A new report by Mark Hoelzel [pictured], Research Analyst, Business Intelligence, finds that:
- More and more video traffic is flowing through this new infrastructure [CDN]: The content delivery networks or CDNs will collectively account for nearly three-fifths of consumer Internet traffic in the U.S. in 2014.
- Pricing is complicated: Pricing for CDNs and for the more specialized transit providers that optimize video delivery, balancing performance and cost, varies a great deal. These players offer plans based on factors like bandwidth, time of day, and volume. Bandwidth is the key factor in pricing, but far from the only one. And special agreements dictate quality parameters.
- Which is why more and more content providers are building their own CDNs: Google and Netflix have these in place, and rumors are building that Apple is also assembling its own infrastructure.
- Peering agreements are the big point of contention: The price of connecting video pipes directly has become a fraught issue in the video world. Netflix is striking up agreements with ISPs [Verizon, Comcast] to guarantee video performance, but at the same time crying foul that they have to do so. Regulators seem undecided on whether this is a good practice. We dive into the hard business decisions driving the debate.
- All the sides — content providers, transit providers, and ISPs — have misrepresented the mechanics and economics of the digital video industry in the context of "net neutrality." We expect more peering agreements that balance the needs of both — and the consumer. The disputes over video streaming fees boil down to who should pay for the exploding popularity of streaming video, and at what quality of service.
See "The Online Video Ecosystem Explained: The Main Players And Conflicts In A Fast-Growing Industry" - here.