Over the past few months, I've been hearing more talk about Brightcove teaming up with Limelight to enable Limelight to move up the stack and offer more solutions in the video ecosystem. While neither company would comment on the rumor, (Updated: Brightcove says the agreement as I have described it does not exist) I've since learned that this deal is in fact taking place and that for the past few months, the companies have been working together to put it in place. While details of what the offering will look like are not being discussed, it would make most sense for Brightcove to license a customized white label version of their platform to Limelight, thereby enabling Limelight's customers to have direct access to the functionality that Brightcove provides.

While some might suggest this does not provide a lot of value as anyone can just go directly to Brigthcove if they need this type of solution, a customized version of the Brightcove system running on Limelight's network would be beneficial to many customers. It would also give Limelight immediate new offerings at scale like transcoding, professional services support for things like custom player builds and I'd like to think that working together, the data that Brightcove and Limelight already collect could be used to provide customers will a very robust reporting and analytics package. We'll have to wait to see exactly what the deal looks like when it is announced, but there is a lot of synergy between the two companies and this is a natural progression of where CDNs are headed.

Over the past year, Limelight, like nearly every other CDN, is trying to do more than just deliver bits. With video delivery pricing declining each year and more content owners asking for solution based offerings, not just bandwidth, CDNs are trying to make the move up the stack and offer more value add services. For vendors like Limelight, this is a 180 degree reversal from 18 months ago when they said they didn't want to move up the stack and just wanted to focus on the delivery part of the business, thereby letting partners solve the other video ecosystem pieces. But like any industry, it evolves quickly and all of the CDNs have tried to evolve with it. Level 3 is working hard to finish their ecosystem offering, Limelight recently acquired Kiptronic, and Akamai is focusing a lot of their efforts on value add services in other segments of the market.

Companies who solve some of the ecosystem problems are going to get acquired by some of the larger CDNs or will do deals to private label their services, enabling CDNs to bring the solution in-house, on their network. While this all makes sense, the one problem I see with it is that no one is willing to talk about what type of impact these deals can have on CDNs revenue. Akamai was years ahead of their competitors when it acquired NineSystems to get the Stream OS content management system, but to date we don't know how many customers use it or what kind of revenue it adds to Akamai's bottom line. So while a Brightcove and Limelight deal makes a lot of sense, it might be a good 24 months or more before these solutions account for even 10-15% of CDNs revenue.

While it's too early to know what kind of impact a Brightcove and
Limelight deal could have, we should expect more of these types of
announcement from the CDNs over the next few quarters.

Internap has confirmed that VP or Engineering Steve Kiene will be leaving the company in August to pursue another career opportunity. Steve joined Internap about six months ago and one of his tasks was working on Internap's CDN platform. The company said it is currently looking for a replacement and that Steve will be with the company until the end of August to help with the transition.

This week, Cisco released their second annual visual networking index which predicts that by 2013, all forms of video will account for almost 90% of the total consumer traffic on the Internet. While that sounds like a big percentage, I'd like to know how Cisco came up with these numbers. Cisco's website shows a lot of charts and numbers, but then says the source for the data is themselves. Where is Cisco getting these numbers? How did they come up with them? What are they based off of? What is their methodology? Come on Cisco, show us the data behind this. More importantly, if Cisco's predictions are right, that's not necessarily a good thing for the industry.

We keep hearing about traffic growth due to video, but what we don't keep hearing from are content owners making money from all this traffic growth. If Cisco's numbers turn out to be accurate, that's a lot of additional video traffic that someone needs to monetize unless they want to be though of as someone like YouTube. A company that pushes a lot of traffic, but can't break even. Don't be fooled into thinking that just because video traffic is growing, so too is the revenue of the companies in the space. Video now easily accounts for more than 50% of all the traffic on the CDNs, but it accounts for far less than 50% of their overall revenue. That's a problem.

For all the traffic growth we keep hearing about, we also see companies like BT and others capping users or telling content owners they are going to have to help foot the bill for network upgrades. We've now got content owners doing 3MB streams and folks like Microsoft announcing they will do 8-10Mbps 1080p streams on the Xbox 360 later in the fall. All of this is great, but there needs to be some kind of business model behind this surge in traffic. If it's not figured by the ISPs and content owners, many are going to have a false sense of security thinking that because video traffic grows by a large percentage, the revenue of companies in this space will grow by the same volume. That won't happen. While the CDNs won't tell us how many total streams or GBs they deliver each quarter or each year, if they did, we'd see that they are delivering five or ten times more volume, yet their revenues are not going up by the same rate.

I'm all for video growth, but lets be realistic when companies like Cisco put out numbers like these and won't show us how they came up with them. Traffic growth without revenue growth really does not matter.

I'm pleased to announce that executives from FLO TV, Epix and TV.com are confirmed as keynote speakers for the upcoming Streaming Media West show taking place November 17-19 in San Jose. I'll be posting more details soon and in the mean time, the call for speakers closes in the next few days. Get your submission in now if you want to be considered.

While dates for the 2010 Streaming Media West show have not yet been announced, all signs point to the show being moved to LA for next year. We'll make the official announcement as soon as we have the dates and location confirmed.

For the past few months, Level 3 has been working on building a brand new video based website dedicated to showcasing their content delivery offering in the market. Yesterday, the site Level3Delivers.com went live with nearly 75 video clips that do a really great job of telling the Level 3 CDN story.

