Building Better Streaming
Race Is On for Speed, Ad Dollars
By Randy Barrett -- Multichannel News, 11/4/2007 5:00:00 PM MT
Viewer demand for streaming video is booming. So too are new distribution technologies and applications designed to make it easier and cheaper for content providers to jump into the game.
Americans watch about 7 billion streams per month, according to Yankee Group analyst Michael Goodman, a figure he predicts will grow to more than 9 billion by 2011.
Today, the average viewing time per online video is 2.6 minutes — up 0.4 minutes from 2005. While that may seem short, most of the content available up to now has been small clips on video-sharing site YouTube. Major networks are now entering the market with full-length shows.
“We're seeing an increase in long-form programming,” said Goodman. He expects the trend to continue as content providers work on ways to attract and monetize Web video eyeballs.
All of which is fueling the race among content distribution networks to get streaming video bits to viewers better, cheaper and faster.
Players such as Akamai Technologies, Level 3 Communications and Limelight Networks are facing numerous challengers, who have tweaked packet delivery mechanisms and optimized servers to move video streams more efficiently.
Minneapolis-based Swarmcast was granted a U.S. patent on Oct. 3 to do just that. Its algorithm allows videos to be broken up into millions of pieces and spread among a multitude of servers across the Internet. Those servers then send the packets to the end user upon demand where they are reassembled in a system called “multisource streaming.”
“The [viewer] gets the best combination of file bits,” Swarmcast vice president of business development Kelly Egan said.
Standard “old-school” protocols put servers out at the “edge” of the network near users. Proximity is important, but this architecture only allows one user video stream per server, said Egan. When demand is high, those servers can get overtaxed, leading to availability problems and reduced picture quality.
“When you're blending [servers] your end solutions becomes much cheaper” and more efficient than a single-source architecture, Egan said.
Swarmcast charges on a per-gig-transferred basis.
Swarmcast's founders, in fact, invented the original algorithms that made peer-to-peer file sharing possible. While they originally tried this approach for moving big video files, they quickly ran into limits. First, Internet service providers often limit their customers' upstream bandwidth capability. Second, many users didn't want to keep their computers running all the time to share huge files.
“What you gain in savings with P2P [peer-to-peer], you have to sacrifice on quality,” said Egan.
Content-delivery newcomer BitGravity arrived on the scene in October. Executives of the Burlingame, Calif.-based company are more guarded about its offering, but insist its customized network works better than those of “archaic” rivals. “We know exactly what everyone has done before,” said BitGravity CEO Perry Wu. “We started with a clean sheet.”
That white space included such vague items as “routing innovations,” a “denser network” and “optimized nodes,” Wu said. According to recent news reports, BitGravity built its own routers and installed them in data centers around the world in such a way as to minimize the number of hops between the viewer and servers, providing fast, high-definition video streams.
The company claims its video bits have been clocked zipping through the network four times faster than those of competitors.
“Rather than building more fiber, they're making smarter use of the capacity already in the network,” Goodman said.
At least one “legacy” CDN is taking close note of the newcomers and concedes some of their technical advances are legitimate. Level 3 is a network mainstay and delivers video streams for such players as the National Basketball Association, social-networking site MySpace, online game Second Life and Internet TV provider Joost. Of particular interest is the Swarmcast model of many servers supplying video data simultaneously to a single viewer.
“That is the way we would like streaming to go,” Level 3 senior vice president of strategy Mark Taylor said. “You need multiple streams going out to users to sustain very high bit rates of up to 2 Megabits per second.” That is what's required for true HD video quality.
By using this kind of HyperText Transfer Protocol caching, servers can get freed up, Taylor added. Level 3 has no lack of iron. In Los Angeles alone, the company runs 24 mega servers in a single node and that's typical for most cities on its network. But the CDN industry is in the midst of a price war as new entrants — including CacheLogic, EdgeCast and PantherExpress — try to undercut big players and gain market share. Taylor thinks new developments in architecture will make Level 3's job of moving bits easier and ultimately cheaper.
The company has already reportedly slashed its rates by 30% in order to better compete with the new rivals. Another trend driving prices down is that many content providers are choosing to use multiple CDNs to handle their video streams, for better performance, which means lower margins for the big players.
Driving the trend is Move Networks, which is actually a misnomer, since it doesn't own any. The company, based in American Fork, Utah, offers content providers a turnkey platform that takes video streams and sends them over many CDNs, picking the fastest and cheapest routes to send bits at any given split second.
“We're always maximizing quality, and the user doesn't notice it,” said Move CEO John Edwards. “We view quality as how fast does it start? Is there any buffering? What is the fidelity?”
In addition, the company uses a customized video viewer, which allows it to track usage and maximize ad placement. Its marquee customers include ABC, CBS, Fox, The CW and Discovery Channel.
Akamai, the granddaddy of distributed content-delivery networks, is taking a more conservative approach and not ceding any technical advantage to the upstarts. “Akamai has been around a long time,” said Suzanne Johnson, senior product manager for the company. “New entrants like to describe us as behind the curve but we are innovating constantly.”
Johnson added that Akamai's architecture is robust enough to handle all future video traffic sent its way. “Our network scales and it can infinitely grow.”
Though one of the Big 3 CDNs, Limelight is still a relative newcomer, having opened for business in 2001. Its network architecture is similar to Akamai's distributed model, with 5,000 servers around the globe. Still, co-founder Mike Gordon says his company was focused on streaming media — particularly music — from the beginning and has continued to beef up to handle video.
“The basic customer requirement is that online [content] needs to look and sound like traditional media,” Gordon said. “That imposes a really tough standard and there's nothing about the Internet that exempts it from customer expectations.”
