George Fraser is the Vice President, EMEA and Asia Pacific for Limelight Networks. He oversees sales operations and business development strategies. Prior to Limelight Networks, he was Senior Vice President, Global Sales, for Motricity. Responsible for business development, Mr Farser helped Motricity achieve over US$100 million in revenue in 2008. Earlier, he was Managing Director and VP Europe for Infospace, Inc., where he was responsible for mobile search, media storefront services, portal services and messaging. Mr Fraser held general manager positions in Europe and Latin America for RealNetworks, Inc. He also held executive positions at Eyretel, Worldcom, British Telecom and Xerox Corporation.
As service providers consider how to tackle the OTT content delivery opportunity, they find that outsourcing can provide a convenient solution that allows them to concentrate on core business. Outsourcing Content delivery avoids the CAPEX outlay and enables costs predictability with flexible scalability. In one case study, outsourcing content delivery saved a media company a considerable amount in three areas: good cost control, continuing scalability and performance consistency. In another case a media company contracted out the delivery of a live event, to obtain extra capacity for the event peaks only at the particular time it was needed. This is a typical profile of demand for OTT content that is best suited for outsourcing.
No longer satisfied by serving content to just one screen, media companies are moving quickly to get television and other video services online and on mobile devices. While consumers are still glued to their flat-screen TVs, they’re also finding – and funding – new forms of entertainment via the web, making the world a true three-screen universe. In one sense, there is a great equalising force at work. New content companies have access to online distribution just as the media giants do. In another sense, start-ups and incumbent providers alike are facing monumental hurdles in the next phase of content and entertainment delivery.
The Internet enables OTT target any location on the globe. For example, the highly successful US-based Netflix Inc. is preparing to launch an online video service in the UK and Spain in 2012, taking aim at LOVEFiLM International, Europe’s largest subscription service for streaming movies and TV over the Internet. The stakes become even higher with content owners, media companies and broadcasters, cable and wireless operators and even telecom companies vying for a piece of the over-the-top (OTT) pie.
According the analyst firm SLN Kagan, the UK and France lead Europe’s emerging deployments in OTT video. SNL Kagan adds that fragmented hybrid broadcast broadband initiatives in Europe are being consolidated in new national efforts such as Project Canvas (YouView) in the UK, MHP in Italy and HbbTV (Hybrid Broadcast Broadband TV) in Germany and France, enabling broadcasters to leverage their content and experiment with interactivity. In the meantime, SNL Kagan reports that pay-TV companies in cable, satellite and IPTV such as BSkyB, VirginMedia, BT and Orange are exploring ways to bring OTT to their subscribers in a multi-screen environment.
While content delivery is a critical component of media service success, this does not mean it is core to the media business. Delivery networks on their own do not drive revenue, add customers or create new products and services. On the contrary, they require massive capital expense, continuing scalability and specialized expertise. In other words, managing delivery is costly and difficult. That’s true for media companies that are just getting started, and for ones that have been around for years.
The challenges inherent in content delivery cross many categories, from hardware to software, and from capacity needs to complex technical requirements. Increasingly, the most viable option for meeting these challenges is to outsource specific infrastructure systems that are not core to their business. By outsourcing, media companies can achieve greater scale, better performance, and more predictable, manageable costs.
What outsourcing means
Choosing to outsource all or part of your OTT infrastructure can create immediate benefits. From a cost perspective, you shift the financial burden from capital expense to operational expense. In addition, because you’re not buying excess capacity for the purpose of meeting occasional peak demand loads, overall costs go down without a negative impact on performance.
From a revenue perspective, the fact that your IT team can focus on your core business means it is possible to create a faster road to product growth and new revenue. With an underlying infrastructure that is automatically optimised and always reliable, it is easier to innovate and build on existing competencies to help your company grow.
Finally, from a company value perspective, outsourcing your infrastructure ensures consistent performance because your business operates on a professionally managed network. There is no learning curve, no capacity crisis during high traffic periods, and no disaster recovery issue in the event of a service outage.
The traditional fears around outsourcing can also be mitigated in an infrastructure partnership by putting the appropriate safeguards in place. An outsourcing partner should be able to demonstrate a proven track record of past success, and be able to back that record up with the necessary Service Level Agreements. In addition, partnering with an infrastructure company should involve processes that allow you to maintain control where it serves the business interest. By retaining control in specific areas, a content company can continue to differentiate its services in the marketplace and rest assured that costs or capabilities do not fall outside acceptable parameters in the future. With these safeguards in place, outsourcing becomes a reasonable option, and one that can be measured by the benefits it will deliver.
