As many sites have been talking about over the past week, the new Jackass 2.5 movie by Paramount Pictures will be distributed exclusively on Blockbuster.com starting next week. The content will be using Microsoft’s Silverlight platform and will be delivered by Limelight Networks.

I was going to wait to post about this until later this afternoon when I have a call with the companies involved, but a Microsoft blog posted about it last night. I will post most about the project later this afternoon.

Cisco currently has a job opening in San Jose, CA for a senior product manager focusing on CDN with both technical and marketing expertise. The position is responsible for identifying and driving Cisco strategy in the enterprise and service provider wholesale CDN market segments. The focus of this position is to build and implement the product and solution strategy for Cisco in these markets, working with the line product management team for strategy execution.

The individual filling this position will have extensive experience in the CDN market, most likely gained through mid/senior level career experience in engineering or technical marketing or product management at one of the CDN service providers or, possibly a CDN equipment company. The key requirement is that the individual have an excellent grasp of the factors driving the CDN business at the business and technical levels, plus demonstrated ability to translate this grasp into business strategy.

If interested, contact Brent Rogers at Cisco who is looking to fill the opening.

This morning, I had about half a dozen e-mails from analysts asking about AT&T and their CDN business. Yesterday, at AT&T’s analyst day they announced that they will grow their streaming and caching services by 6x and said they were going to increase their CDN capabilities. Because of this, an analyst at Cowen and Co. downgraded Akamai on concerns of greater competition from AT&T.

Now I am the first one to say I am not a financial analyst, I don’t own shares in any company and I have no vested interest at all whether Akamai or any other stock goes up or down. And while I don’t pour over the numbers like financial analysts do, I listen and hear what is really taking place in the market from customers. Numbers and spreadsheets only tell you so much.

For the past 4+ years AT&T claims to have been in the CDN market for the delivery of static content and video. Yet in that time, I have never spoken to or heard of a single customer using AT&T for any CDN services pertaining to video. I have never seen AT&T even bid on any RFP, have not seen any customers listed on their website, have not found a single customer case study, have not seen AT&T put out any data on their CDN business and have not seen anyone from AT&T speak at any conference or event about their CDN business. If AT&T is in the CDN business today, and I don’t mean via the way of customers delivering content via AT&T’s co-location or IP services, where is the business?

Could AT&T be in the CDN business? Yes. But are they today? No. I find it amazing that analysts are going to think AT&T is competition to Akamai or anyone else when they don’t have a real offering today, and even by the analyst’s own omission, AT&T would not be a competitor until late 2008. You’re downgrading a stock based on what a company "may" do a year from now? Am I the only one who does not see the logic in this? It took Level 3 acquiring the CDN assets of SAVVIS and 12 months of build out just to get a basic offering out the door. If AT&T does not acquire anyone, how long would it take them to  be at even 30% of the capacity Akamai is at today? They can’t do that in a year. And what about streaming support? Whatever limited CDN service AT&T has today, it does not support delivery via streaming, live or on-demand, has no support for Flash, no content management system, no video reporting etc…. all things Akamai and others have today.

In the report the analyst wrote, "AT&T’s extensive network reach could shrink the average distance between a CDN node and a customer to as little as 100 miles versus Akamai’s 25O-plus miles." Ok that may be, but what does that mean for Akamai? How does that affect them? That statement alone does not say how that is suppose to impact Akamai’s business. Plus, AT&T is not going to place servers for CDN services at every location in their network, just like Akamai doesn’t, so it’s not valid to look at AT&T’s entire network and say they can leverage that for one specific service offering like CDN.

If AT&T were to go out and acquire someone like Limelight Networks, which they should do if they are serious about being in the space, then they would have a real shot at the getting into the CDN business and providing real competition to the market in the next 12 months. But if they don’t acquire any company or assets, they will have little to no offering when compared to Akamai or others 12 months from now.

