News From NAB: Adobe, Brightcove, VBrick, Level 3, Inlet, Limelight and Others
Here is a roundup of all the news I have seen come out of NAB as of this morning. I will update this list as the releases come in or as I find more of them on the wire:
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Google Says YouTube Won’t Lose $500M This Year, I Say Prove It
In a NYTimes.com article today, a YouTube spokesman said that a recent report published by Credit Suisse that indicated YouTube would lose nearly half a billion dollars this year was "inaccurate and based on conjecture". For a company that has no business model and will never be profitable with their current mentality, this denial on YouTube's part should come as no surprise.
What Google has failed to do is give anyone any reason to believe them. Simply saying a published report is "inaccurate" means nothing without them giving us any kind of clarity, which they won't do. The report said that YouTube would lose about $470M for the year and Google is not saying is how the report is inaccurate, or what the margin of error is. Google could be accurate with their statement as they could be losing more than $470M this year, or could be losing less. But even if the numbers in the report are off by say 30%, YouTube would still be losing nearly $300M this year alone. That's still a huge number.
YouTube can't be profitable, not this year, not next year, not three years from now. It has no business model, but not for lack of trying. YouTube is the quintessential example that dispels the notion in this industry that all you need is lots of eyeballs to have a profitable, sustainable business model. Google has tried paid downloads with their video store, ad rev share models of every kind, licensing of premium content and now in the NYTimes.com article it says YouTube "might eventually ask users to pay for some of its premium content". What hasn't YouTube tried?
Licensing premium content is only going to make YouTube lose even more money, not less. Their cost of licensing and distributing that content will be greater and the only way to make up for that cost is with an increased number of eyeballs to the content, yet even that won't guarantee success. While YouTube is the king of eyeballs, if the premium content they reference is targeted to a wide audience, YouTube's CPM will be lower since the ads won't truly be targeting a core set of viewers.
While the NYTimes.com article says that the recently announced content deals which includes Sony, Lions Gate, MGM and others, "are significant because YouTube dominates online video", who wants to "dominate" an industry by losing hundreds of millions of dollars a year? The author of the article is quick to point out that YouTube "is struggling to profit from its digital popularity", but does not say what YouTube classifies "premium" content to be or how that plans to help them make money. I'd be willing to bet that when we see the entire list of content coming to YouTube under this "premium content" announcement, none of us, as consumers, will classify it as "premium" content. The dictionary defines the word premium as "best", "finest" and "first-class", not exactly words I would use to define "The Addams Family", content YouTube is getting under this "premium" announcement.
Announcing New Conference: The Video Platform Summit, Call For Presenters Open
StreamingMedia.com is pleased to announce our new two-day conference, the Online Video Platform Summit, taking place in conjunction with the Streaming Media West show, in San Jose, from November 18-19th. This new event is designed to help organizations of all types, not just those for whom video is their core business. Designed for video publishers of all types and sizes, whether small businesses looking to publish content for the first time, independent entertainment content creators, large media organizations, or anywhere in between, the Online Video Platform Summit will provide hands on demonstrations of some the latest online video platforms.
Session tracks will feature real hands on demos as well as sessions covering topics like customization and branding, advertising platform integration, syndication, metrics and analysis, monetization and much more. The call for speakers for both Streaming Media West and the Online Video Platform Summit is now open and the deadline for submitting speaking requests for both shows is May 31st.
For the summit, we're also looking for ways we can incorporate other organizations to help bring awareness to the event, give them co-branding and exposure and have them help lead some of the sessions. Since we are doing this during the Streaming Media West show, we've already got all of the space, registration and logistics covered. If you are a news site/blog that covers the online video platform space and wants to get involved, please contact me.
With so many organizations publishing online video, there have never been more online video platform solutions on the market and we think this is a great opportunity to show the value these platforms can provide. More details will be posted on the summit shortly and for now you can get additional details on the call for speakers page. Questions on speaking for the summit, contact Eric, questions on speaking for West, contact Dan.
More ISPs Not Letting CDN Place Servers Inside Their Network, Doing It Themselves
I've recently spoken to quite a few ISPs about their practice of letting CDNs place servers inside their network to reduce their costs. With video traffic starting to become a real burden on more ISP's network, many are under the impression that CDNs like Akamai and others can just place their CDN servers in the last mile anywhere they want. While this was an easy and common practice for CDNs over the past few years, this is no longer the case.
