Cloud Computing's Effect on Old Media

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Guest editorial by Ted Navarro

Cloud computing is one of the most disruptive technologies the Internet has ever seen. In just a few years, it’s changed the enterprise, opening the door for scores of new vendors and overhauling communication and application distribution. With cloud virtualization, businesses can scale and expand their infrastructure with a level of ease that would have been impossible a decade ago; this technology also brings unprecedented agility to load balancing and traffic management.

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The disruptiveness of the cloud extends far beyond the IT department. Our personal lives have also been impacted by the technology. Thanks to a combination of cloud and mobile technology, connecting and accessing our data from anywhere is becoming entirely reasonable as ever more cloud applications make their debut into the consumer world.

This has had a significant impact on many fields, but none so much as the entertainment industry. Thanks to improved connection speeds, technologies such as video streaming and cloud music have become entirely viable. As a result, the face of old media has been changed forever.

To understand how far-reaching the cloud’s impact on the entertainment space has been, one need only examine Netflix. Originally established back in 1997, the company began offering subscription-based digital video in 1999. It was somewhat ahead of its time – connections back then weren’t generally fast enough for it to be practical. As networking technology improved and the cloud began to gain in popularity, however, Netflix experienced a period of explosive growth. By 2011, it had over 26 million subscribers worldwide. By 2013, that number had nearly doubled to 40.4 million.

As Netflix gained in popularity, other video streaming services began to surface as well.

The end result of all this growth shook the very foundations of both the television and film industry. Suddenly, instead of having to wait for a particular show to be on the air – slogging through a host of irritating advertisements in the process – viewers could watch on their terms, whenever they saw fit. Instead of having to spend upwards of $20 on a DVD or $10 on a rental, they could simply tune in from the comfort of their own home.

As they so often do when confronted with a groundbreaking new technology, consumer expectations underwent a radical shift. They came to expect this level of convenience with all media. They questioned why they should bother spending money to rent or buy when they could simply subscribe. Not surprisingly, this ultimately destroyed the very core of the physical video rental industry – last November, Blockbuster – once one of the largest video rental stores in the world – closed its doors for good. Only a few services, like Redbox, survived this coup.

TV companies weren’t immune to the cloud’s effects, either. American subscribers across the entire television industry fell by a quarter of a million in 2013, dropping to 100 million total, while a new generation of young adults questions the need to even bother paying for cable (I count myself among them; my Netflix subscription serves me well enough). This decline might be even more pronounced, had the industry not taken steps to mitigate it.

One of these steps involves services such as TV recording and video-on-demand. This, coupled with the fact that many programs are only available through a cable subscription, has served to stave off what many see as the death of traditional television. Even if this death doesn’t eventually come, the fact that cloud computing has changed the field is undeniable.

These developments haven’t yet impacted ad spending to any noteworthy degree, though I suspect this will change in the future. Although the cable market still represents a large advertising demographic, it is nevertheless still a market in decline, with – as MarketingCharts puts it – “stagnant reach.”

The story is more or less the same in the film and music industry, as well: widespread disruption. Although sales of physical media remain relatively constant in music, more and more artists are eschewing record labels in favor of services like Pandora, Soundcloud, and Bandcamp. Meanwhile in Hollywood, movie attendance is rapidly declining as many viewers forgo the exorbitantly expensive viewing experience in favor of their own homes.

The disruption caused by the cloud in the entertainment industry extends beyond its changes to content consumption. It’s also bringing about an evolution in how media organizations do business.

For example; Hollywood has fully embraced cloud computing, making use of cloud vendors to streamline the filmmaking process and tap into big data in order to get a clearer picture of audience preferences and desires (the cloud is an integral element in the analysis and organization of such data). Radio has soared to new heights as many traditional stations embrace the Internet as a delivery medium. Applications like Spotify, meanwhile, give users immediate access to millions of different tracks and feature discovery services which allow listeners to track down artists which they might otherwise never have heard of.

Cloud computing will continue to be highly disruptive. Though that disruption may have caused more than a few migraines for executives in the entertainment industry, the effects of the cloud on old media have been overwhelmingly positive, changing both the creation and consumption of content. And though a few organizations might be left in the dust as their industry shifts around them, it’s no great loss – they simply weren’t able or willing to adapt to a technology that offered nothing but benefits.

Ted Navarro is a technology writer for ComputeNext, a cloud marketplace company. Check out the ComputeNext blog for the latest in cloud computing and IaaS technology. Follow them on Twitter, Like them on Facebook, and engage in the discussion at https://www.computenext.com/blog/.

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