There’s been a lot of announcements in the mobile video space over the past two weeks, and these are some of the more interesting I’ve been reading up on:

• Last Friday, news outlets were reporting that Virgin Mobile was closing its U.K. Mobile TV service. This really comes as no surprise considering the service was based on the DMB (Digital Multimedia Broadcast) standard and not the DVB-H standard as well as Virgin Mobile only being able to sell 10,000 handsets capable of getting the content.

• Two weeks ago, The European Union announced
  that it was backing DVB-H as the mobile TV standard  across Europe. The
  EU’s Commissioner is quoted as saying, "We can either take the lead
  globally – as we did for mobile telephony based on the GSM standard
  developed by the European industry – or allow other regions to take the
  lion’s share of the promised mobile TV market. Wait-and-see is not an
  option. The time has come for Europe’s industry and governments to
  switch on to mobile TV." If only it was that easy in the U.S.

• Last week, the Open Mobile Video Coalition, an association looking to accelerate development of mobile digital broadcast TV in the U.S., announced that it had doubled its membership with the addition of nine new broadcast groups. The group has established a time line that calls for parallel development of standards, devices and business models with the goal of a 2009 launch.

• Transpera, a platform that provides online video publishers with an easy way for consumer to create, share and re-purpose video, confirmed last week that it has raised a first-round of venture capital from First Round Capital, IDG Ventures, and Intel Capital.

• Last week, A&E announced that MobiTV has added two new A&E mobile video channels to its lineup bringing A&E’s channel count on MobiTV to nine.

• Telephia Inc., which was acquired by Nielsen last month, released new data last week on the size and adoption of the mobile television and video subscription business. From the release: Mobile television and video subscription revenues grew 198% year-over-year to $146 million in the first quarter of 2007. Approximately 8.4 million wireless customers now subscribe to some form of mobile video, representing nearly 4% of all U.S. mobile subscribers. While those numbers seem high to me, Telephia says that it collects its data from Telephia’s panel of 35,000 mobile subscribers.

• ESPN, MediaFLO and Verizon announced they have teamed up to offer live coverage of the X Games 13 event for V CAST Mobile TV. Eight hours of live footage will be provided during the days of the event along with on-demand content. No one has a phone with a battery that will last for 8 hours, so I know they don’t expect users to tune into it for the duration, but I’d be interested to hear what the average length of time is spent watching it live.

• Last week, AT&T announced a new service named "Video Share" that allows users to share one-way streaming video. While the announcement seemed to get a lot of coverage in the media many don’t highlight the barriers to this AT&T offering. The service only works on their limited 3G network and currently only with four models of Samsung and LG video capable handsets. And there is a monthly video premium consumers need to pay to use this.

• Last week, Harmonic Agreed to Acquire Rhozet, a privately-held company that offers software-based universal transcoding solutions that facilitate the creation of multi-format video for Internet, mobile and broadcast applications for $15.5 million. Harmonic says the acquisition will position them as a leader in Internet and mobile video creation space.

• Based on data released last week, Frost & Sullivan announced that leading U.S. mobile operators have started to embrace mobile advertising and said that mobile advertising is likely to be used to subsidize the cost of content production and lower the cost of service usage. That’s a pretty bold statement. To date, online advertising via the PC has not subsidized many content models let along content models for mobile which are still in their infancy.

In an article on Barron's website this week, which Seeking Alpha has an annotated article summary of by Judy Weil, Mark Vererka says that Internap may be the next Akamai. No offense to Internap, but that's an absurd statement for anyone to make. As you'll see below when it comes purely to revenue, numbers don't lie.

It's amazing the amount of analysts who make blanket statements about vendors in our industry, yet then provide no data to back up their predictions and even contradict themselves with the numbers they use in their articles. For starters, Judy Weil's summary of Mark's article says that "Patent and price battles have seen content-delivery-network giant Akamai and upstart competitor Limelight lose ground." Lose ground to who? How can you make a statement that the number one and number two companies in the space, based on revenue, are losing ground but then don't say who they are losing it to?