Over the past twelve months or so, many of the ISPs I have spoken with said they are denying requests from the CDNs to place servers in their network or are kicking out CDNs who previously had gear in their facilities. Many of the ISPs said they are now focusing on doing it themselves and we have seen examples of this with companies like Verizon deploying video servers on their network for FiOS customers. Over time, nothing would stop Verizon from going to a content owner like Disney and cutting a deal to deliver Disney's content directly to Verizon's customers, essentially cutting out the CDN.
It's also been interesting to hear many ISPs tell me they have allowed some of the biggest CDNs to put gear on their network, only to see much of the gear go unused. I think this is because a CDN server placed inside an ISP network needs to be filled.
The cache fill is data from the CDN’s origin (or the CDN’s customer’s
origin) and most of the time, this fill will come from outside the ISPs network. The cache fill data plus the cost to house and power the CDN’s server is typically borne by the ISP. But if video is not being served from the CDN servers within the ISP network is there a real benefit to having them there? Many of the ISPs I spoke to said no and didn't see the value in letting the CDN reach their end customer for free.
It is important to remember that the ISP owns the customer, not the CDN. The CDN's customer is the content owner, but if the CDN has not done enough deals to get their servers inside ISPs or does not have enough peering in place, content owners could start dealing directly with the ISPs. Amongst the large ISPs I am talking to, those doing billions of revenue a quarter, this trend of kicking out CDNs is one that seems to be gaining traction and I hear a lot of them purchasing their own gear or working with companies like BandCon.
That said, while this all makes sense on paper, we have to see how many content owners are actually willing to deal directly with ISPs. Any major content owner who wants to bypass or supplement a CDN would have to cut deals with a lot of ISPs since no one ISP accounts for the vast majority of eyeballs. In Europe this would be easier as a few ISPs control nearly all of the consumers, but in the U.S., content owners would have to cut a lot of deals. It would not be hard to do, but one has to wonder how much expertise content owners will have to put this in place. For the major content owners, completely doable, but you'd have to be doing a ton of traffic and have quite a large reach to make it worthwhile.
Content owners may not want to do deals with ISPs until HD video is truly adopted and many ISPs are still building out their own CDN offering, not yet selling the service. So until they make it known to content owners that they can deal directly with the ISP, it's too hard to know what impact this will have in the long run. What impact this could have directly on the CDN industry we don't yet know, but this is clearly a trend, something I am hearing more and more of and something to keep an eye on.
In These Economic Times, More Video Vendors Relying On The Channel
While the channel, defined as resellers, has always been a part of some online video vendors strategy, in the past twelve months or so, many vendors are now relying solely on resellers for the vast majority of their revenue. Whether I am talking to enterprise video vendors like IVT, Qumu or Polycom or CDNs like EdgeCast, companies in all segments of the video ecosystem are keeping their sales and marketing costs down by using resellers.
For some, this a big shift from twelve months ago where companies looked to the channel for sales, but didn't really rely on it for the bulk of their revenue each quarter. When the economy started to show signs of serious problems and the number of days it took to close contracts grew, many companies realized they needed to reduce their biggest cost, which is usually sales and marketing. For some, the channel is a great model and one that should help them get through these tough times. Solutions that are complex and require a lot of other ecosystem pieces to work, especially in the enterprise, can be sold by one vendor who helps bring all the right pieces to the table. They tend to be able to articulate to the customer who all the vendors are and how their products fit into the total solution being sold. Companies like Cisco, AT&T and others do a fairly good job of bring many smaller video vendors into the picture and helping them ramp their sales pipeline.
While this strategy is working well for some, others are not having as much success. These days it seems that just about every vendor has a "partnership" with every company in the industry. These "partnerships" are nothing more than referral deals and are not done with a true resellers mentality, which is selling and integrating multiple products to the client as one combined solution. The biggest problem with these type of deals is that most vendors are only good at selling their own offerings, and not a third party. They don't have the time or expertise to really be able to sell something they don't control and sales resources are already stretched thinner than ever. While many of these "partnerships" look good on paper and make noise with a press release, the vast majority of them never produce any revenue.
While the enterprise segment of the market really has the channel strategy locked down and the CDN market as a whole is starting to make it work, many of the other segments of the industry have yet to be able to get any tangible revenue from resellers. While this will change over time, many are only looking at resellers now as they want to simply reduce headcount and keep their costs down because of the economy. This may work in the short term as you see an immediate cost savings on the books, but unless they can ramp revenue quickly, the cost savings are short lived.
The channel strategy has always been an interesting model to watch in our industry as it tends to only lead to success for specific verticals or specific products. The good news is that more are making it work and seeing the value in terms of additional revenue. What companies do you see in the industry that are doing a good job via resellers and are showing real customers or revenue from their channel approach?
