Another flaw I just noticed with the iPad is that the aspect ratio of the screen does not support 4:3 or 16:9 video. (Updated: It appears the iPad is 4:3, but still the viewing experience will suffer. See this article with images of what movies will look like on the iPad and how much black there will be) Does that mean Apple has to re-encode all of their iTunes library just for the iPad? For folks who are really serious about their video, what kind of impact is that going to have on them? While I don’t think this alone will keep anyone from buying one, it’s just another example of how Apple is hyping this device for video, yet then not thinking about video in the design process.

In a conversation with Bloomberg, Roku's CEO Anthony Wood stated that the company plans to raise $30M in private funding this quarter and wants to take the company public sometime next year. Anthony said he expects the company's revenue to double to $75M in 2010 and that the company will top the 1M units sold to date mark this year. Roku also plans to continue to cut the pricing of their Roku units, which has dropped by 30% since 2008. 

In the interview, Anthony sees the hardware as becoming less important, eventually being given away for free, with the focus really being on "subscription content". Roku has been hard at work looking to bring more content to the device and expects to have over 100 channels available by the end of this year. While Roku's goal is to earn money from subscription fees and advertising, that will only work if there are enough devices out in the market. So while the hardware does become less important over time, unless Roku plans to license their platform to non-Roku devices, the company can't expect to make much money from content and advertising any time soon.

Even with 1M devices on the market, what percentage of those customers are going to use it to get content outside of Netflix? Many will, but my guess is that a lot won't use it for any other purpose aside from Netflix streaming. So even if Roku gets a 50% adoption rate of consumers willing to view some of the other content channels, half a million eyeballs is not enough to make money from when it comes to advertising and you have to split that revenue with partners.

One other interesting note from the Bloomberg article is that Netflix has confirmed that it sold their stake in Roku to Menlo Ventures, one of the original investors in the company. Netflix says they might discuss this in more detail during today's Q4 earnings call and I'd be curious to hear their reasoning. I don't know what prompted them to sell their stake, but I wonder if the fact that new devices like PopBox are coming to the market to compete with Roku makes Netflix have to look more neutral.

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.