Offense and Defense in the Video Wars

We’ve got an interesting juxtaposition of supply and demand issues in video, a reflection of the tension that’s inherent in the Internet or OTT or streaming video model, whatever you’d like to call it.  Just what kind of video future the Web has will likely play out based on how these forces interact, and how regulators and vendors confront the problems and opportunities.

Google is creating a buzz (perhaps I should say “re-buzz”) on Google TV with a launch of a Honeycomb version of the Android platform.  The initial Google TV didn’t turn too many heads, and the current version isn’t really out yet so it’s too soon to tell what will happen.  What’s for-sure happening is that Google is making another stab at getting itself a place in the world of television.  The question is whether there’s anything it can really hope to do.

The Google TV concept has been viewed as both an example of cord-cutting and as proof that everything streaming doesn’t have to be that.  My personal view is that Google’s view is simply that it wants to mediate the video experience with video search.  That such a move might make “cords” collateral damage is to Google just one of those things you accept in time of (commercial) war.  But whether Google is gunning for cable and network alike matters less than whether those parties believe that their own models are at risk, and they clearly do.  That’s why they blocked feeds of their web streaming to Google TV, and are likely to continue to do so.

The other issue with Google TV is the whole streaming thing, which creates traffic increases that don’t produce compensatory revenue gains for operators.  The OTT video model has prompted operators to take increasingly far-reaching measures to manage their profits in the face of the onslaught of video traffic.  Some are aimed at monetizing video rights that the operator has or can obtain, and some at managing the traffic impact.

Content delivery is the hottest issue in networking in an operator-strategic sense; it’s been rated number one since we started doing surveys on monetization priorities.  The consistency of the target has belied a considerable amount of variability in the approach and the specific priorities and methodologies.  Interestingly one thing has not only stayed constant in the midst of turmoil, but actually strengthened.  That’s the commitment by operators to the view that the heart of their content strategy is a CDN.

Content delivery networks are not as old as the Internet, but they’re pretty darn old, and because of that everyone thinks they know all about them.  That’s even true of network operators, who have gone into content delivery in the classic “groping the elephant” methodology.  Some grab for peering-point cost optimization and they see an Akamai-like model of peering-point caching.  Some, particularly mobile operators, are worried about transport costs for video and so they’re looking at pushing flow-through caching out to the edges.  Some are actively monetizing content based on rights they’ve acquired, including through channelized TV service they may offer.  The point is that there’s a host of different perspectives on content profit.

As diverse as operator starting points may be, they all think they will end up in the same place, which is “everywhere”.  We’ve not surveyed an operator who believes that they’ll have anything other than a broad commitment to every single profit-enhancing approach, whether cost- or revenue-driven.  A major reason for that is that operators believe that there’s an enormous battle taking place above them, among appliance giants like Apple, portal players like Netflix or Hulu, the studios and TV networks, and even (increasingly) the consumer electronics and TV companies.  This battle-in-the-skies picture creates a market that shifts directions dramatically as various consumer fads driven by various players ebb and flow.

Verivue, who happens to be the only independent CDN player I ever see in operator deals, has announced a new transparent caching feature to their OneVantage CDN.  With the addition of transparent caching, OneVantage can now support every model of CDN deployment that an operator is likely to be considering, and more important every model they’re ever likely to need to consider.  For operators facing market chaos, it’s comforting to know that the thing you believe to be at the center of your content profit strategy is going to stay on-point through all the market shifts.

Startup players are typically going to take a new slant on things, and the basic architecture of OneVantage is very different, which is why something like transparent caching can be added so easily.  It’s a software-based CDN that can be hosted on pretty much any commercial server and support any storage system from memory through flash to rotating media.  The software logic is virtualization-ready, meaning that it’s cloud-ready, and the components are organized through a Verivue-developed scripting workflow language that makes modification and customization easy.

Verivue’s addition of transparent caching is noteworthy in itself because they’re arguably the first player to have a CDN model that spreads across all the various revenue and cost management options that operators see themselves exercising.  What’s probably more noteworthy in the long run is that the things that make it possible to extend the CDN model like this can also support further extension, and that’s darn sure going to be needed as the complicated multi-stakeholder world of streaming video churns and heaves as it evolves.

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