This morning, Akamai announced what they are calling the "Akamai HD Network", and will, as expected, now be able to support Flash via a new HTTP based video platform. While Akamai also mentions Silverlight technology and the iPhone platform in the release, delivering that content via HTTP is something they were previously able to do.

While there is a live webcast today at 1pm ET to showcase the new offering, if Akamai does not lower their pricing for this new platform, it won't do anything to help their business grow. Watching video in HD quality is nice, but most content owners are not putting their content in HD today due to the added cost, not because of any technology limitation. The problem is cost, not scale, distribution or the CDNs not being able to support it.

Lets say a content owner is spending $5k a month right now to deliver their content in non-HD quality, encoding their content at around 500Kbps. Now they want to go to HD quality and have to start encoding their content at 1500Kbps. Overnight, the content owner has just tripled their bandwidth bill, without doing any additional traffic. While some might say that tripling the number of bits being delivered would get the customer a lower price per GB delivered due to more volume, for a $5k a month customer they might see a savings of 10-15% at most. Yet that's not going to make up for the 300% increase they just saw in their monthly bill.

Akamai knows this will be the number one question of content owners, yet there is no mention of it at all in the release. Instead we've got lots of marketing hype like "first platform to deliver HD video online to viewers using Adobe Flash technology, Microsoft Silverlight, and to the iPhone, at broadcast-level audience scale." Really? Defined how? Both Limelight and Level 3 support this, in fact, Level 3 has been supporting HTTP based Flash video delivery via a plugin their wrote for their caching network that ties into FMS 3.5 for some time now. They have been doing this before Akamai. So if Akamai is saying they are the "first" to have this, that's just not accurate. Now they may be saying they are first to have this at "broadcast-level audience scale", but don't define what that means.

The release then says they have the "only solution" and that they have a "first-of-its-kind streaming platform" that "enables content providers to deliver more HD content than previously possible." More marketing buzz words with no definition. And based on Akamai's release, I'm confused as to how they are comparing the experience. Early in the release they say the solution supports an "online experience that matches and complements HD television, " but later in the release Paul Sagan's quote says, "HDTV-like experience". Well what is is? Does it match HD television or not? Honestly, it does not matter. That's all marketing non-sense.

What will be interesting to find out is just how much Akamai is moving away from using Adobe FMS 3.5 servers. While Akamai may have done something like Level 3 did, coming up with a way to deliver Flash video via HTTP in conjunction with FMS 3.5, they also might have totally abandoned Adobe servers for the vast majority of this solution, which would not be good news for Adobe. While Adobe has a quote in the release, it's very generic since today, the Adobe server does not support HTTP streaming. Adobe's own server platform is basically getting passed over by CDNs who are developing and deploying their own technology to make up for what FMS is lacking, which is not a good thing for Adobe.

Whenever I read a release of any new product offering in the market, I try to think of it like a customer would. The release should tell me why I need the offering, what the value is, how it impacts my business and what it's going to cost me. While most releases don't include pricing, I'm willing to bet that during Akamai's 1pm webcast, they won't give out any pricing details at all on the new service. And with customers already knowing that Akamai's CDN is expensive, without them getting out in front of the pricing question, this release will mostly fall on deaf ears.

After speaking to various folks in the industry this morning, it appears that Akamai's announcement tomorrow could be the unveiling of a new HTTP based Flash delivery platform. While I don't know all of the details, there are a bunch of implications this could have on Akamai depending on how they plan to offer the service. Even if this is not announced tomorrow, it's very clear that Akamai has been working on deploying this new platform internally and will offer the service before too long.

Akamai's move to the HTTP protocol to deliver Flash video makes a lot of sense since today, the 3.5 version of Adobe's Flash Media Server does not support HTTP streaming and still has some instability, something many of the CDNs have complained about. This is something that's widely known amongst the CDNs and only a few weeks ago, Level 3 discussed the benefits they saw in deploying HTTP based streaming platforms over proprietary ones. While Adobe has not yet announced it, we do know that come next year, Adobe will have support for HTTP based streaming with their Flash Media Server.

For Akamai, deploying such a service makes a lot of sense since they can leverage all of their entire HTTP infrastructure and provide a better customer experience using standard protocols. While some might suggest this move will also allow Akamai to reduce their internal costs, since they would not have to pay Adobe a FMS license fee, that cost savings would be nominal to start. Within the past few quarters, Adobe has already been working very aggressively with many of the CDNs to reduce their FMS license fees. And with Akamai delivering more Flash video than any other CDN, clearly they already have very good licensing terms with Adobe. So while Akamai may see some internal cost savings, it won't be anytime soon and would not be drastic.

