With all the talk of 4K that took place at CES, some within the industry are making statements and assumptions about 4K streaming bitrates that simply aren’t accurate. Many are under the impression that 4K streaming will soon be delivered at around 10-12Mbps using HEVC and are also quoting data from Akamai incorrectly. If you look at the HEVC testing that guys like Jan Ozer and Alex Zambelli have done, and look at the data Netflix has presented around their 4K encoding (Netflix’s current bitrate for 4K is 15.6Mbps), the bitrates won’t get down to 10-12Mbps anytime soon.

The reality is that true 4K streaming can’t take place at even 12-15Mbps unless there is a 40% efficiency in encoding going from H.264 to HEVC and the content is 24/30 fps, not 60 fps. Netflix has stated they expect HEVC to provide a 20-30% encoding efficiency vs H.264, within two years. That’s a long way away from the 40% required to get bitrates down to 12-15Mbps. While 4K can in theory be compressed at 10-12Mbps, this is typically achieved by reducing the frame rate or sacrificing quality. As Encoding.com points out, to date, “most of the HEVC we’ve seen in the market is heavily noise-reduced with high frequency details blurred out to fake the 40% efficiency”. The optimal bandwidth for high quality 4K is higher than 20Mbps. UMAX in Korea, for instance, compresses its 4K p60 streams at 32Mbps (i.e. using a rate of 60 frames per second, progressive). For the full effect of sports and documentary content, this is a more realistic bit rate at today’s compression efficiency.

As state of the art HEVC improves, some benefit will be reaped in terms of target bit rate. If the 40% efficiency improvements do indeed come true for HEVC, years from now we might see 4K streaming bitrates at the 10-12Mbps level, but it would not be for a very long time. OTT streaming is completely driven by the economics of bandwidth and what it costs to deliver the content. So the video only gets delivered at the minimum bit rate required to make the video look generally acceptable. Costs drive adoption. As I have written about before, the dirty little secret about 4K streaming is that content owners can’t afford the bandwidth costs. At Frost & Sullivan, we have done a lot of work on HEVC and 4K streaming trying to set the record straight on what is and isn’t possible. See [Cutting Through The Hype Of HEVC] and [Why MSOs Should Not Consider Switching Directly from MPEG-2 to HEVC].

With Netflix already encoding 4K content at 15.6Mbps today, and with the expertise they have in encoding and the money they spend on bandwidth, they will get the bitrate lower over time. Some observers think it might go down to 10-12Mbps, but that would only be possible down the road and at 24/30 fps, not 60 fps. If you want 60 fps, it’s going to be even higher. But even if we use the 10-12Mbps number, no ISP can sustain it, at scale. So while everyone wants to talk about compression rates, and bitrates, no one is talking about what the last mile can support or how content owners are going to pay to deliver all the additional bits. The bottom line is that for the next few years at least, 4K streaming will be near impossible to deliver at scale, even at 10-12Mbps, via the cloud with guaranteed QoS.

When it comes to the percentage of consumers in the U.S. that have Internet speeds capable of getting 4K content, with a threshold of 15Mbps, many are using Akamai’s data incorrectly. Multiple media outlets have said that, “Akamai says 19% of U.S. homes now can sustain the average 15 Mbps broadband speeds necessary to stream 4K/Ultra HD video.” That is NOT what Akamai said, nor what their data shows. Akamai’s data from their State Of The Internet Report isn’t breaking down what percentage of U.S. households have 4K ready connections, but rather speaks to the percentage of unique IP addresses from the United States that connected to their platform during the third quarter that had average connection speeds over 15 Mbps. However, there’s no direct correlation between unique IP addresses and households.

So for all those repeating the 19% of U.S. households can get 4K streaming number, that is not accurate. Don’t repeat it just because you read it somewhere, check the source of the data yourself. The bottom line is that 4K and HEVC is exciting and it is the future. But vendors, content owners and the media need to have realistic expectations of what is and isn’t possible with 4K streaming and use real numbers when it comes to bitrates, costs, efficiencies and Internet speeds.

