HD Cloud Launches Video Encoding Platform, Capitalizing on "Cloud Computing"Tuesday, April 14, 2009, 10:09 AM ET|Posted by Will Richmond
Three significant trends are behind today's launch of HD Cloud, a new video transcoding service being announced today: the proliferation of video file formats and encoding rates, the increase in syndication activity to multiple distributors and the cost and scale benefits of "cloud computing." HD Cloud founder and CEO Nicholas Butterworth (who I have known since he ran MTV's digital operations 10 years ago) walked me through the company's plan yesterday and how it benefits content providers looking to cost-effectively capitalize on broadband video's surging popularity.
Anyone who spends a little time watching broadband video will notice variations in video formats and quality. Behind the scenes there are diverse encoding specs for how video is prepared from its source file before it is served to users. This video encoding work is multiplied significantly for content providers if they also want to distribute through 3rd parties like Hulu, Netflix, Fancast, TV.com, etc, all of which have their own encoding specs. Further, these 3rd parties all have their own ways of accepting video feeds and associated metadata from content partners. Yet another driver of complexity are adaptive bit rate players like Move Networks which automatically hop between multiple files encoded at different bit rates depending on the user's available bandwidth. Combine it all and it means encoding has become a labor-intensive, complicated, yet highly-necessary process.
Traditionally encoding has been done locally by content providers using encoding solutions from enterprise-class companies like Anystream, Telestream, Digital Rapids and others. By offering encoding as a service, HD Cloud gives certain content providers an alternative to spending capex and running their own encoding farms. Content providers choose which source files are to be encoded into which formats and bit rates. They also provide HD Cloud with their credentials for distributing to authorized 3rd party sites. When a job is configured, HD Cloud performs the encoding and 3rd party distribution. HD Cloud doesn't store the files or keep a copy, mainly for security reasons.
The key to making all this work is so-called "cloud computing," whereby HD Cloud (and many others) essentially rent computing capacity from providers like Amazon's EC2. As new jobs come in, HD Cloud requests capacity, temporarily loads its encoding software (which is a combination of open source and its own custom code) and runs its jobs. When they're done, HD Cloud releases the capacity back to Amazon. It's all a little analogous to the old days of timesharing on mainframes, except with new efficiencies. HD Cloud's economics are based on Amazon buying the computing capacity and operating the facilities and utilizing them at a far higher rate than HD Cloud or any other customer would have on their own.
The result is that HD Cloud prices its encoding at $2/gigabyte, which Nicholas thinks will only get cheaper as bandwidth prices continue to fall. A financial model he sent along suggests that the content provider's ROI given certain assumptions about the amount of content encoded and streamed could be 3-4 times higher than with traditional local encoding solutions. This also assumes the avoidance of upfront capex for local software and hardware encoding alternatives, an important cost-savings for many given the economy. HD Cloud is announcing Magnify.net as its first client today. Others in this space include mPoint, Encoding.com, ON2 and others.
Between encoding's growing complexity and syndication's appeal, content providers are going to need more extensive and cost-effective encoding solutions. Cloud computing in general, and HD Cloud (and others) seem well-positioned to address these needs.
What do you think? Post a comment now.
Categories: Startups, Technology
Topics: Anystream, Digital Rapids, Encoding.com, HD Cloud, mPOINT, ON2, Telestream
Why NBCOlympics.com's Video Ad Revenues Don't MatterTuesday, August 26, 2008, 9:56 AM ET|Posted by Will Richmond
There was much reporting yesterday of eMarketer's estimate that NBC generated revenue of $5.75 million from its broadband Olympics video. The firm's press release dismissively called the sum "a passable performance." Others, from the blogosphere to mainstream media piled on, characterizing NBC's video revenues as underwhelming, using terms such as "pittance," "piddling," and "unimpressive."
Let's hold on a second here. At the risk of sounding like an irrepressible NBC supporter, I'd like to offer the alternative viewpoint: NBCOlympics.com's video ad revenues actually don't matter.
Don't get me wrong, when it comes to high-stakes Olympics broadcasting - and a sagging economy to boot - every dime counts. Rather, my point is that by focusing on the broadband ad number (which at virtually any level would have been a mere rounding error on NBC's $1 billion+ of overall Olympic ad revenues) we are getting distracted from NBC's real and very valuable broadband accomplishments.
Consider this: there were more on-demand and live sports choices for Olympics viewers than ever, NBC and its technology partners conquered herculean operational challenges without any major snafus and the foundation was laid for broadband to play an increasingly important and integral role in all future iconic programming events.
Focusing just on the operational achievements for a moment, a conversation I had yesterday with Brick Eksten, President of Digital Rapids, the company that provided all of the video encoding and streaming technology for NBC's live streaming events was a reminder of all the complexities NBC and its partners took on. There were up over 100 live simultaneous feeds that needed to be ingested, encoded in multiple bit-rates and delivered in real time across the globe to the right distribution points. All of this had never been done before.
Unlike domestic implementations or those focusing mainly on on-demand delivery, live broadband delivery from China meant spec'ing out all the delivery systems in advance and then shipping all of the gear well in advance of the event itself. There were many unknown variables, beginning with the vast potential range of concurrent users. So long hours were invested by partners modeling different scenarios to meet targeted delivery quality goals. Compounding matters, Brick explained that due to space, manpower and time limitations, Digital Rapids and others were challenged to push their systems to do things not previously done.
Meanwhile, NBC faced a pioneer's balancing act, simultaneously trying to preserve the value for its on-air broadcast rights/supporting advertisers, while meeting consumers' expectations for broadband on-demand access to everything. NBC could have chosen to charge for broadband access (as CBS originally did with March Madness, and as MLB continues to do) or provide only highlights clips or nothing via broadband at all. Instead, it offered up - at no charge - 2,200 hours of live streaming and 3,000 hours of on-demand.
Some fans on the sidelines have groused this wasn't enough. Now some analysts are saying that NBC could have generated more ad revenue if it had opened the broadband spigot further. These comments miss the bigger point: NBC moved the broadband market dramatically forward with its Olympics coverage. Focusing on what NBC proved with the first "Broadband Olympics," rather than what attributable revenue it generated, is what's most important for all of us to remember.
What do you think? Post a comment now.
Categories: Advertising, Broadcasters, Sports
Topics: CBS, Digital Rapids, MLB, NBC, Olympics
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