As NAB kicks off, we’re seeing a number of exciting deployments of cloud-based digital media solutions. From a trend of conceptual trials and early announcements last year, this indicates a remarkable, and remarkably fast, maturing of the industry. Cloud is solving real pain points for the M&E industry which is still struggling to come to terms with the volume, fragmentation and technological complexity that ubiquitous video gives rise to.

From a research perspective, Frost & Sullivan has released a new study called “Global Media and Entertainment Solutions on the Cloud”. We’ve taken an in depth look at five verticals where the cloud is most impacting M&E applications today – transcoding, media asset management, animation, B2B productivity workflows, and niche services such as captioning and metadata insertion. A brief summary of its findings are available here.

One source of confusion we’ve seen in the market is that cloud is still used as a nebulous term for three distinct use cases – deployments within a private data center (so-called virtualized execution), deployments in a public data center (in other words using Infrastructure as a Service or IaaS) and pay-as-you-go service licenses (in other words Software as a Service or SaaS). The two former use cases are influencing product designs away from dedicated hardware and appliance form factors towards software form factors that are more amenable to virtualization.

The growth in SaaS is more fundamentally transforming the industry by lowering barrier to entry for smaller or less technology-savvy media companies, lowing barrier to entry for any size of media company looking to establish new, experimental or short-term services, and by dramatically reducing total cost of ownership of a wide range of online video services while also providing scalability, flexibility and agility. However, for solutions to optimally deliver on the promise of the cloud, it is critical that they be architected from the ground up for the cloud. On-premise products that are ported naively to the cloud cannot deliver reliability if for example virtual machines need to be rebooted or a network connection goes down. Such products will also be less able to intelligently spin distributed computing resources up and down in response to fluctuating workloads.

While the total revenues accrued under the SaaS model for media and entertainment applications are in the neighborhood of $100 million in 2013, we expect this to rise explosively quickly, approaching the billion dollar mark by 2020, driven not only by a compelling value proposition but also by rapidly maturing solutions and improved market awareness. To more closely gauge how media and entertainment companies are harnessing the cloud today and anticipating using it in the future, we also embarked on a consumer-facing research initiative. Specifically, we spoke with senior executives in marquee programmers and broadcasters, both in the USA and in the UK, to discuss their perceptions of the cloud and its role in their strategic growth initiatives. While there is clear recognition of the value and power that cloud-based solutions bring to a media company’s fingertips, there also remains some hesitation in wholehearted adoption of the cloud that stems from historical perceptions – relating to concerns which we feel are being quickly resolved as technology and commercial offerings evolve.

These findings are published in our new white paper, “Empowering Multiscreen Workflows through the Cloud“, which debunks four key pitfalls media companies often fall into when considering the cloud for deploying online video offerings. The paper also discusses our suggested best practices for success in a cloud-based video ecosystem.  It does so in the context of real world case studies derived from our research.  Further, we examine concrete business benefits that cutting edge cloud-based solutions such as Aventus from iStreamPlanet can bring to a modern media business aspiring to succeed in the new online world order. Aventus powered NBC’s recent online video offerings for the Sochi Winter Olympics in a definitive showcase of the production-grade capabilities of today’s cloud based media workflow solutions. A copy of the white paper can be downloaded from www.istreamplanet.com/nab-2014/frost/.

We’re expecting to see continued innovation in bringing cloud-based workflows to market. Online video is going to continue to grow, as are annual shipments of connected video devices. New devices and services that aim to make it easier for consumers to find and consume online content will continue to emerge at rapid pace – such as Amazon’s recent Fire TV announcement. The cloud will accordingly become more and more critical to helping media companies realize the monetary potential of this ecosystem while remaining competitive and differentiated in a fiercely fought market.

I’ve gotten my hands on a bunch of Amazon Fire TVs and will be giving them away to some lucky readers of my blog. We’ll also be giving them away at the Streaming Media East show in May as well. To win one from my blog, simply add a comment to this post and I’ll pick a winner at random in two weeks. I will only ship these within the U.S. so you must have a U.S. based address if you want to win. Good luck!

If you want to get a jump on your speaker submission for the Streaming Media West show, taking place November 18-19 at the Hyatt Regency Huntington Beach Resort and Spa in California, the call for speakers is now open. The submission deadline is July 30th and the advance program will be published on August 1st.

With the launch of Amazon’s $99 streaming box, the company has added a chart on their website that compares their box against the Roku 3, Apple TV and Chromecast devices. By the looks of the chart, it seems as if Amazon’s box comes out on top with more features, but that’s not accurate. Amazon has skewed the chart to only highlight what they want and has left out things their box does not support. If they are going to make a chart that compares boxes, then they should make it real and give consumers all the info, not just selected info.