The article also says "Internap only recently entered the CDN business with its VitalStream acquisition, and CDN accounts for just 10% of Internap's $192.3 million in revenues." That amounts to roughly $20 million last year for Internap in CDN revenue compared to Akamai's roughly $200 million last year on CDN services and Limelight Networks $60 plus million from CDN services. How do those numbers show Internap becoming the next Akamai? Akamai is doing 10x the CDN revenue Internap is. The fact that the article does not mention that last year, Internap was the number one reseller of CDN services for Akamai also goes to prove that even with the revenue Internap was getting from CDN, it was paying Akamai at the same time. These analysts need to do their homework.

The article does seem to be implying that Internap can become the next Akamai because it says "it (Internap) foresees explosive CDN growth as net users increasingly seek smooth delivery of rich online content." And the other CDNs aren't seeing the same growth as well? That's the best reason you have for saying how Internap can grow it's revenue to be that of Akamai? Akamai as a company did over $400 million in revenue last year, Internap did under $200 million. Big difference.

It also goes on to say that "Internap's edge is its proprietary software that has guaranteed 100% reliable internet-routing services and data center hosting (90% of Internap's business), and now guarantees 100% uninterrupted content delivery. The reliability guaranty premium keeps Internap out of CDN price wars while gaining it market share." For starters, that SLA it is referring to is specific to network and data center services, it does not apply today to the CDN services of Internap. Internap has confirmed that it intends to offer a 100% SLA specific to CDN services but not until it integrates the VitalStream platform and customers into the Internap network, something Internap is still working on. And even with a 100% SLA, how would that keep Internap or any other CDN provider out of price wars? If it is implying that customers will pay more for a 100% SLA, then the article should give details on what the premium is over the going rate that they are willing to pay. But my guess is that the authors have no idea what CDN pricing even costs in the market.

The article then goes on to compare Akamai's revenue and product line with that of Internap. "Akamai shares fell about 25% last week over forecasts of market-share loss and shrinking orders; Limelight is down about the same this month. Barron's says Internap's Tuesday earnings report will forecast higher growth, lifting its $13.42 shares back towards January's $20 price." Last time I checked, Akamai and Limelight Networks were not in the co-lo and network business and not getting 90% of their revenue from those products, like Internap is. So how can you possibly compare Akamai, Limelight Networks and Internap's overall revenue and stock price fairly? You can't. Their core business and revenue generators are from completely different industries and different product lines.

Everyone is entitled to their opinion and who am I to try and tell someone they are wrong. But when you make blanket statements like this article does, back it up with no data, and then don't even look at the data that is out there that proves you wrong, you shouldn't be writing about that segment of the market.

I recently got to sit down with management at Internap and
VitalStream to ask about and get an update on their CDN offering and I
hope to get to finish my write up of that for my blog this week.

Note: Since I wrote this post on Sunday night, I see that Yahoo! has
updated the page I was linking to and now better defines who wrote
what. I have edited the text below on Monday morning to reflect the
correct authors names. I'd also like to point out that after reading
the Baron's article by Mark Vererka, it is my opinion that Judy's
summary of Mark's article takes a lot out of context.

I’ve never posted news before about the stock price of any particular company (unless it was a new IPO) simply because to me, the fact that a stock went up or down is not news, it happens everyday. But over the past 24 hours, I have gotten many calls and inquiries from analysts and the media asking me if the fact that Akamai’s stock price has gone done nearly $10 a share in the past two days is a sign that the content delivery market for video is slowing down. The simple answer is no.

The fact that Akamai has lost nearly 20% of their market cap in the past two days is reflective of many factors investors attribute to their earnings, growth projections and other factors that I don’t even pretend to know all about. While I track the CDN companies very closely, I’m not an analyst in the sense that I don’t track companies P&L the way money managers do, nor do I have the interest in doing that.

The fact that so many analysts, media and industry folks are asking about Akamai’s stock price and the content delivery industry shows us just how much people don’t truly know about what services vendors provide. These days, everyone thinks of Akamai or references Akamai as the streaming company or video delivery company. Yes, they are. But that is just one of many services they provide. While we don’t know the exact percentage of revenue that content delivery for audio and video provides to Akamai’s total revenue, the consensus in the industry is about 40-45% of their total revenue. That would mean last year they did just under or around $200 million for CDN services for audio and video content. And since Akamai did over $400 million last year as a company in total revenue, the other 50+% of their revenue comes from other non CDN products and services like EdgeSuite, Dynamic Site Accelerator, Web Application Accelerator, Electronic Software Delivery and professional services. But when Akamai’s stock drops nearly $10 a share, why is it that no one is asking about those products and services and those industries? Why is it that so many assume that the CDN product line and the video industry is at the root of the problem?

