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Analysis for 'ON2'

  • 4 Items Worth Noting from the Week of August 3rd

    Following are 4 items worth noting from the week of August 3rd:

    1. Research, research, research - For some unknown reason, there was a flurry online video-related research and forecasts released this week. In no particular order:

    eMarketer was out with a new forecast indicating 188 million online video viewers in the U.S. in 2013.

    Veronis Suhler released its forecast of 2009-2013 communications industry spending, showing advertising shrinking as a percentage of total spending.

    PWC's UK office released its 2009-2013 forecast, which also anticipates declines in advertising.

    CBS's research head David Poltrack used detailed data to explain the company's online video strategy and buttress its argument that in a TV Everywhere world, it should be compensated for its content (slides are here, via PaidContent).

    Ipsos found that Americans streamed a record amount of TV programs and movies, doubling their consumption from Sept '08 to July '09.

    Yahoo and a group of research partners released data finding that 70% of online video consumption happens throughout the day and night, as opposed to traditional TV viewing which is concentrated in the prime-time window.

    Last but not least, TDG released excerpts of its research on "over-the-top" video services, available for download at VideoNuze.

    2. Unicorn Media launches, hires ex-Move Networks executive David Rice - It will be hard for some to believe there's room for yet another white label video publishing and management platform, but startup Unicorn Media is going to try elbowing its way into the crowded space, with a specific focus on large media companies. I spoke with Unicorn's executive team this week, led by Bill Rinehart, who was the founding CEO of Limelight.

    Unicorn is positioning itself as the first "enterprise-grade" solution, staking out key differentiators such as enhanced analytics/reporting, faster/easier transcoding, improved APIs for content ingest/management and more flexible monetization/ad queuing. I have not yet seen a demo, but I'm intrigued by what I heard. The company has raised $5M to date from executives/angels and has a staff of 25. David Rice, formerly Move's VP of Marketing has come on board as Chief Strategy Officer. Given the team's industry expertise and relationships, this could be a company to watch.

    3. Google acquires On2 Technologies and other encoding-related news - The blogosphere was in a flurry about Google's $106M acquisition of video compression provider On2 Technologies this week. Speculation flew about Google open-sourcing On2 new VP8 codec, which could potentially force a new standard to emerge as a challenge to H.264, today's leading codec. This is important stuff, though a little further down the stack than I usually focus, so I refer you to Dan Rayburn's analysis of the deal's implications, which is the best I've seen.

    There was other news in the emerging cloud-based encoding/transcoding/delivery market this week, as Encoding.com announced a new premium service with tighter service level agreements (4 minute max wait time and 50 Gbyte/hour/customer throughput). Encoding.com's Gregg Heil and Jeff Malkin explained the company is using the new SLAs to move upmarket to service tier 1 and 2 media companies. Separate, Encoding.com's competitor mPoint's CEO Chiranjeev Bordoloi told me they're now on a $3M annualized revenue run rate as cloud-based alternatives continue to gain acceptance.

    4. Don't try this at home - On a lighter note, there's been no shortage of knuckle-head stunt videos we've all seen online, but this one is near the top of my personal favorite list. Do NOT try replicating this over the weekend!
     
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  • HD Cloud Launches Video Encoding Platform, Capitalizing on "Cloud Computing"

    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.

     
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