Amazon says their box allows you to “access all the entertainment you love” and “comes with instant access to all of the most popular subscription video services”, but apparently they don’t think anyone loves sports. Amazon’s box does not support live streaming services from MLB, NHL, NBA or MLS, but of course they don’t list those content services on their comparison chart under “popular services”. Because if they did, Roku would have a check box on all of them and Amazon’s box wouldn’t. [Updated 8:06pm ET: Amazon’s press release says that MLB.TV and WWE Network are “coming soon”. ] They also don’t call out the fact that their box has no current support to play back content from a USB source, something Roku can already do. The Roku’s remote also includes a headphone jack so you can listen to the audio in private, at any volume you want, but Amazon’s box does not have that functionality. Roku also has a version of the box that works on older TVs, with Amazon’s box only working on TVs with HDMI.

Amazon’s box has some nice features, but Amazon owes it to consumers to fairly compare the boxes and not simply limit the info they present in the chart to selected details.

Amazon’s $99 streaming box, dubbed “Amazon Fire TV” is now available for sale on Amazon’s website and while it has potential as Amazon adds more functionality to it over time, it’s no Roku or Apple TV killer today. During Amazon’s presentation they said the current gaming consoles in the market are too expensive, but their box is not competitive to Sony’s or Microsoft’s and they are fooling themselves if they think otherwise. No serious gamer is getting Amazon’s box, which has no online multiplayer service, something that most Xbox’s and PlayStation’s are used for. Amazon’s streaming box would be great for casual gaming, but that’s it. Even from the gaming demos they showed off it’s no where near what games look like on the Xbox One or PS4.

Right now, the only content on the box, that matters, is from Netflix, Hulu Plus, Amazon, ESPN, Showtime and YouTube. Missing is HBO Go, MLB.TV, NHL GameCenter, NBA League Pass, Epix, Vudu, SlingPlayer, Major League Soccer, Redbox, WWE Network – all content services that Roku’s boxes currently have. While more content will come to Amazon’s box over time, we don’t know how much content it will get or how quickly it gets it. For some segment of the market, cost is the biggest factor and Roku has a box in the market that’s only $50 and works with older TVs, something Amazon’s box does not do. So some consumers will pick the Roku simply because it is cheaper than Amazon’s streaming box, when cost is the primary factor in their decision. [Updated 8:06pm ET: Amazon’s press release says that MLB.TV and WWE Network are “coming soon”.]

That’s not to say that we should count Amazon out as they have tremendous marketing power and the ability to sell a lot of these boxes very quickly simply due to all the eyeballs they have to their website. I expect Amazon to sell millions of them this year, but they aren’t doing it to make money from the hardware and their business model with Amazon Fire TV is clear. Just like their Kindles, Amazon is selling the hardware at a loss to make money on the digital content services consumed via the boxes. If it was just about anyone else in the market coming out with yet another $99 streamer, I’d say it was pointless. But in Amazon’s case, because of their diversified business model and marketing reach, it’s necessary for them to have their own streaming box.

Updated 2:52pm ET: Engadget’s hands-on experience with the box involved “noticeable delay between making selections and the next page loading” for Hulu Plus and that gaming was “not exactly perfect” with “noticeable lag when it came to input.” Amazon has posted a video that shows some of the upcoming games for the box and they are crazy  if they think the video quality rivals the Xbox One or PS4.

I wasn’t planning to write anything about the WSJ’s news story about Apple and Comcast being in discussions to work together, but since I have gotten so many inquiries from others asking me to comment on the post and seeing that Netflix’s stock is now down $30 a share as of 2pm ET, I felt compelled to get something up.

From sources I have spoken to, no such deal between Apple and Comcast is being considered today, the way the WSJ describes it. Apple routinely has discussions with all the major content owners but Apple is not working on any special streaming service that will be delivered via Comcast. While one could always speculate that such a service might, could or should come to the market in the future, anything is possible, but not the way the WSJ details it.

For starters, the WSJ post says that Apple would get “special treatment on Comcast’s cables to ensure it bypasses congestion on the Web”. Not only would Comcast not offer that, legally they aren’t allowed to. The post goes on to say that Apple “wants the new TV service’s traffic to be separated from public Internet traffic over the last mile”. This makes no sense. Once the content is already inside the last mile, it’s no longer “public Internet traffic”, so the WSJ authors simply doesn’t understand, from a basic technical level, how content is delivered.

The post also says that the last mile “tends to get clogged when too many users in a region try to access too much bandwidth at the same time.” As we know from the Netflix and Comcast story, the congestion takes place at interconnect points and generally not inside the “last mile”. Does the WSJ have any data to show us that congestion is taking place inside the last mile at Comcast? Also, users aren’t accessing too much “bandwidth”. I get what they are saying, but they are using the wrong term. Bandwidth is simply the amount of data that can be carried from one point to another in a given time period. Users don’t access “bandwidth”, they are accessing content.

