The Emerging Video Internet (part 1)

DrPeering -

What’s the big deal about video?  We are Peering coordinators. Bits are bits, right?

Angela Kinsey

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Angela -

Why should peering people care? 

Because the reality is, we are all in the video distribution business.

If we understand the video internet ecosystem we can better plan for growth, spot events, identify the next generation of customers, alliances, protocols, and services to better meet the unique and emerging needs of video distribution over the Internet.

It is important to understand the surrounding ecosystem that drives your peering bits since:

  1. the financial value of peering is proportional to the volume of traffic that is peered “for free” compared against the cost of peering (equipment, colo, IX fees, etc.).
  2. video is larger in volume than say tweets, email, or just about any other type of traffic.  If 80-90% of all Internet traffic by volume is best characterized as video①, then I would go as far as to say that the Internet should even be renamed the Video Internet to reflect this dominant use.  All other traffic (by volume) is insignificant in comparison.
  3. the traditional 100-year-old video distribution system is migrating even more of its content to the Video Internet.

The traditional “Hollywood” system is where movies have been produced, licensed, distributed and viewed using tightly controlled methodologies over the last hundred years. The emerging “Video Internet” provides video content distribution with easy and in some cases free access to a global audience, or at least to those who have a robust Internet connection. 

I have modeled the two systems, and in the next few ask.DrPeering articles, I will demonstrate how these two competing systems are in some ways parallel, in some ways clashing, and in many ways evolving in response to each other. I will highlight some of the mini-revolutions in each step of the video Internet supply chain, from producer to consumer, that have enabled the Video Internet.

 

The ecosystem at the top is the traditional Hollywood system, and starts with the controlled creation-production system. In order to have your idea for a film “green lighted” it must be one of the precious few screenplays that are accepted into the Hollywood system. Retired studio executives told me that inside the studios there are so many people adding their creative input into the process that the end result is often very different from the original vision. The point is, this is a tightly controlled process, and if you want to have your film financed and distributed into the theaters, you have to go through this process that has evolved over the last hundred years.

The ecosystem on the bottom is the Video Internet, a five year old process that is much more of a wild west frontier system.  Anyone with an HD camera, some software, and an imagination can make and distribute globally their creative expression. While Hollywood focuses exclusively on blockbusters like Avatar②, there are opportunities for the Video Internet ecosystem to take over the lower and mid tier movie production and distribution. We will see examples of the Hollywood system  migrating more and more of its content to the Video Internet distribution system. The unanswered question is “how do players in the Video Internet to make money?”  The Hollywood ecosystem already has a mostly working economic model.

The economics of the Video Internet can not be ignored. A former Fox executive shared that it costs $1200 to make a celluloid film for distribution to the theaters. As a result, they are two-thirds of the way through a twelve year process to pay for the costs for the theaters to upgrade their systems to receive digital video. This has been an eight year process to get this far. A comparably slow process as Netflix can today stream a movie to your house for less than twenty five cents.

If the Internet is already 80-90% video, and Hollywood is only starting to migrate its library of movies to distribution over the Internet, we can expect to see increased dependency on the Video Internet for high quality video distribution.  Peering coordinators should care about this because their value is how effectively their peering can move video traffic now, and the needs of this dominant application is all that really matters.

Dr Peering

drpeering [at] drpeering [dot] net

Source:

http://techcrunch.com/2009/06/09/cisco-by-2013-video-will-be-90-percent-of-all-consumer-ip-traffic-and-64-percent-of-mobile/

② “A World of Hits”, The Economist Nov 26, 2009



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