As soon as Netflix started offering video content to the PC, Roku, TiVo and Xbox 360, I have been hounding them to give me details on what settings are being used for the encoding. At the risk of annoying them with too many e-mails, I'm happy to see they have agreed to make this info available and do a great job in really drilling down into the details. (thanks Steve)

While many probably think that only video "nerds" would care about the info, these are details that everyone should care about for one major reason. Quality. That word is probably used in this industry more than any other to define what type of video experience a viewer gets, yet typically there is no definition on what the word means. As more HD content becomes available, headed discussions are only going to ramp up about who is offering the best online video quality. In order to truly be able to compare one video clip to another, you must know how the clip was encoded. While two videos may look the same and have the same aspect ratio, (window size) one could be encoded with a different codec or at a higher bitrate, thereby making it impossible to compare fairly.

Knowing what bitrate, codec and settings were used in the encoding allows us to fairly and accurately compare one video offering to another. I hope other content others follow Netflix's lead and will give out the details on their encoding specs as well.

As expected, I've already read half a dozen posts this morning from those who are saying Amazon's new CloudFront CDN offering is either going to challenge CDNs such as Akamai and Limelight for business or will force CDNs to cut their pricing in the market. This assumption could not be further from the truth and people should look at the facts of what the Amazon service is and how that compares to Akamai or Limelight.

For starters, have any of these writers spoken to Amazon about their offering? Because if you ask Amazon directly, even they agree that they are not trying to compete directly with Akamai or Limelight. Today, they are going after different sized customers with very specific needs, who only need HTTP delivery. Sure, there are a lot of those kinds of customers out in the market but that is not who the major CDNs are going after. Akamai is not interested in your business unless you are doing a few grand a month. Limelight's minimum is a bit lower, but again, is not targeting a thousand dollar a month customer. That's not to say that Amazon won't sign up larger customers, but that's not who the service is targeting.

This is a great service for smaller customers who have very specific needs but it won’t challenge any of the major CDNs for years to come. Amazon would have to add so much additional functionality to the service that it would take years just to build and deploy it. Too many people are under the wrong assumption that all you have to do is deploy a bunch of boxes and turn them up and then all of a sudden you can then compete with the major CDNs. It takes a lot more than just a ton of boxes and bandwidth to compete with Akamai or Limelight in terms of size, scale and functionality, not to mention revenue. Which is proven by the fact that after Limelight, the next closest company in terms of CDN revenue is doing less than half of Limelight's total revenue for this year.

Even Amazon's own video on demand service isn't using CloudFront. Today, they still use Limelight Networks to deliver all of their videos since they are delivered in the browser using streaming protocols. And the notion that Amazon's new CDN service is somehow going to put pressure on the major CDNs to reduce their pricing is so laughable it's not even funny. For starters, Amazon is more expensive when it comes to large volume but those that are writing about pricing would not know that as they don't have any idea what the major CDNs charge. Limelight, CDNetworks, BitGravity and others are half of what Amazon's lowest pricing is at for large volume deals. The fact that Amazon's sliding scale of usage only goes to 150TB gives you an indication of what some of their average sized deals will look like. The major CDNs have customers doing three or four times that much volume and have a sliding scale that goes to 800TB a month or more.

When Amazon announced they would offer this service, many rushed to write headlines saying it would challenge the major CDNs. Now with the service out, again people are rushing to use generic phrases on how this spells doom and gloom for Akamai or Limelight. Yet, in none of these articles that I have seen have the authors provided any analysis or insight into why they think Amazon will challenge the major CDNs. Where is the reasoning behind this thought? BMW and Hyundai are both car manufacturers. Does that mean they compete with each other? Of course not. Yes, Amazon now has a CDN offering, but that does not mean that they now automatically compete with every other CDN in the market.

If you think otherwise, I'd love to hear your thoughts on why in the comments section.

Last night, Amazon launched their new HTTP based content delivery service, dubbed "CloudFront", as an unlimited public beta. While I'm sure many in the market are going to compare Amazon's new CDN offering to other CDNs like Akamai and Limelight, it's important to get the facts straight on what Amazon's CloudFront service does and does not offer.

Amazon will initially support HTTP only delivery out of a total of 14 worldwide locations with 8 in the U.S., 4 in Europe and 2 in Asia. Amazon's pricing for the new service starts at $0.17 per GB for content delivered in the U.S. and $0.21 per GB for content delivered in Asia. In addition to a per GB charge, Amazon also charges a fee of $0.01 per 10,000 requests for content in the U.S. and $0.012 per 10,000 requests outside the U.S.

When a customer reaches 150 TB of content delivery per month, Amazon's pricing drops to the lowest pricing tier at $0.09 per GB for U.S. delivered content and $0.13 per GB for content delivered in Asia. Much like the other AWS services, Amazon's new offering requires no contracts, no minimum commits and no overages. You simply sign up online with a credit card and pay for what you use.

