Yesterday, Apple released an update to the Safari browser, version 4.0.3 that included stability improvements for webpages that use the HTML 5 video tag. I've downloaded and installed the update and do see a difference when viewing sites that use the HTML 5 video tag. In the past, Safari would often crash or hang for me but all seems good now. Anyone else notice a difference?
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While many of us in the industry have been trying to figure out what exactly Google will do with On2 after the acquisition, we may be getting ahead of ourselves. Some On2 investors have filed separate lawsuits in New York and Delaware looking to block the acquisition, claiming that On2's board essentially agreed not to shop the company around and look for a higher price. Many of On2's investors are already banding together to stop the deal and have launched a website at Vote4On2.com to make their opinions heard.
While Google announced the deal would close in the fourth quarter of this year, they have yet to announced a date for when On2 shareholders will vote on the deal. Google has agreed to acquire On2 for $0.60 a share but the vast majority of On2 shareholders I have spoken to since the announcement think the company is worth a lot more than that and have said they will vote down the deal. With On2 on a run rate to do around $20M in revenue for 2009, Google's offering price of $0.60 a share puts the deal at $106.5M, or roughly five times revenue, which is not a bad multiple. While I don't know if On2 is worth more than Google is offering and am not a shareholder in any public company, from what I can tell, it sounds like Google may have a real fight on their hands from a large percentage of On2 shareholders.
As of April 7th 2009, there were 175,510,794 shares of On2 common stock outstanding and current directors and named executives only owned 6,001,222 shares, or about 3.33% according to a proxy statement. If all of the individual investors who have voted down the deal on Vote4on2.com do in fact own the number of shares they list, as of today they represent 37,716,990 shares or about 20% of the total outstanding shares in the market.
If there is one thing I have learned about many On2 shareholders in the past it's that they are very opinionated, do a good job of talking to one another and sharing info, are very aggressive in trying to get their message across and always seem to be up for a fight. Not something that works very well on a blog, but maybe just exactly the kind of thing needed to block the acquisition by Google or get Google to raise their offer price.
At midnight last night, Roku and MLB publicly announced that baseball fans who have a MLB.TV Premium account can now stream live and on-demand games to the Roku. For those in the Roku developer program, the MLB.TV app showed up a few weeks ago and we've all been eagerly awaiting to try it out. My Roku unit got the upgrade a few hours before it went live (thanks Roku!) and I got to spend a few hours testing out the interface and studying the video quality.
Like everything else on the Roku, the interface is easy to use with the MLB.TV app icon showing up on the home screen alongside Netflix and Amazon. Once you connect your Roku to your MLB.TV account via the computer, you then have the option of picking live games or those on-demand simply be scrolling through the date at the top of the Roku screen. All game match-ups are shown with team logos and when you select a live stream, you have the option of starting the game from the beginning or joining the game live in progress. Just like on the PC, you have the option of selecting the home or away feed and as expected, the same blackout restrictions that apply on the PC apply via the Roku. One thing that doesn't work on the Roku is the audio only stream when you are in a blackout area. For audio only streams, the Roku delivers you a message telling you to access the audio stream via your PC.
As for the video quality, it's really good. On a 50" plasma the quality is impressive and while not clearly as good as the HD broadcast TV signal, that would not be a fair comparison since the Roku stream maxes out at 3Mbps. While I noticed a slight lag at times and very slight pixelation, I would imagine that on a smaller TV, it would look even better. That said, the quality is really very good and I can't see any baseball fan having anything to complain about. The one thing I did notice that is different than watching a movie via Netlfix is that when you fast-forward any on-demand game, you don't get the little screen grabs at the top that shows you where you are in the video. I would imagine that since the screen grabs of a baseball game would look the same no matter what inning the game is in, it would be pretty useless as compared to a movie.
While I've always personally been a fan of MLB's video service, it's something that to date, you've always had to watch on your computer. Being able to move the experience to the TV, which is the whole reason I bought a 50" screen to begin with, really makes the experience that much better. Overall I can't find a single thing wrong with the offering and over time, I imagine the video quality will get even better as MLB continues to encode the games at higher bitrates.
While some have said the Roku box is simply too "dumb" to really be successful, since it can't play games or store content like some of its more expensive competitors, the fact it's still only $99 and does one thing really well is the whole reason why it can succeed.
Related Posts:
– Review: Hands-On With Amazon On The Roku, Close To 300,000 Units Sold
– Roku Adds HD Streaming, SD Upscaling, But Drives Netflix's Costs Up
– Roku To Stream Netflix HD Movies By End Of The Year
– Roku Capable Of HD Streaming, Netflix HD Content Only On Xbox 360 For Now
While the larger CDN vendors targeting the media and entertainment market are still having problems growing their business, over in the enterprise vertical, many vendors involved with the video ecosystem inside the firewall continue to grow. The latest is Ignite Technologies, who last week told me they have now been "profitable for the last few quarters" and are "roughly cash flow break-even". Based on my estimates, Ignite should have revenue of between $11-$15M for 2009. The company has raised a total of $28M to date.
