Over the past few months, there's been a lot of talk in the industry about HTTP based streaming and how new technologies like Microsoft's Smooth Streaming are going to change the future of video delivery. While most industry insiders want to talk about how technologies like Smooth Streaming enable content delivery networks to scale and delivery video cheaper than using proprietary streaming protocols and servers, to date, no CDN is charging any less for HTTP based streaming.

The big selling point I keep hearing industry people talk about is that since CDNs already have a big footprint of HTTP based servers, they can save money on not having to deploy and manage streaming specific services like FMS and WMS. While this makes sense on paper, the problem I see with the adoption of HTTP based streaming is that none of the CDNs who currently offer it charge any less for HTTP based streaming. While HTTP streaming might be cheaper for them to deploy over time than say RTMP based streaming, if they aren't passing that savings onto the customer, where's the incentive for the content owner to adopt it? Taking away the pricing argument, there are still some great reasons for a content owner to adopt HTTP based streaming, mainly having to do with higher quality, but it seems they don't know what those values are and no one seems to be talking about them.

The other problem with this topic is that industry people automatically assume HTTP streaming is cheaper for CDNs to deploy and manage, yet to date, we have no proof of that. In order to support technologies like Smooth Streaming, CDNs have had to upgrade their networks and get hands on with the technology. They have to deploy it on their network, change the way it ties into their reporting system, since this is now the delivery of chunked files, and become familiar with the service and be prepared to support it. All of that costs the CDNs time and money and until there is a big enough demand for HTTP based streaming, it's not cheaper for any CDN to deliver. Nothing is ever cheaper for a CDN unless it takes into account the economics of scale, something not currently taking place with HTTP based streaming.

Down the road, the opportunity exists for CDNs to better control their internal costs if they can use the same box to delivery any type of content, based on the standard HTTP protocol. But right now, that's not a reality. While we hear a lot of people talking about the incentive for CDNs to move to HTTP based streaming delivery, what's the incentive for the content owner? We see the value for the CDN and one of the corresponding values for the content owner could be that if it costs less for the CDN deliver, they may pass some of that savings onto the customer. But today, that's not happening. And with HTTP based streaming and multi-bitrate encoding, a content owners delivery and storage costs may actually go up, not down. Not to mention, what's the cost to a content owner who has to re-encode their content to support HTTP based streaming?

Since nearly all of the CDNs in the industry already charge one price no matter what format the media is in or what protocol is being used to deliver it, chances are, CDNs won't start discounting HTTP based streaming anytime soon. It's possible that a CDN may start offering HTTP based streaming at a lower cost to make a name for themselves or use it as a marketing pitch, but considering that all CDNs are still trying to become profitable, I don't see that being a tactic of their's anytime soon.

The value in HTTP based streaming and technologies like Smooth Streaming needs to be about something other than cost. I think the industry is setting some really poor expectations with content owners when they have heard that HTTP based streaming is much cheaper to deploy, but then don't get a cheaper price from their CDN when they ask for a quote. Customers I have spoken to are then really confused as to what the value is when it comes to HTTP based streaming services since to date, the industry has only been harping on the lower price argument.

Lower cost is not what the industry should be selling right now, since that's not taking place in the market. Yes, there is an opportunity for content owners to potentially get a lower price in the future if HTTP based streaming takes off and CDNs find a way to pass that savings onto the customer. But until that happens, if it happens, the industry and vendors need to focus on educating content owners on what the value of HTTP based streaming services are today. Not something that may or may not happen down the road.

Added: I forgot to mention that I spoke to both Level 3 and Limelight Networks who said that today, HTTP based streaming is not cheaper for them to deliver.

While there has been a lot of talk about the TV Everywhere trials being rolled out by cable companies (Comcast, Time Warner Cable, Verizon), the sad reality is that none of them have figured out how they are going to pay for the service. While many want to proclaim TV Everywhere offerings as being the future of the cable industry, it's not. No cable company is going to simply give this away and lose tens if not hundreds of millions each year, just so consumers can get cable TV programs on their computer.

No cable company can afford to offer a TV Everywhere product if they aren't recouping their costs to operate it. While Comcast and others have talked about using online video advertising as a way to pay for it, lets be real. Video advertising alone will not pay for the costs associated with a TV Everywhere offering. In the end, cable companies will either raise our cable bill each month to pay for the so called "free" offering, or they will charge an additional fee per month on top of our cable bill. While there is nothing wrong with them offering a new service at an additional price, the majority of consumers won't pay for it.

If there is one thing that consumers have clearly told content owners is that they are not willing to pay for the same piece of content multiple times. I already pay for cable, now I have to pay more each month simply to get that same content to a different device? Consumers won't stand for that. Sure, the cable companies would get some users to pay more each month for the service, but not in the numbers they would need to cover their costs. Just think how much it costs to deliver a 500Kbps video on the internet today and then multiply that cost times six for a TV Everywhere offering that would probably deliver video at around 3Mbps.

