CDNs: New Channels, New Demands, New Opportunities

The ecosystem for digital distribution is complex,
with unique nuances for each category of content. In a broad sense, the
ecosystem includes the creation of content, the availability of
services that deliver content and services to consumers, and the
deployment of technologies that enable delivery to connected consumer
electronics platforms that are capable of receiving and displaying
content.

Total sales of video- and audio-connected consumer electronics
products worldwide will be more than 292 million units in 2012 and will
grow to more than 760 million units by 2016. The growing number of
connected devices in broadband households heightens the need for
dedicated delivery solutions provided by content delivery networks
(CDNs).

Providers build CDNs with a huge number of connected servers whose
main purpose is to bring content closer to end users, thereby reducing
latency and packet loss. Most CDNs are also capable of supporting huge
demand peaks, such as those generated by events streamed live online.

The growth in online traffic that accompanies an ever-rising number of
connected devices makes the role of CDNs more important than ever. In
the early stages of the Internet, most of the online content was static
and could be easily duplicated and cached in multiple CDN servers for
better access by end users. Today, simple content caching has rapidly
become a commodity, with competition for this "basic" service based
mostly on price and geographical reach.

Furthermore, dynamic content is a much larger part of Internet
traffic. Even content that appears to be the same for all users has
dynamic additions, including advanced advertising that changes based on
time, location of use, or known user attributes.

Service Differentiation

To differentiate their services, and to build sources for new revenues,
CDN providers are offering a growing number of value-added services
(VAS) that help manage such complexity of content and create new service
options for content providers. CDNs are poised to earn an increasing
share of their revenues from value-added services such as:

• Content ingestion and management
• Metadata
• Encoding and transcoding
• Multiscreen delivery support (particularly for mobile platforms)
• Ad insertion and analytics
• Creation and management of distribution rules (e.g., allowing
  content access only to certain users or in certain times of the day)

A few CDNs have adopted advanced solutions called "transparent caching."
These CDNs cache content based on its popularity: The most popular
content is always closer to end users, while the least popular content
is cached farther away in the network. The allocation of content changes
continuously depending on content popularity and does not require
manual intervention from content distributors.

There are two main types of CDNs, based on the type of entity that
created and controls the network. Telco and third-party CDNs both offer
unique advantages to content distribution.

Third-Party CDNs

Traditional third-party CDNs are essentially application service
providers that use the Internet to connect their distributed servers.
Third-party CDNs dedicate a significant portion of their operational
expense to ongoing software development in order to keep pace with the
introduction of new technologies that emerge in the consumer market.
Global coverage, achieved through extensive connectivity with ISPs
around the globe, is one of the strongest benefits of third-party CDNs.

Third-party CDNs have distinct advantages:

• Existing relationships with content providers
• Global coverage
• Ongoing software development and solutions that have been tested and improved over time
• Connectivity among multiple ISPs
• Low investment required for operators to use a third-party CDN
• Ability to interoperate with a variety of other networks

For example, Akamai has the EdgePlatform that allows 1080p video streaming to different platforms, including Adobe (Nasdaq: ADBE) Flash, Microsoft (Nasdaq: MSFT) Silverlight, iPhones and iPads. Akamai has 95,000 servers in 1,900 networks across 71 countries.

Telco CDNs

Telco CDNs use their own physical fiber networks to connect their points
of presence around the world. Several telcos have undertaken internal
CDN development initiatives to protect themselves from both cost and
competitive standpoints and to benefit from the growth in digital
content traffic. Major broadband providers such as BT, Telia Sonera (Nasdaq: SNRA), and Verizon have taken the aggressive approach of investing in complete in-house CDN solutions.

Telcos have to invest considerable money and effort to build strong
international capabilities. Thus, telco CDNs are newer systems that are
less "road-tested" than the more mature third-party CDNs. However, Telco
CDNs have their own inherent advantages:

• Highly customized solutions
• Greater proximity to end users within the telco footprint
• Optimized for the operator's network
• Cost advantages for the operator
• Stronger telco control over content going through the network

AT&T
(NYSE: T) offers branded AT&T Digital Media Solutions, an
end-to-end solution that claims to cover every step of digital media
distribution (content ingestion, management, marketing, operations and
distribution). This CDN also includes a multiscreen solution and 38
Internet data centers worldwide.

Companies behind both types of CDNs will increasingly leverage
value-added services in order to earn larger shares of revenues. At the
same time, demand for their services will increase as consumers
transition from physical to digital content and adopt streaming and
cloud-based services, which users will naturally expect to work with
their multiple connected devices.

These circumstances will lead to a more direct relationship between
content producers and content consumers. CDNs, by virtue of their role
in enabling dynamic and ostensibly seamless distribution of media
content over a wide population of users, will have a significant role in
the digital lifestyle ecosystem -- and those that can fortify and
expand the relationship with the consumer will be the most successful.

source: http://www.ecommercetimes.com/story/74697.html