Posts Tagged ‘Downsizing’

AV-over-IT, Unplanned Obsolescence, and Unintended Consequences

The audiovisual industry, like many others, is in the midst of a big paradigm shift. That term is often beaten to death, but in this case, it’s apropos as we are redefining the process of switching and distributing audio and video signals (with control and metadata thrown in). And we’re doing it by migrating to a packet structure, using standard TCP/IP headers and streaming protocols.

And we’re not alone. Broadcast, cable, and satellite video services are adopting IT-centric models for signal management, a trend that began year ago with the first streaming video services. We laughed at those early attempts, as a combination of slow networks and inefficient video compression imposed limits on image resolution and refresh rates. Remember the old jokes about “dancing postage stamps” heard at the NAB show in 1999, in the Streaming Media pavilion?

Well, no one’s laughing these days. We can send 4K video with multichannel surround over fast broadband networks to multiple homes, reliably and repeatedly. Streaming media has become so popular that it is putting a noticeable dent in subscriptions to traditional multichannel video services (like cable and satellite TV). Some smaller cable MSOs have even encouraged viewers to drop pay TV packages and sign up for streaming services – those systems are actually losing money on pay TV subscriptions!

Streaming companies like Netflix and Amazon pose a real threat to established content producers. Indeed, the industry consolidation we’re seeing in Hollywood is largely a response to this trend, and media conglomerates now have plays in movie theaters, broadcast television, and streaming services. Think Disney, with its recent acquisition of Fox and its ownership of Marvel Studios, Lucasfilm, and Pixar, plus the ABC network and ESPN.

But that’s all old news. And while people endlessly debate the future of traditional linear video services, video-on-demand, and pay-per-view, there is another debate that isn’t happening. And that’s the future of skilled technical staff, particularly engineers.

As the move to IT structures for signal management and program distribution picks up speed, so too is a move to shed engineering staff. Yes, there are redundancies any time one company buys another, which is why so many staff positions were eliminated when Disney completed its acquisition of 21st century Fox studios. But Disney’s been cutting back for some time on the broadcast side, both at the O&O station level and at the ABC network.

A similar shift is taking place at CBS, possibly to prepare for an acquisition by Viacom. Many engineering positions are being eliminated as a result. And this downsizing isn’t limited to broadcast networks – it’s happened recently and will happen again at cable MSOs, not to mention satellite MVPDs that are seeing their days coming to an end in favor of lower-cost streaming.

The question is, why? And the answer appears to be along the lines of “since everything is moving to an IT network, and so much of the signal management process is automated, a few IT specialists can handle the job.” This thinking tends to oversimplify the process, but there’s no question that engineers don’t carry nearly as much weight at the TV station and network level as they used to, even a decade ago.

There is a second undercurrent, and that’s the commoditization of hardware. To save even more money, the focus has shifted from capital expenses (CapEx) to operating expenses (OpEx) at a myriad of facilities from colleges and universities to TV stations, corporate offices, and post-production facilities. Here, the thinking is that hardware has become so powerful and so inexpensive that it’s foolish to spend lots of money on products that might be obsolete in a year.

And with all signal distribution moving to an IT structure, it’s simply easier to buy two or more of a given product so that spares are on hand when the original purchase fails. This is particularly true of video cameras – even UHD models have gone cheap – but we’re also hearing about similar purchases of things like routing switchers, monitors (even TVs are used), and audio gear. If it lasts a year and blows/burns up, simply toss it and pull another one out of the box.

There’s ample evidence of the first trend taking root across a wide variety of institutions, whereby dedicated AV departments are being replaced by IT specialists or having their job functions moved over to in-house IT administrators. There may be real bottom-line savings as a result, but how do you replace all of that technical expertise? Is an in-depth technical education in all aspects of video, audio, lighting, and control going to be worth as much down the road to employers and customers?

Similarly, are we moving to a model of planned obsolescence and commoditized hardware with short-term ROI goals? Do we get rid of old hardware like we throw out used paper plates and cups? Would it make sense for AV integrators to shift their business models away from conventional hardware installation and move to a leasing model, i.e. build out a complete room (or rooms) with all the requisite gear and lease everything to the client for a year or two, then cart it all away for recycling or disposal?

Carrying this model to the extreme, we now see the rise of “rent by the hour/day/week” flex office space in major cities. Who needs to own a building and deal with the substantial CapEx when a company can exist on paper with no real permanent office, except when you need it to impress/meet/inform a client? It’s not much of a stretch to argue in a similar manner against retaining full-time technical and engineering staff in a given facility where most of the hardware and software in use is automated.

Food for thought…