In addition, one of the hidden secrets of these TV Everywhere trials is that the more cable executives I speak to, the more of them talk about how not all programming from a station will be available online, even once the offering is out of beta. When we think of TV Everywhere, most of us probably think of being able to turn on a channel on our computer and see the exact same programming we see on TV. Cable execs continue to tell me that popular shows from a station will be made available, but that the offering will not be the same 24 hour channel like you see on your TV. Notice that all of these announcements by the cable companies say consumers will be able to watch "programs", not channels.

If cable companies could keep the price of such offerings really low, say $4.95 a month, then they would have a shot at getting some traction, but even that will be hard to come by. But what I really don't get about this whole TV Everywhere debate, is why consumers would not just buy a Slingbox instead? For a one time cost of about $250, you can get HD quality video to your PC and have the exact same channel experience on your computer, instead of just a limited number of shows via a TV Everywhere offering. Maybe some folks would not want to pay $250 upfront for a Slingbox, but as a consumer who has one, I can say it's well worth it.

I'm sure I'm probably in the minority in the industry since I'm not hyping the TV Everywhere trials and not talking about how it will "revolutionize" the industry like everyone else seems to be. But the one thing I don't those folks in the industry explaining is how such a service will be paid for. If anyone thinks the cable companies will simply do it to retain customers, or be forced to do it to "save their business" then I think they are fooling themselves. If you notice, cable companies are not losing a lot of subscribers and for all the talk of consumers cutting the cable in favor of online video, that's just not reality.

Maybe the cable companies will try different levels of a TV Everywhere offering, say one that is free for SD quality content but charges for HD quality video. Maybe users will be able to download some shows to own and that would pay for the service overall. But the bottom line is that all cable companies will need to cover their costs of a TV Everywhere offering and until such a business model exists that allows them to do that, no adoption or speedy roll out will take place.

Related Post:

– Cable Companies Hyping Over-The-Top Video, But Where's The Business Model?

While we hear a lot about the business of delivering video on the internet and shipping bits from point A to point B, one of the most important pieces of the video ecosystem is one that we don't hear much about: reporting and analytics. These terms tend to be used interchangeably in the industry, but in reality, they are really two completely different products that serve two different purposes. 

Since most content owners outsource their video delivery needs to a content delivery network, it's important for them to understand what the differences are between reporting packages and analytics packages and the importance these systems play in their business. After all, what's the point of spending a lot of time and money to create, capture, manage and deliver content if you don't have any way to measure your success? 

For starters, it's important to understand the differences in reporting and analytics from a feature set perspective, as well what can be expected from a content delivery network. Reporting is something all CDNs offer, although the functionality of the reporting systems tends to vary greatly from one vendor to another. 

Reporting is simply the data that is provided to the customer and gives them a very basic, high-level overview of what is taking place with their content. Most reporting systems give stats on the number of videos consumed, what files are most popular, what video formats are being watched, how many unique streams have been served, and a lot of other basic viewer data. 

All of the CDNs offering delivery services in the market today have this level of reporting, but there are many differences between their offerings. Most CDNs deliver this data in a web-based interface. Some of these interfaces are easier to use than others, and some may also deliver the data a lot more frequently than others. Some reporting systems are more granular and can provide details down to the geographic location of the viewers, while others can't. 

While it sounds like the word analytics could be interchangeable with the term reporting, it shouldn't be. Analytics packages take the raw data from the reporting systems and tell you how viewers are interacting with your content. Analytics tell you about your content business, show you how to monetize your content, tell you what is and is not working, and—when relevant—tie directly into online video advertising. It's great to have the raw data from reporting, but simply knowing how many streams were delivered or how many videos were watched is not enough. Analytics is really where you find out if you are having success with your online video offering. 

You can read the rest of this article from StreamingMedia.com's Think Series, sponsored by Internap, for free here.

I've only been on Twitter
a few months now, but I think it is by far the most over-hyped,
over-rated Internet application I've seen in the past fifteen years.
What a waste. While many Twitter users talk about how it allows for
such "meaningful conversations", that's a complete crock. The service
is down every few days, half my new sign ups each day are links to porn
sites and no business gets accomplished with the service. Not to
mention, why do people that we associate with only in the business
world think we want to know all about their personal lives?

If
this was any other company providing a real business communication
platform like your cell phone, email, or Internet connection, they
would have already gone out of business with all the outages they've
had. Twitter is NOT a real communication platform. The company survives
now purely on hype, with no real business model and can't even provide
a service that is reliable. Some my say I'm not getting out of Twitter
what I should since I'm currently not following anyone. They would be
right, if they mean getting spam, comments about people's love life or
all that other garbage you get each day from following people.

When
I first got on Twitter I was following people and it was a complete
waste of time. But what I think is really sad is that too many people
in the business world already rely on email far too much for
communication and it seems no one knows how to use a phone anymore.
With Twitter, many now think they can use the service as an even
shorter version of email. If anyone thinks that having meaningful
conversations based on 140 character blurbs is the way to get business
done, I think they are fooling themselves. I also tend to notice that
many of the power users on Twitter tend to be the same people who in
person, can't speak well, can't carry on a real conversation and can't
speak intelligibly.

