Is SaaS a better model for in-stadium and arena IPTV and digital signage?

Brett Crossley, VP Product - FanConnect

In the in-venue IPTV and digital signage space, legacy vendors often use a pricing model that includes a large one-time up-front cost, a smaller annual support and maintenance fee, and a variable "upgrade fee" for new versions. In contrast, modern software typically follows a different model: a smaller, annual fee for usage, also known as "Software as a Service" (SaaS). This article explores the differences between SaaS and legacy pricing models from the customer perspective, specifically for teams and venues.

Why SaaS and cloud-based solutions go together

Before the mid-2000s, most enterprise-scale software was installed on-site in dedicated server rooms. The venue’s IT department was responsible for installing, maintaining, and upgrading the software and servers. The pricing model involved:

1. A one-time fee for the current version of the software.
2. A smaller annual "support and maintenance" fee (typically 15-20% of the original cost) for bug fixes and security patches.
3. Additional fees for major version upgrades, which were released every few years.

In this model, venues could theoretically avoid recurring costs, but in practice, they would rarely operate on unsupported IPTV software.

After the mid-2000s, most enterprise software shifted to the cloud for reasons including stability, scalability, security, disaster recovery, and the ability to quickly roll out new features. In the cloud-based model, physical servers are hosted off-site, making the one-time fee structure untenable. SaaS has become the standard, with a lower but mandatory annual fee.

SaaS models are also simpler: the annual fee typically covers both support and maintenance, and new features are continuously developed and deployed rather than being bundled into infrequent major version updates.

Which model is cheaper?

SaaS solutions are often more cost-effective over the long term due to greater development and operational efficiency for vendors. This efficiency allows SaaS vendors to offer lower pricing compared to legacy on-premise models.

Components of legacy (on-premise) IPTV pricing

For legacy on-premise IPTV systems, there are several components that contribute to the overall cost:

• Hardware: Physical servers (including backup servers) and storage/networking equipment.
• Software Licenses: One-time license fees for the content management system (CMS), per-screen licenses, and additional licenses for features like electronic program guides (EPGs).
• Support and Maintenance Fees: Annual fees (usually 10-20% of the initial cost) for ongoing technical support and bug fixes.
• Upgrade Fees: Additional fees for major version updates, typically offered at a discount from the original license cost.

Components of SaaS (cloud-based) IPTV

Both legacy and SaaS IPTV solutions require media players (or SoC TVs), and a few IP video encoders, so we will not make a comparison of these components. The unique components required for purchase for a SaaS solution are:

• Annual SaaS license, typically a per-screen license.

Comparing five-year costs

In the first year, SaaS is generally cheaper because legacy pricing models front-load the costs. However, over a five-year period, SaaS is often more cost-effective due to the absence of upgrade fees. The example below illustrates this cost comparison for a small IPTV and signage installation:

• SaaS: The cost is typically lower in Year 1, with a consistent, predictable annual fee.
• Legacy: While the annual support and maintenance costs are lower than SaaS licenses in later years, upgrade fees in Years 3 and 5 can offset these savings, making the legacy model more expensive over time.

Hidden costs of on-premise solutions

The last cost difference for on-premise vs. cloud-based technology is support related. With an on-premise solution, the venue IT group is responsible for:

• System back and restoration in the event of failures, including offsite backup of any content to speed up disaster recovery.
• Performance monitoring to make sure server loads are nominal, and upgrading hardware in the event they aren't.
• Applying software updates as they are made available, and testing the updates to ensure they don't impact anything before a game or event.
• Monitoring servers for any hardware issues, switching to backup hardware in the event of an issue, and unracking, returning and replacing the hardware.

In contrast, a cloud-based solution handles all these tasks, including system maintenance, software updates, and disaster recovery, typically with minimal downtime. For example, FanConnect’s cloud experiences less than five minutes of downtime per year.

Summing up the differences

With a legacy, on-premise pricing model, venues face:

• Higher overall hardware costs from servers and storage.
• Significantly up-front license costs.
• Relatively lower annual support and maintenance costs.
• Additional upgrade costs to stay current with the software.

With a cloud-based SaaS model, venues benefit from:

• Lower overall hardware costs since servers are hosted off-site.
• Predictable annual license fee that includes all upgrades.

About FanConnect

FanConnect has been providing cloud-native TV content and control technology to professional and collegiate teams for more than 10 years. We make IPTV, digital signage, tablet solutions, and RF/QAM technology used by teams in the NFL, MLB, NBA, MLS, NHL, and NCAA.

If you want to hear more about our cloud-based SaaS model for venue and arena IPTV and digital signage, let us know or just leave a comment on this article.