In the second half of last year, Microsoft made the decision not to continue the build out of their own CDN for their Azure cloud platform and instead, struck a deal with Verizon to white label Verizon’s EdgeCast CDN. While no partnership deal was ever officially announced, Microsoft has confirmed the deal to me saying, “Microsoft licenses technology from many partners to complement our product offerings and to give customers complete solutions. We are happy to partner with EdgeCast to provide an integral component of the Azure Media Services workflow.” Some might think it strange for Microsoft to shut down their in-house Azure CDN, and reply on a third-party, but considering Microsoft’s approach to the market, it makes sense.

While many cloud providers like Amazon and others want to build everything in-house, Microsoft’s approach with Azure has always been to offer customers more flexibility and deeper functionality, by building the Azure platform with help from other focused solution providers in the market. They took the same approach last September when they rolled out live streaming and content protection offerings within the Azure Media Services group, partnering with Telestream and Newtek amongst others. Microsoft’s goal isn’t simply to build cloud components, but rather to offer an end-to-end ecosystem for video. The announcement this morning that GameStop will be using the Azure cloud platform to stream video game content direct to consumers and to devices in-store, shows the kind of solution that Microsoft is building with partners. Working with best of breed third party providers makes sense when competing with the likes of Amazon and Google, as offering greater product performance and depth helps Azure differentiate their service offering compared with internally built solutions from competitors.

It’s too early for me to say just how much revenue Verizon’s EdgeCast CDN will get from being the backend CDN for Azure, but it should be significant over time. Microsoft’s Azure cloud service continues to get more traction in the market and while Amazon’s cloud service has a lot more in the way of products, with the EdgeCast partnership, Azure has an opportunity to leapfrog ahead of Amazon’s CloudFront, given EdgeCast’s performance focus and CDN product development focus. Looking beyond CDN however, Azure is looking at solving the multitude of video workflow challenges, which is much more complex than just storage and delivery. Broadcasters and other media customers that need to be able to ingest, transcode, protect and deliver their content are out in the market looking for a single cloud based platform that can do it all.

Microsoft’s goal with Azure is to become a robust and easy to use platform for customers who need an ecosystem platform, as opposed to stand alone components. Microsoft still has a way to go with their Azure Media Services platform, but based on what they have done already, and the partners they have chosen, they are on the right track and will be one to watch in the new year. It also seems pretty powerful to me to have a big network player like Verizon and a big Cloud software player like Microsoft partnering up to take a serious run at the Enterprise Cloud Segment, a market where both companies have strength and Amazon and others hope to penetrate.

Roku’s CEO Anthony Wood was on CNBC earlier today and the first question he was asked was if Roku plans to go public this year. While he wouldn’t comment on anything having to do with funding, which is expected, Wall Street bankers I have spoken with tell me Roku will go public shortly. What exactly “shortly” means remains to be seen, and while I haven’t heard a specific date, I’ve been told that Roku is already well into the IPO process. Bankers tell me Roku’s revenue for 2014 was over $200M with them projecting 2015 revenue to be in the range of $275M-$300M. I’m also hearing that Roku is expected to become profitable in Q1 of this year. To date, Roku has raised over $150M in venture funding.

I don’t know how much money Roku is looking to raise in their IPO, but I would estimate it to be $100M on the low-end and as much as $150M on the high-end. While 2014 wasn’t one of the better year’s for new IPOs, GoPro has done well and even thought they sell a different type of consumer product than Roku, many on Wall Street will use GoPro’s IPO success to excite others about Roku’s business. In Q3 of last year, Roku said it had sold 10M players in the U.S. since launching in the market in 2008.

I wanted to take a minute to thank all the readers, sponsors and supporters of my blog in 2014. With just over 1.8M page views last year, and more than 30 sponsors, I’m still amazed by the reach I have, the loyalty of my readers and the support of so many vendors in the market. As just a single person, with no editor, no formal training in writing, and running a blog off of a $100 a year platform, I’m still humbled that so many people take an interest in what I have to say and also link to my posts. As many know, I don’t blog for a paycheck, that’s not what drives me and my only goal is to try to help educate the market, set realistic expectations and tell it like it is. It’s more than a job for me and I understand the responsibility I have to the industry and to those who work in it. As always, I am available to anyone, at any time, and you can always find my cell phone number listed at the top of my blog. I take all calls, return all emails and accept all meeting requests – free of charge. Thank you for your continued support.

