Video-on-Demand: How Service Providers Can Thrive, Instead of Simply Survive

The television industry is changing rapidly. Streaming services like Netflix set new challenges to cable companies. In the US, the trend to change from TV contracts with cable providers to video-on-demand services on the internet even has its own name and is called: “cord-cutting“. And there are already services – like HBO Now – which are available exclusively online.

A recent study by the analysis company Nielsen concludes that the rise of video-on-demand platforms really transforms the media landscape. Providers such as Netflix, Hulu or Amazon Prime – which offer access to media libraries on the Internet for a monthly subscription fee – enjoy a greater popularity than ever before. Last year, the percentage of US households using such services rose from 36 to 40 percent. And just yesterday, one of the most famous German IT magazines “Computerbild” reported that the speculation of recent weeks come true: Google’s video platform YouTube is available (so far only in the US) with the new ad-free subscription model called “Red”. For $ 9.99 per month or about 8,80€ , users can watch videos on YouTube without advertising clips and save the clips for offline usage on their own devices .

So Pay-TV companies are really losing ground – especially when it comes to younger customers who switch from TV to laptops, smartphones and tablets. Although classic paid television via cable companies like Time Warner Cable, Comcast or DirecTV is still the rule. But “cut the cord” is the name of the game. Best evidence is the rapid growth of Netflix – thanks to hit series like “House of Cards”. The California company now has 62 million customers worldwide – five million subscribed to the service only within the first quarter of 2015. In Germany the influence of video-on-demand platform also increases every day. According to estimates of the Association of Private Radio and Telemedia ‘s 2014 the usage of video-on-demand services increased by 18 percent. From 2014 to 2019 the user numbers are expected to triple.

 

Nothing is Possible without a Fast Internet Connection

Mobile service providers (MSPs), cloud service providers (CSPs), video content providers, Internet service providers (ISPs) and others involved with video storage and delivery are under tremendous pressure to meet existing demand for mobile video while simultaneously preparing for even higher thresholds in the very near future. As the amount of video content and number of devices used to view it grow, the need for next-generation networks complete with flexible, high-volume, high-quality video processing power is becoming increasingly critical. Most MSP and cloud providers’ existing networks are hard-pressed to meet today’s demand, let alone near-term or future requirements. This is because they were built to transport voice, data and some video – not the other way around.

Those networks’ legacy video processing server hardware lacks the density required to flexibly, reliably and cost-effectively transcode, process and deliver massive amounts of a wide variety of video content to an ever growing array of mobile end devices. Some service providers and MSPs are meeting these new challenges by building or purchasing their own data centers and developing their own cloud solutions. Lacking the time and capital required for such endeavors, other carriers are turning to CSPs for high-density, cost-effective and scalable video processing solutions. Realizing the tremendous opportunity to grow their businesses and capture video market share, both service providers and CSPs are equipping their networks with next-generation hardware solutions that will meet rapidly evolving requirements as the video era unfolds. Hardware and software providers, in turn, are designing and delivering those leading-edge integrated solutions. Their future-proof, standards-based, compact media processing platforms meet rigorous power consumption thresholds and cost-effectively handles any volume of video content. The platforms also enable service providers and MSPs to quickly monetize their video content and services.

 

Existing Networks are not Designed to Sustain the Projected Growth of Video Services and Applications

Successfully leveraging the skyrocketing growth of video traffic, and monetizing video streams, is a much bigger job than service providers faced evolving their legacy networks to handle huge waves of IP-based data traffic. This is because preparing packet-dense video for delivery to end devices is a complex, compute intensive, multi-step process. For example, AV video is comprised of very large (>1400 bytes) packets. Service providers and CSPs utilize software codecs that require a considerable amount of microprocessing power to compress those packets into video streams that can be quickly and easily delivered to as many end-devices as possible. Further complicating the process, end devices employ proprietary bit rates, resolutions and codecs. Transcoding video content to meet today’s video consumption rates requires a vast number of compute cycles. Future codecs such as H.265 / High Efficiency Video Coding (HEVC) for UltraHD will require even more compute cycles. Existing networks and network topologies are not designed to sustain the projected growth of video services and applications. On average, 2.6GB of video per subscription per month is consumed in some networks. Legacy hardware requires far too much real estate, power, cooling and overall expense to enable services providers to keep up with demand for much longer. However, emerging high-density, video centric media processing hardware and new network topologies offer a cost effective pathway to the future.

 

The Cloud adds Security, Privacy and Protection to the Content

For example, new cloud-based video networking topologies enable video broadcasters and service providers to reduce CapEx. They enable cloud storage and delivery of single, high-quality, high-bit-rate video files in multiple formats, which frees service providers from the expense of purchasing and maintaining their own network servers. In addition, content delivery networks can pull video from a single source– the cloud, which adds security, privacy and protection to the content while it is being stored or transported. Properly equipped next-generation, video-centric networks also employ pre-emptive transcoding, caching and video analytics that make it possible to expedite client-specific delivery and consumption of video. This also allows service providers to seamlessly enhance their video streams and monetize them in a manner that is not possible in today’s networks.

 

 

If you also want to know how cloud and data center providers can save a lot of money, reduce unnecessary headaches and create more opportunities for profitability, you can obtain the full overview on video optimization in the cloud and our SYMKLOUD COTS infrastructure servers for Media and Web cloud environments by downloading our Whitepaper on http://www.kontron.com/mobilecloud.

What about you? Did you already “cut the cord” and enjoy the advantages of mobile video or are you still an old fashioned coach potato?

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