The Economics Of The Streaming Service Provider Business

The Solution
A true multihomed network using BGP routing will still route packets in the quickest possible manner, and the increased number of hops involved in serving content from a multihomed versus distributed network just isn’t apparent to most end users. Packet delivery can be controlled easily if a provider has an indication that a particular backbone has a problem. Streams for live events and 24 x 7 stations in centralized networks are replicated internally, rather than through a reflector network, which requires an expensive VPN, or is attempted over the public Internet, which can be very unpredictable. Server upgrades are much simpler, as one only need pull a server out of the cluster.

In centralized networks with backup capabilities, shared content can be served from another server in the same location, without as much as a hiccup in performance. Content is dynamically replicated instantly across the server cluster, versus taking hours to propagate to remote locations, where it might rarely be accessed. Quality of service is controlled, and no one can point to other parties as being the culprit for poor delivery.

In addition, a network that has several pipes leading to different backbones will still be able to handle peak loads. Remember, packets travel along fiber backbones, most of which have huge amounts of unused capacity. Live webcasting audiences number 1,500 viewers or less 99% of the time anyway. Building a massive distributed network to support large live events is like building an eight lane freeway for one hour of rush hour traffic per week, while other less expensive alternatives exist.

There are exceptions to the rule, of course. In areas such as Asia and Europe, where networks aren’t as well connected as in the US, a distributed network model might work better. Using satellite to bring content closer to the end user is a smart idea, but one could also argue that regional "Super POPs", in locations such as France, the UK, Germany, Korea and Hong Kong might be able accomplish the task just as efficiently and at lower cost.

Conclusion
A new breed of streaming companies will eventually take the place of the giants of the streaming industry. These service companies, which will focus on sales, customer support, and lower costs, will be able to offer the same services as bigger companies, at lower prices, with better reliability, and yet will still be able to maintain and grow a profitable business.

About the Author
Todd Loewenstein is CEO of ArcoStream, a streaming services provider. Prior to co-founding ArcoStream, Mr. Loewenstein was the Vice President of Streaming Services, Entertainment, with Evoke Communications. He was the first salesperson hired at InterVU, and has worked for both distributed and multihomed network streaming companies over the past 6 years. He can be reached at todd@arcostream.com