Online Video: Uses - OTT markets - CDN/delivery services

IDATE, September 2011, Pages: 110

This study spotlights both the online consumer and video delivery market with a segmentation of key services and key metrics on usage. It analyzes revenue models (ad, pay, freemium, bundling) and proposes key player and event case studies. It assesses the key technology for online video delivery (including CDN) and presents the main solutions regarding platforms, protocols and delivery solutions. It identifies the key drivers and provides forecasts

Key questions
- What are the driving services for the online video markets?
- How is consumed video OTT and which are the key metrics/markers on usage?
- Which business models and key players are drawing the market trends?
- Which are the key technologies regarding CDN, platforms, protocols and delivery solutions?
- How is evolving the competition on the CDN market?
- What outlook for the online video market in the next five years?

> This report ships with its Excel database covering:

- France, Germany, Italy, Japan, Spain, the UK, the USA, EU-27, World
- Time spent on OTT, Advertising revenues of OTT video, OTT pay services take-up, Pay services Market, Total OTT market, CDN market (World only)
up to 2015.

Contributors:

Vincent BONNEAU, Head of Internet Business Unit

Vincent BONNEAU is the director of the Internet Business Unit, leading all the assignments and publications related to the Internet industry (fixed and mobile services, Internet network, Internet connected objects) and on emerging technologies. His activities are especially focused on technological and marketing innovations.

Prior to IDATE, Vincent BONNEAU worked for the French Trade Commission (Economic Department of the Embassy of France) in San Francisco, USA as an analyst in charge of the software industry. He has also worked for marketing departments at several telecommunication companies including NOOS (French leading cable operator), WANADOO and FRANCE TELECOM. Vincent BONNEAU graduated from Ecole Polytechnique (1997) and from Ecole Nationale Supérieure des Télécommunications (2002). He was also a visiting student with the class of MS from HEC in IT Management (2002).

Sophie LUBRANO, Director of Studies
Soichi NAKAJIMA, Senior Consultant
Samuel ROPERT, Senior Consultant
Gilles FONTAINE, Deputy CEO

The study includes results of a specifically commissioned survey and focus group.

1 Executive Summary
1.1 The consumer online video market
1.2 The online video delivery services market
1.3 Forecasts
2 Methodology
3 The consumer online video market
3.1 Key online video services
3.1.1 Free short clips services
3.1.2 Streaming platforms
3.1.3 Catch-up TV services
3.1.4 Premium VOD offers
3. 1. 5 Live streaming services
3.2 Usage of online video
3.2.1 Mainstream and increasing usages
3.2.2 Consumption behaviour
3.2.3 PC versus TV set
3.3 Revenue models of consumer online video services
3.3.1 Advertising revenue models
3.3.2 Consumer payment for content
3.3.3 The freemium model
3.3.4 Bundling the content with other services
3.4 Key players on the consumer online video market
3.4.1 Overview of case studies
3.4.2 FilmoTV
3.4.3 Amazon Instant Video and Amazon Prime
3.4.4 YouTube
3.4.5 Dailymotion
3.4.6 Megavideo
3.4.7 Hulu
3.4.8 BBC iPlayer
3.4.9 Netflix
3.4.10 MLB tv
3.4.11 Facebook
3.4.12 iTunes
3.4.13 HBO Go
3.4.14 Comparison of key players metrics
3.5 The case of major events
3.5.1 Case study: The French Open
3.5.2 Other major sporting events
3.6 Size of the consumer online video market
4 The online video delivery services market
4.1 Key technologies
4.1.1 Content delivery technologies
4.1.2 Platforms and formats
4.1.3 Codecs and containers
4.1.4 Protocols and adaptive streaming
4.2 Key elements for cost models and pricing of online delivery services
4.2.1 Unicast
4.2.2 CDN
4.2.3 Storage
4.2.4 Transcoding
4.2.5 DRM
4.2.6 Technical requirements for the delivery of online video
4.3 Key players on the CDN market
4.4 Size of the online video delivery services market
5 Forecasts
5.1 Key trends/drivers for online video and for CDN
5 2 Market forecast
5.2.1 Market forecast for the consumer online video market
5.2.2 Market forecast for the CDN industry

