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CDN Economics: Cost-Avoidance Is the Key Issue

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The issue on the table was build versus buy, at a morning session during the recent Content Delivery Summit in New York City, but the real issue was cost avoidance, said Michael O'Donnell, president and CEO of online video analytics company Skytide.

"The first thing we needed to remember is why are we here in the first place. We're really here about cost-avoidance, even controversially more so than revenue," said O'Donnell.

Supporting video is expensive, so O'Donnell urged attendees to make cost-avoidance a priority in their planning.

"What we heard in the beginning is if we could address this massive video challenge -- all the video that's coming over the network creating such a burden -- we could dramatically reduce by maybe a factor of 80 percent the cost. So cost-avoidance, I think, still should be the primary motivation in almost like building an internet property: don't focus on advertising revenue first, focus on building your audience. I think the service provider CDNs should really remember that on an ongoing basis: cost-avoidance," said O'Donnell.

The biggest challenge to costs is the network upgrades required to keep pace with a rapidly expanding, largely mobile online video world.

"These network upgrades are costing companies billions of dollars," added O'Donnell. "I'm sure at Comcast you know how much you're spending and all the carriers in the U.S. and around the world, the challenge of supporting video is so much greater than supporting voice, and the video projections, it seems, are even conservative now based on what you're seeing with the adoption and the proliferation of all these devices, not only just phone devices, but all the tablet devices in this connected world we're in. So, network upgrades are a real threat that they need to address."

For more from O'Donnell, as well as panelists from Jet-Stream and Comcast, watch the full video below and download the presentation.

Understanding the CDN Economics of Build vs. Buy

What's the best path, economically, for operators contemplating a CDN strategy? Build it, or rent capacity from a growing roster of third-party partner CDNs? This session will discuss how to think through the economic tradeoffs, both business and technical, associated with CDN planning and implementation. Attendees will learn how to cost out a CDN rollout, from two perspectives: Building it, or renting "space" with a third-party partner. Speakers will also discuss how to correlate peak demand with economic necessity, what "scale" means in dollars and cents, and how to factor in the economic impact on transport and data center costs. 

Moderator: Ben Bekele, Senior Architecture Marketing Manager, Service Provider Business, Cisco

Michael O'Donnell, President, CEO, Skytide

Scott Landman, VP, Business Development, Americas, Jet-Stream

Jacob Rosenberg, Platform Architecture, Comcast Cable

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