Last week, rumors started circulating that Swarmcast was going out of business and had laid off all of their employees. While the company is not out of business yet, they did make some major layoffs and have changed their focus. I had a call with Christian Wilhelm over the weekend who is the chairman of the company and now runs their day-to-day operations. Christian said that at the end of December, more than 50% of the employees were let go and that about ten people still remain with the company, mostly engineers who work remotely. In addition, all of the executives are now gone, including the founder Justin Chapweske who left over a year ago, although some of the execs are still consulting to the company on a limited basis.

For anyone who followed Swarmcast, they are probably not surprised by the news. Swarmcast has been in the market since around 2002 trying to license their technology platform to enable content owners to do multi-source streaming using standard HTTP delivery. Their most well known client is MLB which has been using Swarmcast’s technology with their NexDef plugin which in 2009, allowed viewers to get HD video and features like DVR when using MLB.TV.

While Swarmcast’s Autobahn platform was unique when they launched in the market, today, multi-source HTTP streaming is the norm. Microsoft and Apple now offer this functionality and Adobe will offer support for it as well later this year. Christian said with these changes in the market, Swarmcast could not remain alive unless they changed their business model and simply had to make an “economic decision”. Instead of trying to license their platform to content owners, the company is now going to focus on trying to get their technology embedded within consumer electronic devices.

While the company will no longer have any VP roles like sales, marketing or business development, Christian said the company only needs to sign up 2-3 customers a year to stay in business. He said that Swarmcast signed two CE manufactures this month and that those two customers alone are enough revenue for the company to be profitable. While he would not say who these new customers are, he did say press releases about the deals would be announced within the next two weeks.

While the reduced head count and shift of focus to CE manufactures may allow Swarmcast to survive, I think the company is going to have a really hard time sticking around in the market with such limited resources. To date, MLB has been Swarmcast’s largest customer but last year, MLB experienced problems with their NextDef plugin which they attributed to Swarmcast’s technology. While Swarmcast denied it was a problem on their end when I interviewed them for the story last year, something Christian reinforced in our call, all that matters is whether or not MLB will use the technology for the 2010 season.

If MLB drops support, one would have to wonder if Swarmcast would be able to keep the doors open, even with the reduced headcount. Christian said MLB has a contract to use Swarmcast for the 2010 season and he does not see any reason why they would not use it, but I’ve put in a call to MLB to see if they can talk about the technology they will be using this year. I’ll update the post if they talk about it on record.

Either way, I think Swarmcast’s chances of surviving in the market as a stand-alone company are slim to none. Even if they sign up a few CE manufactures, how well can they really support them with such a small staff, no office, very few resources and no branding, marketing or exposure in the market? While the company was granted two patents for their technology, I believe their IP has simply become outdated in today’s market. I hate to say it, but I think Swarmcast’s days are numbered.

The drawing is now closed. Thanks to the generous folks over at Sorenson, I have two copies of Squeeze 6, which retails for $799, that I can give away on my blog. To enter the drawing, just leave one comment on this post with a valid email address and I'll pick two lucky winners at random on February 8th. A big thanks to Sorenson for letting me give these away on my blog. Winners: Chris K. from NY and JD Hauger from Oregon.

With all the telcos and carriers that continue to enter the CDN business, I keep a running list on my blog that I update a couple of times a year. I also include the companies who I feel are non-pure play CDNs and have also indicated which CDNs have been acquired or shut down and which CDNs the telcos and carriers are partnering with. The list may not be 100% complete, but it’s a good starting point for who’s in the market.

Here’s an updated list of CDNs in the market, broken down between pure-play CDNs versus non pure-play vendors like carriers and telcos. (To make the list easier to find on my blog, all you have to do is go to www.cdnlist.com for the latest update)

Non Pure-Play CDNs

• Alcatel-Lucent (acquired Velocix 7/09)
• AT&T
• Bharti Airtel (partnered with Limelight)
• Bell (working with Limelight)
• Broadmedia
• BT (was supposed to have launched in 2009)
• Deutsche Telekom (partnered with EdgeCast)
• Global Crossing (reselling Limelight and EdgeCast)
• Internap (acquired VitalStream)
• Interoute (acquired Virtue Media Services)
• KPN
• Level 3 (acquired CDN assets of SAVVIS, acquired Servecast)
• NaviSite (reselling EdgeCast)
• NTT Communications
• Pacnet (partnered with Internap)
  
• PCCW
• Reliance Globalcom (partnered with Internap)
• SingTel
• Tata Communications (partnered and invested in BitGravity)
• TeliaSonera
• Telecom Italia Sparkle (reselling CDNetworks)
• Telecom New Zealand (AAPT) (partnered with EdgeCast)
• Telstra (launched Q2 2010)

Pure-Play CDNs

• Accelia
• Abacast
• Advection.net
• Akamai
• Amazon Web Services
• BitGravity
• BitTorrent
• CacheFly
• ChinaCache
• CDNetworks
• Cotendo
  
• Conviva
• Digital Fountain (acquired by Qualcomm 2/09)
• EdgeCast
• EdgeStream
• Grid Networks (merged with GMS 4/09)
• Highwinds
• Itiva
• Limelight Networks
• Mirror Image
• Panther Express (acquired by CDNetworks 2/09)
• PEER1
• Real Broadcast Network
  
• Technicolor
• Velocix (acquired by Alcaltel-Lucent 7/09)
• Voxel.net
• Vusion (went out of business 5/09)

Before anyone starts saying it’s not fair to put all these folks on a list, please read my disclaimer in my last CDN post which explains many of the differences between the CDN vendors in the market.