My suggestion, relax. This is not the first time this has happened where a company that provides services in the online video industry has seen a major change in their stock price and it won’t be the last time either. The content delivery market is as healthy as ever and the growth of the consumption of online video for longer time, more frequently, at higher bitrates and on multiple devices shows no signs of slowing down.

But I would also suggest that everyone do their homework and become more educated about what services each vendor provides and what percentage of their business is made up from that service. For instance, not a week goes by where someone doesn’t compares Akamai’s $428.7 million in revenue last year to Limelight Networks $64.3 million in revenue and says Akamai did nearly seven times more revenue than Limelight Networks for content delivery pertaining to audio and video content. That’s wrong. They are comparing revenue from products and services Akamai offers against ones that Limelight Networks does not offer. Learn what products and services both companies offer and then compare just those products and services on an apples to apples basis and not the entire company.

It’s the same on the network side. People always says Akamai has over 25,000 servers for streaming and video delivery. No they don’t. They have over 25,000 servers for all of the types of products and services they offer, but not all 25,000 are setup to deliver every type of content. The servers that deliver Windows Media videos via a streaming protocol are not the same servers that are then delivering a Flash video via streaming. Separate servers are required to deliver content for each streaming platform chosen. What percentage of Akamai’s 25,000 servers are setup to support what formats, protocols and geographic locations, they won’t say. But if you are going to compare any CDNs infrastructure for streaming to another CDN, then you have to compare the infrastructure that is specific to that type of service. Even if you don’t know or the company won’t say, you still can get a good estimate if you do some research.

My point is this, if you are going to compare any vendors in the space one to the other, you have to do it in a fair apples to apples comparison as much as possible, which right now, when it comes to streaming and CDN, is not being done by most analysts and investors.

The BBC announced today their new free Internet TV service today and are heralding the arrival of their "on-demand" iPlayer as "important as the first color broadcasts in the 1960s." They have got to be kidding.

For starters, the service is only available to users running Windows XP, contains programming from only 65% of the total content on TV and is only available to users living in Britain. The BBC says that it’s a priority for them to support other operating
systems at some time, including Mac, Linux and Vista, but don’t give a
time frame as to when. You can’t save the content to your computer and can’t burn copies of the shows and you can only watch the content for a total of seven days. You can stream content on-demand, you can only download it. The iPlayer, which the BBC has been working on since 2003 and was originally called the iMP (Integrated Media Player) is still in beta mode and to date, I have not seen the BBC talk about what kind of market penetration they think they can get with their player when they do a full launch.

The content won’t be HD quality and I can’t find any article or info that details what the quality of the video will be. What is the bitrate and resolution? You’d think the BBC would really be focusing on getting this info out there being they are comparing it to a TV experience. But of the 37 news articles in Google News today, not a single one talks to the quality of the BBC service. The BBC is not the first broadcaster to offer this service in Britain. Channel 4’s ‘On Demand’ video download service has been out  for close to a year already.

Also, you can sign up to use the service, but the BBC is limiting the number of people initially who use as so as not to swamp the service and keep it to a controlled beta. I don’t think there is anything wrong with  doing it that way, but then why promote it and talk about it so heavily when a large percentage of the people who sign up you will be turning away? Sets bad customer expectations.

The BBC has a long way to go before this becomes a real service and by continuing to talk about how important this is and comparing it to the color TV considering the service is only in beta, has not been tested for scalability, can’t support multiple platforms, and can only do downloads, they are setting themselves up for failure in the eyes of customers. You can’t promise the world, call it the start of a new revolution for TV and then not deliver an experience that is not even close to the one you say you are going to replace.

With all that is going on in the online video world today, why is it that most of the blogs and news sites only seem to focus on YouTube or user generated content topics? This week is typical of most. Over the past four days, I have read about 450 posts from 54 sites that I have in my RSS reader. Of those 450, nearly 60% of them are about YouTube, user generated content, video and social networking sites and topics all pertaining to user generated content in some form.