Currently, the service comes with no SLA and customers are not credited for any outages. Customers don't have the ability to call any kind of support center to reach a live person as all support is provided via web forums and online, although premium AWS support can be purchased. The service supports only HTTP delivery today, meaning no streaming and no live broadcasting is possible. Customers don't have the ability to get raw logs as only usage reporting is offered via their dashboard. In addition, in order to use CloudFront, all customers must use Amazon's S3 service for storage.

For customers that need streaming, live broadcasting, have their own origin storage, need raw logs or want SLAs and human support options, Amazon's CloudFront won't be a fit. That being said, Amazon's offering is going to go over well with a large segment of the market who does not need streaming and are smaller sized customers that want to deliver all kinds of content, not just video. As with all of Amazon's AWS offerings, their goal is to design a service that is of interest to the widest possible segment of the market and sign up as many customers as possible.

If you follow the content delivery industry you have to love this new offering by Amazon for a few reasons. For starters, there are many different sized customers in the market who have very different needs. Major CDNs are not a fit for a lot of them and that's where regional streaming service providers have always been able to do well. But for customers who don't need streaming, Amazon provides another offering in the market. While many co-lo and hosting companies have already been offering such a service, most of them are not truly global and require contracts and commitment terms.

Amazon is helping to take content delivery, which has been around for more than ten years, and make it as simple as possible. The industry has the basic fundamental building blocks of encoding, storage and delivery and now needs to focus on building video applications that utilize these building blocks. More than ten years later, we should not be focusing on how bits should be stored and delivered, especially for smaller customers who aren't doing streaming, don't have HD video or in many cases, just want to deliver small objects without tons of traffic. For these customers, delivering content should not be rocket science and should be cheap and easy to use. That's the strength of what Amazon's service brings to the table and to a wide audience. And over time, one can only imagine the service will get even cheaper.

For now, Amazon's service won't have any impact on the major content delivery networks since they primarily focus on customers who need more than just delivery, have larger volumes of traffic and have more complex business problems to solve. That being said, Amazon has a history of constantly improving all of their AWS products over time and I could see Amazon adding more functionality, including streaming, further down the road. While Cloud Front could look like a very different product two years from now, its real strength today is that it is focused and limited in it's offering.

Last night, Scott Guthrie at Microsoft posted more details on his blog about the adoption of Silverlight 2 and gave some details on new features in Silverlight 3, slated to be released next year. While I had previously heard Microsoft say 1 in 4 machines on the Internet has some form of the Silverlight player installed, this is the first time I have seen the 100 million number for consumer machines mentioned. And since that number does not include installs in the enterprise, the total number of machines that have the Silverlight player are even higher.

While 100 million sounds like a big number, many will want to compare that to the number of Flash installs that Adobe has and say that it's still small. But right now, it's still too early to compare the two. Silverlight is still new in the market and we need to wait and see what kind of growth and penetration rate Silverlight gets over the next 12-18 months before you can really compare Silverlight to Flash. As I have said in the past, Microsoft is in this platform fight for the long term and can spend the time growing their share of the market strategically and steadily. They don't need to surge ahead overnight and they have the ability to compete with Flash over time. Microsoft knows this is a race that will be won year's from now and they have time on their side.

In addition to Scott's post listing many of the new features in Silverlight 2,he also briefly talks about some of the new features coming next year in Silverlight 3 including support for H.264, 3D and GPU hardware acceleration, richer data-binding and support for additional controls.

When Microsoft releases Silverlight 3 next year, adds support for H.264 and we see video services like those from Netflix gain traction, the online video format market is really going to heat up. I'm not making any bets on who's going to eventually win, but I will say that I don't think there is ever going to be a single format the dominates the market. I think we will also have more than one major player in the format space and considering how many different kinds of video solutions are needed in the market, there is room for two major players.

This morning, Sky News and Times Online announced they are teaming up to develop video content to be shared between the Times online and Skynews.com websites. Starting today, Times Online articles will include daily co-produced and co-branded videos. Sky News says the new co-produced videos will focus on two areas: business and home and foreign news. With Sky's expertise in video production and the Times editorial staff, it is a smart use of both company's resources.

For the new video service, I have confirmed that they will be using the Brightcove 3 platform. This is another big customer win by Brightcove who last month also won a large deal with AOL. For Brightove, they continue to lock up the UK market for online news sites with the Guardian and Telegraph already using their system and now the Times online, which does 20 million monthly unique viewers.

With so many new customer wins being announced by Brightcove, the company should see some very good revenue growth next year. And while some want to predict that Brightove will not be profitable by mid 2009, like CEO Jeremy Allaire said they would be, I'm willing to bet that Brightcove can be profitable in the next 6-8 months

North Dakota Senator Byron Dorgan plans to once again re-introduce a bill in January that would stop Internet providers from blocking certain kinds of web content. Senator Dorgan and Senator Olympia Snowe already introduced a similar
bill together in January of 2007, refereed to as the Internet Freedom Preservation Act, but as an amendment to a larger video
franchise reform bill. That bill ended with the vote to add it to the
bill as an 11-11 tie, meaning the amendment did not pass.

