Updated July 4th: (Boxee has announced their cloud DVR service will shut down on July 10th) Samsung has agreed to acquire Boxee, in what I am hearing will be an all cash deal, with news reports saying Samsung valued Boxee at under $30M. A blog post out of Israel first broke the news, and Samsung has since confirmed the sale, but did not disclose what they paid. While Boxee has some good technology, the company always struggled to find an identity for themselves and never came up with a way to turn their technology into a sustainable business model. Boxee started off as software users downloaded and installed on a PC, with the first beta release available in 2010, but then turned into a software licensing model that didn’t pan out, a hardware box built-in combination with D-Link, only to then move to a new cloud-based DVR box, with a monthly subscription model. All of these changes took place within a span of less than four years, which really kept Boxee from ever having any focus.

Boxee never sold a lot of boxes (under 100,000 to date) and their software licensing model, which kicked off with a deal with ViewSonic, that then fizzled, never took off. The company never found a void to fill in the market and while some would compare the original Boxee Box by D-Link to Apple or Roku devices, they are all targeting a very different user. Boxee set their goals high, but the market simply wasn’t and still isn’t big enough for those who want over-the-air services with DVR in the cloud. That will always be a niche market and won’t be a big enough opportunity to create a large business from. While Boxee did try to create revenue from licensing their platform, with the goal of having their software run on as many third-party hardware platforms as possible, they only secured one deal with Iomega, for a product that was sold outside the U.S. A deal with ViewSonic for a Boxee powered TV was announced in 2011, but then abandoned by ViewSonic later in the year.

Neither Samsung nor Boxee are commenting on how Boxee will be integrated into Samsung, but one would have to expect Samsung to kill Boxee’s current Cloud DVR hardware and service and use some of Boxee’s technology in their Smart TV sets. So this is probably the end of Boxee as a hardware device and as a brand. Some media reports are saying that Boxee’s current employees will all stay with Samsung after the deal, but we’ll have to wait for verification of that. Boxee does have a good development team in NY and Israel, so one would imagine Samsung would want them as part of the acquisition.

The NYT and TC are calling Boxee a “startup”, but that’s not really accurate. Boxee released its first software platform in alpha in 2008 and the beta version in 2010. So the company has been in the market for more than a few years.

There were a lot of news stories over the past week on TV Everywhere, its lack of use, deployment delays and hurdles keeping it from going mainstream. Here’s a round-up of the ones I read:

• TV Everywhere still not there – San Antonio Express News
• Executives admit TV Everywhere Isn’t – Tulsa World
• Scripps Launches TV Everywhere With TWC – MediaPost
• Sinclair Broadcast Group CEO David Smith: Adopt Next TV Standard Now – TVNewsCheck
• Discovery Is Not Developing or Pursuing a Direct-To-Consumer “TV Everywhere” Offering – Ad Week
• TV Everywhere Fans Called Unlikely to Cut Cords – CE Daily
• MTV Launches First TV Everywhere Application – RightStartups.com
• Problems plague TV Everywhere – Buffalo News
• The TV Everywhere Opportunity – Brightcove Blog
• A+E Networks David Zagin Talks TV Everywhere – CableFAX
• Second Screen: The Story So Far Is One of Unfulfilled Potential – The Guardian
• Millennials Study: More Are At Risk For Cord Cutting, TV Everywhere A Must – Deadline.com
• Scripps Networks Interactive to Roll Out New TV Everywhere Travel Channel, Food Network, HGTV, DIY Network and Cooking Channel Websites – Yahoo! News
• Why TV Everywhere Is Less Than Half There – TDG Research

I’ll try to do news roundups like this more often if I can.

Last month, at my annual Content Delivery Summit in NYC, Netflix’s VP of Content Delivery, Ken Florance, delivered a keynote presentation highlight how major ISPs around the world are using Netflix’s Open Connect Content Delivery Network to help ISPs and service providers deliver video via the last mile. Ken gives a history of content delivery at Netflix, including details on how their video usage has evolved since 2007. His presentation gives details on Netflix’s control plane, their architecture, what an average deployment inside the last mile looks like, show to scale for OTT delivery and Ken touches on how Netflix is moving to SSD storage. You’ll also hear what Netflix sees as the most “common misconceptions about OTT delivery” and hear how Netflix preparing to deliver even better video quality, dubbed Netflix Super HD. You can download Ken’s slides from the presentation here.

