Online video growth prompts new content monetization strategies

Carriers must differentiate their content monetization strategies by offering advertisers something pure-play CDN providers cannot: subscriber usage data and video QoE metrics.

Understanding subscribers' quality of experience (QoE) with online video is critical—and not just to prevent cranky subscribers from flooding contact centers with complaints that they can't load "30 Rock" reruns on Hulu. Network operators pursuing a content monetization strategy for over-the-top (OTT) video can differentiate themselves by offering advertisers and content providers something that content delivery network (CDN) providers like Akamai Technologies and Level 3 Communications cannot: subscriber usage data and video QoE metrics.

"[Service providers] can't keep expanding the capacity of the network to satisfy everybody's need for high-resolution stupid cat videos," said Melanie Posey, research vice president at IDC. "The end game for carriers is [to establish] that direct relationship with the content owners and turn that into some kind of revenue stream.... [But] before you develop a content strategy, you have to know what your subscribers are consuming."

Peer-to-peer traffic has historically made up the largest percentage of Internet traffic, but online video snatched that title for the first time in 2010, according to a newly published forecast from Cisco Systems' fifth annual Visual Networking Index. By 2012, video will account for half of all consumer Internet traffic, up from 40% this year, according to Cisco. Meanwhile, Netflix generates nearly a third (29.7%) of peak downstream Internet traffic in North America, according to a recent survey by Sandvine, a network equipment vendor.

[Service providers] can't keep expanding the capacity of the network to satisfy everybody's need for high-resolution stupid cat videos ... [but] before you develop a content strategy, you have to know what your subscribers are consuming.

Melanie Posey
Research Vice President, IDC

As other players cash in on online video growth—content providers, advertisers, distributors and independent CDN providers—traditional network operators receive no incremental revenue from the flood of video traffic while spending capital to build networks to support that growth. Moreover, when online video QoE suffers, subscribers often look to their service providers to improve performance—even when the network isn't to blame for degraded quality of experience.

However, carriers want to court top content providers away from the CDN players and go head-to-head with the likes of Akamai and Level 3 to recoup that revenue, according to telecom consultant Tom Nolle, president of CIMI Corp.

"The network operators have kind of looked at this and said to themselves, 'You know what? It's kind of illogical for Netflix to be running a process that everybody is contributing to, and we need to find a way to monetize content better instead of carrying it for free,'" Nolle said.  

ALU's content monetization strategy: Sell video QoE data to content providers

Content monetization was identified as the top revenue priority worldwide for network operators in 2010 and 2011, according to a recent CIMI survey, Nolle said. More network providers this year also indicated that they believed a CDN would be part of their content monetization strategies, as compared with previous years, he said.

 Alcatel-Lucent (ALU) wants to add another dimension to that content monetization strategy: online video analytics. Alcatel-Lucent Ventures, a strategic investment group within Bell Labs that operates independently of ALU, recently announced AppGlide, a managed service for analyzing video QoE on CDNs.

AppGlide gathers about a dozen QoE metrics for individual users from multiple points on the network; the service then cross-correlates and aggregates the data throughout a region to identify popular content, video performance indicators and the effectiveness of CDN traffic management.

Instead of monitoring traditional network conditions, such as latency and packet loss, AppGlide measures quality of experience using metrics that reflect what subscribers see, according to Buck Peterson, general manager of AppGlide at ALU Ventures.

Through network probes and software plug-ins in the content provider's media player, AppGlide gathers about a dozen video QoE metrics, including how many times a video buffers, the delay between when a subscriber selects a video and when it actually plays, and how many times adaptive streaming bounces around between different levels of quality. AppGlide databases, which reside in Amazon's cloud, can be used to cross correlate that data into various reports, Peterson said.

"The best examples we got from the service providers themselves. They asked, 'Can you help me understand if there's a correlation between viewing length and network performance?'" Peterson said. "Meaning, 'Did someone stop watching the video after 10 minutes because there was a bad quality of experience? Because if there is, we need to isolate that video and fix it.'"

The idea is for carriers to differentiate themselves from pure-play CDN providers by presenting this subscriber usage and video QoE data to content providers and advertisers, Peterson said. ALU Ventures is running "active trials" with AppGlide but has no full-scale customer deployments yet, he said.

"I don't know if people want to talk about eyeballs again, but AppGlide basically gives carriers a way to tell [content providers], 'Stop using Akamai and give us that money,'" said Posey, of IDC.

However, analysts cautioned that data culled from AppGlide alone is not a content monetization strategy. Rather, it should be considered one piece of a broader approach.

"There is, in truth, little value to this kind of data unless it can be turned into something actionable—that is, a technical means of addressing it and a financial motive for addressing it," Nolle said. "This in and of itself is not intended to be a solution to anything ... [and should] be used primarily as a strategy in engagement [with content providers and advertisers]."

Let us know what you think about the story; email: Jessica Scarpati, News Writer.

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