Tables
Table 1: The total online video market, 2010-2015
Table 2: Online video consumption Figures
Table 3: Monthly time spent by month
Table 4: A sample of pre-roll CPMs on TV online services
Table 5: Content acquisition by type of video service
Table 6: Examples of ‘freemium' video services
Table 7: Netflix key figures
Table 8: Impact of 2010 French Open on volume of visits to France
Table 9: Online live video consumption metrics for the Olympic Games
Table 10: The world consumer online market, 2010
Table 11: Different types of codec by type of video container
Table 12: Video delivery protocols and features
Table 13: HTTP and RTSP Features
Table 14: Popular coders and specific features
Table 15: ABR features
Table 16: Major players' initiatives in ABR streaming
Table 17: Global CDN costs delivery, Q4 2010
Table 18: Extra fees, JetStream
Table 19: Storage strategies
Table 20: Amazon S3 (storage service) pricing
Table 21: Typical costs for transcoding
Table 22: Typical bandwidth per type of programming characteristics
Table 23: Main global CDN players
Table 24: Main European CDN players
Table 25: Streamzilla rates
Table 26: Telco CDN initiatives
Table 27: AT&T Traffic Forecasts
Table 28: The advertising online video market, 2010-2015
Table 29: The pay online video market, 2010-2015
Table 30: The total online video market, 2010-2015

Figures
Figure 1: The world online video market, 2010-2015
Figure 2: Consumption trends in the USA
Figure 3: Type of programme watched
Figure 4: Frequency of use by type of programme
Figure 5: Types of short clips watched
Figure 6: Types of programmes watched, by type of format
Figure 7: Use of video services by age
Figure 8: Use of services by gender
Figure 9: Places where people watch online videos
Figure 10: Ways of choosing short clips
Figure 11: Satisfaction rate by service
Figure 12: Multi-tasking activity combined with online video
Figure 13: Consumption trends
Figure 14: Reasons for watching online videos on TV set
Figure 15: Time of video consumption
Figure 16: Internet and TV usage patterns in the UK
Figure 17: Level of interest in online videos on TV set
Figure 18: Overlay on YouTube
Figure 19: Ticker ad on YouTube
Figure 20: Adidas branded player skin on Hulu
Figure 21: Companion ad on MSN Video
Figure 22: Demonstration of bug ad by EyeWonder
Figure 23: Hulu Ad Selector
Figure 24: Hulu Branded Entertainment Selector
Figure 25: Hulu Survey ad
Figure 26: FilmoTV
Figure 27: Amazon Prime now includes instant video access
Figure 28: YouTube homepage
Figure 29: Dailymotion homepage
Figure 30: Megavideo homepage
Figure 31: Hulu homepage
Figure 32: BBC iPlayer homepage
Figure 33: Netflix homepage
Figure 34: MLB tv player and main features
Figure 35: Facebook's video page
Figure 36: iTunes Store
Figure 37: Number of video viewers on each site as % of total Internet access
Figure 38: Number of video viewers on YouTube as % of total Internet access, country comparison
Figure 39: Number of video viewers on Dailymotion as % of total Internet access, France versus worldwide
Figure 40: Average length per video viewed
Figure 41: Number of videos per viewer per month
Figure 42: Time per viewer per month
Figure 43: Positioning of players with respect to their metrics
Figure 44: Unique users and average viewing time on the France Télévisions' 2009 French Open streaming service
Figure 45: Breakdown of OTT video services in a selection of countries, 2010
Figure 46: Technical value chain description
Figure 47: Unicast and multicast
Figure 48: Illustration of the CDN principles
Figure 49: Video delivery based on P2P architecture
Figure 50: SVC codec illustration
Figure 51: How video download, progressive download and streaming work
Figure 52: Matching bandwidth changes to maintain QoS
Figure 53: IIS Smooth Streaming Description
Figure 54: HTTP Dynamic streaming workflow diagram
Figure 55: Example of 95th percentile calculation
Figure 56: Client-server relationship in the four-layer model
Figure 57: QoS satisfaction
Figure 58: Limelight financial trends (In millions USD)
Figure 59: BT wholesale CDN in the UK
Figure 60: Akamai mobile solution for iPhone
Figure 61: World CDN market size
Figure 62: The world online video market, 2010-2015

Consumer OTT video already represents an impressive worldwide market of almost 5 billion EUR in 2010

IDATE has released recently its report "Online Video: Uses, Markets, delivery technologies/CDN” which spotlights both the online consumer and video delivery market with a segmentation of key services and key metrics on usage. It analyzes revenue models (ad, pay, freemium, bundling) and proposes key player and event case studies. It assesses the key technology for online video delivery (including CDN) and presents the main solutions regarding platforms, protocols and delivery solutions. It identifies the key drivers and provides forecasts.