Just as broadcast networks have embraced HDTV, everyone in the streaming biz expects high-definition quality video will be standard — and expected by viewers — within the next two years. Level 3's Taylor predicts users might also be given a choice of different grades of video quality, at different prices.
To get there, price points for bandwidth will have to fall considerably, according to industry experts, and content owners will have to find ways to make money on their programming. Competition and advances in computing power are helping to drive bandwidth costs down and CDN carriage rates are dropping about 25% per year, said Gordon.
Still, that might not be fast enough, says skeptic Dan Rayburn, a former video executive, and now industry pundit and blogger. “Everyone's talking about video quality,” he said. “Three years ago, streams were encoded at 300 kilobits per second. Now they're encoded at … 300 kilobits per second. Nobody can figure out how to send it cheaper.”
HD video requires 2 Mbps to 3 Mbps, a ninefold increase in bandwidth. “The numbers just don't add up,” said Rayburn
The streaming ad market remains small compared to its television counterpart, but it's growing fast. According to Accustream Media Research, spending in the segment (music and video) grew 128% to $990 million last year and is expected to jump another 40% by the end of the year to $1.38 billion.
“I think the Internet broadband video market has a tremendously bright future ahead,” said Paul Palumbo, research director at Accustream. He added that research is showing that streaming ads get watched — and provide brand lift.
For broadcasters originally set up and focused on television as a distribution medium, placing shows online is a daunting prospect. A plethora of companies now offer platforms that let content creators easily publish online video, and include streaming advertising along with them.
Move Networks is one of them. Since it streams to a customized player that lives on viewers' computers, the company can gather highly accurate information on how many times a video ad is delivered and actually watched, according to the company. Move can also allow geographically targeted ads, since it knows where the viewers are located.
Cambridge, Mass.-based Maven Networks offers a software suite that includes media management, workflow and publishing, a customizable player, advertising and analytics. A few big content players have built their own Web publishing platforms in house, but the turnkey market is growing as many recognize it's easier to outsource, according to company vice president of product management Todd Boes.
“We're starting to see a lot of companies saying, 'This isn't our core competency,'” Boes said.
Maven charges a hosting fee based on a per-media-request model. Fees start at about $5,000 per month. Its customers include Fox News, CBS, Sony BMG and Scripps Networks.
Brightcove, also based in Cambridge, Mass., offers a streaming platform and allows its customers to publish directly through their own Web properties. Its newest offering, Brightcove Show, is designed to allow content owners without well-known portals to start their own streaming TV “stations,” as well as run advertising. The platform provides management, publishing and distribution modules.
Hiro Media, an Israeli startup, is also in the space, but its technology is based on video downloads rather than streaming. Co-CEO Ariel Napchi said the approach is more effective, and his platform still allows for customized advertising, even if a file is passed hand to hand.
In yet another twist, VideoEgg, based in San Francisco, provides a streaming video platform specifically for online communities. Plus, it supplies an ad network aimed at this demographic, according to company materials.
Incumbent CDNs are also getting in on the game. Level 3 purchased Vyvx as part of its acquisition of WilTel in 2005. Vyvx competes directly with the platforms mentioned above and is now part of Level 3's overall offering. In November 2006, Akamai bought Nine Systems to fill the same gap.
“We believe that as our business supporting media clients grows and their needs advance, the combined Akamai and Nine Systems rich media framework will allow us to develop the best solutions to help our customers simplify the control, management, distribution, reporting, and monetization of digital assets on the Internet,” said Akamai CEO Paul Sagan after the acquisition.
Publishers in the new Web video age agree that ads designed for TV work poorly in a streamed environment. They're too long and not nearly interactive enough. Without many alternatives available, most broadcasters continue to use “pre-roll” ads which run in the Web viewer before the video is streamed. People universally hate them and a high percentage click away before the commercial is finished, say industry experts.
“People say, 'Screw this,' and hit the back button,” said Nick Wilson, vice president of engineering for Break.com. “Less than 10% sit through it.”
Break.com is a leading video site for the much sought-after 18-35-year-old male demographic, delivering primarily short videos of things being destroyed, people injuring themselves (sometimes quite seriously) and attractive young women. The recipe evidently works. The site gets 30 million page views per day, its advertisers include the major TV networks, car companies and distillers and it has been profitable since it opened in 1998. Break.com gets most of its videos directly from its users, who can earn up to $400 for particularly compelling clips.
Web ads that pop up and slide out are “extremely annoying,” said Wilson. A good streaming ad is “subtle enough not to piss off users but effective for clients,” he added.
Advertisers are now starting to experiment with shorter pre-roll messages — 10 to 15 seconds — and they do seem to work better, said Mediavest Worldwide vice president and group director James Kiernan. CPMs (cost per thousands) for pre-roll ads run from $15 on the low end to as much as $50 for highly targeted business-to-business videos, he said.
Also on the horizon are overlays, which place a transparent wrapper over the bottom third of the viewing screen. The model allows video watchers to either ignore the ad, take note of the message for later action, or click on it to go directly to advertiser content. Some systems allow the users to click on the ad, visit the advertiser, and then return to the video which remains on hold where they left off.
“People like them because they're not forced advertising,” said Boes.
Streaming advertising requires a shift of mindset from traditional zombie-on-the-couch, one-way communication to a much more interactive model, say industry insiders.
“The whole idea this is a two-way communication is a new thing for broadcasters,” said Brightcove vice president of marketing Adam Berrey.
Accustream's Palumbo is optimistic that content owners will find a way to make streaming video pay through advertising. “If they weren't making money doing what they're doing — or on a run rate to become profitable — they wouldn't be doing it,” he said.
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