Netflix

Last June, Netflix announced plans to build out their own content delivery network by giving ISPs free caches to place inside their networks. Called Open Connect, Netflix’s new platform allows network operators to provide higher quality streaming and more importantly, gives them control over the video that flows through their pipes. This morning, Netflix announced which ISPs have joined the program which include Cablevision (U.S.), Virgin Media (UK), British Telecom (UK), Telmex (Latin America), Telus (Canada), TDC (Denmark) and GVT (Latin America).

Netflix says that Open Connect is now serving the “vast majority” of Netflix video in Europe, Canada and Latin America. Netflix wouldn’t clarify exactly how much of their traffic that is, but did say back in June that more than 50% of their traffic in the UK alone was coming from their new CDN platform, so clearly it’s grown quite a bit since then. Netflix said their goal is to have “all of our members served by Open Connect as soon as possible” and while they haven’t given out a time frame just yet, realistically it would probably take them 24-36 months to have nearly all of their International and U.S. video streams being delivered from inside ISP networks.

In addition, Netflix says that their Open Connect partners now have the ability to offer a limited number of videos in Super HD and 3D streaming, with 3D streaming being limited to North America only. I tried to see if I could test one of the videos, but my ISP Verizon isn’t in Netflix’s Open Connect program. Netflix has launched a new page on their website where consumers can check to see if their ISP is in the Open Connect program by simply going to www.netflix.com/superhd.

Netflix told me their Super HD videos are encoded for 7 Mbps and that the 3D streaming videos require 12 Mbps at the high end. Currently, only the PS3, WiiU, Windows 8 devices, Roku, Apple TVs (1080p model) and select smart TVs and Blu-Ray players are supported.

It’s also interesting to think about how Netflix’s Open Connect program could help protect their business. For some time now, service providers have been feeling the pressure by having to backhaul a lot of Netflix’s traffic, at their own cost. They only thing they can do to combat it is spend money to built-out, which means they put that pressure back on the consumer by raising rates or implementing caps. Over time, it will be very interesting to see if any of the ISPs that have Netflix caches inside their network allow content from Netflix not to count towards consumers caps. I don’t know of any ISPs currently thinking of doing that, but it’s something to keep an eye on.

Very_few content owners can build out their own CDN, but for Netflix it makes perfect sense. They have enough traffic to make it more cost-effective than using third-party CDNs and even more importantly, it allows them to provide an even better user experience. Based on recent data Netflix has given out, their average broadband stream is delivered at just over 2 Mbps and for mobile devices, those streams average 600 Kbps. So over time, their Open Connect initiative will allow customers to be able to get much better quality video, something every content owner is always striving to improve on.

If you’re interested in hearing more about Netflix’s CDN plans then save the date to join us on Monday May 20th at my Content Delivery Summit in NYC, where Ken Florance, VP of Content Delivery for Netflix will be our opening keynote speaker.

Read more:

– Netflix’s Streaming Cost Per Movie Drops 50% From 2009, Expected To Spend $50M In 2012

– Netflix’s CDN News Being Overblown By Many Wall Street Analysts, Focus On The Facts

– Average Family Of Four Probably Has 10 Netflix Enabled Devices In Their Home Today

– Netflix Announces New Content Delivery Network, Offering Free Caches To ISPs

Earlier today I reviewed the Apple TV player in a head-to-head comparison with the Roku 2 XS in an article entitled “Roku 2 vs. Apple TV: How To Chose The Right $99 Streamer“. To go with the review, I am giving away one Roku XS device to a lucky reader of my blog. To enter the drawing, all you have to do is leave one comment on this post and make sure you submit the comment with a valid email address. The drawing is open to anyone with a mailing address in the U.S. and the winner will be selected at random later this month. The drawing is now over. Congrats to Larry S. who won the item.

I’m also giving away an Apple TV unit and a Vizio Co-Star unit. You must enter each drawing separately. Good luck!

The market for streaming boxes just got a little more crowded with the release of Vizio’s new $99 streaming media device, named the Co-Star. Joining the ranks of Roku, Apple, Western Digital, Sony and Netgear who already have $99 boxes in the market, Vizio’s Co-Star device is being delivered this week, to those who pre-ordered from Vizio.com. I’ve been testing the box for the past two days, and overall, the box performs pretty well. [Updated: See part two of my Vizio Co-Star review, where I answered some of your questions.]

Vizio said they sold out of the original run of boxes made just for the pre-order, but won’t say what quantity that was. The box will soon be up for general availability, but in the mean time, I’m giving one away for free. (See the link at the bottom of this post to enter.)

Starting off with the basics, the Co-Star has built-in ethernet, WiFi, two HDMI ports (in and out), DLNA support, one IR port and has USB to support the playback of local content. The Co-Star supports 1080p streaming and is about the size of two Apple TV units stacked on top of one another. The box supports content offerings from Netflix, YouTube, Amazon Instant Video, HBO GO, Wall Street Journal, Pandora, iHeartRadio and Slacker Radio. M-GO video-on-demand is advertised as being available, but hasn’t yet launched. While Vizio originally said the box would support Hulu Plus when they announced the Co-Star, the box does not currently have Hulu Plus support. Vizio says more content services will be added to the box before the end of the year, but aren’t hinting at what those services will be.

While this would be just another $99 box on the market if the specs stopped there, unique to the Co-Star is that it comes bundled with the Google TV platform, which Vizio has completely re-skinned for their device. In addition, no other $99 box on the market has HDMI pass through, thereby allowing you to overlay the Google TV platform and apps on top of live TV, thanks to the Co-Star’s HDMI in port. This is one of the nicest features of the device, as the user experience switching between live TV, Google TV and apps is seamless, but is still hampered by the fact that the Google TV platform still feels like a beta product.

