2015 was the year when OTT video really took off and fuelled the already fierce competition in the TV and video industry. The increasing amount of available content drives traffic volume and challenges existing business models. In a market characterized by short subscription periods and high quality expectations, OTT service providers need to meet and exceed customer expectations every day. A recent study suggests that 20% of viewers will abandon poor experiences immediately and never return to that service.
To grow and retain OTT viewers, a key challenge for service providers is how to gain more control over content delivery in order to guarantee the quality of experience (QoE) and to scale in a cost-effective way.
One of the most important decisions to make is whether to buy or build a CDN. Buying capacity from a third-party CDN might seem to be the best option at first glance. However, this means putting the most valuable asset - the content - in the hands of a third party who delivers it on a best effort basis. To expand services without compromising quality, OTT providers should consider building their own CDN to drive sustainable business growth.
It's important to note that "build" does not mean building a CDN from scratch. It means leveraging the best-in-breed products available in the market. This provides the opportunity to guarantee performance, achieve a faster time-to-market and the flexibility to deliver a solution at much lower costs. It also gives control over the capacity to grow. For example, by building a CDN, it is possible to know exactly how much to invest in IT in order to grow X% of subscribers by the end of the year.
The good news is that there is a simple and incremental 1-2-3 approach for building a CDN that outlines the best option based on a player's current - and future - OTT needs. Service providers can leverage their existing infrastructure and grow at their own pace without the need to "rip and replace."
Step 1: Add a local origin server to existing headend
Adding a local origin server to an existing headend results in a more powerful and flexible headend with the capacity to ingest, record, repackage and encrypt content before pushing it to a third-party CDN provider. This ensures a simple way to deliver time-shift TV offerings and advanced services, such as targeted ad insertion or ad replacement for both linear and non-linear content. More control of the content gives the freedom to switch between CDN providers or work with multiple CDNs at the same time.
Step 2: Expand reach into the delivery network
As audience demand increases, there is the opportunity to scale the network by distributing origin or cache servers to the points where the content is handed off to ISPs. This step bypasses CDN providers, resulting in more control of the video delivery chain and a lower OPEX when compared to outsourcing services. The content is repackaged, encrypted, time-shifted and personalized with replacement ads from these distributed origins, or simply cached if these functions are not required.
Step 3: Explore a dedicated CDN model
The last step in this scalable approach involves putting cache servers at ISPs for a dedicated CDN. Negotiations are required, but ISPs increasingly favor this idea because they can eliminate significant network traffic by allowing dedicated pipes for the video content. It's a win-win for all parties involved.
This scalable 1-2-3 approach provides a solution for all players to tap into OTT opportunities at whatever stage makes the most sense for their specific needs today, or in the future. This path ensures the most cost-effective way to gain control and have visibility of the right set of data to ensure quality for consumers and monetization opportunities for long-term business success.
Ling Koay is the product marketing manager at Edgeware.