Yesterday, ESPN announced that when ESPN360.com relaunches on April 4th as ESPN3, Major League Baseball Advanced Media (MLBAM) will take over all of the technical support and infrastructure requirements for the new site. EPSN3 plans to broadcast more than 3,500 games this year and will now rely on MLBAM to handle all of the video workflow using the same platform used for MLB.TV.

In a call yesterday with John Kosner, SVP of ESPN Digital Media, John said the deal with MLBAM is a straight services contract with no sharing of ad revenue of any kind. For ESPN, this ends their reliance on technology from Move Networks and now gives them access to all of the functionality that MLB.TV has in their video player. This is a smart deal for both companies as ESPN goes from having to use multiple vendors to stream their events to one provider that handles everything and as a result, John said ESPN’s costs will go down. In addition, users will no longer be required to have to download a Move Networks plugin and can now rely on Adobe’s Flash platform. And for anyone who has used MLB.TV, they know that MLB has some of the best quality video and technology hands down.

This isn’t the first time the two companies have worked together and John pointed out that ESPN and MLBAM have worked on projects with one another over the past seven years. It’s also a good example of two companies that some say compete with one another, actually working with one another.

ESPN3 is only available to consumers if their ISP has licensed access to it from ESPN and John said ESPN3 will reach 50M households in the U.S. this year. While I asked if ESPN plans to offer any kind of subscription based service for consumers who ISP hasn’t licensed the platform, John says ESPN has no plans to do so.

Another interesting aspect here is that many of the pro sports leagues now seem to be moving to the same video platform, that being Flash. MLB.TV use to use Silverlight and moved to Flash some time again. ESPN is now moving from Move Networks to Flash, the NBA already uses Flash and I hear rumors that the NFL will be moving away from Move Networks this year and over to Flash. I’ve asked the NFL for an official comment on this and will update the post if they give me one.

This morning, SaaS based webcasting platform provider IVT announced the appointment of Jim McGovern as the company's new CEO. Jim replaces Greg Pulier who was acting as the interim CEO after former CEO Phillip Whalen stepped down last year. Jim was most recently the CEO of itzbig, an interactive job board and he spent six years as CEO of Marketwire. Last month IVT also announced they had a raised a B round of funding in the amount of $5.5M.

When Walmart announced it had acquired VUDU, quite a few discussions were taking place on the web suggesting that Walmart would now need to setup a data center to be able to handle the delivery of videos or that Walmart wasn’t going to want to support VUDU’s P2P based technology. Since neither of those assumptions are accurate, I thought it might be helpful to detail what video technology VUDU is using and how they encode and deliver content to devices.

For anyone like myself that has an original VUDU device, videos are still delivered using P2P technology that is enabled by the fact that the devices have built in storage. But starting last year, VUDU decided to get out of the hardware business and has been working to get their VUDU platform embedded into as many third party devices as possible and now has deals with LG, Mitsubishi, Samsung, SANYO, Sharp, Toshiba and VIZIO. For these broadband enabled devices, VUDUs P2P technology is not being used since most of those hardware models have no internal storage. That might change over time if SD memory or hard drives get included in TVs and Blu-ray players, but for now, VUDU can’t use their P2P technology for the delivery of videos.

Today, VUDU uses both Limelight and Akamai to deliver their videos to third party devices and encodes all of their content in H.264 for SD, HD and VUDU’s proprietary HDX quality. For each quality classification, VUDU is doing multiple encodes which takes advantage of their own in-house adaptive streaming technology for the delivery. SD quality videos are encoded at 1Mbps, 1.5Mbps and 2Mbps. 720p HD content is encoded at 2.25Mbps, 3.75mbps and 4.5Mbps. 1080p HDX videos are encoded at 4.5Mbps, 6.75Mbps and 9Mbps. While VUDU encodes using the H.264 standard, they spend a lot of time to optimize their videos by using an open-source video encoding platform that they have made a lot of modifications to. This is one of the reasons why people who use VUDU, including myself, think they have the best looking videos today. To me, VUDU’s 1.5Mbps stream looks much better quality wise, than Netflix’s 1.5Mbps stream and has some of the fastest start times I have seen, outside of 1080p streaming on the Xbox 360.

