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Broadband Access
Undoing CDN commoditization to deliver value-added services
Online video quality could provide carrier differentiation
by Anshu Agarwal, Nokeena
Considering that 75 percent of U.S. Internet users are streaming 11.4 billion videos monthly , it would seem that Content Delivery Networks (CDN)s are in the right place at the right time to capitalize on the opportunities afforded by the explosive growth of new media.
However, the steady commoditization of CDN services has left many providers without competitive differentiation and with declining margins. The good news is that the appetite for online video and new media is only growing more voracious, and with the right infrastructure, CDNs can deliver the added value to win and retain customers.
User generated content (UGC), podcasts, TV programs, movies and live events are now all being offered over the Web fueling tremendous growth in online video. Whether it’s the increase in video views, percentage of Internet users streaming online videos, number of video streams viewed in a single month or the average duration of video watched, the numbers are steadily climbing.
The insatiable demand for online video is surpassed only by the need for better online video quality. Today’s savvy viewers, used to HD and Blu-ray output, expect broadcast-quality from online video, yet they may not fully appreciate the bandwidth required for consistent 720p or 1080i resolution.
These demands for scalability, capacity and quality often exceed the capabilities of content owners who turn to CDNs to distribute their rich media.
Pushing the infrastructure’s boundaries
CDNs combine technology and services to enable delivery of content from the origin site to the end-user by placing content caches closer to the end-user. CDNs often rely on a proprietary infrastructure that has evolved with market, application and user requirements. The extreme growth in online video content and demand for quality has pushed the boundaries of CDN infrastructures as well. Originally designed for smaller objects, these infrastructures often fall behind the unique requirements of media.
Network congestion, large numbers of concurrent streams, varying bit rates and diverse media players can all impact the viewing experience. To overcome these challenges and deliver an acceptable level of quality, CDNs have been forced to overbuild data centers, oversubscribe bandwidth or push content beyond encoded bit rates. However, each of these approaches adds to the cost-per-stream and diminishes precious margins even further.
Dwindling CDN differentiation and price
Video content initially provided strategic differentiation for CDNs, who were able to uniquely meet the bandwidth, format and resolution requirements of video. The explosive demand for video content invited new players to the game which now includes enterprises, ISPs, telcos, and media and entertainment companies. Video content is no longer a distinguishing service, but a commodity measured only in bits and bytes.
While CDNs could formerly charge a premium for video content services, they are now largely forced to compete on price, and the competitive pressure continues to drive downward. Average CDN prices have fallen drastically in 2006-2008 and now range from a high of $0.50 per GB delivered for low volume, down to $0.05 per GB delivered for high volume.
The ability of CDNs to monetize rich content comes not only from their media offerings but also through the advertisers they attract. By focusing on quality, CDNs can win and retain the larger audiences and attract online advertisers.
Banking on quality
Quality of Experience (QoE) and monetization go hand in hand when it comes to online media. Online video audiences are extremely fickle. Postage stamp sized images, grainy full-screen images, inconsistent jittery delivery and start-stop buffering interruptions all leave viewers feeling frustrated and undermine brand loyalty. This results in viewers spending less time and therefore creating fewer monetization opportunities.
In order to attract larger audiences and for longer durations, CDNs must provide a reliable, scalable and high QoE by ensuring the underlying infrastructure can support it. The delivery system plays an increasingly critical role in the overall user experience and CDNs must break the cycle of propping up resources as problems arise. They must take a new approach to rich, streaming content delivery.
Redefining the delivery infrastructure
On the Internet today, the bandwidth available to a single user stream varies substantially due to shared links, congestion, packet loss, etc. For example, homes that previously supported one stream may now have media players in multiple rooms that are used simultaneously. As this concept is extrapolated to reflect market adoption numbers, it’s easy to see the challenges CDNs face. To date, media providers have addressed this challenge by oversubscribing bandwidth, or consuming more bandwidth than necessary to provide a seamless experience for the user. This results in inflated costs and wasted bandwidth. Emerging solutions can deliver the varying video encoding segments to minimize impact from the IP network and conserve bandwidth without adding cost. Variable delivery can also enable CDNs to provide video at higher levels of encoding.
Scalability is another challenge in delivering a high QoE to users. To meet peak demands and support thousands of concurrent streams along with serving higher resolution streams, CDNs have augmented their data centers, adding resources but also costs. Fortunately, hardware technology advancements in computing are enabling greater scalability without the high cost impact. Multi-core processors, faster/larger RAM and specialized instructions for media all support greater scalability for CDNs. Networking technologies, including 10 Gbit interfaces and intelligent controllers, as well as and multi-tier caching and caching devices all support rich media content delivery and help CDNs consolidate resources while scaling to market demand.
Infrastructures leveraging commodity systems and open technologies also provide greater flexibility to support multi-network delivery and multi-platform viewing. New media infrastructures based upon open technologies that support multiple protocols (HTTP, etc.), formats (Flash, QuickTime, MPEG) and players (PCs, mobile devices, game consoles, media players, set-top boxes) will allow CDNs to reach the broadest audience and help them keep pace with quickly evolving requirements.
By redefining a new media delivery infrastructure using these advancements, CDNs gain the scalability to efficiently and reliably deliver rich streaming media with minimal footprint, power consumption and operational overhead. The granularity, flexibility and scalability afforded by a new media delivery infrastructure also enable CDNs to more easily incorporate value added services into their offerings.
Value Added Services
CDNs have a greater opportunity to increase their value proposition with the right infrastructure in place. They can offer tiered services such as HD quality and non-HD quality subscriptions as well as premium live events and on-demand content. They can provide DVR-like controls such as fast forward, rewind, pause and skip to enhance the broadcast quality of experience.
The challenge and opportunity for CDNs lies largely within the underlying technology. Media is different from data, it has to be served at the rate that is closer to the media encoding rate otherwise the user experience suffers. Addressing delivery challenges holistically to create a media-centric infrastructure, CDNs can achieve the capacity, scale and reliability they need to deliver a television-like quality of experience to the widest audience possible.
They are able to break the cycle of continually revamping different areas of the infrastructure as requirements evolve and bottlenecks shift. Leveraging a new media infrastructure CDNs move beyond video commoditization to bring greater value to their customers.
Following successful stints at Level 3 Communications, Akamai Technology and Speedera Technologies, Anshu Agarwal joined the Nokeena management team in 2008 as the company’s vice president of product marketing. 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.
1. “SMW: Video monetization a good news/bad news story,” by Doug Mohney, Fierce Online Video, Sept. 24, 2008: http://www.fierceonlinevideo.com/story/smw-video-monetization-good-news-bad-news-story/2008-09-24
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