We’ve been hearing about Dish’s Internet Pay TV service for a long time, and today, we finally have some more details. While some might be intrigued by the low price, don’t get too excited just yet, there are some major limitations to the service. Called Sling TV, the service will launch sometime this quarter (Update: Sling TV’s CEO said the service will “commercially launch later this month”) and will provide a dozen channels at launch for $20 a month, with no contract. Sling TV will only be available in the U.S. and one of the major limitations is that you can only stream to one device at a time. So multiple people in your home won’t be able to use the service at the same time. Also, for anyone who signs up in the U.S. and then travels overseas, the service will not work outside the U.S. on any device.

At launch, the channels included with the service include ESPN, ESPN2, CNN, TBS, TNT, Cartoon Network, Adult Swim, Travel Channel, Food Network, ABC Family, HGTV, Disney Channel and some Internet video from Maker Studios, which is owned by Disney. While it’s great to see sports in the lineup with ESPN, Sling TV won’t come with any channels from ABC, CBS, Fox and NBC. So anyone who was hoping Sling TV would be a seamless way to get content from both cable and broadcast channels will be disappointed. Users will still have to use another service/method (Hulu, OTA Antenna etc.) to get a full channel lineup.

Sling TV will also offer a Kids Extra package for $5 more per month, giving you access to Boomerang, Baby TV, Disney Junior, Disney XD and Duck TV and a News & Info Extra package also for $5 a month which adds channels from HLN, Cooking Channel, DIY and Bloomberg TV. Sling TV won’t come with any DVR service, but users will have access to on-demand videos, going back between 3-7 days, depending on the content.

Sling TV won’t require any new hardware and will be supported on Roku, Amazon Fire TV, Google Nexus Player, Xbox One, (Update: Xbox One will be the exclusive gaming console when it launches in the coming weeks) Apple’s iOS and Google’s Android operating systems and select TVs from Samsung and LG (“coming soon”). While it’s good to see more options coming to consumers, Sling TV will be a very limited offering at launch. It doesn’t include many of the channels that some of the top rated shows are on, limits you to only one stream at a time, provides no options for recording shows, and doesn’t work outside the U.S. We also haven’t yet heard from Dish what the quality of the video will be and the max bitrate it will be encoded at.

If you are single, only watch ESPN and don’t travel outside the U.S., Sling TV is perfect. But for the majority of consumers, even cord-cutters, it’s not going to be a viable option at launch.

Note: As of now, it doesn’t appear that Dish has a link where users can go to learn more Sling TV. That’s a missed opportunity on Dish’s part.

CNET will live stream Dish’s press event at 2pm ET. Live link here. I’ll update this post with the link when I find it.

Content delivery networks play a key role in improving user experiences on the web and are responsible for the growth we have seen in the consumption of online content. All content providers rely on CDNs because they provide an effective medium to avoid the global limitations of the public internet. They add value through edge caching by delivering popular content locally from a cache server deployed within a region and completely skipping the latency ridden middle mile as well as through intelligent routing and optimization to avoid congestion at the Internet peering points.

Today’s CDN market is heavily fragmented. [See: cdnlist.com] A majority of the vendors broadly call themselves CDNs, which is a generic term these days, but in reality are focused on a smaller piece of the pie. Vendors such as Level 3, for example, are deeper into the video and large file delivery ecosystem. Others, such as Instart Logic are focused on front end optimization for publishing, retail and ecommerce customers. Some vendors, like Aryaka, run upstream towards the premium enterprise segment.

With the broad coverage of premium content offerings, video and other consumer content delivery has enjoyed extensive coverage by the media, vendors and analysts. Out of the 30+ CDNs today, 20 or more provide value for static content and video. Only a handful truly focus on dynamic content delivery. There is a niche offering in the CDN market that is seldom talked about, one which is very different in terms of technology. IP application delivery or IP application acceleration is likely the unsung hero of the CDN world. It provides value for enterprises with 100% dynamic content with no edge caching capabilities included and isn’t something that’s sold strictly on price, giving CDNs much higher margins.

So how did the need for delivery of dynamic IP applications come about? Legacy ERP, CRM and HR applications were hosted centrally in a client-server model for distributed access within the company’s internal wide area network. MPLS networks combined with WAN optimization appliances did a fairly good job of accelerating employee access to these applications.

