I’m testing the Super Bowl stream live across 25+ apps/platforms on Apple TV, Roku, Xbox, PS, Fire TV, iPad, iPhone, Samsung Galaxy Tab, smart TVs from LG, Vizio and Samsung. Follow this blog post for updates.

Updated Feb 9th: The Super Bowl streaming numbers are out and had an average minute audience of 5.7M viewers.

Updated 10:15pm: And that’s a wrap. Other than some issues CBS had with the CBS All Access app at the start, everything else looked good for me.

Updated 7:28pm: Some users of the CBS All Access app specifically reported having trouble logging in right around kickoff, but I don’t know what percentage of people it impacted. Wasn’t a video problem specifically but an issue with the app. I had it running on an iPad and Fire TV but wasn’t impacted. CBS has confirmed the issue has now been resolved.

Updated 6:41pm: Super Bowl stream is looking good across CBS All Access app, CBSSports.com, Yahoo! Sports across Roku, Fire TV, Apple TV and Apple and Android tablets. As you can see from the photo above, the latency across the devices varies based on hardware and app. I have 13 streams running across all devices and so far they all look good.

Updated 6:04pm: The content delivery networks (CDNs) doing the video distribution this year are Fastly, Verizon Media and Amazon Web Services (CloudFront).

Updated 5:40pm: As a refresher on previous Super Bowl streaming numbers, the 2020 Super Bowl stream by FOX had a 3.4M “average minute audience” across all digital properties (including Verizon, NFL, Yahoo and other properties). The 2019 Super Bowl stream by CBS had a 2.6M “average minute audience” across all digital properties (including Verizon, NFL, Yahoo, Tumblr, AOL and other properties). The 2018 Super Bowl stream by NBC had 3.1M “concurrent streams” across all digital properties.

Updated 5:29pm: The max bitrate for the Super Bowl stream, depending on the device you are using, will be 9Mbps. Due to the pandemic and CBS having to do so much remotely, there will be no 4K or HDR variations of the stream.

If you have any Super Bowl streaming issues today with the video or apps please email me at dan@danrayburn.com and I’ll send your feedback directly to the CBS tech team. Make sure you update both the app the device OS you are using as most problems can be fixed simply by doing that. If you have a problem, please include all details when you reach out to me including device, model number, device OS, app, app version and internet connection.

My 2020 Super Bowl post is here and my 2018 Super Bowl post is here.

I’ve seen a lot of speculation over what’s currently taking place with the delivery of TikTok traffic as it pertains to third-party CDNs as well as TikTok’s own DIY efforts. So in an effort to clear up some of the confusion, here are some details on what’s happening. TikTok has been working on their own DIY CDN to deploy hardware they own and operate inside third-party networks. So far they are early in their efforts with some deployments in specific countries, but they are still in the process of rolling it out and expanding their footprint. In September of last year TikTok said it plans to hire about 3,000 engineers over the next three years, mostly in Europe, Canada and Singapore. So while they haven’t gotten their DIY CDN to mass scale yet, we know that is ByteDance’s goal for the delivery of TikTok content.

Around the end of Q2 2020, TikTok changed their approach to delivering videos and other content and moved to a model that relied on what looked to be almost two dozen different providers globally, large and small. When the changed happened, you could see this from public trace routes in various countries. This change was driven by politics due to the Trump Executive Order and was not driven by any kind of performance or capacity problems with the CDNs they were using. Fastly and Akamai were two CDNs that had a large volume of TikTok’s delivery traffic in various regions of the world and at different volumes. For example, we know Akamai was doing a lot of delivery for TikTok in India, where the application has since been banned by the government.

While it doesn’t seem like TikTok will be banned in the U.S. for now, the Biden administration has said they will continue to “hold China accountable” on technology-related topics, though final decisions around its stance on TikTok and other telecom issues have not yet been made. Since the start of the new year, third-party CDNs have started to see some additional TikTok traffic come to their network, in specific countries. This is not an indication that TikTok is going to default back to third-party CDNs, but is a sign that they may once again rely on them more as they continue to build out their own CDN. Even if TikTok had not made the change in their strategy in the second half of last year, it was only a matter of time before they started moving to more of a DIY model in 2021. So while some think the TikTok change was unexpected, we all knew that going DIY was coming sooner than later. It’s also important to note that not all DIY customers move 100% of their traffic to their own CDN platform, especially when they have such a global audience. So even with TikTok’s DIY CDN growing over time, they still might rely on third-party CDNs in specific regions.

