Previous to my original post I had in no way read or researched this initiative from netflix….you will have to beleive me on that!
After reading a news feed that commented on a statistic that physical media sales have declined by 19% over the last 5 years and I just had to add my view and comments. Please don’t be under the illusion I am a media mogul or media pundit, in this post I will hopefully add some Infrastructure focussed insightful provocative thoughts that focus on why this decline in sales might not be as dramatic when they run the same comparative reports in the next Five years.
So firstly, I do know why this decline is as its a tad obvious. Hopefully you have got the reason for the decline? Well yes its rise of Internet streaming and the on demand availability of films, TV programmes and video games all via a multitude of devices within the home and on the road. Scaremongers will say the decline is a lot to do with piracy and avoiding buying physical media but I’m not so sure that piracy dented buying figures that much in comparison to the VHS era when the video recorder was in full flow pirating films.
Netflix, Lovefilm, Apple are the new house hold names who are delivering what consumers of the current generation want to view, all on demand, on fancy new devices and without the expense or inconvenience of physical media. And of course with 19% decrease profits and the capability to innovate further with this profit they are certainly currently quashing competition, with the likes of Blockbuster, HMV and any other shop who has a primary business based on selling/renting good old physical discs being consigned to history if they don’t change their strategy in this area.
Wind this clock forward and what will the future look like when they run this report in Five years, will the streaming companies be able to keep up with demand?, who and what will be the dependencies for streaming companies to be able to succeed? Will we see a new innovative wave of technology that will eat into the streaming media businesses market share? Time to go into each of these and add my view and prediction.
As we all know, with popularity comes more demand and the publicity surrounding the Netflix outage that happened over Christmas just gone shows how much people really want and demand streaming services like they do normal TV. So will the likes of Netflix be able to meet this constant future growth demand? Infrastructure wise we know they use EC2, I think with streaming we may begin to see a point in time where this on demand any device scenario just isn’t sustainable from a cost/profit margin perspective, and I think that the popularity for streaming services will mean that we could begin to see more stringent policies around how much each user can download in a same fashion that I can’t use more than Two registered devices for SkyGo. If i’ve got say 4-6 devices all connecting to say Lovefilm at home that places a hell of a lot of demand on the backend compute delivering this and places load on networking connectivity both at the egress and my ingress points.
I have mentioned compute and networking as a key part of this future, and the question has to be asked whether when we even get to double the decline of Physical media sales at 40% we would be able to use the existing current home broadband backbone for on demand streaming in the same way that Digital replaced analog to give us more channels and better quality high definition broadcasting. I’d think that Telcos therefore will be both a winner in this and a dependency of the streaming media companies, and I don’t particular think they can afford to ignore this, both will need to work in tandem to deliver quality services, especially telcos who deliver other services into the home, that is of course if they’ll want to work in tandem, which leads me onto my other rambling.
So today we have Netflix who charge comparatively the same amount as my satellite provider, how long will it be before we start to see customers moving away from satellite television film offerings across to streaming services? I think we may begin to see more aggressive approaches by the TV companies that also provide broadband services under their portfolio like Virgin Media and Sky by blocking network access to Streaming services like Netflix on the all in one broadband/media package in order to either keep you on there core offerings or buy there own internet streaming services, and also lastly to be able to protect against delivering quality of service elsewhere via broadband.
Another winner in this will be of course the cloud infrastructure providers who have to both store the grand amounts of media and then deliver it to customers using infrastructure compute power. Netflix must have to strike deals with media companies on licensing agreements to succeed and deliver the much more up to date and rich content that consumers demand, and so in the same way they will need to strike deals with cloud providers like Amazon if they want to both deliver, and meet the demand to continually eat away at the physical media market.
So it will be an interesting time to see how the large media companies begin to unfold as they are certainly not going to fade away as the figures quite clearly show, and It will also be interesting to see if this aggressive decline we have seen over the last Five years will slow down and be replaced by a more dominant force due to the potential root causes and limitations highlighted in this post.
After a VMworld I always have a look at some of the announcements to surface after a VMworld, mainly also after the marketing fairy dust has settled. One of the most notable was VMware’s new Cloud Ops announcement. The VMware headline for this was;
VMware Defines New Operating Model for the Cloud Era.
New Cloud Ops education, transformation and advisory services help unleash value of cloud through people, process and measurement.
VMware will also be forming as part of this and to build and contribute, the Cloud Ops forum;
VMware is also introducing the Cloud Ops Forum, a group of consulting and integration partners that will collaborate on further definition of this new operating model.
So simplied this reads that several of the top tier outsourcers and consultancies will be collaborating and working in harmony as a forum to build an operating model that both you and me can use to great effect in order to relinquish business value and innovation (and I assume this means any user of VMware products).
