Archive for February, 2006|Monthly archive page

Can P2P save VOD?

People have been predicting that Video On Demand would be the “next big thing” for about 87 years now. Ok, maybe only 10. But it hasn’t happened. The main reasons are pretty clear:

  • Fear on the part of the big media companies (fear of copying, fear of killing the DVD cash cow).
  • The “couch potato problem” – I don’t want to watch TV/Movies on my computer.
  • The cost problem. If you checked out my earlier post covering bandwidth costs, then you can see that $.75 – $1.50 in bandwidth charges to download a single video kills lots of business models like pay-per-TV-show or video rental.

The fear amonst the media companies is slowly starting to change. Just look at iTunes video downloads plus lots of other early initiatives. There’s a little more faith in the reliability of DRM systems now. Not so much that they won’t get cracked, but rather that common users won’t bother and will accept encrypted files.

The problem of getting content to your big screen has not gone away. However, there are more devices that help this happen, and portable players like the video iPod and video-capable cell phones are turning the third screen into a bigger market.

However, the bandwidth cost problem is still with us, even after the dramatic fall in costs over the last few years. There is lots of video content that simply isn’t valuable enough to be worth the cost to download. Very valuable content, like a Hollywood movie, can still only fetch a few dollars on a rental, which makes a $1 cost to download prohibitive. Shorter content is a lot less costly to download, but most of it much be ad supported because users won’t pay real money for it. All of which makes sense as to why iTunes would launch with first-run TV shows – the download cost is smaller, yet people (apparently) are willing to pay a couple bucks to download them. (Read Robert Cringely’s analysis of iTunes video costs and the advantages of p2p distribution).

So for a long time people have recognized that using peer-to-peer for video distribution could dramatically lower the costs. Warner Brothers is set to launch such a p2p vod system in Europe in March. But in fact the core p2p technology already exists, and it’s called BitTorrent. The problem is, that’s the same technology that people are using to pirate tons of video content right now. So while Vinton Cerf claims that Hollywood is interested in using BitTorrent for distribution, the MPAA is in fact filing lawsuits to shut down sites offering torrents for download.

At the end of the day, I think the real problem is that all p2p clients require a desktop download right now. Given the big problems with spyware and viruses, that desktop install is a huge barrier to user adotion. Don’t believe me? Just compare the user base for Grouper to that for YouTube. (But don’t tell the folks at a recent Under the Radar conference who supposedly were wowed by Grouper). What we really need is the ability for a video web site like YouTube or my site gofish.com to be able to use p2p for distribution, but behind the scenes without requiring any software install. Now that’s what I call nirvana, but of course, it’s impossible…or at least, very difficult. Can you serve up file segments from your browser using just Javascript?!?! If you’ve got a solution, please drop me a line so we can go start a company tomorrow!

Maybe the AllPeers plugin for Firefox is the answer. At least they’ve got the right idea, which is to run inside the brower. Of course, they need to support IE in addition to FF. If they could do that, and make the install as easy as the Flash player, then maybe…

Or maybe Windows Vista, with it’s built-in p2p features. Maybe MS will integrate hooks to the p2p library into an upgrade to IE…now that would be interesting!

Downloading files from YouTube

Lots of people know about this greasemonkey script for adding a “download” link to YouTube pages. However, I didn’t want to go to the hassle of installing the script (actually the real hassle was to upgrade FF), so I found this guy’s nice page:

http://javimoya.com/blog/download-videos/

it provides a nice web form where you just put in your YouTube,Google, or iFilm page URL, and it generates the download link for you. Very nice!

Once you’ve got your flv (Flash video file), you need something to play it with. Here is a simple desktop player for Mac or Windows:

http://www.wimpyplayer.com/products/wimpy_standalone_flv_player.html

Building the solution: Part 2 – Video content delivery

The overriding cost when dealing with video delivery on the web is bandwidth cost. The other major cost can be storage, depending on how big your catalog is. But even then bandwidth will generally dominate in the cost model.

