Telcos Not Yet Willing To Run Their Own CDN: Bharti Airtel Enters Via Limelight

Over the past two years, more than a dozen telcos and carriers have entered the CDN space, all with the strategy of re-selling or partnering with a pure-play CDN provider like Akamai or Limelight. In that time, Level 3 has been the only company with the strategy of wanting to own and operate their own CDN, laying the groundwork today for what will be a big business in the future. This morning, Asia's largest telecom provider Bharti Airtel announced they too would enter the CDN space to serve the Indian market via a partnership with Limelight Networks.

With this announcement, more than 20 telcos and carriers have entered the CDN market and I know of other carriers who plan to make similar partner announcements this year. While Wall Street and others want to continue to speculate that telcos and carriers will one day rule the CDN business, thereby forcing pure-play CDNs out of the market, that won't be happening anytime soon. Yes, carriers who own their own fiber have a distinct advantage over pure-play CDNs who don't operate their own network, but the delivery of bits is only one of the many pieces required for a real CDN offering. Vendors have to be able to do more than just own their own network and deploy a bunch of boxes. If it was that easy, all of these carriers would have done it already and would not be partnering with pure-play CDNs.

Right now, the CDN market for video is too small for most carriers to spend the money to build and deploy their own network. By my estimates, the entire market size for video delivery services globally was only $500M last year, which while a big number, is small in comparison to the other markets that telcos and carriers are in. Until the market size and opportunity is larger, I don't expect we'll see many of these companies who have partnered with pure-play CDNs doing anything on their own and bringing CDN services in-house to their product portfolio.

FOX On Demand Goes Live With Brightcove For Their Long-Form Video Content

Yesterday, FOX on Demand, which provides full episodes of 24, Bones, Family Guy, Glee, House, and The Simpsons went live with their new Brightcove powered video player, The site, which used to be powered by Move Networks is the latest FOX property to use Brightcove in a partnership between the companies that dates back to 2007.

While Brightcove had previously been adopted by FOX for over a dozen sites like FX Networks, SPEED and others, this is the first FOX property that I am aware of that is using Brightcove for their long-form ad-supported video content. On other FOX properties, Brightcove is been used with short-form promotional content but not content that FOX was directly monetizing. This is a big deal for Brightcove as the company has said they will be focused in the New Year at trying to get content owners to use their new Brightcove 4 system to generate money for long-form video content.

As for FOX no longer using Move Networks platform, the change is really not surprisingly at all considering that Move is now focusing all of their efforts on the TV Everywhere space. At the same time, FOX was one of Move Networks first major customers, a client they use to always use in marketing collateral and a content partner who generated a lot of consumers to download and install Move's player. I guess none of that is important to them anymore since they have shifted all of their efforts to working with major cable operators.

Intercall Acquires NYC Based Webcasting Platform Provider Stream57

Yesterday, Intercall, which brands itself as "the world's largest conferencing and collaboration services provider" announced that it had acquired privately held Stream57. The company, founded by Ben Chodor in 2001 and headquartered in NYC, specialized in providing customizable web events with their webcasting platform and provided live event services. Terms of the deal were not disclosed but I will update this post if I get some details.

Related:

- Thomson Reuters Acquires Webcasting Platform Provider Streamlogics

Akamai Granted Patent For Webcasting Meetings, Looks Pretty Broad To Me

Last month, on December 29th, Akamai was granted a patent (number 7,640,303) relating to a "Method of, and system for, webcasting with just-in-time resource provisioning, automated telephone signal acquisition and streaming, and fully-automated event archival."

Reading over the details of the patent, the focus appears to be on a system that allows for the real-time provisioning of a live meeting and the automated process to be able to handle things like audio signal acquisition, encoding, monitoring, archiving, reporting and billing.

While the patent filing makes reference to prior art and systems that already do this today, the basis for the patent seems to be the claims that all of these other systems have deficiencies, which the Akamai patent supposedly overcomes. Some of these deficiencies include:

• "traditional Internet conferencing casting systems have several deficiencies. These applications typically use databases to generate reservation information, to initiate events, and to authenticate a host or the attendees. The database dependency creates a potential single point of failure because if the database is unavailable, events cannot be run."

• "a typical application runs the event streams from a single server, which again represents a single point of failure and limits scalability, i.e., the number of attendees that can attend the conference."

• "prior art conference casting systems also do not have the capability to archive the event in an automated manner and/or to manage when particular streams get interrupted before the event is terminated."

