise of remote production and the growing importance of cybersecurity will all influence TCO considerations.
In a time when financial prudence is paramount, media companies must adopt a holistic approach to TCO, considering not just immediate costs but also the long-term implications of their technology choices. By doing so, they can ensure their investments meet today’s operational demands while positioning themselves for future success in a rapidly changing and financially pressured landscape.
Gordon Brooks, Executive Chairman, Zixi
230 3rd Avenue, Suite 3203
Waltham, MA 02451
USA
zixi.com
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