Darrigues: ‘There is an upward trend in programmatic advertising and it is time for Europe and Latin America to try this technological catch up’

A few days after the coming Nextv Series Argentina & South America edition, Dataxis has held yesterday a new virtual panel, which it called ‘How to build an OTT with‘ zero investment ’and new ‘revenue streams’. The panel was sponsored by SeaChange and featured industry experts such as Gustavo Marra, Vice President, Business Development at SeaChange, and Mikel Darrigues, Latam SaaS Business Development Director at Harmonic.

When expressing his point of view on the main problems to invest in OTTs in Latin America, Marra said that ‘historically, there has been a disastrous amount of components. There are costs to develop an OTT service (infrastructure, video platform, distribution), and there was an unclear way of remuneration. Many of these services did not charge an additional subscription. The sale of ads was not established either, and there were very high costs, without new income. For this reason, many OTTs fell by the wayside’. The executive also said that ‘what is changing today is that infrastructure and distribution costs are falling. The business model for us today is to share part of the money that was not generated before. Video distribution today is much more efficient’.

‘Before all this, there was only one option, which was to invest in an on-premise platform’, said Darrigues. ‘Operators and broadcasters had to buy a transcoder, an origin server, storage; and dimensioning an entire platform. And the investment was quite high. Today, we have a second option, which is to go for a SaaS model. The cloud offers us these types of alternatives today, something that was not possible before’, he added. In relation to the price of SaaS, Darrigues explained that ‘it has always been an important issue when choosing between models. A good exercise is to do a TCO (Total Cost of Ownership) for several years, and there you can go comparing’. The executive also explained that ‘in the traditional model, it is necessary to make a strong initial investment, and then operate the platform, which involves maintenance and repair costs. These elements do not exist in the SaaS field, because it is a service that is hired, in which the entry barrier is much lower. It is possible to launch a service in a matter of days or weeks, compared to the traditional way, where it is necessary to buy the equipment and import it. SaaS gives more flexibility’.

Darrigues later reflected that ‘the lesson we have learned at Harmonic by setting up OTT systems is that in two or three years we must ask ourselves if the platform will be able to support new services, advertising insertion, regionalization of content, new multi-camera services, and other factors. It is a world that evolves very fast. Technology moves forward so fast that investment will always continue to keep the platform up to date. The good thing about SaaS is that it is always up to date in terms of technology’. 

Regarding the type of companies that can develop this model, Marra reported that ‘it is accessible to all, although the way in which it will be developed may be different, without restrictions’. In turn, Darrigues added that ‘today technology allows inserting programmatic advertising not only in VOD, with pre and post roll, but also live. The trend of advertisers is to make more and more programmatic insertion in linear channels’. The executive also explained that ‘today there are 1.1 billion streaming users in the world. There are more people watching streaming than traditional pay TV. All the main streaming services are having great growth’. This way, the executive pointed to Hulu, DAZN and Netflix. ‘In connected TVs in the US, 50% of the advertising insertion is already programmatic, and it is expected that, in 2 to 3 years, 80% of the insertion will be. There is an upward trend in programmatic advertising. For historical reasons, the US developed it massively, and now it is time for Europe and Latin America to do this technological catch up’.

‘The advertising module can even be implemented on an existing platform. If at any time there is an intention to migrate from an existing platform to SeaChange, the benefit will be that all the maintenance costs of the platform will be saved, because we are paid 100% by the revenue share’, explained Marra. ‘Today at SeaChange we have more than 100 million users, between OTTs and traditional TV. In Latin America we have several clients in the process of taking off. Their main motivation was the generation of new income, without any risk’, he added. Later, Darrigues stated that ‘on our side, we want to help the implementation to take place, and we want to offer the best of our technology’.

Regarding the first clients that are partnering with SeaChange, Marra said that ‘we have a global operator based in Latin America; a broadcaster from the main countries in the region; another that only operates in VOD; and an OTT with linear contents. Today we already have all the types of distribution signed and in the process of deployment’.

‘There is no need to state that SaaS is magic and it will solve everything. I think the lesson is to be as flexible as possible. Today we offer a very complete range of solutions. What I see with actors in Latin America is that a hybrid model is also a good mix. We are in a transition process. In 10 years, I am convinced that all flows will be in the cloud. What we offer is to be together with our clients on this path’, Darrigues said.