Over time, it could have a much bigger impact on Akamai's P&L since they could spend less on hardware and servers and leverage more of their already built HTTP infrastructure. When it comes to having to add more capacity and scalability, Akamai would be able to spend less to do so. As for how much less, there's no way for me to know, but it could be a significant amount for the company over the span of multiple quarters.

But the real positive impact this could have on Akamai is if they decide to lower their pricing in the market, based on them reducing their internal costs. If they don't change their pricing model, then this new platform, if announced tomorrow, won't have that much of an impact on their numbers and won't help them close new business. Yes, it will be easier for them to support, will enable them to leverage a larger portion of their network infrastructure and should help them reduce some of their costs over time. But that's nothing like the impact it would have if they came to the market with a lower priced service. They have to do something to jumpstart their M&E business again and this new service would be a great marketing message for them to rally behind.

The other important thing to remember is that without lowering their pricing, a new Akamai based HTTP platform really has no impact on the customer. Most customers don't know and don't care whether their video is being delivered via HTTP or RTMP. And since most of the other CDNs already charge the same price to deliver Flash streaming or Silverlight streaming, most content owners already pay the same price for both. While a HTTP based Flash platform is a big deal for Akamai internally, unless they find a way to make the value relevant to customers, most of them could care less. So the company has to be able to show the content owner a lower price, a much better level of quality that can be measured or some other value add to where customers are going to demand HTTP based delivery. Without that, this announcement is only relevant to Akamai internally, Adobe and folks within the online video industry who cover infrastructure.

I'm guessing there will be more to the announcement and I'm sure there are details I don't know. But whether or not such an offering by Akamai is going to be seen as a value to the customer is really all that matters. The bottom line anyone should care about is how does the announcement help content owners, what's the value and how will it help Akamai grow their CDN business.

Last Friday, Akamai announced via an email to members of the media that the company will "Announce a New Strategic Company Direction for Video Delivery", via a live webcast on Tuesday. Over the weekend, I got a lot of calls and inquiries asking me for more details on the announcement. While I don't know what Akamai plans to announce, a lot of industry folks are speculating that the new Akamai offering would be something around P2P-assisted delivery, but I have no evidence to show that's accurate. Guess we'll have to wait until Tuesday to find out and I'll blog the details of the announcement as soon as they come out.

It's been seven months since CDNetworks acquired Panther Express and in that time, we've not heard anything from the company on how the integration is going, what their bigger plans are for the U.S. market and how all the recent management changes will affect the direction of the company. So last week, John Milburn, President of CDNetworks International, spend some time with me to answer my questions about their business and gave me an update on their balance sheet, projected revenue and their plans to take the company private.

While CDNetworks was starting to get some traction in the U.S. last year, over the past few quarters, the company has been pretty quiet and I've seen them lose some momentum as the look to continue to try and expand from their home base in Asia into the U.S. market. John explained that one of the major things that CDNetworks has working on over the past few quarters is finalizing their management structure with new hires and promotions. The company has hired a new VP of sales, Cameron Lorentz, hired a new VP of marketing, Jim Campbell, promoted Ian Van Hoven to VP of operations and named current board member John Milburn as the president of CDNetworks International, which includes operations in the Americas as well as Europe/Middle East/Africa (EMEA).

John said that the efforts in the U.S. are still a relatively recent development for the company even though they started to crack the U.S. market with a fairly low-level entry about three years ago. He said the recent Panther acquisition was an indication that the company was going to put a new focus on business in the U.S. and that their goal is to become a significant player in the U.S. market. John said that the real value they saw from the Panther acquisition was the self provision and caching platform as well as their mentality on how they built out their infrastructure. John admitted that Panther had some execution issues and said that part of the reason CDNetworks has been quiet in the market since announcing the acquisition was to "clean up" some of those problems, problems that were widely known by anyone who covers the CDN market.

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Today, at 2pm ET I’ll be hosting a free webinar over at TelephonyOnline.com on the topic of “How CDN Services Are Evolving“. I’ll be covering some of the latest trends in the CDN market and reviewing the role carriers and telcos might possibly play in the future. You can register for this free webinar here and I’ll be taking questions at the end of the webinar. You can also send me questions via email in advance if you like.

Some CDNs don't want to admit it, but today, delivering video bits over the Internet is commoditized. While the performance and scale that comes with delivery is not commoditized across the board, Akamai, Limelight and Level 3 all have very similar performance when it comes to delivering video. Of course, they would probably all disagree with that statement, but the simply fact that so many content owners use two out of the three of them, to deliver the same content, proves the point.

Not to mention, when was the last time you saw any of those three CDNs put out any release talking to increased performance of their network? Their releases have been about adding new functionality, moving up the stack, ecosystem solutions, value add services and the like. Not performance. The fact is, the performance of Akamai, Limelight and Level 3 are considered by most to be very identical to one another for video delivery. This notion is only reinforced by the fact that all three of them are at the top of the list in the market in terms of CDN revenue.