For small companies, it is generally not financially feasible to try to serve video yourself. This is where a Content Distribution Network comes in. A CDN provides an outsourced service where they serve content for you for a price. Video is an obvious candidate because it’s so huge, but large sites often use CDNs for images or audio as well. A good example here is Myspace who uses Limelight Networks for delivering images.

A CDN works by providing a farm of servers for delivering your content to your users. All you need to do is to transfer your content to the CDN, and then give your user a link pointing to the CDN’s server pool instead of your own. Content can be transferred to the CDN either by pushing it up (typically using FTP) or by having the CDN pull it from your sever on demand. Pull-on-demand is the better model (it’s actually easier to implement since your just web-serve the content to the CDN) and supports more efficient caching strategies by the CDN.

Costs

CDN service costs money, but one great advantage is you save on hardware by not having to run a large pool of servers yourself. And in exchange you’re likely to get access to much better streaming capacity then you could set up yourself. For a small company, this advantage alone is enough to make the CDN worth it. However, depending on your situation the raw bandwidth charges may well be lower through the CDN than you can negotiate yourself.

A CDN generally charges based on bandwidth usage and storage. Costs-per-unit should drop as your usage grows. Bandwidth can be charged based on either total data transferred over a month, or based on peak transfer rate. Charging based on data transfer is simpler and easier to understand. If you serve 1 terabyte of video over the month, then you pay 1024 * the rate per Gig. Peak transfer pricing is a little harder to figure out. A typical formula is 95% peak. What happens is that the CDN samples your transfer rate periodically (say every 5 minutes). At the end of the month they throw out the top 5% of the highest samples. The next highest sample then determines your usage. The result is that you won’t get hit if you have a few short-term spikes in a traffic. But, if you got hit by a “slashdot effect” say, and traffic spiked for 48 hours then fell, then you will get pegged towards the peak. Overall, if your traffic is very consistent (which generally requires a lot of traffic), then overall transfer is probably the way to go. However, if you have spikey traffic, but the spikes are short-lived, then you may save some money paying on a peak transfer basis.

Ok, but what does it really cost?

Here again, there is more to the question. Different services have different pricing. For example, basic HTTP GET delivery will be the lowest cost per GB, but things like video streaming (mms or flash) will be charged at a higher rate.

For basic HTTP delivery, you should be looking at $60 – $100 per MB of peak usage. So if you have a peak transfer of 100 Mbps, that’s $10,000 per month. The trick now is to estimate your peak bandwidth usage (I’ll post some ideas on that later).

For Flash streaming, I have seen $.75 – $1.25 per GB transferred. To get the lower rates, you have to commit to higher minimum levels.

Where can I get it?

The market leader is Akamai/Speedera. I’m sure they have a great service, but I suspect they are also the most expensive. One salesguy’s quote to me was “You don’t use us to save on bandwidth costs”. Ouch! Other options are Limelight Networks, Vital Stream, and Mirror Image. All of these guys purportedly support Flash streaming.

Building the solution: Part 1 – The Format Wars

One of the fundamental questions when dealing with video on the web is: what format do I use? This question actually seems a lot easier to answer today than it was even in recent memory with the apparent dominance of Flash 8 video as the format of choice.

Flash had been showing up mostly on smaller sites, but recently I’ve started to notice more and more of the commercial news sites (like Foxnews) using Flash. I think I can safely say at this point that Real and Quicktime are dead as web video formats. WMV still has a little life, but given the horrible bugginess of the web control, I expect to see WMV disappear pretty quickly.

More and more of the sites using Flash are delivering good quality, fast serving, and great cross-platform/browser compatibility. Add to this the ability to brand/customize your player, plus supply a bloggable version, and the solution is awfully compelling. (One of the implications here is that if you’re not using Flash, then you’re at a competitive disadvantage).