There has also been some speculation that if Oracle and Walmart were to get a combined 20% stake in a new company called TikTok Global that, “TikTok will likely move its video to Oracle’s cloud computing platform.” Oracle does not have their own CDN offering as part of their Oracle Cloud Infrastructure (OCI) platform and I would not envision them building out a CDN just for TikTok. As part of the proposed deal it was announced that Oracle would host all U.S. user data on its cloud platform, but that’s not the same as delivering videos. Other cloud based services like origin storage and compute could potentially be moved to Oracle, but one would expect that Oracle would use a multi-CDN strategy of third-party CDNs for video delivery, like all large video customers have adopted.

I think the biggest potential opportunity for third-party CDNs to get additional revenue from the delivery of TikTok related content would be if the deal with Oracle and Walmart went through. Based on the latest data I saw, TikTok had over 100M users for their application just in the U.S. alone. So far we haven’t gotten any information from the new administration on when or if that deal will happen, or what any new requirements might be needed for it to take place. But if that deal were to come to fruition, I would estimate that it would be good for third-party content delivery networks.

Between all the craziness on Wall Street and the number of earnings in the past few days, it’s been a busy week to say the least. With earnings from NBCU, AT&T, Verizon, Facebook, Apple, Microsoft and Charter, along with news from Sling TV, Peacock, YouTube and others, there’s a lot that’s taken place. I’ve broken down all the earnings, news and concise takeaways at the links below to try and make it easy for everyone to catch up on what they may have missed:

• Vimeo’s Business Detailed In IAC’s S-4 Filing: Revenue from first 9 months of 2020 of $199.4M, with a net loss of $44.8M. Has 1.5M subscribers who pay an average of $214 per year ($17.83 a month). See my blog post for the full details: http://bit.ly/2M8v5E1
• Some clarity on Vimeo’s $300M raise. The report by Reuters that they raised $150M on a $2.75B valuation is NOT accurate. Vimeo did a $200M raise at a $5.2B pre-money valuation and a second raise of $100M at a $5.7B pre-money valuation.
• Comcast Q4 2020 Earnings: Lost 248,000 pay TV subs in the quarter, total loss of 1.4M pay TV subs for the year; 33M “sign ups” for Peacock TV in U.S.; Revenue of $103.6B for the year, a decrease of 14.9% y/o/y. More details: http://bit.ly/3r3eRur
• NBCU says Peacock TV brought in $100M in Q4 revenue and that losses on Peacock TV are estimated to be $2B for 2020/2021. Peacock TV has 33M “sign ups” as of this week. CEO says, “Peacock remains primarily an advertising play”.
• AT&T Q4 2020 Earnings: Ended the year with 41.5M combined HBO Max and HBO U.S. subscribers but didn’t break out how many are just HBO Max subs. Lost 617,000 DirecTV and AT&T TV premium video subscribers (27,000 were the AT&T TV streaming service). More details and a chart that breaks down HBO Max subs more here: http://bit.ly/2YtpLxi
• Verizon Q4 2020 Earnings: Lost 72,000 pay TV subscribers. Total pay TV losses for all of 2020 totaled 298,000 subscribers, which was 7.2% of all pay TV customers. Verizon ended 2020 with 3.8M pay TV subscribers. More details: http://bit.ly/2YrvjZf
• Sling TV raises pricing by $5 a month for new subscribers with their base plan now starting at $35 a month. Sling says they are being “forced to raise prices because the television networks keep charging us more.” Customers now receive 50 hours of free DVR storage, an increase from 10 free storage. More details: http://bit.ly/2M8CZ08
• Apple Q4 2020 Earnings: Total revenue of $111.4B, up 21% y/o/y, Services revenue of $15.7B, up 21% y/o/y,; iPhone revenue of $65.5B, up 17% y/o/y. Revenue from China of $21.3B, up from $13.5B y/o/y. More details: http://bit.ly/3afvRaa
• For those that got free Apple TV+ accounts from buying an Apple product, Apple has extended subscriptions for free until July. They were due to roll over to paid accounts in February.
• Verizon CFO: “As the early cohort of Disney+ customers have come off of the initial free 12-month period, more than two-thirds have maintained their subscription, either through their Verizon direct billing relationship or by opting into one of our newest Mix & Match plans with the Disney bundle included.” More details: http://bit.ly/3orVzgx
• Facebook Q4 2020 Earnings: Total revenue of $28.07B, up 22% y/o/y; Monthly active users of 2.8B, up 12% y/o/y; Daily active users of 1.84B; Warns Apple iOS changes could hurt business. More details: http://bit.ly/3akq9UB
• Charter Q4 2020 Earnings: Lost 66,000 residential pay TV customers; but ended the year up a total of 19,000 residential pay TV customers, totaling 15.6M residential pay TV customers at year’s end. More details: http://bit.ly/3oEJBAB
• YouTube is introducing clipping, the ability to make short clips of live streams or videos with a small group of creators. YouTube blog: http://bit.ly/2YtBwUE