Verizon To Keynote SM East Show: Outline Their Plans To Bring Internet Video To TV
Joe Ambeault, Director of Product Development and Management for Video Services at Verizon has been added as our final keynote at next month's Streaming Media East conference. Over the last 3 years Verizon has been employing a spiral development approach in close collaboration with a wide cross section of consumer segments to progressively deliver more of the Internet to the television in a mass market friendly manner. In Joe's keynote, attendees will learn about Verizon's first Internet applications for FiOS TV's approach for bringing Internet video to the set top box and Verizon's vision for the future of Internet TV.
Joe joins other keynote speakers Paul Sagan, CEO of Akamai, Gregg Moss, SVP of Enterprise Streaming at Media Bank of America and Avner Ronen, CEO and Founder of boxee.
The early registration deadline ends this Friday and readers of this blog can register with a special discount code of DRF1
Impossible To Compare Limelight and Akamai’s Enterprise and Commerce Products
Two weeks ago, Limelight Networks launched their new whole site delivery product, branded LimelightSITE, directly targeting the enterprise, finance, retail and government verticals. With this announcement, everyone is asking if this will have any affect on Akamai, who to date, has always dominated the enterprise and retail markets with their dynamic site solutions.
In my post about Limelight's new offering, I mentioned that I was going to follow it up with another article that would compare the services from the two companies on a technical level. Not a performance comparison, as that can only be done by customers, but rather an overview of how each service works and what the differences are. After spending a lot of time in the past week with both companies, I've come to the realization that's comparing the two services is nearly impossible for multiple reasons.
For starters, the solutions are very different and while there is some overlap, they appear to be targeting different customers with a different feature set. With commerce, Akamai is looking at more than just the transaction and personalization of the site and is also overlaying purchasing data from advertisers' websites to present the most relevant ad to shoppers, hence their Acerno acquisition. And unlike video, whole site delivery and accelerating apps comes with a host of complex tasks that is a lot harder to compare from one vendor to another. Retail sites are using a lot of RIA apps, dynamic HTML, javascript and components that can't be cached, not to mention the security requirements, specific page loads times demanded by customers and professional services work performed around commerce and enterprise solutions.
While delivering video has its own host of ecosystem pieces, it's a whole lot easier to compare one vendor to another for the delivery of video versus whole site delivery and application acceleration. The only true way to compare both of these service would be for a customer to take part of their site and create a sub domain so that both Akamai and Limelight could deliver similar content from the same site. But even that may be hard to do as Akamai and Limelight really do seem to be targeting different sized customers and more importantly, customers with different needs. When Limelight launched their product they said they were not expecting to compete with Akamai head on but rather with their customers own IT department. While some overlap between the two companies is expected, having spent time with both companies in the past week, their solutions really are quite different. After getting lots of product specific details from both companies, I've come to the realization that doing a fair, apples to apples technical comparison would be nearly impossible.
That said, I think both companies can grow their solutions in the market. Unlike video which was only a $400M market last year, the total content delivery market for all kinds of content is well over a billion dollars and growing rapidly. With Limelight already having over 160 customers for their new offering, it proves that there is room in the market for both Akamai and Limelight with different offerings.
When it comes to the subject of Akamai and their enterprise and commerce customers, I get a lot of questions. Many hear Akamai use terms like "value add services" or "retail solutions" but don't know exactly what that means, what the offering looks like and how it all works. No where on Akamai's website can you even find a product sheet on commerce because as I learned this week, to Akamai, commerce is a market, not a product line. Commerce falls under their dynamic site solutions product line. Since we all know that Akamai's margins on services outside of video delivery are quite healthy and are the products that make Akamai unique in the market, Wall Street always always has a lot of questions.
This is very similar to Akamai's application delivery product which is a term that everyone knows, but rarely do I find anyone who can explain what that means or how it works. That was my reasoning for publishing two articles on Akamai's app delivery offering last year that outline how it works and what it is used for. Taking that same approach, I am already working on doing the same for Akamai's commerce related business detailing how it all works, what the offering looks like and how it is used. I hope to have that follow up post ready sometime next week.
Related:
– A Detailed Look At Akamai's Application Delivery Product – Part 1
– Overview Of Akamai's Application Delivery Customers – Part 2
– Limelight To Challenge Akamai With E-Commerce, Whole Site Delivery Product
– Cisco Buying Colo Space In Third Party Data Centers, Says It's For New CDN Offering