Over the past two years, more than a dozen telcos and carriers have entered the CDN space, all with the strategy of re-selling or partnering with a pure-play CDN provider like Akamai or Limelight. In that time, Level 3 has been the only company with the strategy of wanting to own and operate their own CDN, laying the groundwork today for what will be a big business in the future. This morning, Asia’s largest telecom provider Bharti Airtel announced they too would enter the CDN space to serve the Indian market via a partnership with Limelight Networks.

With this announcement, more than 20 telcos and carriers have entered the CDN market and I know of other carriers who plan to make similar partner announcements this year. While Wall Street and others want to continue to speculate that telcos and carriers will one day rule the CDN business, thereby forcing pure-play CDNs out of the market, that won’t be happening anytime soon. Yes, carriers who own their own fiber have a distinct advantage over pure-play CDNs who don’t operate their own network, but the delivery of bits is only one of the many pieces required for a real CDN offering. Vendors have to be able to do more than just own their own network and deploy a bunch of boxes. If it was that easy, all of these carriers would have done it already and would not be partnering with pure-play CDNs.

Right now, the CDN market for video is too small for most carriers to spend the money to build and deploy their own network. By my estimates, the entire market size for video delivery services globally was only $500M last year, which while a big number, is small in comparison to the other markets that telcos and carriers are in. Until the market size and opportunity is larger, I don’t expect we’ll see many of these companies who have partnered with pure-play CDNs doing anything on their own and bringing CDN services in-house to their product portfolio.

Yesterday, FOX on Demand, which provides full episodes of 24, Bones, Family Guy, Glee, House, and The Simpsons went live with their new Brightcove powered video player, The site, which used to be powered by Move Networks is the latest FOX property to use Brightcove in a partnership between the companies that dates back to 2007.

While Brightcove had previously been adopted by FOX for over a dozen sites like FX Networks, SPEED and others, this is the first FOX property that I am aware of that is using Brightcove for their long-form ad-supported video content. On other FOX properties, Brightcove is been used with short-form promotional content but not content that FOX was directly monetizing. This is a big deal for Brightcove as the company has said they will be focused in the New Year at trying to get content owners to use their new Brightcove 4 system to generate money for long-form video content.

As for FOX no longer using Move Networks platform, the change is really not surprisingly at all considering that Move is now focusing all of their efforts on the TV Everywhere space. At the same time, FOX was one of Move Networks first major customers, a client they use to always use in marketing collateral and a content partner who generated a lot of consumers to download and install Move's player. I guess none of that is important to them anymore since they have shifted all of their efforts to working with major cable operators.

Yesterday, Intercall, which brands itself as "the world's largest conferencing and collaboration services provider" announced that it had acquired privately held Stream57. The company, founded by Ben Chodor in 2001 and headquartered in NYC, specialized in providing customizable web events with their webcasting platform and provided live event services. Terms of the deal were not disclosed but I will update this post if I get some details.

Related:

– Thomson Reuters Acquires Webcasting Platform Provider Streamlogics

Last month, on December 29th, Akamai was granted a patent (number 7,640,303) relating to a "Method of, and system for, webcasting with just-in-time resource provisioning, automated telephone signal acquisition and streaming, and fully-automated event archival."

Reading over the details of the patent, the focus appears to be on a system that allows for the real-time provisioning of a live meeting and the automated process to be able to handle things like audio signal acquisition, encoding, monitoring, archiving, reporting and billing.

While the patent filing makes reference to prior art and systems that already do this today, the basis for the patent seems to be the claims that all of these other systems have deficiencies, which the Akamai patent supposedly overcomes. Some of these deficiencies include:

• "traditional Internet conferencing casting systems have several
  deficiencies. These applications typically use databases to generate
  reservation information, to initiate events, and to authenticate a host
  or the attendees. The database dependency creates a potential single
  point of failure because if the database is unavailable, events cannot
  be run."

• "a typical application runs the event streams from a single server,
  which again represents a single point of failure and limits
  scalability, i.e., the number of attendees that can attend the
  conference."

• "prior art conference casting systems also do not have the capability to
  archive the event in an automated manner and/or to manage when
  particular streams get interrupted before the event is terminated."

• "the prior art systems require advanced setup for the streams, which
  dictates a blackout period between the time that an event is reserved
  and the occurrence of the event itself. Thus, once an event is
  scheduled, a service provider typically must provision or allocate in
  advance various system and other resources. Such resources include,
  without limitation, media encoders, storage, network connectivity,
  streaming server ports or publishing points, and the like."

• "prior art conference casting systems do not have the capability of
  reserving and then immediately executing the event, with the resulting
  stream being immediately available to an audience member. In prior art
  systems, stream redundancy typically requires special handling and
  raises costs."

What seems broad to me is Akamai's assertion that all other systems reserve physical resources ahead of time. They are implying that no events based webcasting system on the market today can generate a live stream, or provision any audio resources on the fly, or what they call "just-in-time", when requested. The patent also mentions multiple times that the Akamai patent "provides significant flexibility and reduced costs as compared to prior systems", which sounds like marketing speak to me. They also say that, "In addition, the system is able to handle large numbers of simultaneous events and massive total audience sizes." Again, lots of marketing words, but no definition of what "large numbers", "massive" or how many "simultaneous" streams they are talking about.

Clearly this patent is aimed at the business side of webcasting since
typically, those are the events that have registration databases
involved and audio conferencing bridges. Most of your one-off media and
entertainment events, sports and concerts, don't involve that kind of
functionality.

I'm very curious to see if Akamai does anything with this patent and if they try to go out to the market to enforce it in any way. That may not be their intention, or they may view it as something they want to try and enforce, we just don't know. Since Akamai has a company policy of not commenting on anything patent related, I didn't ask them what they plan to do with it.