Also, does anyone remember back around 2000 when Quest, MCI, AT&T,
Sprint and others all had CDN offerings and divisions? They lasted
about 12-18 months in the market before they all decided to no longer
be in the CDN business. Yes, they had a lot of factors going against
them in those years, especially being in the market in the wrong time,
but how many people "assumed" they would make it just because they are
big named networks?

In my opinion, many analysts are too quick to listen to what vendors tell them without doing enough research to really know what is taking place in the market. Speak to customers. Look at RFPs. Evaluate pricing trends. Know what products companies actually offer. Compare product to product, not company to company. Anyone can say they are going to be a competitor in any market, but they don’t get any creditability in my eyes just because they are a big company.

As we near the end of 2007, I’ve seen a few reports estimating the CDN space to have been anywhere between $800 million and $1.4 billion for the year. The reports I have seen do not break out what specific "CDN" products they are talking to and how those numbers were calculated. So with that in mind, here is how I sized the market for 2007 and the data I used to come up with the number. This does not include revenue numbers for P2P only based vendors.

The number I am talking to is for the outsourced delivery of video in the U.S. market and is specific to video delivery, be it streaming, progressive download, live or on-demand. I also looked at all outsourced CDN services and not companies who sold products or services for internal delivery, such as Cisco’s CDN solution.

While not all of the companies listed below provide public data on their revenue, many of them tell me off the record what they are billing or I have other data to know their revenue. In these cases, I have grouped some of those companies together below so as not to expose data they have given me privately. In no particular order:

– Internap (run rate of about $24 million for 2007, nearly all of which comes from the U.S.)

– Limelight Networks (estimated to do about $105 million for 2007 and I estimate about $95+ million of that to be from the U.S.)

– Akamai (it is estimated that about $400-$450 million of their approxiametly $625 million $900 million in revenue comes from their CDN offering. What percentage of that $400-$450 million is specific to video and comes from the U.S. market is up for debate, but I estimate it to be about $300 million.) Note: The $900 million number I originally quoted is their 2008 revenue guidance, not 2007.

–  Level 3 (didn’t do much in the way of video delivery in 2007 since their streaming product only recently launched, however their CDN product for video downloads has been around for about half the year. Estimated 2007 revenue about $2 million.)

– VeriSign (why I don’t have exact numbers for VeriSign, taking the European business out of the picture, I estimate the CDN revenue in the U.S to be about $8 million for the year, the majority of which was P2P based from the Kontiki product.)

– Mirror Image, CacheLogic, Panther Express, CacheFly and Advection.NET (combined, they will do about $20 million in video delivery for 2007, U.S. based.)

– EdgeCast, CDNetworks and BitGravity (combined, I estimate these companies did about $5 million for the year as would be expected since they all just recently launched their services in the later half of the year.)

– PEER 1, NaviSite and Ignite Technologies (combined, I estimate they did about $8 million in 2007 for video delivery services in the U.S.)

– Regional service providers. While not typically not classified as CDNs as they tend to go after small and medium sized business, they still provide outsourced video delivery services and tend to focus in the U.S. market in particular. (all of these companies combined did under $20 million in 2007.)

So based on that data, the market for outsourced video delivery services in the U.S. for 2007 comes in at $482 million. Factor in an error margin of $20-$25 million and the market for video delivery services in the U.S. for 2007 was between $450-$500 million. Very different than the $800 million and $1.4 billion number that is being reported.

The real question is what it will grow to in 2008? Based on what I am seeing in contract terms, increased volume of bits, higher bitrates, etc… I expect to see the U.S. video delivery market grow to about $800 million for 2008. If you factor in the revenue for P2P delivery networks in the new year, that number could go up another $50 million.

I know some may disagree with my market size numbers and that is fine, but if you can’t provide the data to back up the number you published in a report, it’s hard for anyone to take that number seriously. Anyone who wants to quote any of my numbers above in a report, press release, on their website or any other format is welcome to do so as long as they attribute it to me by name.
 