Of course Verizon (who's FiOS service I use), AT&T and others oppose the bill and when you read some of their quotes on the subject, you have to wonder how dumb they think we all are? Verizon has stated, "…Net Regulation, is trying to solve a problem that doesn’t exist," and "There is a ‘disconnect’ between consumers’ desires for new products and services and the stifling effects of this bill."

Problem that does not exist? Have they seen what Comcast has been in the news for lately? And forget "new products and services" that consumers want, how about being more concerned with the products and services we have today. With all that has gone on in the past year, I'm interested to see if Senator Dorgan's bill in January will be the same as the one he proposed in the past or if any changes have been made to it. I've contacted his office and am waiting to hear back from them if they have any outline of the bill that they can share.

No one will argue that just about every business vertical and our country are experiencing hard times. But for the online video industry, the challenging times are good for business and as a whole, good for the industry overall. To me, it looks as if too many folks are writing for headlines and want to predict doom and gloom just so they can play on emotions and do things like create lists of ways that companies in our space can "survive" the hard times. How many more posts do we have to read where someone gives advice saying things like "watch your expenses" or "renegotiate vendor contracts"? If any company in any industry does not already know to watch their expenses and isn't constantly working to renegotiate vendor contracts, in good or bad times, then they don't deserve to survive. Let them go under.

Part of the reason why we see so many of these is lists is that quite frankly, there are way too many companies that have to do with the Internet, being run by a bunch of young kids with no business experience at all. What other industries besides the Internet space do you see lists like this being made? The airline and automotive industries as a whole have been taking for years. We don't see the Airlines and those who cover the space talking about how airlines should "watch their fuel costs" or "make sure they don't have empty planes". A lot of what we are reading about in the online video space is due to the fact that many running these companies just don't have a lot of business experience. I don't fault them for that, you have to get your start somewhere, but those who have money in these companies should be overseeing them very closely all the time, not just when times are bad. And how many companies have a CEO or executive management team who might have very strategic visions or be very smart people, yet have no leadership skills or business experience. Many of the companies in the Internet space as a whole are founded by very smart technology people, not business people.

It seems that many writers want readers to give into the scare of these articles talking about how bad things are, and how much worse they are going to get, without looking at the real reason companies are having problems. Most of the companies I see laying off employees, don't have any business model to begin with. So at some point, in good economic times or bad, they are going to layoff employees anyway. That is not the case for all companies, but it is for many of them. And what about the positive impact this will have on the industry as a whole? Do we really need a hundred user generated video sites out there? Chopping many of them out of the market will help better define who the leaders are, what business models work and will assist those with real business models to grow faster and help them stand out from the sea of confusion. Many companies who have a legitimate shot at making it tell me their main marketing problem is how they make themselves stand out from all the noise that comes from having way too many companies, with no real business, in the market.

That being said, I'm not suggesting that anyone losing their job is a good thing or easy to deal with. And some cuts are coming to companies who I do think have a real business model in the future. But layoffs are a part of any business. The thing I don't like hearing is how so many executives of these companies are only just now talking about keeping an eye on costs because of the economy. Any real business person will tell you that you keep a closer eye on costs when things are good, when you tend to waste money, so that when things are bad, you are already prepared and don't have to take drastic actions. More money is wasted in good economic times with things like lavish dinners, expensive hotel rooms and company branded swag, than in times when the economy is bad.

I think it is also crucial for all facets of the online video industry to keep things in perspective and set expectations properly. For instance, at the beginning of this year it was all about how online video advertising was talking all this money from broadcast and print advertising. The death of every medium except the Internet was being predicted and as a result, people expected more than what was possible. The most aggressive prediction I saw was for online video advertising to be a billion and a half dollars in 2008. Now, at the end of this year, it looks like it will be more along the lines of $500 million. While there is nothing wrong with that number, even if it was a billion and a half dollars this year, that's less than 3% of the entire TV advertising market, that the industry is predicting such immediate death for. Lets be positive and excited about the growth we have coming, but also be realistic.

We have to keep in mind that even though this industry has been around for more than ten years now, every facet of the online video industry is still very small. The markets for online video advertising and content delivery for video are both under half a billion dollars this year. The market size for video transcoding, video publishing platforms and niche video networks are all under a few hundred million each. I think it is very easy for people in the industry to forget that while many have been working in this industry for years, our industry as a whole is still very small when compared to just about every other vertical market. We still have a lot of growth to do, a lot of innovation to bring to the market and many applications that need to be developed on top of the basic underlying technology that has been created.

Things will get worse for companies with no real business model, product offering or clear and defined message of who they are and what they offer. That's just business. But after the shakeout, our industry will still be here, business is still growing and the industry will be stronger as a result of it. We are only just getting started.