This blog continues a multi-part series that suggests ideas by which our customers could deploy and monetize video applications. Most of these ideas (as stated) are as yet un-tested in the industry, but we believe there is enough value in the ideas to encourage our more clever readers to enable or launch a service or two which might prove successful.
Last week, I talked about inflection points and trends leading towards mobile video services. This week I will start to talk about some of the mobile video service applications which we see having potential in the market.
Before we start, we need to understand the value behind streaming video content to end users. The value, stated as simply as possible: is advertising.
Advertising helps monetize the content. For the CDN, it may be the only source of monetization. Whoever places the advertisement gets the revenue. The value of the advertisement is a function of the proximity of the ad with the end viewer's personal preferences or environment. The closer the advertisement is to what the user wants, in personal; preferences, space and time, the greater the value of the advertisement. One thing to note about Mobile network operators is that while many of them do not own content they do know quite a bit about the customer, from the type of phone they use, the services they buy and their current location. Placing advertisements in this fashion is known as 'directed advertising' and a directed ad can bring 10 to 100 times as much revenue to the purveyor of that ad than a simple click through advertisement found on most web pages.
Keep this in mind as we stroll through some potential application scenarios in the remainder of this series.
The first application is content adaptation. Content adaption is the process of converting stored video content to a format which is viewable on an end-user's device. Since PCs have all the video codecs and processing power they need, the only applicable end user device we need to adapt to is the mobile handset.
As noted previously, the traditional means by which content is adapted to the handset is to do it in a 3G gateway. This is necessary because the 3G network is not an IP network and therefore adaptation involves more than simply changing the video compression. As we fast forward to the near future, and end users are using over the top services, they will be streaming content directly from the HTTP server using an application layer network control protocol such as RTSP which gateways are not directly equipped to work with.
With over the top video services in the mobile network, the content must be in the proper format for the end user device as it is streamed from the server or the service itself must enable the adaptation with a separate content adaptor. The mobile network operator has no hand in the broadband data path, therefore they cannot enable content adaptation, even if they wanted to, which they won't because at present it is difficult for them to monetize it. However, if the mobile network operator had a means by which to run advertisements on top of (pre-roll or inserted) over the top content their perception of over the top video content might change.
Content Adaptation Scenario 1: Help the Web CDN
The web Content Distribution Networks are companies like Hulu, Limelight, Chinacache, Google, etc. who really have little appreciation of the mobile network. By incorporating a media server in their network solution which is capable of mass transcoding and adaptation, a mobile client can access the video content regardless of what type of network or client the end user has. This solution could be provided to the CDN integrator as a stand-alone box or as a service hosted in the cloud. This is pretty straight forward and a number of CDNs are employing this technique today. It is limited however in the fact that the CDN has very little appreciation for the customer's location or personal preferences which could impact the value of the advertising.
In this scenario, the Mobile Network Operator actually provides the adaptation of the content in exchange for some portion of the ad revenue from the CDN. This is more of a gateway play, but unless the operator is also the CDN (such as AT&T) it is not likely to be a big opportunity. Under this scenario, the gateway (or media server functioning as a gateway much like Dialogic's Vision or HMP MMK could) sits in the IMS edge and provides transcoding services. The primary purpose of this approach is the control that the Mobile Network Operator has over the quality of the 'last mile.' In essence, the CDN could provide a higher quality of experience if they were to cooperate with the Mobile Network Operator because they would be in the best position to ensure the quality of the content delivery.
Optionally, we might be able to enable this with a hosted service much like the "adjunct' services of old, but there are issues with routing latency from the network core to the adjunct (hosted) service and back.
We will see later how we believe that the Mobile Network Operator approach can be combined with directed advertising to make this solution much more favorable.