• "the prior art systems require advanced setup for the streams, which dictates a blackout period between the time that an event is reserved and the occurrence of the event itself. Thus, once an event is scheduled, a service provider typically must provision or allocate in advance various system and other resources. Such resources include, without limitation, media encoders, storage, network connectivity, streaming server ports or publishing points, and the like."

• "prior art conference casting systems do not have the capability of reserving and then immediately executing the event, with the resulting stream being immediately available to an audience member. In prior art systems, stream redundancy typically requires special handling and raises costs."

What seems broad to me is Akamai's assertion that all other systems reserve physical resources ahead of time. They are implying that no events based webcasting system on the market today can generate a live stream, or provision any audio resources on the fly, or what they call "just-in-time", when requested. The patent also mentions multiple times that the Akamai patent "provides significant flexibility and reduced costs as compared to prior systems", which sounds like marketing speak to me. They also say that, "In addition, the system is able to handle large numbers of simultaneous events and massive total audience sizes." Again, lots of marketing words, but no definition of what "large numbers", "massive" or how many "simultaneous" streams they are talking about.

Clearly this patent is aimed at the business side of webcasting since typically, those are the events that have registration databases involved and audio conferencing bridges. Most of your one-off media and entertainment events, sports and concerts, don't involve that kind of functionality.

I'm very curious to see if Akamai does anything with this patent and if they try to go out to the market to enforce it in any way. That may not be their intention, or they may view it as something they want to try and enforce, we just don't know. Since Akamai has a company policy of not commenting on anything patent related, I didn't ask them what they plan to do with it.

Akamai Gaining Market Share With Their Lower CDN Video Pricing

For a couple of quarters now, Akamai has been talking about being more aggressive with their CDN pricing. But historically, those pricing reductions have only been with a limited number of customers that Akamai defined as "strategic". After the Streaming Media West show in November, I wrote that Akamai had begun to get a lot more aggressive across the board and they have only accelerated this trend last month and into January.

Over the past four weeks I have seen bids where Akamai has matched pricing from Limelight, Level 3 and EdgeCast or in some cases, undercut their pricing all together. I have seen fewer video contracts steer away from Akamai in December and January and it's clear the company is taking a serious pricing reduction strategy and applying it to a wide portion of their video business. I estimate that by the third quarter of this year, Akamai will have re-priced roughly 75% of their contracts that include video.

IVT Replaces CEO Phillip Whalen With Founder Greg Pulier As Interim CEO

While not announced, webcasting platform provider IVT has confirmed that CEO Phillip Whalen has stepped down and been replaced by company founder Greg Pulier, who will act as the interim CEO. Greg takes over for Phillip who joined IVT two years ago. No details were given on when a new CEO would be hired. The company plans to make some news announcements in the coming weeks.

Enterprise Video Provider Ignite Technologies Does Revenue North Of $10M In 09'

The vast majority of companies in the online video space are private and as a result, don't publish any details on their revenue, profit loss or rate of growth in the market. Many times, vendors will tell me off-the-record what their financials look like but don't allow me to give out any of those details in any public forum.

So it was great to have a call with Ignite Technologies last week where the company was willing to go on-record with numbers, drill down into their revenue and provided me with a list of new clients wins from 2009. While everyone is talking about content delivery over the public Internet, companies like Ignite are focused on providing a platform that enables enterprise corporations to deliver video and digital assets inside their firewall, across the customers own network.

Ignite signed up more than ten new customers last year including BP, FlowServe, Sepracor, Altria and Hyatt and ended the year with revenue over $10M. While that number is small when compared to CDNs in the market, those CDNs are in the service business, while companies like Ignite are in the software business.

While the topic of enterprise CDN does not get a lot of coverage in the media, it's crucial to the way enterprise corporations communicate with employees, customers, partners, suppliers and others in their value chain. The market for enterprise video delivery platforms is still small, under $100M last year, but it's a fast growing segment of the market and one that does not require any type of monetization model, like we see in the consumer entertainment market. Corporations understand the value of video and their challenges are things like managing content, scaling their network and integrating with CMS platforms, as opposed to ad insertion or content licensing models.

The enterprise CDN market does not get written about a lot because most of the work being done is not talked about, many customers don't want their name used and the nature of the content being delivered can't compete with exciting content like movies and entertainment. But there is a quiet revolution going on in the enterprise CDN space and if you speak to a lot of Fortune 500 corporations, the will tell you that their use of video delivery inside their firewall tends to double each year.

Related:

- Enterprise Video Still Growing, Ignite Technologies Reaches Profitability

- In These Economic Times, More Video Vendors Relying On The Channel

Rob Glaser Deserves More Credit Than He Is Being Given By Bloggers

Yesterday, after sixteen years as CEO of RealNetworks, the company announced that Rob Glaser would step down as the CEO and the day-to-day operations of the company. Rob will still maintain his chairman of the board duties and is still the largest single shareholder in RealNetworks.