However, the enterprise ecosystem has become exceedingly global and mobile over time, while the need for collaboration is stronger than ever. Partners, suppliers and customers have become a part of an integrated supply chain that needs access to these centrally hosted applications from anywhere in the world. So, client server access and WAN needs have changed. Also, MPLS with on premise optimization cannot be deployed for every partner and customer alike. IT teams are faced with the unique challenge of making these applications, that have traditionally been behind the firewall, available to public users.

Pushing these enterprise applications outside the firewall and the use of the public Internet as a mode of access poses the same challenges that content and media customers faced before their adoption of CDNs including latency, congestion, packet loss and jitter. Poor application performance especially in the enterprise space, results in low adoption rates and lost productivity.

Enterprise mobility is different from the issue of delivering cacheable content to a mobile device. The need is to accelerate not just HTTP but practically any IP application, irrespective of the application layer protocol. Fortunately, a few CDNs have recognized this need. IP application acceleration solutions cater to the challenge of providing high performance, cost effective access to centralized applications like the use of distributed SSL VPN by users directed to centralized concentrators, Citrix, FTP and Remote Desktop across globally distributed partners, remote employees, mobile workers and smaller international offices.

Some IP Application acceleration solutions cater to application performance needs through intelligent routing of dynamic traffic over the Internet middle mile. TCP Optimization combined with persistent connections reduces handshaking to a minimum and leads to improved response time. However the public Internet is still a major bottleneck when it comes to delivering dynamic applications with greater real-time needs. The middle mile over the Internet with optimization may be considered intelligent but the Internet is still a shared medium. And even though its availability within a region may be plentiful, across peering points and during rush hour there is still tremendous congestion, packet loss and poor performance.

If you are looking for an ideal solution for your IP application acceleration needs, I would recommend you consider the following issues before you make a decision:

• Are your users regional or truly global with a footprint into the Americas, Asia Pacific and Europe? If global, the best solution might just be one that is built over a dedicated private network to completely bypass the unreliable public internet for IP application delivery. This would enable end users to experience stable latency and consistency in application performance.
• For dynamic applications, ensure that the solution includes intelligent features such as TCP optimization and persistent connection capabilities so as to provide acceleration benefits.
• Ensure the solution is application agnostic and not limited to only one or two applications like SSL VPN as some vendors provide other possible use cases like Citrix, FTP server and RDP.
• A real world trial for a subset of your critical locations on the vendor’s production network is a great way to determine application performance.
• Pricing models for IP application delivery can range from simple pricing based on locations, bandwidth and applications to a fairly complex exercise for certain vendors.

The IP application delivery market still presents an unexplored opportunity in the CDN space. More companies are entering this segment of the market, but many still haven’t made the transition to value add services. The competition is scarce with Akamai, CDNetworks and Aryaka trying to capture market share. Akamai is the largest in the space and CDNetworks primarily sells outside of the U.S. Aryaka seems to have an interesting solution for this market, which they claim is truly application agnostic and built on top of a private network. Other CDNs are somewhat in the space, and have limited offerings, but haven’t really gotten them to scale or been able to win a lot of business to date. The CDN market is moving towards more value add services and CDN vendors are still trying to enter those markets and diversify their revenue away from just commodity CDN services. Akamai’s been successful at this for years, CDNetworks has shown success outside the U.S. and Aryaka’s been very aggressive in the market lately, which is getting them into more deals. This is a segment of the CDN market to keep an eye on as Web App Acceleration and IP Application Delivery services are the future of the CDN industry.

Thursday at 2pm ET, I’ll be moderating another StreamingMedia.com webinar, this time on the topic of, “Video Monetization and Audience Building.” With an explosion in the amount of content being consumed Over-The-Top, video content providers are scrambling to accelerate the capture of additional, ongoing viewership and monetize this new distribution channel. A one-size-fits-all strategy for this type of disruptive scenario can yield disastrous results. Identifying and tailoring specific subscription and other automatically recurring revenue-based monetization models appropriate for a content owner or provider’s audience based upon viewing habits is a key to rapid growth.

Join speakers from Vindicia and Clearleap and bring your questions for a discussion on:

• Video Consumption Trends
• Revenue & Monetization Models
• “Frictionless” Customer Experience
• Maximizing ACLV/ARPU
• Innovative Pricing Strategies
• Revenue Uplift & Churn Mgmt

Register now to attend this webinar, “Video Monetization and Audience Building”.