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There is a significant challenge facing the streaming video industry today. It’s a problem that will get much more acute as time passes unless significant technological innovations can change the economics of how video is distributed. The challenge, which I will call the capacity gap, is that the continued improvement in the performance of streaming infrastructure is not keeping up with the rate of growth in streaming demand.

The capacity gap is a result of the incredible success of streaming video combined with the maturation in performance of the platform used to deliver streaming video to consumers. Today streaming video is delivered to consumers using the same basic technology platform that was used to deliver streaming a decade ago: namely an x86 CPU based server platform running an OS and a streaming application. While the traditional server platform has certainly improved in performance over time, the reality is that the success of streaming video is outrunning the capabilities of the underlying technology infrastructure.

In the last ten years, while streaming video was growing from infancy to 20% of consumption hours, content delivery networks and companies that operate their own CDNs, such as Netflix, have accomplished significant feats of software optimization and achieved performance increases that have squeezed most of the available capacity from the software layers of the x86 streaming video delivery platform. In the same timeframe, the regular increase in server processor performance has all but leveled out and currently stands at approximately 3.5% per year.

This combination of these two factors means that the performance improvement curve of streaming video delivery infrastructure has flattened out just as streaming video is achieving mass market adoption and the demand curve is rapidly accelerating. The difference in these two curves is the capacity gap between the rapidly increasing market demand for streaming video and the inability of the underlying technology to increase performance to deliver on that demand. In a market where the demand curve is increasing 30% per year and the underlying delivery performance curve is increasing by less than 10% per year, the two curves will never cross. This creates a massive service capacity gap that will have to be addressed in order to meet market demand and the market to continue to develop and prosper.

So, what is being done to address the capacity gap? The current solution is to simply build more data centers and to “rack and stack” more servers to fill them. In 2017 Alphabet built ten new data centers. While all of them were not for YouTube, it’s a safe bet that YouTube and streaming video were a significant driver of the $10B Alphabet spent on data centers and data center operations last year. The other large streaming video players such as Amazon and Microsoft are spending similar amounts annually. If the streaming video market was close to saturation, the capacity gap problem could likely be solved by simply continuing to build more infrastructure. But this is not the case.

If online video consumption continues to take market share from traditional distribution channels and ultimately replaces traditional broadcast distribution, then streaming video infrastructure will need to increase its capacity by over 3X in the coming years. If all the streamed content improves from HD to 4K, the required bandwidth will increase by a factor of another 4X. If 8K, which is also required for true VR and AR, becomes widely adopted, there would be another 3X increase in capacity needed. It is not difficult to project a scenario over the next 10 years where the streaming video market requires 20X the infrastructure delivering capacity that exists today. Building 20X the data centers and filling them with 20X the servers in addition to constructing the power plants to power this infrastructure is clearly not an economically viable or sustainable strategy.

I’m not the only one to see this problem on the horizon and there are plenty of network engineers much smarter than me who are actively talking about how to scale video delivery as more content goes over-the-top. But if we truly believe that one day, streaming video is going to replace traditional linear TV distribution, then we need to start talking about how we are going to address the most daunting challenge facing the streaming media industry today – the capacity gap.

Live streaming of sporting events in the U.S. garner a lot of attention from the media for their viewership numbers, but the fact is that these events pale in comparison to what’s going on in places like China and India. On May 20th, the live stream of the League Of Legends final peaked at just over 24.5M simultaneous streams, with 98% of those viewers coming from China. To date, I haven’t heard of any live event on the web that comes even close to those viewership numbers.

While there is no way to verify the data directly, in this case, these numbers come from ESC, a third-party analytical service that many of the eSports companies parter with to track viewership, including Twitch, YouTube, Huya, Panda TV and other major eSports platforms. With the vast majority of the event being viewed by users in China, the official live stream was delivered using Tencent’s cloud, which has over 800 nodes around Mainland China, covering major network operators. (CMCC, China Unicom and China Telecom)

For anyone who has read my blog long enough they know I am very skeptical about any numbers put out after live streaming events. Many times the numbers can be generalized or definitions of what “concurrent” or “simultaneous” mean change based on the broadcaster or content owner. So I had multiple back and forth conversations with ESC about the data to confirm their numbers, with them defining simultaneous as “Avg CCV”, or Average Concurrent Viewership. The 24.5M number was the same feed, broadcast across 11 partners including Twitch, YouTube, Facebook and other platforms.