While Ignite and many of the other vendors in the enterprise video sector aren't doing anywhere near the revenue when compared to vendors that target the M&E vertical, the solution and value proposition they are selling is completely different. The growth of enterprise video is not dependent on ad formats, online video ad adoption, content syndication models or whether or not someone is willing to buy content. Video inside the enterprise continues to flourish as it has a very clear and concise value proposition. While the poor economy clearly has an impact on all vendors, in every vertical, companies like Ignite that are laser focused on enterprise video solutions, say that over the past few months, customers have been getting better with their budgets and money is starting to loosen up.
Ignite and many other enterprise video vendors also tell me that they are starting to see more RFPs in the market and continue to close deals that have a higher value. In the past few months, Ignite has closed at least half a dozen deals with companies that are all global multi-billion dollar corporations with very well knows brands. While I can't disclose who those customer wins are just yet, Ignite said many of them will be announced to the media by the end of the year. Ignite now counts roughly 50 enterprise companies as customers and said they now have over a million seats deployed, which is classified as their client being installed on the desktop or a mobile device. While still small, roughly 50 employees, they key here is that many companies like Ignite that are focused and very good at only targeting a specific vertical or ecosystem component, can succeed in the market. Ignite also mentioned that a good portion of their sales comes from a lot of referral and channel partners, an industry wide trend I wrote about a few months back.
While many vendors in the market continue to want to be the biggest or show signs of double digit revenue growth each quarter, many vendors like Ignite and others quietly continue to grow their business is a vertical that rarely gets any recognition. Video inside the enterprise is typically not very sexy, much of the content can be quite boring, but it's content that plays an essential role in the way Fortune 500 companies communicate with their employees, partners and customers.
Compared to many of the vendors selling into the M&E vertical, vendors selling into the enterprise space tend to change their strategy quickly to reflect the ever changing market conditions. A great example of this is when the market got bad and customers were not spending six figures to try out a solution, many vendors started offering SaaS based services that enabled customers to try out the offering without having to spend a lot of money or do a long integration. Vendors in this space tend to be a lot more quick and nimble, partly because of their size, but also because of their mentality. I think a lot of other vendors targeting the M&E space could learn a lesson or two from some of the enterprise video vendors.
Related Posts:
– In These Economic Times, More Video Vendors Relying On The Channel
– The FeedRoom Launches New Website, Back To Focusing On Enterprise Video
– Cisco Launches Network Based Media Processing Platform For Video
– Enterprise Video Market and Vendors Growing Nicely: VBrick Raises $11.9 Million
– Google's New Business Video Offering Not A True Enterprise Product
– Enterprise Video Still Growing: Ecosystem and SaaS The Focus
With Limelight reporting earnings last night, it's now clear that the major players in the CDN space, the vendors that control the vast majority of the market share for video delivery, are all experiencing no growth. Akamai's M&E business was down and Limelight, Internap and Level 3 all reported no revenue growth for their CDN business. And with Q3 typically being a weak quarter for the CDNs and some of them setting guidance that shows no growth over Q2, we may have yet to see the bottom.
While Limelight was very optimistic that they will see growth in the second half of this year and that the CDN market as a whole will pick up, I'm not so sure that industry wide, that's going to happen in the next two quarters. While pricing still took a decline last quarter, I see the bigger impact being that traffic growth with current customer is no where near the levels it once was and many smaller content owners continue to go under. While Akamai and Limelight both talked about the future of HD and higher-quality video, more devices on the market, blu-ray streaming etc. none of that will take place any time soon on any kind of large scale to impact their revenue in the near-term.
I'm constantly asked when is the tipping point and what's the next killer app for video that allows the industry to once again grow at a rapid rate? Devices are great, but they are not enough of them yet to make any real impact on volume overall. That will change, but not in the next two quarters. Higher quality video is coming and we see more of it every day, but again, not enough volume yet by itself to push the industry forward with rapid growth. While I think we'll start to see some growth again next year, I don't think the CDN market really starts to grow again, at the rate we've seen in the past, until 2011. As an industry, we're still waiting on all these devices to penetrate the market along with higher bitrate video, over-the-top services, the broadcast of more live content and better ad integration. I don't see this taking place in earnest by next year. That's not to say they won't be any growth next year in the CDN market, but I'm afraid it's not until 2011 that we really start to see the surge in the space that we saw in 2006.