I might be reading into this one too much but this is certainly an interesting strategy, and I’m asking myself what does this mean to the customer? And when I look into what this could/might mean i’m finding this gem an interesting one. I’m finding it interesting firstly as it sounds a bit too good to be true and also classic EMC strategy, and secondly I have asked myself why/how VMware have got the multiple top tier Outsourcer’s to actually collaborate and combine to build an operating model, when they are in effect in marketplace competition?
It’s got a few confusing messages for customers, for me I equate any past experiences I have had with the Outsourcer in tendering and general consultancy engagements has been that Outsourcer A has always been better than Outsourcer B due to Outsourcer A adding additional “Value” to the customer and delivering the same focal point of that RFP at less cost than Consultancy B, although this is never entirely true that is how the game has mainly worked, so how will a level playing field in Cloud ops forum change this whole process?
Are VMware now saying that Cloud Ops will make Outsourcers equal in the value add they bring to any proposals for usage and implementation of VMware technologies (In which case why bother with the RFP?) or are they introducing this and rallying up key outsources as they sick of endless escalations and complaints from not so happy customers due to botched implementations and capability promises from Outsourcers that couldn’t be met, OR they want to build a new delivery model for delivering services indirectly more?
Time will tell on this but it certainly looks to me that they have a few intentions for this one, we have not seen this type of approach occur within outsourcers in the past, and one last pondering thought is it may be a tactic to take on the latest developments we are seeing in open source alternatives such as Openstack and Cloudstack.
What backs this up?
- Emergence of platform as a service offerings that are providing the flexibility to move, migrate and be portable between cloud providers,
- Collective wave movements of thousands of knowledgeable people in highly connected and collaborative communities that can be tapped in for FREE, replacing timely consultancy and engagement at the embryonic stage of projects
- Community driven development and design tools and methods reducing time to market
- More successful agile software delivery and change methods, reducing release management processes
- Proprietary vendor marketing expenditure rising over the last 2-3 years, when was the last time you saw EC2 on a billboard
Maybe I’m wrong…?
Reading this article definitely shows we have a new Architectural strategy kid on the block. Potentially migrating to an open source technology like Openflow would appear to the previous generation of IT architects as being risky business. Look to other big players in the new breed of computing and such as Instagram’s engineering blog and you can see yet more adoption of non proprietary technologies so its quite obviously not, and the financial results are showing it isn’t.
It’s no wonder why this could be perceived as being a risky business, in contrast to the strategy adopted in previous proprietary dominated worlds of Mainframe and Server/Client computing. However with the early adopters of open, extensible technologies now being the biggest fish in the pond and not the smallest first it is becoming quite clear that this architectural strategy is going to continue to dominate and be a defacto strategy to adopt for any new breed player in the world of consumer IT today, and then to likely merge into enterprise strategy.
Comparing the older strategies to the new generation and you couldn’t be far enough apart between what technologies have been used. In the past proprietary technologies have been used to ensure that they have;
- Assurance with the external vendor support when things go well…tits up
- A throat to choke on the end of a phone line when things again go wrong with the risk being applied to the vendor
- Product integration and support within an ecosystem which is capable of partial compatibility with other toolsets and services
To add to this, the previous adoption of proprietary technology, has also made building a support capability to manage and grow that Infrastructure much easier with the educational programs allowing both old and new dogs to be taught tricks.. but again at a cost.
Granted, the difference here is that the likes of Google whom are adopting new strategies have a completely different business model and risk factor in certain areas of business operation but the majority adopting new breed strategy still serve enterprises or indirectly serve enterprise customers. So in my limited wisdom here some thoughts on this new generation of Architectural strategy and where it will go (or not);
How long will it last?
Personally I think this type of strategy is likely to never stall as the momentum grows and the new generations “growing up” in a cloud world are all oblivious to the past strategies, as lets face it the Client/Server world of computing is never going to the inheiritance that the Mainframe has been.
What dependencies are there?
A big one is the community that keeps it ticking and innovative, and I’m also sure this is never going to be an issue for as long as Proprietary technologies are around and people want freedom of openness. To add the likes of Facebook and Google are even building a community themselves that will be respected and continual, for both the organisations own business and the benefit of the open community.
Where does this leave proprietary tech vendors?
In a vulnerable position I think, for years organisations have shelled massive volumes of investment into technology solutions with very little revolutionary development in product sets. We’ve of course seen new technologies arise (at a cost) but they are still lumbered with the original technology that is depreciating meaning less competitive edge and less ability to manoeuvre.
Will it fail?
As i’ve said, we will see yet more emergence of the types of strategy google are adopting and the failure is going to be in the hands of the adopter not the hands of a vendors R&D program. Openness will provide more choice on what is and what isn’t adopted and more importantly at a cheaper cost. If this cost saving against risk is accepted by the key stakeholders then I can’t see it failing.
Do I need to change?
Well I think you and I will need to change the way we approach architecture. I am and I expect you are still caught in an enterprise world of Client/Server legacy but I see this legacy dissolving in the 3-5 year time frame with more emphasis on knowing how to utilise the inner workings of an open platform and not just know how to read a vendors Readme or PDF in order to architect the solution.