When the news broke, it was very interesting to watch how many bloggers jumped on the story and published a post without really knowing anything about Rob, what he accomplished with RealNetworks and the role he played in starting the entire online video revolution. Many were quick to say he should have stepped down long ago, wanted to imply that RealNetworks business is in trouble or wrote about the "format wars" from nearly ten years ago.

The reason for this is that none of the bloggers I read are actually in, or from, the online video industry. They weren't around in 1995 webcasting with RealAudio 2.0 software, weren't encoding video two years later when Progressive Networks introduced RealVideo and they never had to negotiate a contract for a RealNetworks license. They simply don't know how important of a role Rob and Real have played and the groundwork they laid for the technology we have today. Half of them, including sites like USAToday.com, don't even know how to spell the name of the company or the word RealPlayer correctly. They are both one word, not two.

That's not to say I think Rob and Real did everything right and Rob and I have disagreed on many things over the years. Probably the biggest thing was in 1998, while at Globix, I negotiated a $200K Real license to be able to deliver content on our network, only to then find out that Real also planned to compete with us for the same business with their own network called RBN. That was a really bad move on Real's part and was one of the reasons Microsoft was able to get their foot in the door since so many delivery networks were upset with Real's licensing practice.

I also remember bashing Real in an article for Streaming Magazine in 1998 when Real decided to limit their support for the Mac client and I also didn't agree with many of the bets Real made over the last few years with regards to the iPod. But disagreements like those aside, while they don't deserve all of the credit, Rob and Progressive Networks started this industry, which can't be debated. Even former Microsoft employees who don't like Rob won't deny the fact that he deserves credit for what he's accomplished.

Today, many talk about multi-bitrate video delivery probably without even knowing that Real invented the technology ten years ago when they launched their G2 system and called the technology SureStream. Real was also responsible for the wide adoption of the RTSP protocol, the first video platform to support SMIL and a whole host of other firsts. Today, most don't know how the online video industry started, what companies were around back then, how the technology evolved or who was responsible for it. The media is so quick to judge companies with the what have you done for me today mentality, as opposed to looking at what they have accomplished over many years.

As was evident by a lot of the bloggers who covered the news, most of them only know Real as a format that use to be around after losing the format wars to Microsoft. While that's accurate, that took place almost ten years ago and Real moved away from the online video format business nearly eight years ago. Today, they only think of Real as a gaming or music company and are quick to dismiss Real as a company that is struggling, without really knowing anything about their core business or where they get their revenue.

There is no question that Real has gone through hard times over the past eighteen months with lower revenue, layoffs and a sagging stock price. But show me a company who hasn't experienced the same thing? It's not like Rob left the company in some kind of financial turmoil, like other CEOs we could all list. As of Q3 2009, RealNetworks had $373.2M in cash and short-term investments. For the third quarter, their revenue declined 5% year over year, which considering the economy we are in, is not bad at all. Many companies would give anything to get a number that low.

While Real has not yet reported Q4 numbers, for all of 2009 the company will have generated more than half a billion dollars in revenue. That alone should get Rob some respect. In addition, Real's carrier platform is used by 85 mobile operators in more than 45 countries and in Q3, the company generated $47.4M in revenue just from their technology products and solutions alone. And for all the industry people who want to talk about the monetization of video, Real will generate close to $100M for all of 2009 from selling premium content services, syndication and player licenses. How many other companies are generating nearly $100M from content today?

While looking through a lot of the comments on other blogs about Rob stepping down, folks were quick to say how Real is losing the music battle to Apple or how five years ago they used the RealPlayer and didn't like it. I get the sense that the vast majority of people don't know what Real's business is today and it is very clear that many of the people writing about the news don't know the history of Progressive Networks and the important role they played.

Many bloggers were quick to try and get their post up first about the news that I found it sad that none of them, that I read, took the time to talk to one of the many folks who have been in the online video space since the early beginning, to ask them what Rob really meant to the industry. That alone is a good story, but many bloggers are less concerned with telling stories these days and just want to be the first to report news.

In many industries, most companies don't last sixteen years. In the Internet space, it's even more unheard of. In that time, Rob managed to not only start the online video revolution but stay the CEO of a company and grow revenue to half a billion dollars. Like it or not, it's pretty hard to argue with those facts. You don't have to agree with everything someone says or does to show them the respect they deserve for what they have accomplished.

Rob, for your efforts over the past sixteen years, and for what you have done for the industry over that time, you have my thanks.

