Mobile video optimization 2012 - July update

For those who follow the video optimization market, it will not come as a surprise that my acclaimed report needed already an update after its release in March.The market has been abuzz with rumors and movement, following acquisitions, re-positioning and the changes in market share:

• Bytemobile's acquisition by Citrix
• Ortiva wireless acquisition by Allot
• Openwave's acquisition by Marlin Equity Partners
• Mobile video optimization show 2012 in Brussels
• Flash Network now #2 in market share 

The report describes the trends impacting network operators, the technologies involved in video optimization, a review of the vendors and re-sellers in this space, with their differentiators and strategies.


You can find some reviews for the report and my services here and below:

“Patrick is an astute, engaging and articulate individual who has provided my company with valued data, opinion and reports on market status and dynamics in the area of OTT video. Patrick's insights have helped my company recently in developing group strategy and deployment options for video optimization and policy management. ” June 8, 2012
Top qualities: Great Results, Expert, High Integrity
Desmond O'Connor Vice President of Data Design at Deutsche Telekom group

Sprint kills two birds

There is little doubt in my mind, that someone woke up at Sprint one morning and looked at their current position and strategy and thought:

• Launched iPhone, check,
• Introduced all-you-can-eat unlimited data plan, check,
• Launch 4G, check, 
• ...wow that feels pretty good... 

That is until someone must have asked "Who are our suppliers of mobile internet technology who we will be relying on to grow drastically our capacity and services while reducing our costs?".


The answer was probably, "the same vendors whom we have relied on for 2G and 3G, Openwave and Ortiva Wireless"... Well, the market had changed and as the execs looked at the viability of their current suppliers, they probably accelerated their exit by selecting a new vendor. Sprint has been rumored to have selected Bytemobile last month, after a short evaluation. 


As you have seen, Ortiva got scooped up by Allot, a good operation for the vendor who has been wanting to expand their offering for the last eighteen months. The company was looking for good technology, at a low price, and that is exactly what they got. 


Ortiva Wireless has been one of the first pure play video optimization vendors, focusing on transrating and dynamic bit rate adaptation. A narrow field that allowed it to focus and execute well technically, on a few deployments, but lacked the breadth to challenge vendors with a more complete offering. The company never got the critical mass to grow organically fast enough, and when the news hit, last month, that Sprint, their largest customer was looking at alternative vendors for 4G,  the investors, who have put in over $40m in equity and convertible debt decided to look for alternative growth strategy. Allot had been in the market for a while for a video optimization vendor and the deal was concluded in a few weeks, for less than $16m.


The following week, Sandvine announces a joint video optimization  deployment with Mobixell at nTelos. Bytemobile had already started communicating (here) around policy-based optimization at mobile world congress, with Openet.


As for Openwave, if you have followed the saga (here), you will  not have been surprised to learn that after a few weeks of due diligence with a couple of possible suitors, the company decided to continue licensing its patent portfolio under the name "Unwired Planet" while divesting its product divisions split between Openwave Messaging and Openwave Mobility to Marlin Equity Partners for $55m.It is too bad that the strategic relationship with Juniper did not develop into an acquisition, but it is hardly surprising, considering Openwave's market share and technical results in video optimization.


Meanwhile, as Comviva, NSN, OnMobile, and Huawei enter the segment with their in-house and OEM'd technology, Alcatel Lucent, Amdocs, Cisco and others have selected partners for VAR and OEM and are actively participating in vendors' evaluations. 


These subjects and many more at the Mobile Video Optimization forum in Brussels June 12-13th. I am the show's official blogger and will chair day 1. I am looking forward to seeing you there.

Allot acquires Ortiva Wireless

You probably by now all know to whom I was referring to in my last post, when I was mentioning rumors of video optimization vendors getting closer to policy vendors. Allot announced this morning the acquisition of Ortiva Wireless for an undisclosed amount. 