Not all outsourced options are equal
There are a variety of infrastructure options available ranging from Content Delivery Networks (CDNs) to ISPs and Telcos. Offerings in each category differ as well, with many specialising in regional service rather than global, and others providing pure infrastructure without any performance gains. For example, one can leverage a global CDN like Limelight Networks that has provisioned a dedicated fibre optic backbone so that the majority of traffic will not need to traverse over the congested Internet. On the other hand, others with regional needs will be satisfied with a telco-based infrastructure.
Consumer video viewing habits are changing further while mobility brings another variable to the equation. The success of Facebook, YouTube, BBC’s iPlayer and Apple’s App Store via mobiles has brought a sharper focus to OTT content through connected devices, including new tablets like Apple’s iPad. What does this mean to the media company? Media companies must consider mobility - or risk losing a rapidly growing segment, hungry for video. This brings more considerations to selecting outsourcing ranging from interoperability of content management solutions to delivery systems. Offerings in each category will differ here as well.
What outsourcing looks like in the real world for a mobile content distributor
For a television company, the arguments for outsourcing a delivery network are compelling on their own, but they are better demonstrated by real case study: One media company who chose to outsource content delivery and achieved significant return on investment after trying the do-it-yourself approach.
The media company, a provider of live and on-demand programmes, premium television and radio services, with content from leading sports, network and satellite providers, was faced with growing scalability and performance problems because of its home-grown approach.
First, issues of scale threatened the company’s ability to continue increasing the number of concurrent users it could support across a wide range of mobile devices. Second, performance expectations placed significant pressure on the company to improve availability and the overall streaming experience for its subscribers. It needed more data centre capacity to support growth, and more in-house expertise to deal with live streaming protocols and rapidly evolving consumer hardware requirements.
The company had to focus on containing costs and driving business growth in core areas. Cost was an issue because the company had to continue buying more hardware on an incremental basis to keep up with subscriber increases with its home-grown approach. It wasn’t an efficient method of scaling service infrastructure, and it would become a greater issue over time. The company also had separate priorities around continuing service innovation and growth, and it recognised that content delivery was not core to those efforts. The company did not want to expend resources where it couldn’t create a return on investment for the business.
The company decided to outsource with Limelight Networks. The media company now has a scalable content delivery architecture that it can maintain cost-effectively even as subscriber counts and service offerings grow. Previously, the company could serve only 80,000 concurrent users. With the CDN, it can now deliver to hundreds of thousands of concurrent users. The company also found it could minimise latency with the outsourced infrastructure, ensure performance consistency by routing traffic more efficiently, and support automated fail-over across a distributed content storage platform.
The media company solved three problems when it worked with Limelight Networks: cost control, continuing scalability, and performance consistency. Because it outsourced an area of the business that is not core to the company’s growth, the company can now focus on what it does best: creating and executing the best mobile TV services available to consumers today.
Best in show
Horse & Country TV (H&C TV) is a popular on-air and online channel that offers topic-specific news, sporting events, and feature programming. In response to its growing internet audience, the channel recently decided to extend its website offering to include live streaming events. With the help of Limelight, H&C TV hosted its first live online event at the end of April 2010, in conjunction with the Mitsubishi Motors Badminton Horse Trials. The effort was highly successful, attracting users from more than 70 countries and an average online viewing time of forty-eight minutes per user. H&C TV’s website now hosts more than 300 hours of video, with visitors accessing the site from more than 100 different countries.
The future of OTT
The rapidly evolving environment for OTT has attracted players from a wide range of industries – from media companies and other content owners to infrastructure companies such as cable providers, wireless operators and telcos – interested in generating revenue through OTT. This has created a very competitive environment where media companies need to make the most of their investments in their core businesses and their infrastructures.
Choosing to outsource all or part of your OTT infrastructure can create immediate benefits from cost containment, rolling-out new products quicker, generating new revenue streams, and ensuring consistent performance through the outsourced network. Adapting an outsourcing strategy can help mitigate the rapidly changing technology environment by laying a scalable infrastructure that can satisfy the rapidly growing appetite for TV Everywhere.