Better OTT Quality At Lower Cost? That Would Be Video Voodoo

According to the CTA, streaming video now claims as many subscribers as traditional Pay TV. Another study, from the Leichtman Research Group proposed that more households have streaming video than have a DVR. However accurate – or wonkily constructed – these statistics, what’s not up for grabs is that more people than ever are getting a big chunk of their video entertainment over the Web. Given the infamous AWS outage, this means that providers are constantly at risk of seeing their best-laid-plans laid low by someone’s else’s poor typing skills.

Resiliency isn’t a nice-to-have, it’s a necessity. Services that were knocked out last week owing to AWS’ challenges were, to some degree, lucky: they may have lost out on direct revenue, but their reputations took no real hit, because the core outage was so broadly reported. In other words, everyone knew the culprit was AWS. But it turns out that outages happen all the time – smaller, shorter, more localized ones, which don’t draw the attention of the global media, and which don’t supply a scapegoat. In those circumstances, a CDN glitch is invisible to the consumer, and is therefore not considered: when the consumer’s video doesn’t work, only the publisher is available to take the blame.

It’s for this reason that many video publishers that are Cedexis customers first start to look at breaking from the one-CDN-to-rule-them-all strategy, and look to diversify their delivery infrastructure. As often as not,this starts as simply adding a second provider: not so much as an equal partner, but as a safety outlet and backup. Openmix intelligently directs traffic, using a combination of community data (the 6 billion measurements we collect from web users around the world each day) and synthetic data (e.g. New Relic and CDN records). All of a sudden, event though outages don’t stop happening, they do stop being noticeable because they are simply routed around. Ops teams stop getting woken up in the middle of the night, Support teams stop getting sudden call spikes that overload the circuits, and PR teams stop having to work damage control.

But a funny thing happens once the outage distractions stop: there’s time catch a breath, and realize there’s more to this multi-CDN strategy than just solving a pain. When a video publisher can seamlessly route between more than one CDN, based on its ability to serve customers at an acceptable quality level, there is a natural economic opportunity to choose the best-cost option – in real time. Publishers can balance traffic based simply on per-Gig pricing; ensure that commits are met, but not exceeded until every bit of pre-paid bandwidth throughout the network is exhausted; and distribute sudden spikes to avoid surge pricing. Openmix users have reported seeing cost savings that reach low to mid double-digit percentages – while they are delivering a superior, more consistent, more reliable service to their users.

Call it Video Voodoo: it shouldn’t be possible to improve service reliability and reduce the cost of delivery…and yet, there it is. It turns out that eliminating a single point of failure introduces multiple points of efficiency. And, indeed, we’ve seen great results for companies that already have multiple CDN providers: simply avoiding overages on each CDN until all the commits are met can deliver returns that fundamentally change the economics of a streaming video service.

And changing the economics of streaming is fundamental to the next round of evolution in the industry. Netflix, the 800 pound gorilla, has turned over more than $20 billion in revenue the last three years, and generated less than half a billion in net margin, a 5% rate; Hulu (privately- and closely-held) is rumored to have racked up $1.8B in losses so far and still be generating red ink on some $2B in revenues. The bottom line is that delivering streaming video is expensive, for any number of reasons. Any engine that can measurably, predictably, and reliably eliminate cost is not just intriguing for streaming publishers – it is mandatory to at least explore.