Dynamic content delivery has been available for a number of years and beyond just basic caching functionality, solutions in the market now focus on route, connection and content optimization. As online commerce sites have grown more complex, they rely on every feature and function of a CDN to quickly and optimally serve users. More importantly, these sites have to cater to higher user expectations across an ever-changing set of devices.

To date, Akamai has pretty much dominated the content delivery market when it comes to offering Internet retailers a PCI compliant based platform that solves the specific challenges commerce companies face. But just like with video content delivery, a market that Akamai owned for years before Limelight, Level 3, Amazon and others stepped in and pushed pricing down in the market, EdgeCast is looking to do the same thing in the commerce market. EdgeCast is now out in the industry educating customers that in many cases, there is now a credible alternative to Akamai, that one vendor no longer owns that market and that retail customers should expect better features and pricing, as another vendor has finally stepped up with an alternative in this segment.

EdgeCast new solution, launched last month, which they call “Transact”, combines the concept of a purpose-built platform for commerce with PCI Compliance, front end optimization, more efficient caching and what they say are faster SSL connections. Leveraging their existing Application Delivery Network, EdgeCast deployed an entirely new network dedicated to their commerce customers, in a more cost-effective manner, to deliver dynamic and static content globally and securely. EdgeCast also said it will match up their code freezes with the holiday online shopping season so customers can be guaranteed that EdgeCast will not make any code changes to its platform during the most critical time of the year.

To help serve and accelerate commerce sites, a CDN must have a deployment to serve a global set of users, be highly available with excellent performance and be PCI compliant. The audience for sites has continued to change and many commerce websites now offer multiple languages, different domains based on country, international shipping and local currencies. With this diverse audience, sites must maintain availability and reliability through a CDN that can serve content and information as quickly as possible. This all has to be done in a secure and compliant environment. PCI (Payment Card Industry) Compliance is not just a nice-to-have it is a necessity. Without it, customer data such as credit card information is vulnerable.

Above and beyond site acceleration there are a number of functions that commerce sites can leverage to improve performance and internal processes. Relying on a dedicated, purpose-built platform for commerce allows sites to confidently serve traffic without the burden of sharing a network with large social media sites, videos, downloads or other types of content. Additionally, code freezes to match up with holiday schedules allow sites to handle Black Friday, Cyber Monday and the rest of the shopping season without having to worry about downtime, code rollbacks or other circumstances. Newer functionality around secure connections called OCSP stapling allows for massive performance improvements for what is generally some of the most resource-intensive, yet the most important content. OCSP stapling involves improvements around the certificate revocation process and pushing that out to the edge and closer to end users results in faster performance of SSL requests. Additionally, allowing sites to make changes more quickly and efficiently with faster, near-instant purging and more reliable configuration changes permits for better management of internal processes and faster responses to user behavior.

Leveraging their existing relationship with Google’s PageSpeed technology, EdgeCast allows customers to leverage Edge Optimizer – front end optimization – at the edge in a highly scalable and flexible manner. EdgeCast was the first CDN to have FEO built-in at the edge and Edge Optimizer gives customers the ability to manage optimizations on an individual basis while still maintaining control over content. Their rules engine gives granular control over cache control settings, mobile device enablement, content protection and more. Customers can further control that content with nearly instant content purging using the new Piranha purge functionality and configuration changes generally take less than an hour to propagate.

EdgeCast has also leveraged OCSP stapling in order to make SSL connections as fast as possible. By pushing part of the SSL process to the edge, end users will now have even faster performance for the most important content – shopping carts and checkout. This functionality allows EdgeCast to serve SSL much faster using DigiCert than other certificate authorities such as Comodo or CyberTrust. EdgeCast’s new purpose-built platform for ecommerce should help change the way people look at traditional CDN providers. Focusing on commerce with PCI Compliance, faster configuration changes and content purging, more efficient technologies and what they say are better SSL connections, should allow EdgeCast to provide retailers with a premium site acceleration service and show that there is now an alternative to Akamai.

