S07E06: Game of Streams (It’s better to build than to buy… if…)
Our Media Solution Specialist, Magnus Svensson, is sharing his reflections on the online streaming industry in this post. This is part of a monthly series so make sure to follow us here if you do not want to miss an episode.
Warren Buffett stated that “it’s better to build than to buy if you can find the right people.”. On that occasion, he was talking about the insurance business, but it is equally applicable to the art of building a video streaming tech stack. Buffett also advises that you should know your “circle of competence.” and know what you’re good at and stick with those things.
As I have written about before, the video streaming tech stack is complex, with many different components and vendors that offer everything from small components to complete end-to-end solutions. To understand what path to take you need to start from the business needs, the unique values, and the capabilities of the organization. No situation is the same as the other, and there is no one size fits all.
Based on a structured business analysis you need to evaluate whether the streaming service has unique needs that are not readily available in existing off-the-shelf solutions. As an example, in most cases the unique selling point is not within the video pipeline, i.e., ingest, transcoding, storage, and delivery.
Time to market and total cost of ownership should also be considered. If time to market is critical, purchasing an existing solution can expedite the process. Building a solution, from scratch or through building blocks and components, typically takes longer than initially planned.
Make an informed decision!
A good way to structure the decision is to divide the solution into components and building blocks. The video pipeline, as mentioned before, could be one building block, the frontend applications another, and user engagement functions a third example. With this approach, you could structure your solution with clear interfaces and demarcation points.
Based on your business needs, competence, unique selling point, and urgency to get to market you assess each component or building block one by one. With this, each decision doesn’t need to be a long-term solution, but a first step to reach the immediate needs. With clear demarcation points you could later replace components if any of the evaluation criteria has changed. With the correct structure, you’re not locked into a corner.
Making the right choice between building and buying software is a significant decision that can have long-term implications for your organization. Many organizations overrate the need for unique software and underestimate the capabilities of the organization. Consider consulting with industry experts who have experience in evaluating options to get guidance, assess your requirements, and help you weigh the pros and cons of building versus buying. Focus the efforts on the parts that make your business unique.
To watch out for the coming months…
Advertising and ad-funded (partly or completely) services continue to grow, and the latest figures indicate that we have seen the end of the latest ad spending recession and we will from now on see growth in ad spend. It will be interesting to see the numbers from Netflix at their earnings call on the 19th of July. Netflix has removed the lower priced basic Plan in Canada, with the only options for sign-up now being the ad-funded plan or the standard plan, which might guide what will come.
Magnus Svensson is a Media Solution Specialist and partner at Eyevinn Technology. Eyevinn Technology is the leading independent consulting company specializing in video technology and media distribution.