It’s incredible to think it’s been ten years since Netflix and Comcast signed their interconnect deal, which is due to expire in 2024. This took place at the height of net neutrality and only a year after the deal, the FCC announced the net neutrality order in an effort to prevent the blocking or prioritization of any internet traffic. But just two years later, the FCC voted to do away with the previous order.

Fast forward ten years and the media and telco industries have changed dramatically. Netflix and Comcast’s businesses have both seen seismic changes with Netflix estimating at least $6.5 billion in free cash flow this year, growing to nearly 250 million global subscribers (247.2 million) and having invested over $1 billion in their Open Connect program.

Comcast now owns NBUC (full ownership happened a year before their deal with Netflix), owns and operates Peacock, has sold their 33% stake in Hulu to Disney, and is aggressively building out its 5G network for its Xfinity Mobile service. Their Xfinity X1 platform became a successful aggregation point for a lot of streaming apps even as, like all pay TV providers, Comcast has seen millions of consumers cut the cord.

Since the original deal, the companies expanded their relationship with Netflix launching on Comcast’s X1 platform in 2016, and in 2018, Comcast included a Netflix subscription for new and existing Xfinity packages. Working together, Comcast and Netflix have done a great job of delivering video to consumers and have a great working relationship.

The companies are currently in discussions about a new deal and I expect both sides to be able to come to an agreement without any public spat. The companies work well with one another and they have a very clear understanding of how to deliver a great quality Netflix experience over Comcast’s last mile. I do think some network changes could happen at Comcast internally, especially tied to CTS, but that would simply be about Comcast’s internal network strategy which is always evolving.

I don’t expect any public drama when it comes to a new agreement between the two companies and I would expect a new deal to be done without much fanfare, as it should be.

Thanks to Carlo De Marchis for having me on his latest video interview series talking about the current business economics of the streaming media industry, AI, personalization and the need to focus on long-term sustainability over quarterly fluctuations. The key takeaway is that streaming necessitates reimagination across the value chain – from business models to technical architecture. Quick fixes only defer this underlying work and he recaps some of the interview on his LinkedIn post here.

Thanks to Seeking Alpha for having me on their Investing Experts Podcast discussing the “Reality Vs. Fantasy” in the streaming media industry. I broke down key earnings data, what some OTT platforms are doing right and where challenges are in the industry. We talked live sports streaming, subscriber losses and gains across Disney, Paramount, Warner Bros. Discovery and the different business models across many OTT platforms. A transcript of the podcast is also available on their website.

I’m pleased to announce an expanded program and launch of the call for speakers and sponsorships for the 2024 NAB Show Streaming Summit, taking place Monday and Tuesday, April 15-16 in Las Vegas. On day one, the show will expand with a NEW third track dedicated to AI topics and demos.

In an effort to help companies with their 2024 budgeting as early as possible, I’ve launched all sponsorships for the Summit which you can see here. I’ve revamped the call for speakers submission process to make it easier to submit and more informative so you can propose the best possible idea(s). I am always available to chat on the phone before you send in a submission to help you refine your proposal and give you real-time feedback.

For round-table sessions, I have already confirmed many new moderators and I will be adding some new content topics within the program, both technical and business related. If you are interested in being considered as a moderator, now is the time to reach out to me.

I’m excited to be expanding the show in 2024 with more topics, 100+ speakers and sessions rooms that will now be located on the first floor of the West Hall. Ideas? Questions? Please reach out to me at any time. Registration opens on November 14th, please reach out to me if you would like a discount code.

The hype around FAST, with almost no metrics tied to business is ridiculous. Every day there is a new report published that says FAST is “growing”, or that it is “taking share”. Growing how? Taking share from what? It’s nonsense. I see reports with the language of, “47% of US households use a FAST service each week,” but then it doesn’t define what “use” means. What’s not being shared are FAST ad CPMs, revenue, P&L, usage by viewing hours across channels, etc. In other words, actual business metrics outside of limited info from some of the TV manufacturers who have FAST offerings.

FAST services are NOT taking away any share, defined as subscriber dollars, from SVOD services and not a single SVOD service has ever disclosed during an earnings call that time spent on FAST services is impacting their churn. Media pointing to data from Tubi and others showing “growth” in FAST MAUs is garbage when for some of these FAST services you only have to open up the app and not watch anything to still be counted as a MAU.

