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Making the case for Network Operator & Direct-to-Consumer streaming partnerships

Nov 27, 2023 | By Jane Allan

As the content delivery landscape continues to evolve, Network Operators have the potential to play a pivotal role in the future growth of Direct-to-Consumer (D2C) video service offerings. That is because they sit at the crossroads of the D2C delivery chain. It is through their private data networks that all streaming content flows to the end consumer, which puts them in an ideal position to establish lucrative business relationships with D2C operators to improve stream quality and substantially reduce delivery costs at scale. Using new technology from Velocix, network operators can take advantage of their unique position to drive business growth, showing D2Cs how they can run more profitable businesses by working together with the companies that own the last-mile connection to consumers.

To enable its network operator customers to tap into this growing opportunity, Velocix recently announced it’s Wholesale CDN solution - a software product that empowers Internet Service Providers (ISPs) and other video distribution service providers, to offer third-parties access to their high-performance and cost efficient video delivery network. Fueling the dynamic shift from traditional Pay-TV services to the realm of D2C streaming, Wholesale CDN enables network operators to secure fresh revenues, while also igniting a new era of cost efficiencies for Network Operators. It facilitates strategic partnerships between D2C services and Network Operators that provide game-changing benefits to both parties.

The growing challenge facing D2C streaming video providers

Streaming video providers – including national and regional broadcasters, pureplay SVOD and AVOD providers, FAST channels, sports streamers, and many other types of media & entertainment companies – are growing rapidly in terms of consumption and capacity requirements. Their growth means the video distribution networks that carry all of their streaming video to consumers must also grow - not only to support the increasing numbers of streaming viewers, but also to support the need for better quality, reduced latency, and lower costs as traffic volumes rise.

Streamers have specific video distribution requirements that must be met, both now and as their services continue to grow. Our market research highlights the following key objectives for D2C providers:

QoEStream quality must be consistently high. Viewers must not be given a reason to change channel or cancel a subscription due to low resolution content or inconsistent streaming performance. HD should mean HD, and UHD should mean UHD.

LatencyStreams should start immediately and deliver content within a few seconds of live, especially for sports content. Viewers are increasingly frustrated with live video that is not truly live. It has become unacceptable to deliver content that is 10s of seconds behind sports apps, social media, or cable or satellite services.

Performance ScalabilityPerformance should remain consistently high as capacity scales. It’s one thing to have perfect QoE and latency for 1 person or 10,000 people. It’s quite another to have it for 1 million or 10 million. Performance scalability means exceeding KPIs irrespective of audience size.

PredictabilityStreaming platforms need to be rock-solid. Predictable performance and scaling is mission-critical for media businesses that must meet quarterly financial objectives and satisfy stakeholders.

ControlGranular controls are key, as are operational metrics to proactively ID problems and fine tune performance. Technology leaders need to know their platforms are working and how to fix problems quickly when things go wrong. Business stakeholders do not accept “I don’t know what happened” responses to outages that directly impact customer viewership and revenues.

TransitionFlexible technology that can adapt to changing business needs is a must. Broadcasters and other Video Service Providers are already operating in a multi-platform world, but the balance between platforms is shifting. Broadcasters facing viewership decline in linear and terrestrial broadcasting (DTT/DTH) see their audiences moving to IP-based OTT services. Transitioning from a large-scale DTT/DTH operation to a large-scale OTT operation requires careful management.

Economic ScalabilityStreaming technology needs to be economically viable at massive scaling levels, just like broadcasting technology has been. Broadcast delivery models generally involve fixed cost bases that have excellent economies of scale, while streaming delivery models generally involve variable, consumption-based costs that increase as audiences watch more content. Not only does this result in extra expense when upgrading video resolution from SD to HD to UHD, but it also creates extra cost when a person watches for longer periods of time – which is happening as part of the growth of streaming. Streaming economics must improve as capacity scales. 

DIY and managed services A mixture of managed services and DIY networks can provide a competitive edge. Most D2C Streamers want to focus on their content plans and their customer experience insight. Content delivery has traditionally been outsourced, however some Streamers are seeking more direct control. Companies like Netflix and DAZN treat their delivery operations as a source of competitive advantage. Leading Streamers are interested in striking an economic balance between expert managed services and a build-your-own delivery network approach.

Introducing Velocix's Wholesale CDN

Velocix’s Wholesale CDN solution provides a means for cooperation and mutually beneficial commercial agreements between Streamers and Network Operators. Network Operators with a Velocix CDN can open their last-mile network to third-party stream traffic, enabling Streamers to improve the quality of experience for customers while saving money as capacity demands scale. Velocix provides an extensive array of controls to streamers, as well as near real-time metrics about service performance and consumer behavior. Wholesale CDN is a true multi-tenant platform that can support many Streamers in parallel, each with their own unique requirements, controls, and guaranteed capacity. Streamers can connect to Wholesale CDN using the SVTA’s Open Caching specifications or published Velocix APIs to interface with their existing content hosting or delivery platforms, making it easy to get started.