I judge the value of any communication
service by the value it provides. If Twitter went away tomorrow, would
it have any serious impact on being able to get business done? Nope.
While it does have some value for marketing purposes, especially for
brands that want to be able to reach out to consumers, it's not a game
changer, but rather the biggest fad we've ever had in the Internet
space. So why am I on Twitter? I wish I wasn't. But some readers prefer
to use Twitter the same way some folks use Google Reader for RSS feeds. So if people want news that way, I'll deliver it, but I don't think Twitter provides any value.

While I love seeing research about the CDN market, I continue to see research reports about the space that have numbers and statements that make absolutely no sense. Anyone who has read my blog long enough knows that I question all numbers, market data and market sizing. While some might want to think I'm picking on folks when I do this, I'm not. It's nothing personal. I simply believe that people in our industry should be asking harder questions and trying to get to the bottom of what the real size of the market is, instead of just quoting something from a press release without actually thinking about it.

That said, I'm not immune to the scrutiny either. As a Principal Analyst with Frost & Sullivan, I expect people to question the data I present and encourage people to ask questions about any numbers I put out in the market. I believe we all still have a lot to learn about the CDN market, myself included, as well as many other facets of this industry.

No doubt, the CDN market is hot, but I also get the sense that many folks think they have to put out a report on the CDN market just because many others have. I can't remember another time in the industry when so many CDN reports came out in the market so close to one another, all of which cost thousands of dollars each. The two most recent CDN reports that have content I have to disagree with come from In-Stat and Yankee Group.

What I don't understand is how any report can be published with so many names of the vendors in the market spelled wrong or formatted wrong. I know it seems like I am nitpicking, and I've written about this on my blog before but it's important. If you are telling someone to spend three thousand dollars on a report, how can you expect them to think of your company as an expect on the topic when the vendors names are spelled wrong? In the In-Stat report and even the press release, the names of RealNetworks, CDNetworks, Highwinds and Alcatel-Lucent are all formatted wrong.

RealNetworks and CDNetworks are all one word, not two. Highwinds does not have the word "CDN" in the name of their company. If the report is attempting to use the product names from Highwinds network offering, it would be "RollingThunder", not CDN. And Alcatel-Lucent should have a hyphen in their name. Those issues aside, just the press release alone about the In-Stat report doesn't make a lot of sense to me. While I don't have a problem with the projected growth of the market, I question what market they are referencing? Reading the report, I don't see them define what "content delivery network services" are? The press release talks only to video delivery, but the vendors mentioned in the release include non video related companies. So what type of content is included in the $2B by 2011 prediction? Why can't any report define what they classify as CDN, what content it includes and what vertical market it is addressing? The term "CDN" is very generic. Are they talking about video? Small objects? Application delivery? Software downloads? Ecommerce? Or all of the above?

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With Apple having already announced their plans to build its new $1 billion data center in Maiden, North Carolina, folks I have spoken to inside Apple told me that once the new data center is completed, Apple plans to have a more active role in doing their own content delivery.

While this won't be happening anytime soon, since the data center won't even be completed this year, it does indicate that over time, third party CDNs like Akamai and Limelight could very well lose a large portion of Apple's business. While it's way to early to speculate what kind of content Apple will deliver and in what volume, this strategy is nearly identical to what we've seen Microsoft do over the years.

In 2007, third party CDNs delivered more than 95% of Microsoft's traffic. But only three short years later, Microsoft projected that third party CDNs will only account for about 40% of their traffic. While this might scare some investors into thinking that a new trend is taking place, whereby content owners start building their own CDNs for delivery, that's not the case. There are very few companies the size of Apple, Microsoft and Google who can spend hundreds of millions of dollars to build out a CDN with the scale and performance that they need, especially when it comes to video.

It is however something to keep a close eye on as we know that Apple has been a long time customer of Akamai and recently, started using Limelight as well. What we don't know is how much business is potentially at stake with these companies since neither of them will comment on their business with Apple or the size of their deals. But it's also something to keep an eye on for another reason. We keep hearing the CDNs talk about Blu-ray quality streaming and more HD quality video coming online and how it will help fuel the growth of their business. While I agree with them that it will help fuel the growth of the CDN industry, I disagree with them that it will be a catalyst anytime soon.

But what happens if Apple and Microsoft start producing higher quality content, like they will, yet start doing a lot of that delivery of it themselves? What impact will that have on the CDNs? While Microsoft and Apple clearly aren't the only two content creators who can help fuel the growth of the industry with higher quality content, they are two of the largest. It's something to keep an eye on and I expect we'll know a lot more details around this come next year.

Related Posts:

– CDN's Delivered 95% Of Microsoft's Traffic In 07', But Only 40% By Next Year

– What's The Barrier To Entry In The CDN Business? A Few Hundred Million

– Apple Moves To Dual CDN Vendor Strategy: Now Using Limelight With Akamai