Netflix Confirms It's Coming To The Wii: But Most Wii's Aren't Internet Connected

As I reported in October, when I got access to some screenshots of Netflix streaming on the Wii, Netflix confirmed today that come this spring, Netflix members will be able to get streaming video to their Wii consoles. Similar to Netflix's offering on the PS3, users will be required to insert a DVD into the Wii console each time they want to stream something from Netflix.

While the current Wii console is not capable of displaying video in HD quality, for most Wii users, they won't care. I am willing to bet that the vast majority of content that will be consumed via the Wii is going to be content for kids and families where HD won't be a requirement. And in many cases, the content Wii users are going to consume, like cartoons, would not be impacted by the lack of any HD version.

Many have suggested that when Netflix is able to bring streaming to the Wii that it would be a big deal for Netflix since Nintendo has the most gaming consoles in the U.S. and has sold 26M Wii's to date. While it is a big deal for Netflix, the Nintendo deal won't be as successful or more widely adopted than the Xbox 360 platform, even though Microsoft has 6M fewer consoles in North America.

The biggest problem is that most Wii's are not connected to the Internet. While it is impossible to know exactly what percentage aren't connected, folks inside Nintendo have told me the figure is as high as 85%. And for anyone who wants to hook up their Wii to the Internet via a wired network to enable Netflix streaming, they have to go out and buy a $25 Wii Lan Adapter. Compare that to the Xbox 360 where Microsoft has said that roughly 80% of all 360 consoles are connected to the Internet and you get a clear picture that the Wii won't have that big of an impact on Netflix's revenue in the short or near term. It's a great deal for Netflix and for Wii users, but the impact to both companies won't be felt within the next year.

Why Can't YouTube's Player Auto-Detect When A User Should Get HD Quality?

For all the praise that the industry and the media continues to give YouTube, I don't understand why those same people never hold YouTube up to the standards that other media companies are held to. While everyone wants to discuss the business model behind YouTube, no one ever seems to question why the videos look so bad and why some of the most basic features that other sites have had for years are completely lacking with YouTube.

While the media was quick to cover how YouTube was moving to HD quality video last year, I didn't see a single person commenting that the YouTube player does not currently have the ability to auto-detect when a user should get the HD copy instead of the SD copy. This technology has been around for years and most sites have been using it for quite a long time. Why isn't YouTube? Why do I have to manually click on an HD icon to actually get the HD stream? Why can't YouTube auto-detect that I am on a fast enough connection to get HQ the quality video to begin with? It is so annoying that when you visit a page where the video is set to auto-start, you have to click on the HD icon to get the one you want and then wait again for it to re-buffer.

Today on YouTube's blog, they are asking people to send them ideas on how they can improve the service and to vote on what they think are the most important features that are missing, or not needed at all. First suggestion, FIX ALL THE BUFFERING ISSUES! A quick look at the comments section on YouTube's own blog shows I am not the only one who continues to have buffering problems - for the last THREE years! (2007, 2007, 2008, 2009)

YouTube needs to get with the times and have a user interface that actually takes advantage of some of the technology that has been in the industry forever. YouTube does not use any streaming protocols, only downloads via HTTP, has no player auto-detection feature and lately, 50% of the time myself and many others upload a file to YouTube we get an error message of "try again later." In addition, while YouTube has very limited functionality for variable bit rate (VBR) encoding for HD quality videos, they don't have the option at all for SD quality videos and default to a constant bit rate (CBR). The whole point of VBR is to improve the user experience by providing higher quality video without the need for the video to re-buffer. It's a standard on the web today, but apparently YouTube has not realized that.

If this was the search business and Google was missing some of the most basic features that every other search engine had, the media would hold Google accountable for it and there would be a lot of discussions taking place on the subject. Of course, we know Google does not have any of these problems in their search business but if they did, they would address them and correct them very quickly. But with YouTube, they don't seem to follow the same strategy. The service has been bad for years, the user experience is still very poor, the quality of the videos is not up to par with others on the web and the the YouTube platform has a long list of really major problems that still aren't being addressed or corrected. Users of YouTube are complaining about these problems in public forums, yet the media and many in the industry continue to heap praise on the company even though they are not doing anything to address the poor user experience.

Related:

- Bandwidth Pricing Trends: Cost To Stream A Movie Today, Five Cents: In 1998, $270

- Detailing Netflix's Streaming Costs: Average Movie Costs Five Cents To Deliver

- Platform Overload: How Many Content Platforms Can Survive On TVs And Devices?

- TV Everywhere: The Future of Television, or Another Over-Hyped Promise?