How anyone can take the WSJ’s post seriously is beyond me when they use so many vague terms, and it’s clear that the authors don’t understand this subject from a basic technical level. They say Apple wants a separate “flow” for its video traffic. What does that mean? Define “flow”. Earlier in the post they said that Apple would “get special treatment on Comcast’s cables”, but later on say “it isn’t asking for its traffic to be prioritized over other Internet-based services.” Well, which one is it? It can’t be both.

Their “technical” description of how this would work makes no sense at all. They say “Apple’s video streams would be treated as a “managed service” traveling in Internet protocol format—similar to cable video-on-demand or phone service. Those services travel on a special portion of the cable pipe that is separate from the more congested portion reserved for public Internet access.” That’s a lot of vague, generic words thrown together that mean nothing without defining them. “Special portion”? “Managed service”? Are they suggesting a private peering connection? Maybe, but then that’s not inside the last mile. And why do they say it will be delivered using the “Internet protocol format”? Is there any other format to use? Of course it’s in IP format, it’s going over IP-based networks!

I was just going to leave this article alone and not say anything as I’m not trying to police the web. But Wall Street thinks this is big news and has sent Netflix’s stock down $30 a share as of 2pm ET, which is crazy. The WSJ’s post does not have enough facts in it, and far too many errors, to use it as the reason to justify a sell off in Netflix. Just because something is published in the WSJ or any other major publication does not guarantee they have the story right. It does not take much to see that the way the story is written, the authors don’t understand the basics of how content gets delivered on the Internet. They don’t use the right terminology, and the post is filled with so many vague and nondescript terms that no one should be making any decisions on buying or selling stocks based on what this WSJ post says.

Added 4:02pm – While Netflix’s stock could be down for reasons other than the WSJ’s post, nearly all Internet stocks are down today including Google, Akamai, Facebook, Twitter, Yahoo and others. The two stocks that are up are Apple and Comcast. So you can draw your own conclusions if you think the WSJ article had any impact on Netflix’s stock today.

Disclaimer: I have never bought, sold or traded a single share of stock in any public company ever. I have no vested interested in Netflix, Apple, Comcast or any other company mentioned in this post.

Level 3 has just filed a 14 page brief with the FCC saying that ISPs “must also exchange Internet traffic on commercially reasonable terms without imposing access charges”. They have reinforced their previous statement that they want the FCC to regulate interconnections between networks, but still don’t provide any suggestions on how the FCC should do that. Level 3 feels that “ISPs should be permitted to charge other providers for services they provide, but they may not charge fees simply for the privilege of accessing that ISP’s customers”. So how does one define “commercially reasonable terms” that Level 3 is asking for? [see my earlier post in the day on this topic: Netflix & Level 3 Only Telling Half The Story, Won’t Detail What Changes They Want To Net Neutrality]

Level 3 also states that “many end users might not know, when experiencing degraded performance, that the cause of that degradation is that the ISP’s ports are congested.” They are right about that, which is why we need the companies involved in this dispute to be transparent and provide the data to show all the technical and business pieces behind the scenes.

Level 3 says they are “willing to work with ISPs to ensure that all costs are borne fairly (i.e. that Level 3 will incur the costs to augment its network if the ISP will likewise incur the costs to augment the ISP’s network), the tolls that ISPs are seeking to impose are unrelated to costs.” So what are the costs? Level 3 will only say that the “precise size of the tolls demanded vary from ISP to ISP.” They also argue that these costs “would have an appreciable impact on costs for edge providers, including new or small garage entrepreneurs”, yet small “garage entrepreneurs” are never going to build their own CDNs and won’t need to connect to other networks. If Level 3’s argument is that smaller content owners will also suffer, why aren’t we also hearing from any of these smaller content owners? To date, Netflix is the only content owner who says their is a problem. Where are the other voices?

Level 3 finishes by saying they want “commercially reasonable terms” that are “sufficiently flexible” and that ISPs could agree to “different terms” which are “suited to the unique circumstances of the parties at the time”. That’s pretty vague with lots of variables. Level 3 also says that “while it is impossible to quantify, now, how much worse consumers’ future Internet experience will be than it otherwise could be, or how much innovation will never happen, or how much higher prices for online services might be, those are the predictable consequences if the Commission fails to act”.

What I want are all the facts so I can make an informed decision of what should be done. But without details on the current business terms and how they work between all the parties involved and details, with numbers, on how they want it to change, it really keeps all of us in the dark.