The mini video portal has interviews with Level 3 executives, customers and features a whole bunch of case studies and shows logos from such customers as Netflix, Microsoft, Comcast and Yahoo! amongst others. The videos provide a great insight into Level 3's entire CDN ecosystem including Vyvx and their broadcast operations services and it's great to see Level 3 really focus an entire website to their CDN offering. The new site is well thought out, provides answers to a lot of technical questions about their ecosystem and will be a valuable sales tool for Level 3 when pitching content owners.

A few weeks back, I got to spend a good deal of time with Level 3 executives at the Content Delivery Summit and Streaming Media East shows. I also recently had a call with Peter Neill, the new SVP of content markets for Level 3 to hear more about their CDN strategy. While some of our conversation was off the record, what I can say from the calls and meetings is that while some turmoil came out of the changes made within the CDN group last month, Level 3 is clearly still committed to their CDN offering.

At the Streaming Media East show, the biggest thing I heard Level 3 competitors talking about was just how many Level 3 sales reps were at the show looking for new jobs, implying that Level 3 was really losing people. Yet when I asked Level 3 competitors if any of them were going to hire these reps, they all commented that most of them weren't qualified. So while Level 3 has been losing and cutting some account managers, it does not sound like it's due to anything negative at Level 3. Level 3 still continues to sign up large content owners and I still think they are on track to do nearly $100M this year in total CDN revenue, defined as streaming, software downloads and small object delivery.

I've been a long time customer of Verizon's FiOS service, starting off years ago with 10Mbps, then 20Mbps and as of last week, now 50Mbps. For those who can't get FiOS I feel for you as it's hands down the best offering available in the market and puts cable to shame. Even with Cablevision's recent announcement saying they will offer a supposed 101Mbps offering, it's not fiber to my house. If it's not fiber to the home, then it's not FiOS and can't be compared to FiOS.

I called Cablevision last week only to be told their 101Mbps service won't be available "for some time", the price is not "guaranteed" to be $99 when it launches and the service won't come with any guaranteed throughput. When I asked Cablevision how they can compete with a service like FiOS that pulls fiber to your house I was told "the service is just as good as FiOS as Cablevision's modem has lots of power." Too funny. When will Cablevision get a clue.

Cablevision's poor marketing ploys aside, I'm looking to test as much high bitrate video as possible across multiple entertainment devices. I have a Xbox 360, PS3, Wii, Roku, TiVo Series 3,VUDU, Slingbox PRO-HD, Apple TV and broadband enabled Blu-ray player setup in my living room. So if you know of some really high-bitrate video offerings, streaming or otherwise, please let me know and I'll test them out. In addition, if you'd like me to test anything on any of the above mentioned devices, drop a note in the comments section.

Related Posts:

– Numbers Show Consumers Are Not Cutting Cable In Favor Of Online Video

– Verizon Cuts Peering Costs To CDNs: The Real Story Is More Than Price

– If Everyone Had Verizon FiOS For Broadband, Capping Would Not Be An Issue

– Verizon's FiOS Service Will Change The Game For Video Delivery

– Verizon's FiOS Service Pays Off: Adoption Growing, Service Capable Of 50MB Today

Last week at E3, Microsoft announced that later in the fall, 1080p streaming will come to the Xbox 360 using Zune video technology. While full details of the technology and how it works are not ready to be released by Microsoft, they did share some additional details on the service which I can make public.

Zune video on Xbox LIVE was built from the ground-up for Xbox 360 to
take full advantage of the Xbox platform and is built on top of Smooth Streaming. It features what Microsoft is calling a
"state-of-the-art encoder" for the highest level of fidelity and a high
performance decoder capable of full-framerate 1080p playback, which
enables Smooth Streaming playback, smooth fast-forward and smooth
rewind functionality. Microsoft says their 1080p instant on technology will offer a level of quality and
performance only previously seen with downloadable or physical media.

For the full instant on 1080p streaming and 5.1 surround sound
experience, Microsoft recommends at least an 8 Mbps broadband connection. The
beauty of the technology however, is that movies and TV shows on Zune
video will automatically scale to the best possible resolution based on
the speed of the users connection. So if a consumer has a 6 Mbps
connection, they will still get 1080p and a great audio experience, but
may not get 5.1. And as a back-up, Microsoft says anyone can have a 1080p/5.1
experience, but they may be required to download the content instead of
streaming it if they don’t have an 8 – 10 Mbps broadband connection.

While no specific date has yet been given, Zune video on Xbox LIVE will launch sometime this fall with only a small inventory of video available at 1080p. While no exact numbers have been given on the volume of inventory available at launch, Microsoft said they will bring some of the best content from some of the top studios including Warner Bros., Universal, Paramount,
CBC [Canada] and the MLB Network, Whether or not content from Netflix will take advantage of the new 1080p streaming technology is not yet known but I would not be surprised if there weren't at least a few title from Netflix available at launch.

While there has already been some speculation in the industry as to which CDN(s) will get this delivery business, that's still to be seen at this time. I've heard various answers including the idea that Microsoft may keep some of this delivery on their internal CDN.

No matter who gets to deliver this content, clearly it's not going to be a lot of traffic. The number of Xbox 360 users who have their console hooked up to a TV set capable of doing 1080p and having at least an 8Mbps connection can't be huge. Not to mention, most of the content available in 1080p is probably going to have to be purchased. Clearly the Internet is not capable of handing the streaming of 1080p content to any large scale and while this offering is all about the future, the Internet still won't be able to handle this level of streaming years from now.

For Microsoft, I believe this offering is their way of getting ahead of the rest of the market and saying they can do 1080p streaming before anyone else and prove the concept. Nothing wrong with that and as a Verizon FiOS user, I can't wait to see what it looks like. But for the average Xbox 360 user, I don't think they will be able to take advantage of 1080p streaming for a long time to come.