Clearly, a lot of questions still remain about the current decline in pricing and where that is headed. With that in mind, StreamingMedia.com will be rolling out our annual video CDN pricing survey that we do each year. (entire survey results, including raw data now priced at only $295) Last time we had over 1,000 customers complete the survey and this year, I'm keeping it even shorter and to the point. The questions that will be asked include:
The last time we did this survey, I published a lot of the data for free on my blog here, here, here and here. I'll be doing the same thing again this time and hope to have all the data collected within the next few weeks.
If you think there is a question I'm missing from this list that I should add, you're welcome to make suggestions in the comments section but please note that I'm trying to keep the survey small and keep it focused only on video delivery and pricing.
Special Note: I am having the pricing changed on the 2008 CDN pricing survey from $495 to $295. That change will be reflected on the website shortly and I hope that by make it cheaper, it's now affordable for everyone that wants to have pricing data from 1,000 customers so they can see the trends.
During Internap's second quarter earnings call yesterday, the company announced they would take a write down of $55.6M, with about 90% of that coming from the legacy VitalStream CDN business. Having already taken a write down of approximately $99.7 million for their CDN business back in October of last year, Internap has now written off around $150M of the $217M they paid for VitalStream in February of 07'. With this latest action, Internap has now removed the VitalStream acquisition from their books and is starting from a clean slate, so to speak, in regards to their CDN business.
With the VitalStream acquisition now out of the way, Internap also announced they would realign the company into two divisions, with their CDN services now falling within their IP services and data center services segments. The traditional CDN business will fall under the IP services group and the legacy manages services business from the VitalStream acquisition aligns under the data center business. On paper this makes a lot of sense and I think it gives us a clearer picture of how Internap's CDN offering will fit in with the rest of their business.
While Internap still needs to come to the market with a clear and concise CDN product offering and message on what exactly they offer, and still needs to fill the open vacancy's for their GM of CDN and VP of engineering, it sounds like Internap is now a lot more realistic on where their CDN product aligns with the rest of the company.
On the call CEO Eric Cooney mentioned that Internap is working to launch their "next generation CDN product later this year", which has some investors speculating that Internap is working on some kind of new CDN technology. In a conversation I had with with Internap last night, they explained that the technology they are working to roll out are things like support for Microsoft Silverlight and Smooth Streaming, not some kind of proprietary CDN technology.
Over the past two years, it's been start and stop for Internap's CDN business as they have made so many changes to their management and the focus of the company, that's it's been impossible for their CDN offering to get any traction or have any focus. With management changes now hopefully completed, the VitalStream acquisition off the books and the company realigned, hopefully Internap is now at a point where they can move forward once and for all with a very focused CDN offering. Only time will tell.
Following up on my earlier post today entitled "Google's Acquisition Of On2 Not A Big Deal, Here's Why", here's some more thoughts on the subject. While clearly no one, including me, truly knows what Google plans to do with On2, a lot of potential scenarios being discussed on the web revolve around facts that just aren't accurate. I'm all for having a discussion on what Google may or may not do with the On2 assets, but a lot of folks are using bad info to come up with their logic behind what Google may or may not do. Here are some of the "myths" I keep hearing or reading about:
As for the issue surrounding the quality of VP8, we don't know how good the codec is. I have been getting a lot of calls and questions asking me why I think the quality of VP8 is not as good as H.264. I never said the quality was not as good, I said, "Everyone is assuming the quality is better than H.264, but is it?" It may be, but the point is, we don't know. I have spoken to two content owners who were using VP8 under beta and told me there were not impressed. On2 announced VP8 back on September 13th of 2008 and nearly a year later, where is the adoption? Not to mention, the subtitle of the On2 release says "On2 video delivers over 50% bandwidth savings compared to leading H.264 implementations." That may be, but where is the data to prove it?
For nearly the past year, StreamingMedia.com has made multiple requests to On2 to let us get hands on with VP8 so we can compare it for ourselves, just as we did in 2006, when Jan Ozer produced a 100 page report comparing all of the Flash video codecs. To date, we've not been given anything to test with VP8 and it's worth noting that the H.264 sample clips that On2 uses on their website and at tradeshows as comparison to VP8, are not optimized H.264 videos, so the comparison is not fair.
Is VP8 really better than H.264 from a quality perspective? It may or may not be. The point is, let the industry get hands on with it and test it themselves. I'm sure many will say it must be better if Google is willing to acquire On2, but keep in mind we are all speculating that they even want to compete with H.264, which may not be the case. No on seems to be thinking about the potential live streaming aspect for VP8 which for low latency, real-time streams, could work just as good if not better than H.264 for bi-directional video chat applications like Google Talk.
Clearly we all have a lot of unanswered questions and hopefully soon Google will start to lay out a road map on what they plan to do, although considering they don't like to talk about things and the slow rate at which they move, I'm not holding my breath.
For more details on the subject of VP8's quality, see Tim Siglin's post from last year on StreamingMedia.com