If you have questions on earnings or news, and what the key takeaways are, I’m happy to chat at any time. 917-523-4562 or dan@danrayburn.com

[Updated with Q4 and full year revenue] Last month, IAC filed an S-4 detailing Vimeo’s business and their planned spin-off from IAC. Here’s the numbers which are all from the first 9 months of 2020 and some key takeaways on the business:

• *Updated: Q4 revenue of $83.8M, up 54% y/o/y
• *Updated: Total 2020 revenue of $283.2M, up from $196M the previous year
• Based on Q4 growth, total 2020 revenue should be $230M-$240M (my estimate)
• Revenue for first 9 months of $199.4M, with a net loss of $44.8M
• Vimeo has 1.5M subscribers who pay an average of $214 per year ($17.83 a month). 50% of revenue came from customers outside of the U.S. Vimeo has 200M free users on the platform, having added 25M free users in the first 9 months of 2020.
• Has over 3,300 enterprise customers who pay over $22,000 per year ($1,833 per month), on average. Vimeo defines “enterprise customers” as those who purchase plans through contact with their sales force. As a comparison, in Q3 2020, Brightcove’s average annual subscription revenue per “premium” customer was $87,200 ($7266 a month).
• Less than 1% of subscribers pay more than $10,000 per year
• While a majority of Vimeo subscribers began as free users, only a small percentage of free users become paying users over time
• Vimeo’s sales and marketing expenses were $77M, an increase of $12.1M, or 19% y/o/y, due to the growth in the sales force and increased commission expense resulting from growth in bookings and marketing costs. Accounted for 39% as a percentage of revenue.
• Research and development expense increased $14.7M, or 44% y/o/y, due primarily to increased investment in products, including Vimeo Create and accounted for 24% as a percentage of revenue.
• Cost of revenue primarily consisted of $48.9M in hosting fees, $9.4M in credit card processing fees and $4.2M in-app purchase fees paid to Apple and Google.
• 674 full-time employees, of whom 204 were based outside of the U.S.
• Vimeo uses Google’s Cloud Service (hosting/transcoding), AWS (S3) and multiple CDNs (Akamai/Fastly [my info added, CDNs not called out by name in the filing]) Vimeo does not have backup systems for GCS or Amazon S3.
• [Corrected]The $150M Vimeo raised in November of 2020 was by selling 8,655,510 shares at $17.33 per share (They have since raised another $150M in 2021, valuing Vimeo at $6B) Vimeo did a $200M raise at a $5.2B pre-money valuation and a second raise of $100M at a $5.7B pre-money valuation. [Updated] Raised $450M in total with another $150M raise in January 2021.
• Vimeo has $19.4M of a current payable due to IAC and $90.6M of long-term debt
• IAC financed the acquisition of Livestream in 2017 and Magisto in 2019 for Vimeo, but didn’t break out what they paid for the acquisitions, only calling them “small acquisitions”. But they did say the cost of revenue in 2018 increased from 2017, by $19M, “due primarily to the inclusion of Livestream”.
• Over 300,000 new videos are being uploaded to Vimeo’s platform each day
• Vimeo typically does not provide 100% uptime across its video services in any given month
• In its 16-year history, Vimeo did not decide to focus primarily on SaaS offerings until 2017. In addition, Vimeo has only operated an enterprise-focused sales operation since 2017, when it acquired Livestream.
• Based on Vimeo’s internal data, they estimate their total addressable market to be approximately $40B in 2021, growing to $70B in 2024. [I 100% DISAGREE with these TAM numbers, they are not realistic]
• Vimeo says the growth they experienced during the first nine months of 2020 may be partly or largely attributable due to the COVID-19 pandemic. If the COVID-19 pandemic ends and the level of demand for online video returns to pre-pandemic levels, then the growth rates Vimeo achieved in 2020 may not be indicative of growth rates in future periods.
• Vimeo has a few lawsuits currently on their hands, including one filed by British Telecommunications plc on March 18, 2018, regarding patent infringement. Another is a class action complaint in Illinois against Vimeo regarding “facial biometric information”.

