Digital Fountain Building Out Content Delivery Network For 2008 Launch

Back in April, Digital Fountain quietly announced at NAB that they would be building out a CDN for streaming media delivery and last month, again quietly announced they had hired a GM to run the CDN business unit. I had the chance to speak with Digital Fountain last week about the build out and get a sense of where they see themselves competing in the market.

While I believe that there is still plenty of time left for companies to be bale to enter the CDN market, Digital Fountain did say that they don't expect to be able to offer their CDN service until the first quarter of next year. That time frame is going to position them really far behind most of the competitors, especially when the service when it launches will be so limited.

When the service is ready next year, it will only support streaming media, no progressive downloading options will be available and they will only be targeting customers with long-from content at bitrates over 500Kbps. They plan to only support H.264 at launch and customers who want to use their delivery services will need to have end-users download a client based plugin, similar to what you need to do today if you use Move Networks platform.

I had a long chat with Digital Fountain about many aspects of the CDN business today and the needs that customers have for content delivery. But we don't see eye to eye. Digital Fountain really believes that if the quality of video on the web can be increased, then more consumers will watch more video and the CPM rates will then increase. I disagree. If the technology and quality is the hurdle, then why don't content owners today encode all of their content at 750Kbps? It would not take much to increase the quality. Most of the broadband content today is encoded at 300Kbps, the same bitrate it was 2-3 years ago. The problem is not the technology but rather the additional costs content owners will have to pay to distribute the additional bits. If a company can increase the quality and also decrease the price, great, but that is what the P2P providers and others "claim" to be able to do, but to date have gotten very little traction at all. I think they forget that it's not about replacing traditional CDN delivery with P2P or any other technology, it's about using the right combination of technologies based on many factors. Does streaming media replace progressive downloads? No, they are compliments to each other and choosing the right combination is based on many factors surrounding the content, the device and the user. Delivery is the same way.

Does Digital Fountain have a chance? Possibly. In this industry I think anyone has the ability to carve out a section of the market since here is still do much business still out there. Will the market still be like that come Q1 next year? I believe it will. But Digital Fountain will be very limited in who they can sell the service to if it only support streaming and H.264. There may be a market out there for only H.264, but it is a very small one at that. If Digital Fountain expands their offering a bit and supports more in the way of what customers want, they have a better shot at being able to go after a larger percentage of the market and a greater chance at success. But only time will tell. By the time they launch the service, they are going to be years behind their competitors.