In 2009 I wrote a post detailing what Netflix's direct costs were for streaming movies and TV shows over the Internet. Since then, Netflix's cost to stream two-hours of video has dropped by about half and I estimate the company will spend about $50M this year with third party CDNs for video delivery.

Two years ago, Netflix paid about five cents to stream a movie and today, pays about two and half cents. While most video contracts with third party CDNs are typically priced on per GB delivered model, Netflix and other large content distributors usually pay the CDNs on a per Mbps sustained model. They pay not for the total number of bits they transfer each month, but rather the total amount of bandwidth they peak at each month, a pricing model also referred to in the industry as 95/5. This means that a customer can burst above their committed rate of Mbps less than 5% of the time with no penalty, but once they go over that, they pay for overages.

Like most videos viewed on the web, Netflix's movies and TV shows are encoded at multiple bitrates to allow for the different broadband connection speeds and performance of today's ISPs. Netflix has given out some details that shows the average user streams Netflix at just over 2Mbps (2000Kbps) even though they encoded video for twice that speed. Most Netflix users watch content in 480p or 720p quality, but Netflix does offer a limited amount of content in 1080p, only available via playback on the PS3.

What's really interesting about the bitrate data that Netflix provides is that it shows just how bad most consumers ISPs really are at delivering video. In 2009, most users were getting about a one and half to two Mbps stream from Netflix. Two years later and Netflix's data shows most users are getting about 2Mpbs. That's almost no video quality improvements in the rate of Kbps being delivered in two years time. That's not to say that Netflix isn't improving their video quality because they are working to make their encoding more efficient as well as working with their partner CDNs to deliver the bits more efficiently. But even with those efforts, Netflix has no control over the last-mile providers, who still treat Netflix traffic as if it's a burden on their network.

While there has been a lot of talk lately about new bandwidth caps by AT&T, that really has no impact on Netflix because as we can see from Netflix's own data, bitrates and video quality aren't exactly growing very quickly, if at all. AT&T said that 2% of their users account for 20% of the traffic and the caps are a way for them to manage performance on their network. I think rather than going after the 98% of their customers with caps they should really go after the 2% causing the problem, but that aside, caps from Comcast or AT&T won't have any material impact on Netflix now or anytime in the near future. Years from now they could, if the ISPs don't raise their cap levels, but right now caps are not a big deal to Netflix.

Some might suggest that the Netflix pricing data shows that bandwidth pricing is falling fast, and while it is for a company like Netflix, most content owners aren't seeing this big of a decline in CDN pricing because they don't grow traffic as fast as Netflix. Overall, I expect the average CDN customer, which Netflix isn't, to see a pricing decline of about 20% this year. Of course the good news for Netflix in all of this is that their pricing to stream video continues to decline and it's cheaper to stream than mail DVDs through the mail. And with video bitrates not growing very fast, Netflix's cost to deliver video remains very stable and overall, is a very small percentage of their cost to run their streaming service.

I'm pleased to announce that the first group of speakers have been confirmed for the Streaming Media East show, May 10th-11th in NYC. We've already got a great lineup of cable networks, broadcasters, MSOs and device manufactures who will discuss topics around cord cutting; monetizing over-the-top video; the impact Netflix is having on the broadcast TV business; winners and Losers in over-the-top video; the impact of broadband-enabled devices; and a lot more.

These are just a few of the topics that executives from the following companies will discuss including Comcast, CBS Interactive, Turner Broadcasting, MTV Networks, PBS, A&E Television Networks, EPIX, Huffington Post, AOL Video, Hearst, NHL, CNET, Boxee, Roku, TiVo, Western Digital, Sony PlayStation, MSN/Bing Video, Yahoo!, Revision3, The New York Times, Wall Street Journal and others.