Wholesale CDN by Velocix is a blend of 4 components that are critical to Network Operators’ businesses:

  1. Advanced CDN technology – proven at scale by many of the world’s biggest video service providers, and ready to handle the enormous increase in future streaming demands.
  2. Tier 1 customer service – from decades of experience working with the leading video service providers, and being geared up to support the best-in-class video platforms.
  3. Unified go-to-market approach – a joint effort between Velocix and Network Operator sales and marketing teams, to maximise the value proposition to Streamer customers.
  4. Flexible business models – a range of commercial options spanning capex to opex, consumption to capacity, and revenue-share mean that there is always a way to make the model work for the Network Operator’s business.

Faced with a future of high-bandwidth OTT video streaming, including UHD and immersive formats, Network Operators can secure new benefits for themselves by working with the Velocix Wholesale CDN solution, including:

  • New revenues and profits from OTT streaming video delivery, helping to off-set any decline in Pay-TV revenues
  • Greater control of video distribution to create new network efficiencies and cost savings
  • Core network bandwidth savings by delivering Tbps of OTT streaming video from more distributed locations deeper in the network
  • Reduced costs of network upgrades by adding downstream video delivery capacity that simultaneously enables incremental revenues
  • Elevated Quality of Experience (QoE) for viewers by delivering from closer to their location
  • Opportunity to leverage Open Caching technology with Velocix’s SVTA-tested implementation
  • Strategic alignment with the largest Streamers as they expand their D2C services
  • Collaborative go-to-market approach between the Network Operator and Velocix

A new CDN model

Based on current CDN deployment trends and CDN technologies and specifications, Velocix sees an opportunity for Network Operators to take a strong and influential position in the next generation of streaming platforms and services.

CDN deployment models have evolved over the last 5-10 years. Streamers have moved from having a single public CDN supplier, to having sophisticated multi-CDN supplier bases with performance and cost policies for dividing content delivery responsibilities. Some Streamers have adopted a Private CDN model, either as a build-your-own solution (e.g., Netflix, BBC, RTE) or as a managed service (e.g., DAZN, Sky, ORF).

Wholesale CDN graphic for blog

Simultaneously, Open Caching specifications that are developed through the Streaming Video Technology Alliance (SVTA) have continued to evolve and gain traction in the CDN marketplace. The vision for Open Caching is of an open and global CDN marketplace for CDN capacity available inside ISP networks. The target suppliers of Open Caching solutions are Network Operators, deploying CDN capacity on their own networks. The target customers are the D2C Streamers.

The Open Caching specifications define standardised interfaces for video delivery and platform monitoring, leaving the internal technologies and software/hardware architectures specific to each CDN provider. Standardisation of interfaces means that Streamers can access CDN capacity in a consistent manner, and Network Operators can deploy future-proofed technology that supports Streamers’ growth. The Velocix CDN was one of the first CDNs to be tested and qualified as an Open-Caching compliant “downstream CDN” (dCDN) against the SVTA testbed.

Streamer requirements plus CDN technology evolution are leading us towards a new CDN model. The new model includes on-net capacity deployed much closer to consumers, supplied in a mix of business models with increasing emphasis on capacity, and delivered as a managed service to the Streamers. This approach creates the opportunity for Network Operators to engage directly in the CDN marketplace.

What next for Network Operators?

Network Operators have a critical role to play in the future of streaming video. Today we are focused on how pureplay SVOD/AVOD services like Netflix and Hulu will continue to scale, and how broadcasters will migrate the majority of their viewing from DTT/Satellite/Cable/IPTV to OTT. This requires a large increase in OTT streaming capacity. Add in the fact that video resolutions continue to rise and AR/VR and immersive viewing experiences on the horizon.  

The market trajectory is clear – streaming is growing, and the need for scalable CDN solutions that can drive better economics is going to get much, much more critical as time progresses. Velocix Wholesale CDN provides Network Operators the right technology and the right business partner to help them generate the maximum value from every stream that is delivered through their network.

Welcome to the future of streaming.

To learn more about the Velocix Wholesale CDN and discuss the business case for providing CDN services to your Streamer marketplace, book a call with one of our video streaming experts


Click for more related content

Product: Open Caching – tap into the OTT streaming value chain
Product: Multi CDN – Strengthen scaling, QoE and revenues
Product: Velocix CDN – class leading CDN efficiency
Webinar: The business of Open Caching
Blog: The business of Open Caching
Article: How Open Caching Aims to Support Broadcast Streaming (Broadcast Bridge)

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