The video platform market is crowded with many vendors offering services and I routinely heard Vimeo compared with the likes of Kaltura, Panopto, Zype, Resi, Brightcove, Microsoft Stream, MediaPlatform, Vidyard, Wistia, Qumu, Wowza, YouTube, Dacast, JW Player, ON24, Uscreen, Frame, Hive Streaming, VidGrid, Metacafe and a long list of others. Of course the majority of companies on that list are NOT comparable to Vimeo at all! Let me make that clear. Many vendors target a specific vertical only, or a specific video use case, go after only certain sized customers based on users or revenue, or only operate in regional locations.

You cannot compare Vimeo who has 1.5M customers, paying $17.83 a month, with an enterprise video platform that is on-prem, that ties into learning management systems (LMS), ingestion from video conferencing gear etc. and has customers signing six and seven figure contracts per year. The same goes for video platforms targeting edu institutions and lecture capture based solutions. There are a LOT of differences between video platforms in the market and it is very important to compare apples-to-apples across services and market targets.

If you have any questions on Vimeo’s business, the size of the market for video services, the competitive landscape, Vimeo’s strengths and weaknesses etc. I’m happy to chat more about it. Reach out anytime at 917-523-4562 or dan@danrayburn.com

[Updated Post Here: Vimeo’s Business Detailed In IAC’s S-4 Filing: All The Numbers and Key Takeaways You Need To Know]

I’m all for companies in the video space being valued by investors and Wall Street for the value they bring to the market, but I am also a firm believer that valuations need to be realistic to set proper expectations with investors. Since November, Vimeo has raised $300M with a valuation of $6B. They had $199.4M in revenue for the first 9 months of 2020 and are expected to end the year with about $230M in total revenue. [Updated Feb 3rd] Vimeo ended the year with $283.2M in revenue. So even if they grow at a continued 40% y/o/y rate, they are valued at almost 19X projected 2021 revenue. Vimeo is competing in one of the most competitive and price sensitive markets around and they are not an enterprise platform. Their customers are SMBs with spends well under $100 a month and none of these video platforms for SMBs are sticky. Vimeo offers an easy to use and reliable video streaming service, but so do many other companies specifically targeting the SMB market.

Their parent company IAC keeps mentioning how Vimeo has “200 million users globally”, but those are not all paying customers and they don’t define what a “user” means. Vimeo doesn’t have any kind of proprietary service or platform and from the IAC investors and Wall Street people I have spoken to, many don’t really understand Vimeo’s business or the competitive landscape for their services. Yes, Vimeo has an easy to use service and it works well. But not to the tune of a valuation based on 19x revenue, which includes a 40% year-over-year growth assumption. Vimeo’s 2018 revenue was $147M, so assuming back-to-back years of 40% growth by itself is a big bet. IAC plans to spin Vimeo out and take the company public this year, so at some point in the next 3-6 months I would expect we’ll see them file an S-4 which will break down all their numbers. Updated: The S-4 has been filed. See my details on it here.

In 2020, over 80% of video streaming traffic still used the H.264 codec, which seems staggering when you consider we’ve had HEVC and VP9 around for quite a while and there are even more advanced options on the way (AV1, EVC, VVC, LCEVC). This isn’t news to anyone who is close to this stuff and has been widely discussed before, but we should be taking a frequent look at what continues to block progress in one of the most fundamental components of the streaming media stack.

I recently conducted a survey on behalf of compression experts V-Nova, and then moderated a webinar (which you can check out here) to discuss the results with Luis Vicente, CEO of sports OTT operator Eleven, and Karam Malhotra, Global VP Revenues for Asian top 10 video app SHAREit. The survey’s focus was on key barriers to improve the quality-of-experience operators are serving their customers. Over 200 senior business and technical decision makers responded from a broad range of industry verticals and the results provided some real food for thought. You can download all the results from the survey for free, at this link.

From the results of the data, it was enlightening to hear which components of their video delivery systems people think are most critical for QoE. CDN comes out top here and in my view that’s simply because it’s the easiest to measure and everyone’s first thing to look at. This is indicative in part of services tending to consider components like video codecs as a fixed constant because changing them is assumed to be a long-term project, which it doesn’t have to be. Interestingly, however, video codec came out close second in terms of relevance to QoE.

It stands to reason that deploying new compression tech and streaming equivalent quality at substantially lower bitrates improves QoE all round by accelerating start-up times, reducing buffering incidents, increasing the % of viewers that can receive higher quality ABR profiles and reducing the traffic load on those CDNs that appear to be taking most of the heat for QoE issues.