In addition to these companies, another large group of content owners, MSOs, publishers and enterprise end-users are also in the stages of being confirmed. With more than 150 speakers over 40 sessions, including our dedicated track on HTML5 Video, Streaming Media East is the show to be at this year. And to make things easier on your wallet, readers of my blog can now register for the show using the promo code of DAN, which gets you into all the sessions and access to all the speakers for only $695.

You can also register for free for an exhibits pass and get access to the show floor, keynotes and the broadband-enabled device pavilion where you will be able to get hands-on with more than 30 streaming media devices.

By my count, there are more than 1,000 vendors in the online video industry. Some of them are quite large and get a lot of publicity in the media but most of them are smaller, don't have as much visibility in the market and are not as well known. Starting with this post, every few months I plan to highlight some of the smaller companies that I personally think are doing a really good job in the market. Here are the companies I have selected for this month:

Wowza Media: For nearly six years now, Wowza Media has been in the market offering streaming server software that does just about everything. Customers I speak to love that Wowza's server has streaming support for all of Apple's iDevices, Microsoft Silverlight and Apple QuickTime formats, Android and BlackBerry support as well as working with IPTV and set-top boxes. David and Charlie at Wowza have taken something that's complex in the market and made it much simpler, kept the server affordable and from what customers tell me, provide fanatical support. Selling server software isn't very sexy, which is why you don't hear too much about Wowza outside of the IT community, but the company really has done a good job over the past six years of making a name for themselves with a very good product and has a lot of happy customers to prove it.

Influxis: In just a few short years, Influxis quickly became known as the go to company in the industry for content providers and publishers looking for custom Flash Media Server hosting options. Many developers needing to run custom FMS applications or doing something unique quickly gravitated to the dedicated hosting options provided by Influxis and their expertise in delivering Flash content. Thousands of customers later, the company has now branched out into providing a lot of the custom development work around players and apps for live events, multi-user collaboration needs, P2P and DRM solutions and is now also specializing in prepping video for mobile applications.

PeerApp: While certainly not the only company providing media caching solutions in the market for telcos and network operators, PeerApp's name keeps coming up with customers as having one of the best solutions in the market. And while not widely known, PeerApp has a long list of customers using their technology to offer their own media caching solutions in the market, essentially white-labeling PeerApp's technology. As the media caching market has started to consolidate with Alcatel-Lucent buying Velocix and Juniper buying Ankeena, I suspect PeerApp is at the top of a very short list of companies that will be acquired next. Over time, the media caching market will be dominated by the big boys like Cisco, Juniper, Alcatel-Lucent, Bluecoat, Huawei etc. and it's only a matter of time before a dominant player in the space takes out PeerApp for their technology and customers.

Accordent: Truly a leader in the enterprise video space, Accordent has been providing enterprise class video platforms for more than a decade. In that time they have amassed more than 1,500 customers and have more than 150 of the Fortune 500 using their solution. Combine that with the fact the company has raised about $10M only $4M in funding over the past decade all while still continuing to grow their business and that speaks for itself. I constantly get feedback from a lot of enterprise customers about the video solutions they have deployed inside their network and to this day, I have yet to hear from a single customer who hasn't been happy with Accordent's technology. And if there was some kind of contest for being the nicest people to deal with, Mike and Jeremy at Accordent would be at the top of that list. That may sound silly, but it's one of the reasons why Accordent's customers are so happy and loyal.

Cotendo: When Cotendo launched in the market just over two years ago, the industry was already crowded with far too many CDNs primarily focused on delivering video. Knowing this, Cotendo made the smart decision to offer products, like app acceleration, that are more complex, have higher margins and what the industry defines as "value add services". While many of the other CDNs in the industry were trying to change their product portfolio to provide value add services and diversify their revenue, Cotendo was already blazing a trail signing up customers like Facebook and Answers.com. Two years later, the company has more than 150 customers, a major deal with AT&T and is quickly ramping revenue and getting a very good reputation in the industry. Adding to their creditability is the fact that that the leader in this space, Akamai, has filed a patent infringement suit against Cotendo, which clearly goes to show that the company is doing something right.

