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Akamai Execs: M&E Sector is Seeing Challenges and Opportunities From Pandemic

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The media and entertainment industry is facing challenges from the COVID-19 pandemic that include increased piracy and the shutdown of many film and TV productions, but there are also opportunities organizations are taking advantage of – or should be taking advantage of, according to Akamai executives.

“The TV and film industries have been through many changes in their relatively short history,” Adam Karon, EVP and GM of Akamai’s Media and Carrier Division, said during the company’s recent Akamai Edge Live Virtual Media Summit.

“Whether that’s been the emergence of a new format, business model or even new competitors, change has been a constant,” he said. And companies in the sector “have always been able to predict the impact of these changes and successfully adapt operations and technology accordingly,” he noted.

“However, what we’re witnessing now is very different,” he told viewers, adding: “We’re seeing a fundamental transformation across the entire media ecosystem – from production to consumption, and in a shorter time span than has ever been experienced before.”

As a result, “production of new TV shows and movies has almost ground to a halt, making it hard for broadcasts and networks to fill schedules,” he pointed out. In addition, “we’ve seen profit challenges recorded across most broadcasters due to [an] advertising downturn, [and] cinemas have been closed, with a lot of uncertainty around when they’re going to reopen.”

And there is one more major challenge, he noted: “Despite the positive efforts to reduce digital piracy, we’ve seen it surge across most countries.”

In spite of all these challenges, “we’re seeing equally positive learning and growth coming from our customers [and] we see media businesses taking advantage of remote working to support editing, script writing and even news broadcasting,” he said, adding: “We’re seeing record-breaking audience ratings, especially for” over-the-top (OTT) services as well.

Social video platforms including TikTok, meanwhile, “have taken on a new meaning for all ages [and] we’re seeing a lot of innovation,” he said. “Who’d have thought the largest single event, with the biggest audience that we’ve experienced this year would” turn out to be Travis Scott’s virtual tour within the online video game “Fortnite,” with “over 12.3 million players watching?”

Also “during this period of uncertainty, we’ve seen comfort that great storytelling [can] bring people and families isolated in their homes together,” he pointed out, adding: “The changes we’re seeing now will likely have a long-lasting impact, which begs the question: What is the world going to look like for media companies when this lockdown is over? What have we learned that we can apply in the way we make, deliver and consume media?”

One key “takeaway” is that we are gaining a “better understanding of how the Internet performs when delivering media at real scale,” he said, adding: “As countries around the world locked down, we witnessed demand like never before across every form of entertainment: game downloads, video on demand and live streams. We witnessed Internet video increases over 46 percent. By and large, the Internet has performed well. But during prime viewing hours, we’re very aware of potential congestion.”

A second “takeaway is the speed at which media companies are having to adapt to this situation and navigate new operational practices,” he said, explaining: “One example of this is the acceptance of remote working across the entire production workflow. Media companies [have], of course, been having teams work remotely for many years, but not necessarily with the same intensity. [There are] long-term benefits, such as improvements to production efficiency, benefits to the environments and benefit to work-life balance.”

However, the benefit of remote working “comes with operational overhead like managing cybersecurity threats,” he said, adding: “One of the more unfortunate trends we’ve seen during this period is a resurgence of piracy. In 2018 and 2019, we saw positive signs that this piracy was reducing and stabilizing across all parts of Europe. But with new trends during COVID, we’ve seen countries’ piracy surge by over 50 percent during this time.”

In a separate session on piracy, Ian Munford, director of product marketing, media solutions at Akamai, said global piracy has increased more than 40% during the lockdown, according to third-party data. Meanwhile, pointing to Asia and Latin America, he said: “In some countries, nearly 50 percent of the Internet population use pirate services… Although there are significant variances across countries, this is a global problem, and no one is immune.”

The revenue losses from piracy are huge, although many industry experts disagree on exactly how much money has been lost, Munford noted. It is also impacting job opportunities in media, he said, pointing to estimates indicating 230,000-560,000 job losses have been caused by video piracy in the U.S. alone.

Akamai has been tracking piracy for its broadcast customers and its data show that piracy activity ranges from 5-20% in the U.S. and 20-60% in Asia Pacific, according to Eric Elbaz, strategic technologist, technology management at Akamai.

In another session, Jeff Tworek, VP of Akamai’s Media and Carrier Division, told viewers: “The world as we know it has changed over the past few months and it’s changed just about everything that people across the globe are doing. With social distancing and stay-at-home orders in place in many countries around the world, this pandemic has quickly increased the demand of online video. And we’ve gotten to a peak much quicker than anybody would have ever predicted. With the sharp demand comes significant opportunity for many media organizations. But it’s also uncovered significant business and technical challenges.”

For example, “monetization lately has been challenging, especially for ad-driven businesses and some of the major advertisers like luxury brands, retail and travel while they sit on the sidelines,” Tworek said.

Also, “there’s a lot of concerns that digital releases can harm relationships with movie theaters,” he said, pointing to the age old challenge of release windows.

One thing that has changed for Thomas Dodson, director of programming operations at Roku, is “the extra three hours of my day that I get for not having to drive to and from work,” Dodson said with a laugh.

Noting that he has an “appreciation of the industry that we’re all in,” Dodson told Tworek: “This is a good place to be, in the digital media space…. The consumption is just going through the roof and so it’s an exciting time from that perspective. But I think [there is] also an opportunity for us all to give the users as much content as we possibly can at this time.”

In another session, Corey Halverson, VP of media products at Akamai, told viewers: “As countries lock down around the world, the Internet has become an even more vital source of communication, information and entertainment. And we at Akamai have witnessed sharp increases in demand for video streaming, video gaming and software distribution.”

Echoing comments made by Akamai CEO and co-founder Tom Leighton at the company’s online Edge Live Virtual Summit 2020 in April, Halverson said global traffic on Akami’s network was up 30% in March from February and the early countries impacted by COVID-19  saw 25% higher Internet traffic growth than the rest of the world. Peak traffic on Akamai’s Edge platform up more than two times year over year, Halverson said, soaring to 167 Tbps in March from 82 Tbps in March 2019 — and that was without live sport. He added that 167 Tbps is the “equivalent to downloading over 23,000 hours of HD movies every second.”

However, Liz Borowsky, SVP of platform engineering at Akamai, said: “This is business as usual for us” and Akamai’s platform was designed to handle this huge increase in demand.