We also don’t see any FAST service breaking down what percentage of total viewing comes from their channel list. Some FAST services tell me that 90% of their viewership comes from 10% or less of their channels. A report by Kantar says that in Q3, “FAST services outpaced VoD streaming,” but doesn’t define what “outpaced” means. Later in the report, it says that “Netflix remains the #1 VoD destination when streamers want to find new content.” Almost all FAST channels are VOD, not live.

I wish those in the streaming industry and the media would stop using the word “growth” to describe FAST. The word is overhyped, unqualified, and has no real business metrics behind it. Almost everything I read about FAST is marketing fluff with tons of charts and graphs, none of which speak to any actual business metrics.

As an example, this eMarketer chart on FAST is useless with such high-level generic words with no definitions saying, “FAST viewers will reach 100.6 billion in the US.” What is defined as a “viewer”? They also say, “the Roku Channel claims the largest share of FAST viewers, at 67.4%, followed by Tubi (64.4%) and Pluto TV (57.1%),” defined how? Share of what? None of those companies mentioned disclose or break out any usage of their FAST service. For any third party to suggest they can narrow down “share”, based on any metric they want to pick, down to a 3% difference between services is ridiculous.

While a private company, CDN77 is allowing me to disclose its revenue and growth numbers, which comes at a great time with some of the vendor changes in the market. Revenue for 2023 will be in the $140M-$150M range, with two-thirds of revenue coming from content delivery and the other portion from infrastructure services.

The company says total 2023 revenue is up 30% year-over-year and should get closer to 40% year-over-year growth in 2024. Growth has accelerated in the second half of 2023 and the company expects it to further accelerate in Q1 of 2024. The company is currently cash flow positive and gets the majority of its delivery revenue from video content outside the US. Since the start of the year, they have upgraded their network from 105 Tbps to 150 Tbps of egress capacity.

I’ve been impressed with how focused and nimble the company operates. When Lumen announced they were exiting the CDN market, CDN77 quickly set up a dedicated transition team for Lumen customers. A week ago, the company announced they had already on-boarded 20 ex-Lumen customers onto their network in the past month.

While it’s hard to run a profitable content delivery business, CDN77 has the benefit of having the majority of its revenue coming from outside the US and having customers in the high tens / low hundreds size. Margins on those contracts are much better and not as price sensitive to US-based delivery pricing and super large customers spending tens of millions of dollars a year who always want the lowest price. There is a profitable business to be made in the mid-tier market for vendors that specialize, which is exactly what CDN77 is doing.

If you strip out the largest CDN vendors by revenue, Akamai, Amazon, Fastly, Edgio, and Google, and exclude CDNs in China, CDN77 would be the next largest CDN services vendor in the market, based on revenue. It’s great to see a vendor have a profitable business in the CDN industry while staying focused on a specific segment of the market and being strategic on how they grow their business. Thanks to CDN77 for allowing me to release their revenue numbers which helps everyone in the industry evaluate overall growth in the market.

In a recent discussion with CEO Stefan Lederer at Bitmovin, the company is seeing some accelerating growth in the market this year with 2022 revenue in the “twenties million” range and growing to the 30s next year. The company will be cash flow positive in early 2024 and is increasing its margins, especially with software-only/licensing deals.

Bitmovin is seeing quite a growth in new logos again, driven by media companies needing to become more efficient, encoding costs that don’t factor in CDN and egress costs, and some companies moving away from their in-house players which can be inefficient and expensive to maintain.

Bitmovin is also seeing good sales growth from the channel being deployed across the AWS Marketplace, Google Cloud Marketplace, and Microsoft Azure Marketplace, further expanding its TAM. Bitmovin was also named as a recommended replacement for Microsoft’s Azure Media Services, which will be retired in June 2024, a deal that is expected to help the company expand in the market. On the self-service side, Stefan said they have signed up over 200 new paying customers so far this year.

While many think of transcoding and video players as a commodity, defined as being interchangeable with other services of the same type, it’s not that simple. Encoding/transcoding services in particular are one of the basic building blocks of the industry but there are many, many differences between solutions in the market. The vendors that will succeed in the market and continue to grow revenue, while also reaching profitability, will need to be laser-focused on their product feature set. That’s a strength Bitmovin has in the market with its products and vertical industry focus.

Bitmovin’s last round of funding was $25 million in 2021 and they have raised $68 million to date. It should be noted that many websites that claim to list accurate revenue numbers for vendors are flat-out wrong. If you look online at Bitmovin, third-party databases and some industry analysts list their revenue as $11 million or $100 million. Do not trust any of these individuals as their numbers for vendors are always off by a large multiple.