How to Hedge Network Capacity and Turn OTT TV into a Profitable Service

TV viewers have an unquenchable thirst for OTT video, and this appetite is growing, with no end in sight. As a result, the OTT video market is expected to grow by 65% worldwide between 2016 and 2021 (Digital TV Research). Live TV represents 30% of this growth, making it the fastest growing OTT segment – and one of the most costly for operators to manage, using traditional Content Delivery Networks (CDN) technology.

Operators continue to heavily invest in CDNs to cope with this traffic growth without clearly being able to take advantage of the economic opportunity it represents. Additionally, during popular events such as a football game, when millions of viewers can end-up watching the same TV programs simultaneously, the bandwidth required to offer viewers a great HD experience, invariably surpasses an operator’s available CDN capacity. The figure below shows how a popular event such as the Euro 2016, can generate traffic demand peaks.

 

Like a dog chasing its tale, operators keep adding more CDN capacity, such as new cache servers, and additional IP routing capacity. But this will never be enough, because with traditional Unicast CDN, the same video stream is delivered millions of times individually to each end-user. So, the more users demand videos, the more operators generate streams and the more CDNs they need to keep up with the expected quality.

But, they will never be able to keep up, as demand grows, video sizes increase and additional services like VR and AR surface. The result is video quality degradation and massive customer dissatisfaction and churn.

Scaling a network with traditional CDNs represents considerable investments. These include additional licenses and associated hardware for IP and CDN networks as well as for head-end and origin servers. Also included are squared meter space in datacenter and the energy to feed the associated datacenters and cooling systems.

Is it really necessary to invest so much in network infrastructure just to meet traffic peaks and growing OTT demand? There’s got to be a better way. Let us give it a thought for a minute.
With a Multicast ABR solution, like the one Expway presented at IBC 2018, operators deliver only one stream per live channel to serve hundreds of millions of viewers. By Multicasting the most popular content, the number of CDN servers required can be divided by at least 4. CDN servers are still needed and relegated to delivering the less popular content in Unicast. The overall cost of delivering OTT is, using this strategy, significantly decreased.

These savings can be illustrated by the graph in figure 2. The figure shows a comparison of operational cost growths between Unicast and Multicast, as the number of OTT viewers increases. Costs estimates include licences, hardware, and the energy to keep the CDN and IP networks running. It is also assumed that the operator is delivering the content at 8 Mbps. Cost savings increase as the number of viewers grows. At 5 Million viewers, the savings can be calculated to be around $25M, or 70% compared to Unicast.

 

 

Adding Expway Multicast ABR to a network is simple. Only a couple of servers are needed in the operator’s network (the Multicast Server and the Multicast Controller) and Multicast Agents in the end-devices.

In addition, the Expway Multicast ABR is CDN agnostic, and supports mobile and fixed networks, whether on 4G or 5G. It can also reduce the cost of delivering VoD, targeted advertisement, and large files through its unique large-file-push multicast technology. Other benefits include total control of video quality, through seamless and automatic Unicast/Multicast switch, Expway’s patented Forward Error Correction (FEC), and Quality-of-Experience metrics.

For more information, read the Expway Multicast ABR data sheet, or contact Expway.