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IHS: Cable Operators Should Invest in CDNs

17 Apr, 2013 By: Erik Gruenwedel

Research firm says cable operators building content delivery networks could effectively combat rising Netflix presence

Content delivery networks (CDNs) help Netflix, Amazon and other subscription video-on-demand services thrive. Now, multichannel video program distributors are being encouraged to invest in CDNs to compete more effectively via multiscreen availability, according to Guy Bisson, research director for television at IHS.

Speaking April 17 at the PEVE Entertainment 2013 confab in London, Bisson said that while European cable operators have lost 1.4 million households in the past five years, they have gained 17.8 revenue-generating units (RGUs) through the evolution of multiscreen availability on tablets, smartphones, laptops and Wi-Fi.

CDNs are Internet-based networks that use servers to deliver video content to myriad users at the same time. In a CDN, content exists in multiple copies on strategically placed servers. This is known as content replication. A large CDN can have thousands of servers, making it possible to provide identical video (and audio) content to many users efficiently, even at times of high Internet traffic.

“The pay-TV industry today is facing an increasingly competitive environment that is not helped by the recent entrance of OTT services like Netflix, Amazon and others,” Bisson said.

He said that while pay-TV operators have been upping availability of telephone and high-speed Internet to subscribers, they need to expand offering mobile telephony, Wi-Fi access outside of the home and multiscreen video on the move. Multiscreen (i.e. TV Everywhere) represents a particularly effective means of competing with SVOD, Bisson said.

“If a pay-TV operator is facing competition from Netflix, multiscreen represents the first step in fending off the competitive threat,” he said. “By making pay-TV less TV-centric — i.e., allowing access on tablets, laptops and smartphones, and enabling TV to be moved around the house and on the road — multiscreen becomes an attractive alternative to OTT.”

To do that, Bisson suggests cable operators invest in their own content delivery networks. While CDNs such as Akamai, Limelight, Amazon Cloudfront, Netflix Open Connect and Level 3 are well known, other services exist such as CDN.net, CoralCDN, CacheFly, MaxCDN, ProCDN, MaxGravity, Edgecast and SoftLayer, among others.

“As operators add multiscreen services to their portfolios, building CDNs makes sense and allows them to transition their operations into a lucrative new area,” Bisson said. “By doing this, pay-TV operators can transform the Internet from a threat into an opportunity as well as open up new business opportunities by servicing the content distribution needs of their content partners.”

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