How quickly EdgeCast can make a dent in Akamai’s business I can’t say, it’s too early to know. But EdgeCast is on track to do more than $100M in total revenue this year, they have nearly 300 employees and they are getting to a size and scale where they are becoming a really big thorn in Akamai’s side. They already dominate the licensed/managed CDN market; a business Akamai is just now trying to get into and EdgeCast is one of the CDNs responsible for pushing down video CDN pricing in the market over the past two years. It’s not “doom and gloom” for Akamai, but to date, no one has really stepped up to pressure Akamai’s dominance in the Internet Retail market and clearly, that is about to change. The Commerce segment is a highly profitable core vertical for Akamai and one where they are totally dominant, so if EdgeCast can get traction in this segment, it can impact Akamai’s commerce business and is something that should be watched closely over the coming quarters.

Updated: Looking at EdgeCast’s website and other public information, some of EdgeCast’s current commerce customers include: Etsy, Bluefly, Overstock, Pacific Sunware, Wet Seal, Garmin, Vegas.com, Magneto, B&H Photo, ZipRealty.com, Burlington Coat Factory, CheaperThanDirt.com, Cooking.com, One Kings Lane and Ideeli, amongst others.

In addition to my role at StreamingMedia.com, I’m also a Principal Analyst at Frost & Sullivan. Most of our work consists of private research for customers looking to enter a new market, but we also produce quite a few reports each year that focus on the size of different products and services in the digital video ecosystem.

I’ve just released my latest report on the size of the “Global Transparent Caching Market“, which also details the market drivers, restraints to market growth, product and pricing trends, competitive landscape, and market forecasts and trend analysis broken out by region of the world for the next four years.

Many telcos, multiple system operators (MSOs), and mobile operators are actively looking at transparent caching as a required element in their network to control over-the-top (OTT) video content consumption and to provide the best possible end-to-end user experience. It is a unique technology that simultaneously benefits a content owner, a network operator, and, most importantly, a broadband or wireless subscriber.

Copies of the report are available to any customer who has a subscription to Frost’s Digital Media research service and anyone interested in getting a subscription can contact me for more details. Also, while many research analysts at other firms won’t talk to someone unless they are a customer of that firm, I have and always will talk to any company who is interested in getting more details on any aspect of the video, streaming and content delivery ecosystem. You don’t have to be a customer of Frost & Sullivan for me to take your call and do a briefing with you, so call anytime.

Rory Maher, a Managing Director over at HillsidePartners, an institutional equity boutique focused on the technology and media industries, has issued his latest report on the state of YouTube’s business. In it, he details why he believes that 2013 gross revenue will likely be $3.7B for YouTube, versus his previous $5B estimate in his last report. Based on recent statistics provided by Google, he estimates video ad sellout on YouTube to be just 14% and that their channel revenue is likely at a $20M run rate. Some other highlights from his report:

• YouTube Mobile Likely Generating $800M In Annual Revenue. We estimate YouTube’s mobile business will generate just under $800M in 2013. We determine our YouTube mobile revenue figure by taking the amount of mobile videos viewed (1B per day) and apply reasonable pre-roll sellout and CPM assumptions of 10% and $20, respectively.
• Video Ad Sellout On YouTube Likely 14%. We estimate sellout of video advertising (pre-roll, truView, interstitial, and any ad appearing within the framed video) to be 14% of videos played on YouTube given updated viewing figures provided by the Company. We calculate our estimates by taking information provided by Google on the number of hours watched annually, the length of the average video, and the number of YouTube videos with some form of monetization on them.
• Original Channels Continue To Grow Double-Digits Monthly. We estimate subscribers of the original channels grew 14% monthly from launch until March 2013 and have grown 11% per month since then. In our opinion, recent viewership has likely been negatively impacted by competition from the new channels for eyeballs, but international expansion starting in October 2012 has likely enabled the original channels to maintain double-digit monthly subscriber growth, attractive growth in our view.
• Strong Ad Sellout During Daytime/Primetime. We surveyed videos on some of the top rated channels during a weekday afternoon and found nearly 90% sellout in pre-roll or Truview video ad inventory on the videos we viewed.
• Lower Sellout During The Weekend Indicates Advertisers Buying Inventory By Daypart. We found lower sellout during the weekend, highlighting how YouTube sells much of its video inventory by daypart. For example, we found 20% video ad inventory sellout during weekend mornings.
• Channel Revenue Likely At $20M Run Rate. Advertisers we speak with indicate YouTube is receiving $20 CPMs for pre-roll and Truview packages on its original channels launched in 10/11 with new channels being added 10/12. Assuming 4 videos viewed per sub per month and 50% video ad sellout we estimate the original channels are likely driving revenue at a $20M annual run rate.
• New Channels Have Outperformed Since Launch Vs Original Channels. We estimate the new channels launched in 10/11 have already outperformed the first YouTube channels due primarily to international distribution. For example, we estimate the new YouTube channels have accumulated 11.3M subscribers in the first 8 months since launch vs 7.6M for the first channels over the same period following launch.

