Sunday, September 5, 2010

Next Paradigm Shift: The Internet Would Democratize Broadcasting and Content Delivery

Over the last few years, there has been such a confluence of technologies in so many different sectors that it is about to bring several paradigm shifts… and in the process shape our lives and also open-up new frontiers to commercial opportunities.

There is a long list of paradigm shifts taking place right under our noses while we work, play or snooze. As the title suggests, here we will just focus on: How Internet Would Democratize Broadcasting and Content Delivery.

How attractive does a new technology have to be to warrant adoption and utilization?

It all started with YouTube and the beginning of ‘broadcast your self” phenomenon in the year 2005.

YouTube is free; and is a video-sharing website on which users can upload, share, and view videos. YouTube uses Adobe Flash Video technology to display a wide variety of user-generated video content, including movie clips, TV clips, and music videos, as well as, amateur content such as video blogs and short original videos. In the early days, most all of the content on YouTube was uploaded by individuals, although there were some early adopter media corporations including CBS, BBC, VEVO and other organizations that offered some of their material via the site, as part of the YouTube partnership program.

Unregistered users can watch the videos, while registered users are permitted to upload an unlimited number of videos. Videos that are considered to contain potentially offensive content are available only to registered users 18 and older.

Before the launch of YouTube, there were only a few easy methods available for ordinary computer users who wanted to post videos online. However, with its simple interface, YouTube made it possible for anyone with an Internet connection to post a video that a worldwide audience could watch within a few minutes. The wide range of topics covered by YouTube has turned video sharing into one of the fastest growing and most important part of Internet culture.

Follow the Eyeballs

Consumer demand for service providers to deliver content to any device, at any time and in any location is growing more prevalent each year. Consumers are gaining additional control over how they access content, whether it’s through personal computers, mobile devices or set-top boxes… challenging service providers’ traditional walled living room offerings and in the process threatening their position in the content delivery value chain.

“All service providers need to do is follow the eyeballs,” said Stef van der Ziel, Jet-Stream CEO. “Thanks to the Internet, consumers are revolutionizing the way they access content, and content owners and advertisers are following their lead. Service providers don’t want to be left behind; they want a portion of the content distribution opportunity.”

To do this, service providers must evolve from triple play services─ offering phone, Internet and video, to ‘open play’ platforms that deliver content to all four screens─ PC, Mobile client, TV and the pico projector.

Technology: Deployment of the “Four Screens CDN”

Anyone with commercial interests in streaming media services and CDN [content delivery network] technologies; and that has ever produced a video for YouTube or a web cast, will tell you that the Internet would democratize broadcasting. If a college dropout with heavy interest in media and technology could broadcast video globally on YouTube, then anyone would be able to do so. In a matter of time, all content would be distributed via the web to PC’s, mobile clients, and TV’s and pico projectors. The signs are all around you… just look at the latest products and services offered by Apple, Amazon, NetFlix, Hulu, ESPN and so on.

Years ago, I envisioned a future where consumers and companies would not be locked in walled living rooms… and content owners could distribute content directly to consumers. It was just a matter of time, people and companies [like Apple, NetFlix, Hulu, ESPN] would use the Internet to share content. I also foresaw that the Internet could not handle the sheer volumes of content. There would be a huge need for smart distribution technologies. Telcos will have to follow the eyeballs and embrace Internet based content and consumption on all four screens─ the PC, mobile client, TV, and pico projector by deploying intelligent CDNs.

The Open Play

Enormous amount of resources will be spent to scale the web for professional and massive content delivery; to democratize broadcasting, to disrupt the traditional cable and broadcasting industry and to break open this market so anyone could create, distribute and consume content, anywhere, without borders.

Continued Market Growth Ahead for CDNs

In 2008, the entire global market for video delivery services was only $400 million, according to Frost & Sullivan. That’s a really small number when compared to the overall CDN market size or many of the other segments of the infrastructure market. It shows that the CDN market still has a long way to go and that many opportunities still exist.

Most content owners still don’t make any money with their content, but just imagine what the CDN market will look like when they do. CDNs will be even more crucial down the road as content owners rely on them to help them generate revenue. In the next few years, as more devices [like Apple TV, iPhone, iPad] come to the market, consumers will begin to adopt them in large numbers—then the market will change.

While many ask when this is going to happen and what the next tipping point will be that gives CDNs the next surge of traffic, you have to remember that it does not happen overnight. Many use the example of YouTube and 2007 as being the year that the CDN market really exploded. But what most people didn’t see, or don’t know about, is all the work that was taking place in the CDN space leading up to that event in the years before. Companies worked very hard from 2004 to 2007—none of that perceived growth in 2007 truly happened overnight.

Today, we’re building the market size for CDNs every single day. Even with the poor economy, you don’t see less content online… you see more. You don’t see poorer quality video… you see HD. You don’t see fewer devices… you see more platforms than ever before. This is what we’re building on. So when it seems like there is a sudden surge in the CDN business years from now, with or without Telco’s, remember that it did not happen overnight.

Tough times for many of the vendors in the CDN space may be coming to an end. All industries need corrections, and the CDN industry is no different. The bottom line is that the CDN industry has never been stronger, has never been more needed, and will only continue to evolve to help do more than just deliver some bits from point A to point B.

In the future, private CDNs─ like the one rumored at Apple, will flourish. Streaming media analyst Dan Rayburn reported last year that Apple was planning to bring some of its CDN capabilities in-house. “Folks I have spoken to inside Apple told me that once the new data center is completed, Apple plans to have a more active role in doing their own content delivery,” Rayburn wrote, noting a precedent. “While its way too early to speculate what kind of content Apple will deliver and in what volume, this strategy is nearly identical to what we’ve seen Microsoft do over the years.”

In closing, I must re-state that most CDNs will become profitable, some will be worth acquiring, and many content owners will be willing to pay more for a service that makes them money. We’re all waiting for this time to come. And while it won’t come overnight, I think it will happen sooner than many people may realize.

Anant Goel