One of the knocks against Flash has been the requirement to pay server licensing fees for the Flash video streaming server. Could this be the reason that YouTube appears to be using progressive download instead of streaming? It’s an interesting question since in theory streaming should save you a lot in bandwidth costs, for the simple reason that LOTS of video downloaded through an HTTP GET never gets watched by the user.

The server license cost can be offset somewhat by the fact that most of the CDNs are now supporting Flash streaming (see Limelight Networks or Vital Stream), although the Flash service does command a price premium.

So now that you’ve choosen Flash, how do you get your video into that format? Most of the authoring tools support a Flash codec, but for on-demand server encoding, you need an automatable solution. One that seems popular is On2, whose Flix Engine product supports server side Flash encoding. Anyone want to suggest any others or share your experience with them?

R.I.P. – “The Myspace of video”

Whoops – looks like one of the obvious models for bringing video to the web, that is to be "the Myspace of video", has now evaporated. Why? Turns out that Myspace will be the Myspace of video, as they are now supporting video hosting themselves. No doubt this was partly in response to the apparent popularity of people adding videos hosted at YouTube (and other sites like gofish.com).

It will be interesting to see what kind of uptake Myspace has for their video service, and whether it impacts YouTube or anyone else. More likely sites that were positioning directly using this model (see vidilife.com) will be in more trouble. This shows the danger of trying to use the "Hollywood mashup" model of business definition: "We're like 'Company X' meets video".

Of course, if YouTube has already established themselves as the de facto "Flickr of video", then what happens if Flickr themselves introduces video hosting?

Update: A few months on now. See this on growth of videos at Myspace

Overview of the video-on-the-web market

Here is a broad overview of the types of solutions and companies bringing video to the web. No doubt I’ve missed someone’s favorite category here…sorry about that.

Content Providers

These are traditional, mostly web 1.0 sites that offer lots of mostly commercial video. Notables here include the standard Yahoo portal, MSN Video, and iFilm.

Broadband Networks

These are companies trying to establish essentially TV networks on the web. I classify Brightcove as the most notable in this space. I’m sure there are a bunch of others here.

Hosting Services

These are the sites that I am most interested in. The early leader in this space is YouTube.com, but there are many, many others, including Google. These sites specialize in accepting videos uploaded by users and delivering that video back through their web sites. The interesting questions here are a)what features and services will appeal most to users, and b)what is the business model that works for these services.

The most obvious models that define this space are to be “the Flickr of video” or “the Myspace of video”. The Flickr model is essentially to be the utility service for publishing and serving video on the web. The Myspace model tries to add video as a key component of a social networking service. Google and Apple have taken an early lead in trying to create a marketplace for video, but I still think it’s early to tell how far that model goes given that people are so accustomed to ad supported models for video.

Video Search

There are a few solutions targeting video search in the marketplace now. These include Yahoo, Truveo (owned by AOL), and Singingfish. These services work like standard web search, returning you links to watch video off on other sites.

Other Services

There are a variety of other companies trying to get into the ecosystem here. Videoegg has a client-side app for helping with the encoding/uploading of video. Lots of companies (Instream, Broadband Enterprises) are trying to intermediate on video advertising.

Is there a cross-over model?
Currently most content sites are either commercial-only or user-gen only. The commercial content services have an obvious business model centered around showing pre-roll advertising. However, the user activity and growth seems to be squarely focused on user-generated video (see YouTube growth of late). The problem is that most user-gen sites have no revenue model other than a bit of banner advertising. So an interesting question is whether anyone can successfully mix commercial and user-gen content in the same service (you could argue that YouTube already does this by virtue of users uploading copyrighted content, but I think they will have to crack down on that going forward). If you could do it and gain user acceptance, then you might be able to find a profitable revenue model. One company trying to do this is my company gofish.com.

Introduction

I started this site as a place for discussion about the explosion of video on the web. My interests cover the technical and business aspects of v.o.w., and especially the web 2.0 uses, in particular user-generated video content.

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