But China isn’t the only region seeing some pretty high viewership numbers when compared to the U.S. On May 27th, Hotstar’s live stream of the 11th edition of the Indian Premier League cricket tournament had their stream peak at 10.3M simultaneous viewers. One media outlet called it a “new global record”, which it isn’t, but the fact remains that live sporting events outside the U.S. are seeing much higher number than events primarily targeting viewers in North America.

Live streams of sporting events outside the U.S. are now starting to be on par with the kind of viewership you would expect only from traditional pay TV services. And while the quality of the broadcast isn’t the same, for most users, the product being offered online is suiting their needs just fine. Pay TV providers have to be watching these simultaneous stream numbers climbing and wondering how they are going to compete with them in the long run, for specific one-off events.

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With multiple industry events taking place in NYC next week and many streaming media professionals in town, I’m going to have another meetup on Wednesday June 6th, starting at 6pm at at Lillie’s, located in Union Square at 13 East 17th Street (map). We’ll have free drinks all night thanks to Ericsson’s UDN group.

There is no RSVP list, just walk to the back of the venue, bring a friend and spread the word! And if you’ve been to the meetup before, this time around we’ll have a larger space at the venue.

These meetups are a great way to network with others tied to the streaming video ecosystem. We get a great mix of attendees from companies like CBS, Hulu, BAMTech, Conde Nast, HBO, WWE, Comcast, VICE Media, NFL, Showtime, Omnicom, NBC, NBA, Time, Viacom, Twitter, WPP, Google, Facebook, FOX, R/GA, Twitch, Riot Games, American Express – wall street money managers, government agencies, VR production companies and vendors from all facets of the video ecosystem.

I’ll keep organizing these every month so if you want to be notified via email when the next one is taking place, send me an email and I’ll add you to the list.

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If you are in the NYC area tonight, come network with other streaming media professionals for free at the NYC Streaming Meetup starting at 6pm at Lillie’s, located in Union Square at 13 East 17th Street (map). We’ll have free drinks thanks to sponsors LiveU, Comcast Technology Solutions, Digital Primates and LTN Global Communications.

There is no RSVP list, just walk to the back of the venue, bring a friend and spread the word!

These meetups are a great way to network with others tied to the streaming video ecosystem. We get a great mix of attendees from companies like CBS, Hulu, BAMTech, Conde Nast, HBO, WWE, Comcast, VICE Media, NFL, Showtime, Omnicom, NBC, NBA, Time, Viacom, Twitter, WPP, Google, Facebook, FOX, R/GA, Twitch, Riot Games, American Express – wall street money managers, government agencies, VR production companies and vendors from all facets of the video ecosystem.

I’ll keep organizing these every month so if you want to be notified via email when the next one is taking place, send me an email and I’ll add you to the list.

Bot mitigation is one of those technologies that typically falls under the security heading of CDNs that offer it as a feature of a larger suite of services. It hovers around the edges of the application security space, but is it its own thing? Or is it just another sub-segment of application security? In some sense, it doesn’t matter – what matters is helping customers solve real problems, and there are a lot of real problems in today’s market. I heard about a couple of interesting stories recently that illustrate that point. Coming off of NAB, it feels odd to be talking about non-media companies, but at the same time, they’re still brands that we all likely see or interact with on a daily basis, and there are clear parallels that can be drawn in any business.

The first story is about one of the larger financial services institutions in the U.S. You’d recognize their name if you heard it. Attackers were using bots to automate the process of validating stolen user account credentials. Many people use the same usernames and passwords with multiple sites. So, if there was a data breach at a popular retailer, you could take any leaked credentials, load them onto a botnet, test them against the login page of a bank to see which ones worked, and then login to transfer money or take out loans. This was leading to over 8,000 account takeovers per month for this company – and over $3 million per month in fraud-related losses.

