I'm pleased to announce that on Wednesday Nov. 3rd, Jennifer Taylor, Senior Director at Adobe will kick off the second day of the Streaming Media West show with a keynote that will showcase Adobe’s latest end-to-end workflow solutions for streaming video and social media applications and include a demonstration of Flash running on mobile devices. You will also hear Adobe’s perspective about the evolving landscape for mobile and controversy surrounding HTML5, and how the Adobe Flash Platform fits in.

Jennifer joins Rishi Chandra, Product Lead for Google TV will be the keynote speaker on the first day of the Streaming Media West show, taking place November 2-3 in LA.

Keynotes at the Streaming Media West show are always free to attend. Simply register for a free exhibit pass and you're in! And if you want to register for a conference pass, you can do so using the promo code DRF1 and get $200 off the ticket price.

In July, AT&T signed a non-exclusive deal with Cotendo to integrate their application acceleration and dynamic site acceleration (DSA) services in with AT&T's network. While the news has not yet been announced, on Friday I spoke with AT&T about the deal and it is clear that AT&T plans to challenge Akamai in the market for these value add services.

For those not familiar with Cotendo, the private company launched in March of last year and in just over 18 months, have signed up more than 200 customers who use their dynamic site acceleration (DSA) and application acceleration services. Many of their customers are some of the biggest names on the net including Facebook, Answers.com, Digg and others.

When it comes to application acceleration services, Akamai has pretty much been the only game in town for customers looking for a non-hardware based solution. Yet as more content delivery networks begin to diversify their revenue and focus on what the industry calls "value add services", Akamai won't be the only vendor in the market that content owners can look to. I've written about this in the past, as recently as March of this year where I explained in a post entitled, "CDNs Will Challenge Akamai For Value Add Services", that Akamai won't rule the value add services market forever.

AT&T said that between 40-60% of all new customers in their sales pipeline either have an existing DSA capability or think they might need one and are including that as part of their vendor requirement. While Cotendo may not have 100% of the functionality that Akamai has for these services just yet, they don't need to. AT&T pretty much owns the enterprise market and when customers have a problem, the first place they go looking for a solution is their current vendor, just like it would be with Akamai customers. The result is that AT&T is going to be able to use the relationships they already have with large enterprise customers to solve the problem, without it simply being an RFP bidding process.

In the past 45 days, AT&T says the new Cotendo offering has allowed them to win business that they either had to walk away from in the past, or could not win since they had no DSA offering. As a result, they were losing all of the delivery business of that customer, not just the DSA component. So these new services not only allow AT&T to generate revenue from new product offerings, but also allow them to capture a larger portion of the overall content delivery business.

As a result of AT&T's partner mentality, they did the deal with Cotendo in July, implemented it six weeks later and already had major AT&T customers using the service in August. AT&T expects to be able to talk about some of these customers by name later this year. From the Cotendo customers I have spoken with, they love the service, the performance and the price. The hurdle facing Cotendo is that they don't have a big brand, lots of marketing dollars or a large sales channel, not to mention the ability to easily and quickly scale. But that's exactly what AT&T provides. AT&T now gives Cotendo a direct sales channel, access to AT&T's global network and the marketing clout of the AT&T name.

While I just wrote on my blog only two months ago that,"Akamai's CDN Business Looks Solid, Threat To Value Add Services Far Off", we're going to start seeing pricing pressure in the market for these services sooner than I thought. When asked, AT&T said they could charge customers 50% less than what Akamai charges today and AT&T would still be "extremely happy" with their margins. Of course, I'm not predicting doom-and-gloom for Akamai here; AT&T still has to prove themselves in the market. But make no mistake, pricing for these services will come down in the market and Akamai won't be the only vendor with value add solutions that will solve customers problems. I think we're going to start to see this impact in a noticeable way within the second half of next year.

Of course, I would not be surprised if I got more than a few comments from Akamai shareholders saying that there is no way that AT&T can compete with Akamai for value add services because Akamai is so far ahead of their competitors. While that may be true now, it won't take years for competitors to close that gap. We've seen this play out in the past with video delivery and these additional services are no different. Many years ago, Akamai was the only game in town for large-scale video delivery. They owned the market and could dictate the going rate for pricing. But after a few years, Limelight and Level 3 in particular became serious competitors and forced Akamai to have to reduce their pricing for video delivery. Limelight and Level 3 drove pricing down across the market.

This is the thing to watch with the value add service component of Akamai's business. Even if companies compete with Akamai for only a portion of their value add service business and don't take a lot of market share, they will drive pricing down for these services. While I didn't expect this to happen for some time, AT&T's deal with Cotendo will speed this up due to AT&T not taking the strategy of not having to build everything in-house. Partnering with a specialist like Cotendo, who's already been out in the market for eighteen months with these offerings allows AT&T to come to the market really fast.

For AT&T, it appears as if they are becoming a lot more smarter on how they approach the market, the rate at which they roll out services and the mentality that even though they are a telco, they don't have to build everything themselves. This would be a welcomed change in strategy for the company and something they should see some immediate benefits from.

Related Posts:

– A Detailed Look At Akamai's Application Delivery Product – Part 1

– Overview Of Akamai's Application Delivery Customers – Part 2

– CDNs Will Challenge Akamai For Value Add Services: CDNetworks The Latest

– CDN Cotendo Raises $12M, Has 120 Customers For DSA and App Delivery

– Akamai's CDN Business Looks Solid, Threat To Value Add Services Far Off

In June, Microsoft and ESPN announced a deal to bring over 3,500 live events a year to Xbox LIVE gold members via the Xbox 360 console. For the past week I've been testing the offering on my Xbox and overall, it's a pretty nice service. Content includes both live and on-demand videos of college basketball, college football, soccer, MLB, NBA, tennis tournaments and golf majors amongst others.