“We expect the worldwide online video market to grow at an average rate of 35% per year between 2010 and 2015 to reach 21.7 billion EUR in 2015, some 6% of the total video market, whereas CDN should reach 4.7 billion EUR with a CAGR of 28%”, says Vincent Bonneau, IDATE's Internet lead analyst. “Video CDN will even develop faster with 2.4 billion EUR at 33%, close to online video rates.”

The consumer online video market
IDATE estimates the world consumer online video market at 4.7 billion EUR in 2010. We estimate that 48% of the world online market derives from advertising revenues and 52% from pay-revenues, due to the peculiar structure of the USA market with strong sell-through on-demand revenues coming from Apple and Netflix, and to a lesser extent paid TV channels (especially from sport leagues). In most of other territories, the bulk of revenues originate from advertising.

Key online video services

The consumer online video services market can be broken down into five main segments, which differ in terms of content length, content quality (premium and therefore blockbuster/popular shows versus long tail), place in the media chronology and business models (free versus paid versus bundles):
- Free short clips services
- Streaming platforms (mostly illegal content coming from Megavideo)
- Catch-up TV services (rerun but fresh content, only available for free for a short period of time)
- Premium VOD offers (paid services on pay per view basis or subscription basis)
- Live streaming services (all live video, especially sports, including also illegal contents).

The lines are less and less clear between the different providers of those services, as they tend to offer all services. The largest remaining differentiation is therefore the business model and to a lesser extent the quality of the content.

Online video is becoming mainstream
In developed countries, more than 80% of Internet users are watching audiovisual content via the Web. Short clips, such as provided by YouTube or DailyMotion, are the favourite online videos, with 78% of broadband Internet users watching them. Other popular short clip video services come from specialists (AlloCiné) or more recently from Facebook, as social networking is spreading on all Web services. Catch-up TV (coming from Hulu and from all popular TV channels such the BBC iPlayer) and streaming platforms such as Megavideo, and live streaming are also fairly used. TV series consumption is indeed growing fast thanks to streaming platforms (very high intensity per user) and catch-up TV services. The availability of streaming video services negatively impacts the use of P2P services. Other video services are still niche, as live is only emerging around dedicated platforms (Justin.tv) or for sport events around traditional broadcasters online video services, but often with a low quality. Premium VOD is developing, but is only being used online by a few users, even for Apple's iTunes (most of VOD consumption being on managed services), except for the skyrocketing Netflix, whose future remains unclear. Adoption of online video remains higher among young people, but Pay-VOD is heavily used by middle-aged people. Unlike TV, Online video is often watched alone, except for pay-premium VOD which is mainly family entertainment. All the same, the bulk of the total time spent watching video is spent on TV.

Consumers accept the trade-off between free content/lower quality and paid content/higher quality, which is currently reflected by the lower adoption of paid services (except for services relying on bundles as has been the case with Netflix or, more recently, HBO). A lot of users are still flocking to free content (legal or illegal), raising therefore questions around the business models. Multi-tasking is also an issue to be addressed in order to monetise online audience: people watching online videos surf on the Web or on Facebook at the same time, chat, or even watch TV.

Revenue models of consumer online video services
Online video benefits from traditional Web advertising formats, namely display, sponsoring and search marketing. Inserting video or non-video advertising inside the video programmes increases its impact and encourages the circulation of programmes. Pre-roll video ads are the most commonly used formats, but overlays, tickers and companion ads are also widely used. A key trend is to let the user personalise the ads he prefers to be offered. Implementing cost-per-click tariffs rather than cost-per-thousand is key for the adoption of online video advertising by advertisers.

Pay-revenue models are moving from pay-per-view patterns to flat-fee subscriptions, such as used by subscription video on demand services.

Services tend to combine the free and pay models into freemium services, where a subscription gives access to more recent content, higher quality and portability between terminals.

However, a significant share of online video consumption, bundled with other services, will not generate specific revenues: streaming services marketing their store and share offers (Megavideo); online free add-on versions of pay-TV channels (ESPN3, HBO Go); premium programming bundled with telcos triple-play services (Orange).

- Amazon Instant Video
- BBC iPlayer
- Dailymotion
- Facebook
- FilmoTV
- HBO Go
- Hulu
- iTunes
- Megavideo
- MLB.tv
- Netflix
- YouTube

CDN key players
- Akamai
- Highwinds
- Limelight
- Octoshape

Protocols and adaptive streaming
- Adobe
- Apple
- Microsoft

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