What was also staggering is the amount of tech that these large financials have pointed at this problem. 2 factor authentication, fraud prevention, identity management, and no shortage of homegrown tools. I’m sure these were all making a dent, but when they put a single bot mitigation solution in place, they saw account takeovers drop to 1-3 a month and fraud-related losses drop below $50k per month. That’s a great reminder that it’s not just about getting more technology, but getting the right technology for the problem.

There’s a popular online retailer that sells very high-demand goods; think about the bot problem with event tickets, only now with retail. Essentially, grey marketeers use bots to lock up the entire inventory the second it’s made available, so that they can resell it on the grey market for profit. Over a 9-day period with multiple sales, this company saw over 500 million login and add-to-cart requests from bots, from over 1.8 million unique IP addresses in over 200 countries. This period also included a single sale event that saw almost 700,000 bot requests per minute. It’s no mystery why it’s so hard to buy these things as a regular person. Akamai (the bot mitigation vendor) said it was the largest transactional bot attack they’ve ever seen.

What’s interesting about this story – beyond the size of the attack – was why this was a problem. Surely grey marketers purchasing goods still means the company made their money, right? For some retailers, the goal isn’t only to generate revenue, but to avoid grey marketeers diluting their brand by taking users away from their own store experience, not risking genuine goods being comingled with counterfeits, and controlling pricing. Put another way, for high-demand retailers brand marketing is critical. These businesses invest in marketing to create a halo around the brand, and to reach rabid fans and online influencers who can carry the brand further downstream. Needless to say, getting scooped by bots doesn’t lead to happy fans or positive movement in brand perception.

Why is this relevant? Your company might not be a large financial services company or an online retailer doing hype sales. But if you generalize the problem, many media and broadcast customers see large amounts of bots doing similar things with their website. I’ve heard from some OTT providers that tell me bots routinely hit their systems trying login credentials, with criminals selling the logins that work. A quick scan of some of message boards where stolen data is sold shows you can buy Netflix, Hulu, Spotify and other OTT logins in bulk. Bots are a problem for all segments of the online world, including the media; publishing and broadcast industries and companies have to ask themselves, what impact are bots having to their business and what is that costing content owners? I’ve not seen a report that answers these questions, but if you know of one, please feel free to leave a link to it in the comments section.

I’ve completed some recent surveys in Q1, collecting data from customers that use various products/services in the market. Below are more details on what I have collected so please reach out to me if you are interested in acquiring any of the data, or if you’d like me to do any custom data collection specific to your needs. Data collecton on SSAI is currently underway as are more topics.

CDN/Web Performance Pricing
I’ve collected data around media delivery and web performance services from hundreds of customers (600+ media, 250+ performance), broken out by the U.S. and APAC markets. The survey details how much they spend, traffic growth, the rate they pay, number of CDNs they use (including vendor name) and a host of other details. There are two separate sets of survey data, broken out by media/web performance.

Multi-CDN Usage
I’ve collected data on multi-CDN usage from over 200+ publishers and broadcasters specific to video, which details what they want from the service, what they are willing to pay for it, how they think about splitting their traffic and how they measure quality amongst many other details.

Cloud Security
I’ve collected data from over 150+ cloud security customers on what type of security solutions they use, if they migrated from on-prem solutions, what features are most important (capacity, automated mitigation, managed service etc.) what types of attacks concern them the most and who they use and other details.

Please contact me for more details on what I have collected and I can share with you additional survey topics I am working on. 917-523-4562

Tomorrow, on May 15th I’ll be hosting a dinner with Akamai in NYC specifically for those on Wall Street. A few seats remain so please contact me if interested. I will be leading a discussion with Rick McConnell, President and GM, Web Division from Akamai along with Josh Shaul, VP Product, Cloud Security and Michael Fay, VP Product and Operations, Media. We plan on discussing the catalysts driving innovation in the market specifically for Akamai’s performance and security solutions and will cover how Akamai’s solutions (WAF, DDoS etc.) work from a technical level. We will also cover the factors (i.e., scale, price, features, ease-of-deployment) that customers use to evaluate vendors and discuss the types of applications customers are deploying across Akamai’s platform.