So, what are the barriers holding the industry back from moving video compression forward? As you can see below, the widely publicized royalty costs regarding uncertainties for codecs like HEVC have generated a lot of hesitancy.In addition, the increased operating costs of encoding and processing are an important barrier too. Furthermore, quite a few of the survey options on this one all point to the risk of incurring significant new costs from heavier compute requirements and the additional complexity that comes from duplicating workflows to serve different types of device. For many, royalty issues are so loud because in truth most people see unclear business benefits from deploying new video codecs and immediately incurring cost increases.

Despite these barriers to adopting new compression technologies, 33% of respondents reported that they are wanting to trial new options in the next 12 months, a clear acknowledgement of the need to find ways to progress somehow. This is possibly being driven by the clear need to differentiate in this evermore competitive entertainment space by launching more premium services like 4K and HDR, which 29% said they were intending to do in 2021.

All of these survey results brings us to the question that really prompted me to do this survey in the first place, which is what would actually convince companies to upgrade their video encoding and reap the available QoE benefits? What are the key factors and where do they need to be to tip the balance?

Respondents were asked to quantify what sort of compression efficiency benefit would be needed (most easily expressed as how much could you reduce the bitrate and maintain equivalent quality). The average came out at 31% which is pretty well aligned with the typical improvement between codec generations (e.g. AVC to HEVC or VP9 to AV1) and also the uplift typically provided by using LCEVC enhancement with AVC or HEVC.

Respondents were also asked what reduction of transcoding costs would be required to convince them to upgrade (that big barrier from earlier). That came out at a very similar average of about 30%. The combination of the two answers is interesting, suggesting that transcoding efficiency is considered roughly as important as compression quality.

I then explored what impact on operating profitability would be generated by an improvement in compression tech meeting these sort of criteria. More than half of respondents felt that optimizing compression technology in this way would provide more than a 25% improvement in profitability. This is surely material, especially if we consider that improved QoE should also produce a benefit to the top line from better user retention and engagement.

A key takeaway from all of this data is that 52% of respondents don’t know what the primary cause of losing viewers from their service is, a key point that warrants more discussion another time.

The general theme that emerged from this survey is one of hesitancy to upgrade video compression because of an array of perceived complexity and cost risks. At the same time, respondents do recognize that improved compression could produce material business benefits. It’s the first time I’ve seen such a clear picture of the criteria that must be met to enable significant progress and an acknowledgement that the benefits to profitability are substantial. It’s also the first time that I see such a clear highlight on the importance of transcoding efficiency, tightly connected to the processing requirements of video codecs.

Objectively it looks like MPEG-5 LCEVC is well positioned to tackle the barriers this survey highlighted. A blend of significant improvements in compression efficiency, simple licensing terms and crucial reductions in the operational processing cost of encoding and delivery seems to be what’s needed to unlock things. It’s going to be interesting to see how that all plays out.

If you want to see all the results from the survey, you can download them for free, at this link.

On Friday January 8th, Roku announced it had acquired Quibi Holdings LLC, the company that holds all of Quibi’s content distribution rights for their library of 75 original shows. All of Quibi’s content will be added to Roku’s free ad-supported channel and as part of the deal, Roku is not permitted to change the format of the shows and must keep all the episodes separate.

Normally for a deal like this we’d all be running calculations on how many ads Roku has to sell, at what CPMs, and with how many viewers, to see a positive return from the deal. But in this instance I would argue that we can value the deal for Quibi’s content with different metrics. The day Roku announced the deal their stock closed up $19.84 a share, adding $2.52B to Roku’s market cap – in one day. Roku’s stock might have gone up that day even without the news, so there is no way to know the exact impact, but Roku’s stock was clearly impacted in a positive way from the news.

The sale price for Quibi Holdings hasn’t been announced but I heard the deal size was “around” $50M, [not verified] while others are reporting the price was less than $100M. Even if Roku paid $100M for Quibi’s content, the return on their investment based on the increase in their market cap would be 25x what they spent. If Roku paid $50M for the content they got a 50x return for their investment, all for just making an announcement. Even if the rumors on wrong on what Roku paid for Quibi’s content and the price was higher, Roku still made back their investment many times over.

If you’ve followed Roku’s stock, you know just how much Wall Street is in love with it and how much it moves based on news. The stock saw positive benefits when they announced the deal with NBCU for support for PeacockTV and again with WarnerMedia for support of HBO Max. We don’t know exactly how much Roku’s stock may have already gone up without the news, but even if it simply doubled the raise that day, Roku sill got a 12x return on their investment. Whether they sell any ads across Quibi’s content and generate any ad revenue almost doesn’t even matter at this point.