As the Streaming Media East and West shows continue to grow each year, it is getting harder and harder for me to program over 110 speakers and nearly 40 sessions per show all by myself. This year, I am looking to hire 2-3 people who are experts in a particular vertical of this industry who would like to help AND have the expertise that is needed to organize a topic with a few speakers/presenters.

I’m looking for individuals who are experts in a particular facet of the industry like advertising, content creation, video workflow, content monetization etc… or are experts in a particular vertical of the market like media, broadcast, enterprise, entertainment etc…. and are willing to create 2-3 session topics around a particular subject or vertical. You would have the ability to create the session topics, discussion focus, decide on the format and organize and select all of the speakers along with my input.

You would not have to moderate the 2-3 sessions but could if you wanted to. You would have a lot of free reign to really design the entire session and this would be your chance to really help shape the discussions around a topic of interest to you. We’ll promote you as the person who organized the sessions and pay you well for your time.

The ideal candidates would be those who are well versed in how to organize a discussion or presentation subject and know who the most engaging speakers and companies are that should be represented. This spot is ideal for bloggers who cover a particular topic in this space. Think of it as a way to organize your own mini-show inside of the bigger show and have the ability and responsibility to be a thought leader around a subject that is important to you.

Also, if you don’t want to take on as much work, but would like to
possibly organize just one session, I am open to that as well and you
should contact me ASAP. The advance program is due in nearly 4-5 weeks
and I need to confirm the session topics. QUALITY moderators are desperately needed. It is still hard to find those who know the role of a moderator, present well, frame the topic of the session properly, keep the discussion on point and keep others on the panel engaging.

Bottom line, I need help. The East 08 show will mark the 12th show I am having to program and I think  input from others in the industry is needed to really help shape the show and the industry moving forward. This is YOUR show, I am open to ideas and suggestions and thank anyone who is willing to help.

As I begin to think about the programming for the Streaming Media East 08 show in May, I’m trying to collect as much feedback as possible on who you think should keynote the show. What company would you find interesting to hear from or what speaker is engaging and has something compelling to show and tell?

The East show will have four keynotes this year and all of them will be from end users. I’m thinking I’d like to have a good mix of speakers representing an agency, (advertising), a major TV broadcaster (content monetization), a portal like Amazon or eBay (commerce) and a Fortune 500 corporation (enterprise). But I am also open to other ideas.

While I have many contacts and will be reaching out to various companies, I am open to ideas and suggestions of someone you know, a customer of yours or a company you may represent. Please send me an e-mail with any suggestions. If they end up working out and become a keynote speaker I will make sure to take care of you or your company in the way of payment or other compensation.

I have to lock down all four of the keynote speakers by mid January so I don’t have as much time as some may think. Please contact me if you think you have someone good in mind. Thank you.

Yesterday, Adobe quietly launched two new HD websites that showcases content in HD quality using the Flash platform. The launch of the sites also coincided with the launch of a new product section at the top of the main Adobe.com website. Different images and products are highlighted each time you load the page and one of them promotes "The fusion of TV and the Internet" and links to a site I had not seen until now at adobe.com/flashon. The flashon site contains movie trailers from some of the major studios as well as some other content. It’s been a busy week for Adobe and they have really increased the volume of HD quality content for demonstration on their websites.

The bad news, if you want to see anything at 720p or higher, you need a really, really, fast machine. Adobe very clearly states the hardware requirements but most won’t really have the power to watch the high-res content at 720p or 1080p. I’m on a year old MacBook and my 1.8GHz processor is the minimum requirement for 720p content but I can barely get it and it keeps stuttering.  No doubt Adobe is using this showcase to promote Flash and does not expect everyone the web to be able to see the stuff, but as of now, only those with very new computers can see the content at the best quality possible.

I have not had time to really watch much content and give the sites a thorough review but will do so over the weekend and post more about them next week.