While some CDNs may be able to show customers slight performance or network coverage differences between one another, for the most part, customers are not willing to pay a premium for that difference with regards to video delivery. In the app delivery, commerce and ad delivery business, fractions of a second can and do impact the customer's business. But when it comes to delivering video, having a video start up on one CDN two tenths of a second faster than another CDN has no real impact on the customer's business. So why should any CDN think the customer is going to be willing to pay a premium for that service? Some may, but most won't when the performance difference between the networks are so similar, not to mention, very difficult to measure. Of course, if one network is starting streaming seconds faster than another, that's a different story, but today, that's not the norm between Akamai, Limelight and Level 3.

Neither myself nor the vendors dictate anything in the market, rather, customers decide what they will and will not pay for and what the value is worth to them. While CDN vendors and others in the industry may not like this, it's reality. In general, CDNs have been very good over the past year to work on adding value added services and continue to try and solve many pieces of the video ecosystem. While they are moving in the right direction, they need to once again look at the commoditized video delivery piece and how they charge for it. Most CDNs don't distinguish between what is commoditized and what isn't and they need to start offering different tiered performance and pricing services to the market. This is not an option for them, but rather something that they will be forced to do and should start to embrace it now. This is where the industry is moving and what customers are starting to demand in the market. The smart move by CDNs would be to get in front of it now.

Many times I have customers tell me that they are willing to pay less to have good performance, but not the best performance known to mankind. Other times, customers say they don't need any reporting, self provisioning tools or other ecosystem pieces and as a result, should not have to pay a high per GB price to help the CDNs build out a platform they are not using. Other times, content owners will tell me that the vast majority of their traffic is passed over the CDNs during off peak hours and wonder why they aren't getting a lower rate. 

In all of these instances, customers are looking for a tiered pricing plan based on different levels of performance. Like it or not, before too long, CDNs are gong to be forced to offer tiered performance pricing. While some may say we already have this in the market today, we don't. Don't be confused by tiered pricing which simply changes based on the different level of bits you push, but not at a different rate based upon varying performance.

While I have not heard many CDNs talk about this type of model, I do know that some are already thinking about it and viewing it as something they know they will have to adopt, sooner rather than later. It's also possible that services like HTTP streaming will help drive different performance and pricing plans to the market sooner and that one day, there will be a valid reason to charge more or less for delivery, based on the protocol that's being used. Before long, I see a big shift coming in the CDN market regarding the way customers want to buy these services and the way CDNs are selling them. That's a disconnect that the CDN vendors can't bear to have. Before too long, the CDNs are going to have to change and adapt to market conditions based on what customers are demanding and I think this change is coming a lot sooner than most CDNs may realize.

This morning, Brightcove announced that they are now supporting Flash Media Server 3.5 functionality via Limelight Networks. While on the surface this may look like a basic release, you need to read between the lines on this one. For quite some time now Limelight and Brightcove have been working closely to sell into Akamai accounts as a team, and to date, have done a very good job pitching their combined solution.

While Brightcove is a neutral platform provider and will work with any CDN that the content owners uses, clearly Brightcove's preference is to use Limelight. The two companies have been working closely together for a few years now and this is the first time we've seen Brightcove go on record to announce how many customers they have running on Limelight's network (more than 700). The two companies are also working on some new functionality that has yet to be announced that will only further integrate the Brightcove platform with Limelight's delivery network. (will have more details on that later in the week)

Today's announcement gives Brightcove customers some new functionality within FMS 3.5 including RTMPE support which prevents playback in unauthorized players, DVR like controls and multibitrate support. For customers who want to take advantage of multibitrate support, they can do so immediately and in most cases, don't need to re-encode their content. When Brightcove 3 launched last year, Brightcove introduced their own dynamic delivery capability and gave their customers the ability to encode multiple renditions; four was the default, but customers could add more if they wanted. Their platform already provided an algorithm for bandwidth detection and switching between renditions to optimize the video quality. Brightcove has now introduced a new default in their encoding system that creates six renditions and customers can configure the encoding settings to add more than six renditions if they like.

With the new FMS 3.5 roll out, Brightcove customers will be able to take advantage of the enhanced rendition switching algorithm, which will work with customers' existing four renditions or new six renditions. In a conversation with Brightcove on Friday, they mentioned that they see more content owners shifting to H.264 encoding over VP6 and that trend is "definitely on the rise". We also had a discussion about the different video platforms on the market and when asked, Brightcove said that right now, they have no plans to add Microsoft's Silverlight platform anytime soon. Brightcove said that until customers start asking for the Silverlight platform, they don't have any plans to support it.

Related:

– Brightcove CEO Says Company Profitable and Cash Flow Positive