2010: An online video infrastructure evolution

By Anshu Agarwal

Last year, we saw significant expansion of the online video delivery market with the emergence of a variety of players across the content management, content delivery infrastructure, and monetization markets. Online video viewing has increased steadily, since it became readily available to consumers, especially as more consumers switch to broadband connections in the consumer market. 2009 saw the largest expansion in online video. comScore data shows that from January to December of 2008, online views increased by 4.5 billion views. Yet, in 2009, online views increased by 18.4 billion views. As online video continues to increase in market size, it will invariably continue to attract a number of players, looking to capitalize on the emerging market. I fully expect to see industry pundits work to more effectively categorize the players into various categories in 2010, as always happens in the technology sector (we can see the analyst classifications already!). I think this is critical, because it is clear that many of the solutions sound alike in nature, but are very different and targeted at very different portions of the online video value-chain.

Within the next few years, I believe we will reach that critical point in the evolution of online video when the typical viewing experience is comparable to that of conventional TV. Online video has already become a preferred form of television for some groups. Online video viewing is in many ways much more economical. Internet use is nearly commonplace in developed nations like the United States. By April of 2009, the Pew Research Center's Internet & American Life Project reported that Internet adoption had reached nearly 80 percent. Because it is almost commonplace, and in certain cases mandatory for people to use the internet, some choose the internet before television. For many college students, watching on personal computers is preferred. For people at work, online video is the only option for sports or special events. While the business models and value chain positioning will continue to evolve, the need for a very high-quality viewing experience as we have come to expect with TV, movies and today's on-demand DVR system is absolute. The rise in smartphone sales has illustrated that people desire more portable and on-the-go methods of receiving a variety of information. Additionally, alternate portable electronic devices are being created by manufacturers to provide a convenient and rapid delivery of information, content, and video.

In executing 3-screen online media delivery strategies (to the internet, televisions, and mobile devices), service providers will face significant shortcomings from their existing network infrastructure. Most are not optimized to support the file sizes and flow of online video and other new media content, while providing a high quality of experience to end users. Today's audiences are tech-savvy and fickle users. The introduction of LED, and plasma televisions, in combination with HD programming has whet the appetite of the video consumer. And with the increase in the number of users watching online video, coupled with the number of devices used to view video; this can prove to be a daunting task. While some providers might excel in some areas--delivery to televisions, delivery to internet, delivery to mobile, or a twosome combination of the three--those who are able to deliver consistently in every area will more than likely be the first to gain more of the market. Because of this fact, service and content providers will be challenged to achieve the massive scalability required to deliver online media content with a consistent level of reliability across every medium to maximize monetization opportunities. The ultimate limiting factor facing service providers in capturing the online video opportunity rests squarely on reducing the cost of delivering high-quality media while improving the quality of experience.

All of this will lead service providers to a build versus buy decision for online media delivery. I believe that we will see significant video delivery infrastructure build out as Telcos seek to gain a greater portion of the media delivery market rather than deferring to traditional CDN service providers. Ultimately, lowering CapEx and OpEx will make a material difference to the bottom line to the business of video delivery. Media infrastructure technologies will play a significant role in helping Telcos unravel the complexity and challenges of online video delivery.

Anshu Agarwal joined the Ankeena management team in 2008 as vice president of product marketing after successful stints at Level 3 Communications, Akamai Technology and Speedera Technologies. Agarwal holds a B.S. in Electronics from IIT/Roorkee, India, an M.S. in Electrical Engineering from Rutgers, and an MBA from the Kellogg Graduate School of Management, Illinois. Santa Clara, Calif-based Ankeena Networks is a leading provider of new media delivery infrastructure solutions. Ankeena's innovative Media Flow Director powers 3-screen delivery of live and on-demand rich media content, and also serves as a platform to integrate comprehensive solutions. For an example, visit www.ankeena.tv.