Included with the box is a bluetooth touchpad universal remote with QWERTY keyboard. For comparison purposes, I included a photo of the remote next to a Blackberry and the Apple TV remote. The keyboard works quite well and the touchpad is easy to navigate, but the downside of all this functionality is that the remote is big, heavy and really thick. The buttons are very small, especially the numbers and all buttons require a hard press. There is no chance of you using the remote in low-light conditions since the remote is not backlit, so it really requires you to have to look at it each time you want to use it, especially if you want to change channels via the numeric keypad. While Vizio intends for users to adopt their remote for controlling their Co-Star, DVR, TV and sound system, any real power user isn’t going to use their remote for all their devices. Unlike many streaming media boxes, the Co-Star remote does have a power button to turn the device on/off, but has no LED light in the front of the box indicating on/off status. Clearly you know will know when it is off since it does pass through of your cable signal, but if it has on/off capabilities, I’d personally still like to see some indicator of this on the front of the unit.

Setting up the Co-Star is pretty easy, but it’s no Roku. That said, it’s a bit unfair to compare the two as the Roku has no HDMI in and doesn’t overlay live TV. So naturally, setup with any device that has more functionality, like the Co-Star, is going to take more time. The initial setup isn’t difficult, but will take 15-20 minutes to pair the bluetooth remote, connect the box to the Internet, enter your Google account info, select your TV model, select your DVR or STB model, select your cable provider and do a software update. I’ve already been pushed one software update and Vizio says another one is coming out this week. For anyone like me who got one of the first boxes during pre-order, your setup will be a bit more complex, as there were some issues that the update fixed. But any boxes going forward will have the latest software and will be easier to set up. While I did have some issues during setup, I chalk that up to getting one of the first boxes made and Vizio already knew about the problems and released the software patch. The patch coming out later this week will fix the problems with the 5.1 surround sound, so it’s great to see how responsive Vizio is being to fixing software issues.

I tested the Co-Star hooked up to a TiVo Series 3 unit with cable cards as well as a regular set-top-box from Verizon and saw quite a difference in performance between the two. The Co-Star had some major issues with the TiVo as many of the TiVo commands aren’t on the Co-Star remote and changing channels really lagged. If you have a TiVo, the Co-Star is probably not the box for you. On a regular set-top-box, the Co-Star performed much faster, didn’t have the lag and was pretty responsive, outside of the Netflix app. Most apps on the Co-Star load within a few seconds, but Netflix takes nearly 20 seconds to load.

I didn’t test playback of local content via a USB drive, but Vizio says the box supports H.264 (MP4, MKV, MOV, AVCHD, 3GP, TS), MPEG-4 part 2 (MP4, DIVX, AVI, 3GP, TS), WMV9 (ASF, AVI), MPEG-2 (MPG, TS), H.263 (MP4, 3GP, FLV). I’ll have to put USB playback to the test when I have time, but based purely on format/codec support, this box gives the Western Digital WD TV Live box some competition, for those users who have a local library of digital content they want to play through the device.

While the Co-Star has a lot of features, it’s really hard to call it the box to beat, or declare any box the winner, as consumers have different needs. The Co-Star won’t work with any TV that doesn’t have HDMI, so it won’t be a fit for everyone. No other $99 box has Google TV built-in though, so the Co-Star wins in that category, as well as the HDMI pass through. There really isn’t much to complain about on the hardware front with the Co-Star, but it still lacks support for Hulu Plus, EPIX, Vudu, MLB.TV, NHL and NBA. So Vizio still has some work to do to catch up to the content choices available on the Roku.

Overall, Vizio’s Co-Star device will please most consumers and Vizio’s made a really nice device, considering this is their first entry into the $99 streaming box market. If they can add content services from Hulu and MLB in particular, along with a few others, then this box will have more functionality than a Roku, at the same price.

Updated: I did not have the time to test the OnLive gaming service on the box, so I don’t know how well that performs.

I have two Vizio Co-Star boxes, so I’m giving one away on my blog. Click here to enter the drawing.

This morning, Netflix (NFLX) announced they plan to roll out streaming services to consumers in Norway, Sweden, Denmark and Finland by the end of this year. Based on the number of Internet users in those regions, Netflix is targeting about 22M connected consumers. Here’s how that breaks down per region (numbers based on data from the ITU).

• Sweden: 8,441,718 Internet users on Dec.31, 2011, 92.9% penetration rate
• Finland: 4,661,265 Internet users as of Dec.31, 2011, 88.6% penetration rate
• Denmark: 4,923,824 Internet users as of Dec.31, 2011, 89.0% penetration rate
• Norway: 4,560,572 Internet users as of Dec.31, 2011, 97.2% penetration rate

To get subscribers, Netflix needs content for these new regions, specific to what consumers want to watch in these countries. But they have the chicken and the egg problem. To get subscribers, Netflix needs content. To get content, Netflix has to pay the studios which requires subscribers. Netflix is having to commit to up front massive payouts to studios for whatever content they can get. But if subscriber growth stagnates, Netflix could quickly find itself upside down in those agreements. From a financial perspective, Netflix has already estimated it won’t be profitable next year as they expand into new territories in a clear sign that content costs are skyrocketing.

The good news is that there are a lot of Internet users in these European regions and their broadband speed is pretty high. The exact speed per country depends on which stats you look at, but the average looks to be at least 5Mbps, which is plenty for Netflix’s streaming service. Netflix has their work cut out for them in terms of licensing the right kind of content for these regions and that will determine how successful they can be in signing up new subscribers. So far, the company hasn’t done a good job with their content licensing strategy in Latin America, so one has to hope they have an easier time in these new European countries.