The videos are the same ones you get from ESPN3.com providing your ISP has cut a licensing deal with ESPN. (Here is a list of all the current ISPs that have a license with ESPN) The quality of both live and on-demand content looks good on a 50" screen and maxes out at 720p. Buffering on my FiOS connection is very quick and live events start within a second. In addition to the live events, ESPN has a ton of on-demand content including shows like SportsCenter.

The ESPN offering is part of a new dashboard upgrade for the Xbox which also includes an improved Netflix streaming app and a lot more
movies and TV shows available for rental via the Zune video channel.

Overall, the quality and selection of the content with ESPN is pretty good. The one thing I like about the offering is that it allows you to get content to your TV that's only available online, without having to use your computer or connect it to your TV. Microsoft isn't giving out the exact date when the new dashboard update with ESPN will launch, but did say it will be available just prior to Kinect being available, which is only about a month away.

I didn't have time to film the new Netflix functionality in the new dashboard, but you can check out a video of it over at Joystiq.

FedEx delivered my Apple TV's bright and early this morning and he's a few shots me unboxing one of the units. Later today I'll have a review up comparing Apple TV to Roku and I'll also be opening up a drawing and giving away an Apple TV to one lucky reader of my blog. If you're interested in a Roku, I'm giving away one of their new XDS units right here.

Today, just about any company involved or associated with streaming movies or TV shows over the Internet seems to have evaluations that we haven't seen in quite a few years. Companies like Netflix, Apple, Akamai and others have share prices that seem to be based more on excitement, rather than basic business fundamentals. While there is nothing wrong with being excited about what's taking place in the market and the growth we are seeing in digital content consumption, many have now set expectations for these companies that simply can't be achieved.

I do a lot of calls with institutional money managers on the buy and sell side and lately, far too many of them are getting all caught up with the idea that online video is going to somehow replace cable, DVDs, or other forms of media. The fact is that today, digital content offerings from the likes of Hulu, Netflix, Apple and Amazon are a compliment to traditional media. There is no doubt that digital is growing, but online video is not replacing cable and streaming movies are not replacing DVDs today, or any time soon. Seismic shifts like that don't happen overnight or over a few years but rather usually over a long period of time, measured by a decade or more. To put it in perspective, Netflix has only been streaming for three years and while they have been the hands down leader, DVDs and cable TV are still around in volume.

When you look at the kind of money Netflix is spending to license content for digital, there is no way to run the numbers to show that Netflix can possibly sign up enough new subscribers over the next five years to cover their $1B licensing deal with EPIX. Yet in the past six months Netflix's stock has gone from $74 to $165 a share simply due to excitement. Financial analysts seem to be asking more about the rate of growth rather than how these services work, what the quality looks like, what devices they work on and what the business model looks like. I am amazed at how many financial analyst pieces I read where the author talks about a particular streaming service yet admits they have never used it. How can they possibly have tens of millions of dollars tied up in a company yet haven't spent $99 to buy a box and actually use the service for themselves?

I see a lot of investors making decisions based on three to five year projections of the size or growth of the industry while ignoring the reality in today's market. I keep hearing about devices, yet 95% of the time when I ask someone on Wall Street how many Roku's, TiVo's or broadband enabled TVs have been sold, they have no clue. How is that possible? How can you track or invest companies in this space who's sole growth is dependent on these devices yet not know how many have been sold, how they work or what the service looks like?

The last thing we need is another
bubble, yet I'm afraid that what we currently have. I keep hearing or
reading things that imply that the ad dollars from TV are flowing to
online. Online video advertising is absolutely growing, but lets keep things in
perspective. Last yet
the online video advertising market was around $500M, the broadcast TV
ad market was $60B. One is not putting the other out of business. And while digital video consumption is growing, it's not growing as fast as some may think. NPD just released numbers stating that 75% of all U.S. consumers did not
stream or download any multimedia content of any kind in the past three
months. That's the kind of data we need more of in the market to keep things in perspective.

Now I'm sure some are going to comment that I'm always negative or I
always have to try and ruin someone's high but the fact is that setting
the proper expectations is crucial in the long term
success and growth of any industry which is all I care about. I'm not in this for the short-term and I don't play stocks. I've been in this industry for
fifteen years and I want to be in it for another fifteen more. But in order for
that to happen, the market needs to evolve into services that can
become profitable and sustainable on real profits, not hype or future projections. Just take a look at how many companies in this space
are actually profitable today. Very, very few. To help them get there we
need sensible, rational thinking with expectations they can meet. Not
evaluations based on wild projections and statements about one service
killing off and replacing another.

I hate to say it, but the current bubble we are in is not going to be able to last much longer. Some of these companies are going to have to get knocked down and many on Wall Street are going to have to come back to reality. We need more folks looking at the core fundamentals of what companies have to offer as opposed to that day trader mentality which is simply trying to figure out if a stock will go up or down the next day.

Disclaimer: I have never bought, sold or traded a single share of stock in any public company ever.

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Last week Roku announced new boxes and after using the Roku XDS for a week, outside of a gaming console, Roku is still my favorite box in the market for video streaming and will soon have support for Hulu Plus. I've bought a top-of-the-line model, the Roku XDS and will be giving it away to one lucky reader of my blog. To enter the drawing, all you have to do is leave one comment on this
post and make sure you submit the comment with a valid email address. The drawing is open to anyone with a mailing address in the U.S. or Canada and the winner will be selected at random on October 11th. Good luck!