In addition to VUDU streaming all of their media, they also are the only one that I know of that streams their entire UI. Since their UI is not inside a web browser, the VUDU application actually sits in the cloud and as a result, their architecture enables them to update their application very quickly. This is very different when compared to devices with embedded software that requires a lot of effort to manage. When your app sits in the cloud, your not writing software and instead, are simply authoring just like you would if you were updating a website. This is one of the reasons how VUDU is able to integrate with Rotten Tomatoes, Wikipedia and last week launched support for Twitter and Facebook.

Some folks have said that with VUDU being forced to abandon their P2P platform, and given the bandwidth required to distribute their premium HDX movies, VUDU’s cost structure drastically changes for the worse. Some have implied that this will force Walmart into making a big infrastructure investment to support the distribution of videos, but that’s not accurate. Since VUDU already uses third party CDNs, they don’t need to make any kind of large investment into VUDU’s delivery capabilities. And while VUDU created their P2P technology years ago to circumvent the high price of delivery, today, the price of delivering movies has drastically fallen from years ago with the average movie now only costing a few cents to deliver.

As a user of VUDU and just about every other movie service available today, I’ve always felt that the VUDU platform and quality were very good, with a great user-experience. While VUDU would have already been dead if they had not changed their business model last year and gotten out of the hardware business, getting acquired by Walmart certainly breathes new life into the company. But I’m still skeptical that Walmart is going to know what to do with the business and will give VUDU the resources they need to be successful in the market. While I could be wrong, Walmart just doesn’t have a good track record of understanding the digital media landscape.

Eight months ago I wrote a post entitled “Ten Years Later, Blockbuster Still Lacks A Digital Media Strategy” where I outlined some of the ways that Blockbuster has faltered with their strategy for the digital distribution of movies. After the post, I heard from some angry shareholders who wanted to argue with me about how the company would turn it around and I received a call from Blockbuster directly who wanted to brief me on their digital media strategy.

While it was great to hear directly from the company on what digital initiatives they were working on and their pitch to me on why things would get better for the company, I’m afraid that eight months later, things have only gotten worse. While I don’t doubt that some of the folks working on the digital media strategy at Blockbuster get it, if you just look at some of the things Blockbuster’s CEO said last week on their earnings call, you can clearly see that the company simply doesn’t have the right culture to be successful with digital.

When asked different questions about Blockbuster’s digital strategy, CEO Jim Keyes responded by saying things like, “these times demand a conservative approach,” and that the company “will proceed cautiously as to how aggressive the company should be.” For a company that has almost no digital offering today, those are some pretty scary statements. The last thing Blockbuster can afford to do is stay at the same slow pace for a digital offering roll-out that they are at now. For all the talk of what Blockbuster is actively working on, I still don’t think they have a single successful deal involving digital they can talk about today. Of course, some will say that they have already signed deals to get their platform on to TVs and mobile phones, but so far, those deals are meaningless.

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While many content delivery vendors continue to add new services tied into the video ecosystem, CDN vendors as a whole have been very slow to diversify their product portfolio outside of delivering video, software and small objects. For a long time, Akamai has been the only game in town for services tied to commerce and application acceleration and has dominated the market with very robust offerings. 

Today, Akamai still has the vast share of the market for services outside of CDN that Akamai classifies as "value added services," of which application acceleration is one of those offerings. But over time, Akamai is going to start to see some competition for these services because the other CDNs know that services like application acceleration have very high margins, aren't being sold purely on price and will enable CDNs to diversify their revenue away from video.

Last year, Limelight launched some new services aimed at the enterprise, government and commerce sectors, for which they now have more than 200 customers, and a new startup called Cotendo launched in the market specifically focusing on application acceleration. And next week, CDNetworks plans to launch a new application acceleration offering, which over time, will also start to compete with Akamai for some of their business. While I am not suggesting that these offerings by Cotendo, Limelight and CDNetworks will grab Akamai's market share overnight, clearly we are starting to see a trend by CDNs who want to do more than just deliver large objects and video streaming.

There is no question that today, Akamai's services still have a lot of functionality that the others don't yet have, like being PCI compliant. But over time, services by Akamai's competitors will come up to speed and Akamai will have a couple companies competing with them for a portion of their value add services based business. While it is too early to predict what percentage of Akamai's market share these companies can compete for and how quickly they can ramp up their platforms to be on par with Akamai, it's something to keep a close eye on over the next twelve months.

