There's a reason, other than free WiFi, that people appreciate having coffee shops on virtually every corner. A local source for a dose of caffeine limits waiting. For the coffee shop owner, less waiting means happier customers -- who will return.
Demand for OTT content in the US and abroad is gathering more steam than an espresso machine. Juniper Research Ltd. forecasts that subscriptions from OTT video providers, such as Netflix Inc. (Nasdaq: NFLX), will generate $31.6 billion globally by 2019, up from just under $8 billion in 2014. And Reed Hastings, CEO of Netflix, recently predicted the demise of traditional TV sometime between 2020 and 2030. At the same time, research firm MTM reckons that Netflix's US OTT market share will drop to 50% by 2018 as new streaming contenders emerge, fragmenting the market further.
We are in the midst of a fast-paced industry transformation where the traditional Internet/last-mile divide is blurring as many historical roles change. This transformation is being powered by the Internet streaming software stack on the one hand and an ever-growing global CDN footprint on the other.
However, the move to ubiquitous Internet-based broadcasting is still fraught with delivery problems that have yet to be solved. Too many network operators -- and content publishers -- are underestimating the challenges associated with delivering bandwidth-hungry Internet applications (both content and services) across the last mile with high enough quality to meet rising consumer expectations. And today's issues will only get bigger as the volume continues to grow and mobile becomes an even more prevalent mode of viewing.
What are those challenges and considerations? They include:
- How to efficiently and cost-effectively deliver HD and UHD/4K video over the Internet on a scale comparable to current pay-TV consumption, while assuring a buffer-free experience
- How to reduce end-to-end cost per bit of content delivery in the gigabit world, where the top 15-20% of subscribers consume over a terabit of data per month
- How to manage and deliver unicast-based live streaming over the Internet -- both regular linear programming and major events like the NFL's Super Bowl or the upcoming 2016 Summer Olympics -- on a scale of tens of millions of households
- How can operators migrate from end-to-end "managed video" to tomorrow’s "open garden" with subscribers consuming both on-net and Internet-based services, while maintaining high quality and potentially offering a unified user interface
- How to reconcile a distributed content delivery architecture with the centralization that some SDN/NFV approaches bring
These are big issues. How can a network operator best address them? This is where a timely, customer-focused approach -- a local approach -- comes into play. Even in a gigabit world, last-mile speed alone is not enough. It's the quality and performance of the apps that matter most. Like all those coffee shops, the shorter distance that streaming video and other OTT applications need to travel, the better consumer experiences will be. And of course, consumer experience is a huge retention factor, which is so important in today's competitive environment.
Adding virtualized local content delivery capabilities to broadband access networks puts popular Internet-based information and entertainment on a faster "expresso" lane to consumers. Local content delivery brings OTT content and services to the edge of operator networks, closer to consumers, thus shortening latency and improving quality and application performance. It also relieves network congestion, conserves bandwidth and lowers operating and capital expenses for mobile, cable, telecom and other broadband service providers.
Augmenting broadband access networks with local content delivery helps carriers optimize their bandwidth use and decongest the last-mile grind. From an operating standpoint, local content delivery must integrate easily with both fixed and mobile networks, and be available as a virtualized elastic solution for maximum efficiency. It is also a key enabler for last-mile network providers to profit from the variety of business models that will abound -- those that exist today and those that are yet to come.
Even beyond their first cup of morning "Joe," people hate to wait. People also have high expectations for the products and services that matter most to them, including streaming video. Local content delivery is the approach that operators should take to meet those expectations.
— Alan Arolovitch, CTO, PeerApp