JumpTV Selling Their CDN: Shows It's Too Expensive To Operate Your Own Network

Last week, JumpTV announced that it was looking to sell its content delivery network and would be "refining its strategic focus toward high-value sports and Hispanic broadcast content." This is a great example of where trying to own and operate your own network specifically for the delivery of video does not makes sense. In the release, JumpTV said "The content delivery network is currently a significant cost center for the company, and the Company believes its sale will enable it to lower its ongoing operating costs."

When asked by investors who their biggest competitors are in the market, some CDNs choose to say "companies who do it themselves". That may be the case when it comes to the static caching of images and HTML, but for video, nearly no content owner builds out their own CDN. Yes, Google and MySpace deliver the majority of their video content themselves, and AOL does a lot, but how many companies are truly like those three? Certainly not JumpTV.

Delivering video to a mass scale, like JumpTV was doing for over 5,500 live events in the last quarter alone, takes a lot of money, a lot of effort and more resources than most realize. Yes, it is not rocket science anymore, but it is very capital and man-power intensive. For all the investors that think any company with some money can enter the market and easily give the top CDN players a run for their money, it's not that easy. And when any content delivery network says that "customers doing it themselves" is the bigger competition they face, ask them for what service they are talking about. It's not for video.

Think about some of the biggest users of video on the web today; MLB, NBA, CNN, MSNBC, FOX, ABC, CBS etc... none of them are building out their own CDNs for video delivery. The CDNs have no major threat from content owners building out their own distribution networks for video delivery.

Comments

[Alexander]

Maybe true for the US, but let's look at Europe.

If running a CDN is not your core business, then you have to seriously consider to outsource. We (StreamZilla) have EU customers who are large EU streaming companies and they have outsourced their complete CDN business to us because their costs decrease and they gain on features and performance. And most important: they can focus on their own core activity (like webcasting, content production, webdesign etc).

Wholesale streaming traffic (all formats) on average costs € 0,07 ($ 0,10) per GB. Compare this to US and UK based CDN's who charge three to ten times as much... ouch!

Even with our low rates It is still a reasonable step to consider to own your own CDN. It's not that expensive to manage a custom CDN. As long as you make it manageable and don't buy extremely expensive traffic.

For instance, a lot of European customers have bought our CDN technologies so they can run a CDN in their own broadband network. Telecom operators, cable companies, universities, hosting providers...

The customers provide the network and the servers, we design a custom CDN within a week, roll out the CDN within another week remotely and they are up and running. CDN's can be managed by a few engineers, and if you already have a NOC, then you can just add the CDN management tasks to the existing staff.

And many broadcasters in the EU have developed their own CDN. And are still running this at much lower costs than Akamai, Limelight or Level3 could do themselves. It's not until recently (past 2 years) that the broadcasters have considered to outsource capacity. Some have tried Akamai and Limelight but are not satisfied (high costs, not optimal performance).

[Thumper]

What most people miss is that the JumpTV is a hybrid of a CDN. It is not the delivery of the content to the watchers that is the expensive or hard part (infact this can be done very efficiently and cheaper than outsourcing) - it's the channel acquisition costs that are hard to swallow. They have over 300 channels world wide - they need to get the signals and convert to digital, and many are not available over satellite. This meeans many different Satellite downlink spots and many individual direct connections and that is where the cost is. And there is no one who can provide the presence in most of these locations. Only way to reduce cost is to cull channels.