Former Vodafone Group Global Head of Fixed Product Development Nuno Sanches is now leading Kaltura’s Media and Telecom Business Unit. He spoke with Julian Clover
Julian Clover: When you decided to join Kaltura, what went through your mind as to the challenges that might come across your desk?
Nuno Sanches: I think there are two types of challenges; first there is the industry-wide competitive challenge, and the consequences if this business is going to be so concentrated, with some players of such a scale that everyone else will never be able to reach their full potential.
But the really big structural question is: Will TV distribution end up being like the cell phones or like social networks and other network-centric tech businesses where a handful of players worldwide will essentially dominate all the value chain globally? I think that’s the biggest industry risk, not just for Kaltura, but for anyone playing in this technology space. I don’t think this is actually going to be the case; the value chain is too complex, with much more locked-in value for that to happen.
JC: Do you think is there is a danger that those big players aren’t challenged by other players in the market? That they won’t need industry standards anymore because they’re big enough to effectively create their own internal standards? And they can then go on and boss everybody about.
NS: If that level of fragmentation, with thousands of players in media and telecom but dominance ending up being concentrated just in the hands of two or three in Silicon Valley, then I think the others will definitely find their own verticals. So no, I don’t think the scenario you describe is very probable. If this were to happen, the other players would join forces in order to create scale and compete.
When I worked in Vodafone the question we asked with partners as we scaled up was how do we get more scale, how do we bring more people on board? How do we guarantee the reinvestment cycle to create network effects? I really believe that we will not end up with that scenario of dominance by just a few. There is a huge opportunity waiting to be unlocked. Telecom companies still live in this old paradigm of either not accessing their consumers directly in the media world or essentially living close to the silos of legacy technology they’ve built on. I would say most are locked in through decisions of the past. I think that unlocking the value of both the media and telecom sectors creates a real opportunity for a company like Kultura, and for all the media and telecom providers.
JC: You say that you have the chance to play a role in moving the industry forward – can you outline these?
In 2014, when I joined Vodafone to build its Group TV service, the industry consensus was that specific networks, like cable, IPTV or OTT, required different solutions, that every country was so specific and different that a copy/paste approach was not possible. The view was that pay-TV services required heavy on-premise deployments in operator-owned data centres.
Vodafone needed a multi-country, multi-network solution that could be deployed in months not years. We believed it was possible to create common group-wide service, deploy it in the public cloud quickly and in a scalable manner and still leverage all the benefits of broadcast and multicast video distribution. It was a paradigm shift that was not obvious and which came with risk. But just five years on, Vodafone TV was fully cloud-based, active in seven different markets with millions of users. NPS reached a high level, significant cost efficiencies were realised, and it takes just six months to launch a service in a new country.
Now I have the opportunity accelerate the industry-wide evolution into Cloud TV, as Kaltura’s reach is global, reaching telcos, pay-TV and media companies. In my new role, I have the chance to be part of the wave of transformation that will drive these businesses, and the industry, forward.
JC A lot of the trend towards OTT and streaming has seen some movement away from the set-top box. Will this continue? Are consumers still typing in channel numbers or are they going through apps to find what they want to watch?
NS I think that it’s still up for grabs. The outcomes of the pain points that the streaming model has introduced in terms of fragmentation is still unclear, whether or not we will at some point see a significant backlash with users almost requesting a return to the aggregation of the bundle, to the aggregation of the experience. Fragmentation has created some problems that didn’t exist before.
JC: Such as?
NS: First of all, the pricing. The fantasy of solving the bundle problem, particularly in the US, has become a nightmare of stacking up of subscriptions, which is not sustainable. There is a role for aggregation there.
JC So as the consumer, in constructing his or her own personal bundle, with multiple separate subscriptions, seems to be creating what they just knocked down not that long ago, there is a role for a new model?
NS Correct, because consumers are used to the convenience of being able to access the content they want – at what was perceived to be a high price – all in one place. In Portugal, which is a market I know well, there was a perception that a single provider dominated the market, and was extracting too high a price. There was not just the pressure from the consumer, but also a regulatory push essentially for the content to be more flexibly available. That’s a different distribution platform. When that happens, the fragmentation leads to the exact same content actually being priced at 20 per cent more, 50 per cent higher, even 100 percent higher. In the end that didn’t prove beneficial to the consumer.
Fragmentation will lead to re-consolidation. There is a role for the super-aggregator, probably either local or regional, who will bundle TV with something else. TV is bundled with everything, right? TV becomes this sort of enabler of other services. and the role of the super-aggregator becomes bigger. TV becomes part of a bigger offer. They can stop the bundle problem through content and through offering other services.
JC: So imagine, if you will, that I’m one of these super-aggregators; I have the potential to become your top customer. What does Kaltura then have to offer me to make sure that I can give the best experience to my customers? What’s going to make it work?
NS: Well, the first thing is we bring cloud scale.I think at this point there isn’t really a competing technology company that can claim to have an equivalent scale in terms of a cloud operation. Our platform now has 50 million subscribers, in all types of technology, cable, IPTV. And so I think that’s the case we make to operators, particularly to telecom operators who are looking to transit from very old paradigms of on-prem platforms, owning their own systems and data centres, towards solutions in the cloud.
I think another important factor is the hybrid element: Most of these pay-TV operators are not able to essentially fund a full OTT experience with live TV. They have live TV as their unique selling proposition today, which hasn’t been taken over by OTT players, but they cannot transition live TV fully to OTT. So they need to remain hybrid due to the simple economics of the network.
There are thousands of companies competing with the global giants for viewers’ attention, and they are facing a decision point of how to move forward. In order to survive, those businesses will have to transform their services. But they can achieve this by joining forces with a technology partner with the global scale and the Cloud TV expertise to support their needs.
