Faced with the daunting challenge of delivering live streaming sports and other coveted content to a growing sea of wired and wireless devices, Verizon has chosen to acquire CDN EdgeCast Networks for over $350 million as the one-time telco throws its video efforts into high gear.
Verizon’s clear interest in multi-platform streaming video content to the masses necessitated this latest buy-vs.-build deal. The company admits it’s talking to sports leagues and other programmers about streaming to mobile devices, and has already partnered with kiosk-based DVD renter Redbox to launch its own streaming service just one year ago.
Verizon’s latest move also brings into focus the current complexion of the CDN market, where pioneer Akamai reigns supreme and sells CDN offerings for use by service providers; integrated communications provider Level 3 owns a global CDN and the additional assets of the former Global Crossing and Limelight Networks remains a standalone without a dance partner.
While the Global CDN Market is forecasted to sports a CAGR of 15.7 percent between 2012 and 2016, according to TechNavio, The Global Video Content Delivery Network Market is predicted by the same firm to report a 40.6 percent CAGR during the same period. Video streaming (primarily live and to mobile devices) is reshaping this market and could have other CDNs, beyond EdgeCast (Limelight, Mirror Image Internet, CDNetworks and Highwinds) pairing off with large service providers.
Verizon Communications CEO Lowell McAdam responded to an audience question at a UBS conference last week; the question was if Verizon was looking at offering video over wireless networks, through FiOS or its Redbox Instant venture, and he revealed Verizon has talked to content suppliers who have expressed interest in offering access to a series after they debut on broadcast TV. His elaboration speaks volumes to mobile video.
"When I talk to all of the content providers, they're very careful about cannibalizing the day of broadcast. But three days, four days, two weeks – whatever it is, to get access to all of that content in the archive, and in our case give 101 million (Verizon Wireless) sets of eyeballs access to it, is a real win-win. I think the market has demonstrated that it wants it. You can see that in the performance of companies like Redbox and Netflix," McAdam said. "There will be several different models, several different technical trials, several different venues to get it out there."
Verizon realizes that talking the talk is meaningless without walking the walk, which it has done through recent acquisitions including EdgeCast.
Last Year, Last Week, Now
-Seeing Red. Last year Verizon awed the industry by launching a video streaming service with power DVD renter Redbox which has a physical enticement to it.
-Up We Go. Verizon acquired upLynk whose technology it claims “simplifies the complex issues content owners face by streamlining the process of uploading and encoding TV Everywhere for live, linear and video on-demand content” by using a single format across all devices.
Both acquired assets become parts of Verizon’s Digital Media Services unit.
-On Edge. Verizon said in a prepared statement that this acquisition “will further strengthen Verizon Digital Media Services’ ability to deliver content and site acceleration services to customers that include studios, broadcasters, retailers and enterprises seeking quality high-performance digital experiences across all devices.”
Verizon’s Digital Media Services unit is expanding at light speed, especially with the over 6,000 customers it says it lands through the EdgeCast buy up. Expect this video-first unit to benefit from additional acquisition as it seeks to offer content owners and programmers as close to a comprehensive solution to the stress-free delivery of captivating content to multiple platforms.
It’s important to understand that not all of EdgeCast customers are video streamers. In fact, many use the CDN as a means to survive and actually thrive during peak traffic times (often unpredictable) without having to buy additional servers, bandwidth and associated software for their websites.
At the same time, however, many of these sites are thinking visual to expend their brands and see video as an evolving and engaging media with which to attract and retain customers. That’s why most all “CDNs” have evolved beyond the first use Akamai brought at its launch in the late 1990s. They offer much beyond network brawn which is why they have earned a category along the lines of digital media distribution solutions firms.
This evolution is in lockstep with the promotion, marketing, sales and brand advancement efforts of both brick and mortar businesses and web ones. The acquisitions reflect Verizon’s understanding that just as it has expanded from a landline telco with wireless holdings to a TV/entertainment company (FiOS, Redbox), its business customers have evolved, brand-wise from a voice, email and website practitioners to rich media implementers embracing wireline and wireless video efforts in increasing numbers.
If ever there was an oxymoron in the tech business, it’s complete solutions.
While countless providers claim to offer them and still others strive to, good old soup-to-nuts wannabes in the video content distribution business should know that those looking to take their coveted assets to the masses have more often used multiple CDNs for live events instead of a sole entity.
Depending on a number of factors with live streamed events; audience size, geographical distribution, bandwidth required and ISP capabilities, big event companies most always use at least two, one as a primary and another as a backup.
Adaptive bit-rate streaming has enabled providers with monitoring packages for real time performance optimization to choose the best network path, route around potential weak spots and avoid outages during their events. Packages and services that allow this in real-time and provide data on customer engagement times and other data points for use going forward are paramount to ROI (Return on Interest)-focused marketing GMs. They provide the “brains” to complement the network “brawn.”
The good news for Verizon is that while live streamers – and others – may choose multiple CDNs for live video delivery, they will likely choose a single performance management and analytics package that measures multiple CDNs at once. The need for multiple delivery nets for non-live video – linear TV and on-demand viewing is dramatically lessened.
The Bottom Line
Verizon’s plan to acquire EdgeCast is a key piece in the evolution of the one-time wireline telco into a full-fledged digital media and communications services firm. Adding the CDN to its media services unit directly addresses the company’s desire to stream all types of video across its assets, especially its vast wireless network, to consumers with fixed and mobile devices.
This will make Verizon’s discussions with sports leagues and programmers far more than just what-if hypotheticals. The company is moving from talking to walking as evidenced by the three major milestones in the last year alone.
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