What about all of the other exciting subjects pertaining to the online video world? Why aren’t more bloggers talking about video in other markets like the enterprise, broadcast, mobile and education markets? Or what about the infrastructure side of the business. Servers, encoders, formats and tools. Yes, some cover these subjects but literally just a handful. If user generated content sites did not exist, I really wonder if a lot of these bloggers and news sites would have anything to talk about?

Am I the only one who is tired of reading a few dozen stories a day about YouTube and other UGC sites that to date, have shown no successful business models? Yes, I understand the role UGC will play in our industry and I understand the excitement around these tools that enable anyone to get video online. But our industry has been around for the past 14 years now and user generated sites have been around for only a few. There was an entire industry and business before the UGC sites were even around, but you wouldn’t know of it the way many of these sites only talk about YouTube.

Last100.com has a detailed two-part story that outlines Microsoft’s current and future strategy for Internet TV posted by Mack Male who also runs the WindowsMediaBlog.com site. It’s a good read that gives insight into Microsoft’s history in the space and covers many of the products and platforms that have had over the years including WebTV, UltimateTV, Windows Media Center, Microsoft TV Foundation Edition, MSN TV2, Xbox Live Video Marketplace and Microsoft Mediaroom.

Speaking of Internet TV, I’d be interested to hear readers feedback on whether or not the phrases Internet TV and IPTV are interchangeable in your eyes and mean the same thing?

I first wrote about this back in March and I am amazed that even since then, MSNBC.com still can’t get it’s live video streaming to work for anyone with a Firefox or Safari browser. And the worst part, they have no problem delivering you a 15 second ad in the player first, BEFORE they tell you that your browser does not currently support live video. So I have to sit through a video ad only to then be told that I can’t see the live stream I clicked on.

MSNBC’s video player has said it is in "beta" ever since it launched, which was at least a year ago. And it’s still in beta? The technology behind MSNBC.com’s video offering is "powered by MSN" which in my eyes is even worse. If MSN can’t provide the video functionality MSNBC.com should have, then MSNBC.com should fire MSN and use a platform that actually works. But of course that won’t happen.

MSN is completely clueless when it comes to its video offering if they think users are going to stay loyal to MSNBC.com as their news source when every other news site does it better. If MSNBC.com was smart, they would dump MSN video immediately and or fire whoever manages their video offering. But they won’t do that as Microsoft wants to push their IE browser on you, except that they don’t make IE for the Mac, so Mac users are basically just screwed as well as PC users who don’t want to use IE and prefer to use Firefox instead.

Last time I posted about this, some readers wrote in to say:

– "It’s not just Mac users. I have a PC as well, and many of MSNBC’s videos won’t play on it either if I’m using Firefox. If I use IE, then I’m okay."

– "I’ve also enjoyed using Firefox on my laptop, but i can NEVER get MSNBC video to work with Firefox on my laptop – it is so frustrating!"

– "Come on MSNBC, get your stuff together. If amateur webmasters can make this stuff work, so can you. You just don’t want to."

2007 marks the 14th year that streaming media technology was first used on the Internet and it’s sites like MSNBC.com that make the technology look like it has barely evolved in that time and gives the entire industry and technology a black eye. As much as MSN says video is an important part of their business, clearly their lack of interest in making their videos work properly says otherwise. It’s as simply as being greedy and wanting to push IE on us, including those platforms they don’t even make IE for.

Microsoft as a company has been late to the game when it comes to all
aspects of the Internet and video is no different. MSN, MSNBC.com,
Soapbox etc… are all behind the times when it comes to their video
offering. You’d think they would want to prove the opposite by having a
quality video offering but they are stuck in the politics and red tape
of a company that can’t get out of it’s own way.

My suggestion to MSN, get out of the video business. You have no
concept of what a good user experience is, you can’t provide basic
functionality that ever other major news outlet has been providing for
years and you’re insulting users by making them sit through ads when
they can’t get to the content they want. You can’t even provide a basic
player check to see if the user has the system requirements that are
needed – which companies were doing back in 1998.

Give up MSN. Throw up your hands and move on. You can’t win in the video game.