If you think there a company in the industry that I should consider as a "hot company to watch", please contact me and let me know why. I'm always interested in suggestions.

Disclaimer: At the time of writing this post, none of the companies highlighted are sponsors of my blog.

I'm moderating another StreamingMedia.com webinar today at 2pm on the topic of "Solving Today's Top Hurdles in Online Video". Limelight Networks will be showing content owners and publishers how they can:

• streamline your video workflow from the ingest process to library management and channel creation
• simplify content syndication and distribution to PCs, tablets, and smartphones
• integrate your video with other IT functions including content management systems, ad serving networks, and content delivery network services
• improve analytics data for continually optimized video performance

We'll also be having a Q&A session answering your practical questions on ways to improve your online processes and technologies for video management and distribution, so sign up here for the webinar and bring your questions.

StreamingMedia.com's sister site, OnlineVideo.net, has just launched The Ultimate HTML5 Video Guide, a thorough resource for those struggling to learn about the new world of HTML5 video. The guide contains features, how-tos, FAQs, and videos by the OnlineVideo.net team of experts. The guide can be found at www.onlinevideo.net/html5

HTML5 video is a new online standard, and because it’s new there’s a lot of confusion about what it means and why it’s important. The OnlineVideo.net experts have seen a huge demand from readers for information on both the basics and details of HTML5 video. Anyone who wants to serve video that will play on the iPad or iPhone, and be viewable on a wide range of browsers and devices, needs to know what HTML5 video is and how to create it.

With that in mind, the OnlineVideo.net team has created an essential resource for anyone struggling to get up to speed on HTML5 video. The guide starts off with FAQs and basic articles to help people learn the essentials of HTML5 video.

Besides articles, the guide contains how-to and comparison videos created by video industry expert Jan Ozer. The videos walk video creators through the steps of encoding video for playback on iPads and iPhones, and also show how H.264 and WebM encoding programs compare. The Ultimate HTML5 Video Guide also includes timely HTML5 video news, so that readers can learn which companies are offering HTML5 video solutions.

If you have any questions about the HTML5 video guide or want to contribute to it, please contact Eric, the editor of the website at erics@streamingmedia.com

At 2pm ET today I'll be moderating another StreamingMedia.com webinar with RealNetworks about their enterprise streaming solution, the Helix Media Delivery Platform. During this webinar, Real will cover today's hottest topics, including:

• Streaming multi-format video to mobile phones, including Apple iPhone, Android, Blackberry and Nokia
• Webcasting whose quality rivals digital television with IP TV for the Enterprise
• Launching your company's own internal "YouTube" with Helix Media Library

We'll be saving a lot of time for Q&A with Real's presenters so sign up here for the webinar and bring your questions.

While many industry conferences do a good job of bringing people together, one of the best ways for vendors to collect industry data and learn what products and services customers need is via small, focused networking events. With that goal in mind I am please to announce that StreamingMedia.com is starting a new series of events called "Dinner With Dan".

The events, which I will organize and moderate, brings together end-user customers for a dinner and discussion around a particular topic. These dinners are a great way for vendors to get one-on-one face time with a small group of customers and utilizing my rolodex, make new introductions to companies they may not normally be able to easily get in front of.

I have done a few of these private dinners already and they have been very successful at bringing together about a dozen customers to have a fun and rewarding conversation about their business challenges and the products and services they are looking for in the market. The sponsoring vendor, only one per dinner, gets to ask questions, collect feedback and get in-person introductions directly with decision makers.

I'm excited to start offering this as a service to companies as I get a lot of requests from vendors for customer introductions and these dinners are a great way of pulling together a small group of executives for a very rewarding discussion. If you are interested in more details on these events, please email or call Joel Unickow at StreamingMedia.com (250-716-8815) who can give you all the details.