The big takeaway from the report is the idea that Google will likely continue to gain share of online video, especially as viewing transitions to mobile. I think anyone would be hard-pressed not to agree with that statement. Google will continue to steal share of online video as usage moves to mobile where, as the report states, its app is superior to other online video apps and has the advantage of preferred placement in the Android OS. The transition to mobile and growth of Android has driven industry-leading growth in online video ads on YouTube especially as advertisers have significantly increased spend on mobile video ads. For example, according to Comscore in January 2012 Google wasn’t even in the top 10 online video properties in terms of ads viewed, but accounted for 13% of all video ads viewed in April 2012 and 18% by April 2013.

Even with all of this data it’s still interesting to see how a huge percentage of streams served by Google every day, via YouTube, still aren’t being monetized in any capacity. At some point, it would be nice if Google could just stop hosting UGC content that has zero chance of making them any money. Of course, the problem with that idea is that Google gets so much of its traffic from users visiting the website to see their own clips, that traffic would drop dramatically, even to the premium content, if they did away with the free video hosting. It’s a necessary evil of being in their business, thanks to their size and scale. Free video hosting is something they probably will never be able to move away from – even though it would reduce their costs and allow them to focus on premium content that they can monetize.

About two weeks ago, Amazon announced that custom SSL domain names and root domain hosting support features had been enabled for content owners looking to deliver static and dynamic content via Amazon’s CloudFront delivery service. After the announcement, I got many inquiries from content owners asking why Amazon is charging $600 per month for each custom SSL certificate associated with one or more CloudFront distributions. Even though this monthly fee is pro-rated by the hour, and in many cases would be cheaper than $600 a month, customers who use other CDNs say most Amazon competitors only charge $200 a month.

But like a lot of content delivery services and cloud solutions in the market today, many aren’t fairly comparing one service to the other. In this case, many customers aren’t making an apples to apples comparison between shared certificates (what most CDNs offer at a lower price) and dedicated certificates (which is what Amazon offers).  To use Amazon’s “dedicated certificate” feature today, customers upload their own dedicated SSL certificate to AWS, associate their certificate with a CloudFront distribution, and have the certificate propagated to the entire global network of CloudFront edge servers to be served in response to end user requests for that distribution. Amazon allocates a set of IP addresses to each cert, and scales this set of IP addresses as the customer’s traffic warrants. A distinct set of IP addresses is needed because each CloudFront IP address handed out for HTTPS must map to exactly one SSL certificate.

What some CDNs offer is a “shared certificate” model, where they will add multiple customers (i.e. multiple domains names) on a single shared SAN (Subject Alternate Name) SSL certificate.  This helps those CDNs lower their cost per customer (because one cert is shared by many customers), therefore they are able to offer this functionality to their customers for a lower price. Amazon says when they talked to their customers, they told them that “dedicated certificates” is their preferred option as it gives them the security, performance and availability they expect. In addition, to use Amazon’s Custom SSL feature, there are no fees for professional services, no set up fees and no extra charges for the SSL bytes transferred (something some other CDNs charge). Plus, Amazon isn’t charging anything extra for dynamic content delivery, which makes it a great choice for customers who want to deliver an entire website (both static and dynamic content) in a secure manner.

When looking at any kind of content delivery offering or feature in the market today, it’s important to fairly compare one service to the other, as accurately as possible. You can’t compare companies, as a whole to one another, only the specific functionality of each product they offer that is the same. In this case, what Amazon is selling with their SSL service is different from what most other CDNs sell as their normal SSL offering. That’s not to say other CDNs can’t offer “dedicated certificates” like Amazon is, but then their pricing is no longer $200.