Content-delivery networks: A struggle for success
Consolidation expected as a result of stock-market fall-off
By Anne Hohenberger -- Broadcasting & Cable, 6/17/2001 8:00:00 PM
Streaming media seems destined to be everywhere, whether in the form of movie trailers, educational videos, advertising, not to mention the ubiquitous streaming audio. So what is a broadcaster, given the amount of content that could be streamed, to do? How might a broadcaster select a content-delivery network? And what is a content-delivery network?
Content-delivery networks (CDNs), sometimes referred to as streaming-media providers, are in place to help Internet-content creators distribute text, audio, video and other visual communications via the Web. The providers have their own technical facilities or operations centers, and some of them piggyback their services on Web-hosting services such as Digex or Genuity. Material is sent from those centers to their "edge-servers," which are located around the country and help distribute the content to different geographical regions. The logic is that, the more edge-servers there are, the less congestion there will be, resulting in an end-user experience that is enjoyable and devoid of crashes, long waits, and stammering audio or video. Happy end-users mean the companies that pay the CDNs are happy, which, in turn, makes the CDN and stockholders happy. The problem is, getting the infrastructure in place is expensive.
Today, there are four major companies involved in the CDN market, particularly as it relates to streaming: Akamai, Digital Island, Activate and iBeam. Each offers its own set of strengths and weaknesses, with Akamai and Digital Island being the most well-known while Activate and iBeam are lesser known but still respected.
The question for broadcasters, as they shop for a CDN, is deciding what they'll get for their investment. Activate, Akamai, Digital Island and iBeam all provide reliable streaming services, from live events to archived content on demand. They also offer an array of tools to measure audience size, what portion of an audience is using which type of player (Real, WindowsMedia or QuickTime) and ad-response rates, among others. CDNs can even determine or predict partial audience demographics extrapolated from area codes/dialing prefixes, connection speeds and type of event.
For many broadcasters, the decision may well come down to customer support and depth of services. For example, Activate has focused on the application piece, the added functionality beyond the stream, according to Jeff Schrock, Activate co-founder and CEO. "Things like presentation tools and event tools, where users can present as well as send a stream," he says. The user experience is similar to WebEx (which allows users to hold online meetings), he explains, but streaming events have larger user requirements because they are archived and are multimedia-focused as opposed to document-focused.
In addition to providing its customers with outsourced managed streaming services, Akamai offers business-intelligence tools. "It's reporting information that tells our customers about what's happening on their sites, such as bit rates or formats," says Ray Weaver, director of product management for Akamai. "Our SiteWise business-intelligence-tool application tracks unique visitors and where they visit or go on the site."
As for iBeam, Gillis says the company offers basic-distribution capabilities to stream the content, plus the ability to target and insert ads. "It introduces new advertising on the Internet," he says. "We synchronize with station automation systems [tone generators] and insert a new stream without buffering on the client side. It's a pretty significant capability."
iBeam also offers syndication tools and, in addition, a product called Geo Agent, allowing customers to filter programs or streams by region or country. Digital Island offers a similar service with Traceware. Wilson, however, touts Digital Island's production experience. "Streaming media starts with a camera crew," he says. "You have to deliver a good interactive experience, as well as the production."
But why?
The biggest problem facing broadcasters looking to stream is that streaming is not designed for reaching untold millions in a flash. "Streaming is not a technology designed for mass media," says Schrock. "It's about niche broadcasting."
The question then becomes: Is there a business in niche broadcasting? "Streaming is not cost-effective enough to replace broadcast television, radio or even newspapers," explains Tim Wilson, chief marketing officer, Digital Island. "It's not a replacement. Unlike television, as you scale the audiences, the cost structure goes up."
Weaver says that the power of streaming media is the ability to combine it with other elements and make it interactive. Akamai has a number of services to offer its customers, which reside on its worldwide network of servers designed to speed the flow of Web information directly to end-users. Noteworthy television customers include MSNBC.com and E! Online.
"Broadcasters need to look beyond [streaming] and ask what are the new technologies on the periphery that they need to be aware of and have on their radar screen," says Sean Badding, vice president and senior editor for The Carmel Group, an industry analyst firm that looks at DBS and broadcast video.
The key, along with new technologies, is getting to a level of critical mass that makes streaming media attractive not only to viewers but to advertisers. Tom Gillis, senior vice president and general manager of entertainment services at iBeam, says, "There's just not enough streaming ads being sold on the Internet to fund the whole market." And that is from someone at a company that has served more than 1 billion streams and 50 million ads.
So what will key the growth? Digital Island's Wilson believes the growth of streaming media is tied to five primary drivers: ad insertion and profiling engines, payment systems, digital asset management, cost to transmit, and the user's ability to receive the stream.
"We're in the second inning of a long ballgame," says Wilson, adding that Digital Island will see its network expand when the global telecommunications company Cable & Wireless' $340 million acquisition of DI is completed.
| Slip-sliding away... | ||||||||
|---|---|---|---|---|---|---|---|---|
| It has been a rough 18 months for Internet stocks, and those in the CDN market are no exception. Here's how the stocks of four major players have fared during that period. (In dollars) | ||||||||
| Company | Symbol | 1/15/00 | 4/15/00 | 7/15/00 | 10/15/00 | 1/15/01 | 4/15/01 | 6/7/01 |
| *Activate is majority-owned by CMGI, whose stock price is quoted here. N/A=not available |
||||||||
| Activate* | CMGI | 112.56 | 71.25 | 37.86 | 16.87 | 6.12 | 2.99 | 4.49 |
| Akamai | AKAM | 249.12 | 98.87 | 78.86 | 51.00 | 29.06 | 9.45 | 9.64 |
| Digital Island | ISLD | 84.5 | 34.86 | 28.68 | 12.62 | 6.03 | 2.47 | 3.36 |
| iBeam | IBEM | N/A | N/A | 12.31 | 5.62 | 2.37 | 0.4 | 0.7 |
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