Make no mistake that multiple CDNs now have their sights set on Akamai's high margin value ad services business and plan to make it more of a challenge for Akamai to dominate the market like they have for so many years. While I've always been mainly focused on video, over the next few months I'll be diving a lot deeper into the application acceleration topic on my blog and reviewing some of the features and functionality that these platforms have to offer. The last time I visited Akamai's HQ in 2008 I wrote up two detailed posts on their application delivery service which you can read more about at "A Detailed Look At Akamai's Application Delivery Product – Part 1" and "Overview Of Akamai's Application Delivery Customers – Part 2."

This morning, SaaS based transcoding provider mPOINT announced a re-launch and re-branding of the company which is now called Panvidea. Originally founded in late 2007, the company has been pretty quiet in the space and hasn't done much talking about their solution or given out many details on the company. With today's re-launch, the company now plans to start marketing their services and has also announced some new clients including A&E Television Networks, Fox Broadcasting Company, and Getty Images.

In a conversation with the company yesterday, they said they have about 15 customers and continue to sign up new ones each month. While their website does not list their pricing like most of the other SaaS based transcoding services do, the company says their pricing is much more affordable as they only charge customers for the content that's encoded and don't charge anything for the ingestion and upload of content to their system. By contrast, most other providers charge content owners based on the size of the file that is upload and the size of the file that results from the encoding.

To date, the company has raised "several million dollars" via seed funding and a Series A round and is expected to announce shortly a new round of funding that will give them enough money to operate and grow the business over the next twelve months. The company has about 25 employees, mostly in the U.S. but also with a development team based in Argentina. Panvidea has teamed up with other vendors in the video ecosystem who resell or white label their service including EdgeCast, IBM, Aspera, Brightcove, Akamai, Highwinds and others who to date, have provided most of the revenue for the company. Moving forward the company expects that direct sales will account for 50% of their revenue with the rest still coming from their channel.

The market for SaaS based transcoding services continues to heat up and while there area bunch of vendors in the industry including Panvidea, HD Cloud, Ankoder, Hey!Watch and uEncode amongst others, except for Encoding.com, most of them are still in beta, just launching or have not reached any real scale as of yet. But the market is still early and we'll have to keep an eye on how these companies grow over the next 12-18 months.

Updated March 18th: Panvidea has announced their series A funding in the amount of $2M.

Back in October, Adobe announced that sometime in 2010 they would provide support for HTTP streaming enabling CDNs to leverage their existing HTTP infrastructure and cache technologies for video delivery. The platform, called “project Zeri”, will provide support for all Flash Codecs, support adaptive bit‐rate switching, support live and on-demand delivery, enable the protection of content and will include full support within the Open Source Media Framework, to help provide a standard player. Kevin Towes from Adobe detailed all of this in a post on the Adobe blog six months ago.

In that time, Adobe has been working with some of the CDNs who have already deployed the technology and they have been working with beta customers to test the platform. Sometime next month, Adobe is expected to officially announce that the technology is now available with CDNs and will also announce content owners who are using the new service.

While this is good news for the industry and for content owners, the real question is how much cheaper is it for a CDN to deliver video via HTTP as opposed to RTMP? If HTTP based Flash streaming really does reduce the internal cost to a CDN, will CDNs pass that savings onto the customer in the form of  lower pricing? While it is possible, I have yet to see any CDN offer lower pricing for video content being delivered via HTTP using Microsoft’s HTTP technology called SmoothStreaming. But the cost to CDNs to deliver content using Microsoft’s technology was never that expensive because unlike Adobe, Microsoft does not charge a license fee for the streaming software or take any kind of revenue share payment.

Right off the bat, I don’t expect any of the CDNs to lower their price, but over time, it is something to keep a close eye on due to the fact that video delivered via HTTP is cheaper for them to manage and distribute And if the CDNs can reduce their internal cost with delivering video, even if they don’t lower the price to customers, the positive impact could be that it helps the CDNs become profitable, something that almost all of them are still struggling with. While Adobe has discussed the pricing model with CDNs for HTTP streaming, from the folks I have spoken with I get the sense that the exact pricing still has not been worked out. So it does sound like from Adobe’s side, the exact numbers are still up in the air.

Adobe has really been behind Microsoft when it comes to the functionality, capability, scalability and pricing model of their streaming server and has been slow to adopt and support HTTP based streaming. This has led some CDNs like Akamai to not wait for Adobe to support HTTP and forced them to develop and deploy their own HTTP based Flash streaming technology, which they announced in September of last year. And while I’ve heard that this has made Adobe quite un-happy, CDNs can’t always rely on third party companies for services they need today.

There are some other interesting details regarding this subject which I will give more details on when Adobe makes the official announcement.