This is the 4th consolidation in this space in 24months, after Ripcode was acquired by RGBNetworks, Dilithium's assets were sold to OnMobile in 2010 and Openwave products division was acquired by Marlin Equity partners earlier this year. Additionally, in related spaces, Avaya acquired Radvision and RealNetworks licensed its codec to Intel in 2012.

I had first heard that Ortiva was in advanced discussions with Allot on March 31st. At that point, Ortiva having allegedly lost future business with Sprint to Bytemobile was in a dire situation, as far as future revenue prospects where considered. Furthermore, one of its main investors, Intel does not appear on the last two financing bridges filed with the SEC. Allot, who had been rumored to have looked at many vendors in the space over the last 18 months, was the number one contender for a possible acquisition. Neither company wanted to offer comments at that stage, even when last week, the rumor became public in Israel and was commented on Azi Ronen's blog here. 


Beyond the purely opportunistic approach of this acquisition, it makes a lot of sense for Allot to have tried and integrate video optimization functions in its portfolio. Bytemobile has strong announced ties with Openet and last week, at the Policy control and real time charging conference 2012, the core of many discussions revolved around how to monetize the tide of OTT video traffic.


I was appalled to hear that, when asked about the best way to price for video, a panel composed of Reliance India, Vodafone Spain and Telefonica Czech, was mostly concerned about congestion and looking at pricing based on time of day. This is a defensive, cost-containment strategy that is sure to backfire. Many vendors who have been selling cost reduction as the main rationale for video optimization have backpedaled in the last few months. As it happens, many operators found out that in peak periods, managing aggressively the size of the feeds to reduce costs is not working. They see that a reduction in 20 to 30% of the size of the individual feeds does not mean less cost, but 20 to 30% more users accessing the same capacity at the same time. Which leads in many cases to no additional  revenue since they have not found a way to monetize OTT traffic and no cost reduction, since the network is still not able to meet the demand.


It is of course, one of many possibilities, but what strikes me, is that the industry has not yet agreed on what is the best way to measure video. Capacity (Megabytes), definition (HD or standard), duration, recentness, rights value or speed (Megabit per second) are some of the metrics that can be used for video charging, but in absence of a single accepted metric throughout the industry, many operators are hitting a wall. How is the industry supposed to monetize a traffic that it is not able to measure properly ? How can prices be shared and accepted by all the actors of the value chain if they measure the value of a video differently?
Costs for content owners and aggregators are measured in rights, geographies, storage, version control... Costs for CDNs are measured in geographies, point of presence, capacity... Costs for mobile carriers are measured in capacity, speed, duration, time of day, geography...


This is a  conundrum this industry will need to solve. If the mobile network operators want to "monetize" OTT video traffic, they first need to understand what measures can be used across other mobile networks horizontally and vertically with the other players of the value chain. Only then, an intelligent discussion on value and price can be derived. In the meantime, OTT vendors will continue selling (and in most cases giving) video content on mobile networks, increasing costs with no means for a viable business model.

For or against Adaptive Bit Rate? part IV: Alternatives

As we have seen  here,  here, and  here, Adaptive Bit Rate (ABR) is a great technology for streaming video contents in lossy networks but it is handicapped by many challenges that are hindering its success and threatening its implementation in mobile networks.

Having spoken to many vendors in the space, here are two techniques that I have seen deployed to try and  emulate ABR benefits in mobile networks, while reducing dependencies on some of the obstacles mentioned.

DBRA (Dynamic Bit Rate Adaptation)

DBRA is a technique that relies on real-time transcoding or transrating to follow network variations. It is implemented in the core network, on a video optimization engine. When the video connection is initialized, a DBRA-capable network uses TCP feedback and metrics to understand whether the connection is improving or worsening. The platform cannot detect congestion in itself but deduces it from the state of the connection. jitter, packet loss ratio, TCP window, device buffer size and filling rate are all parameters that are fed into proprietary heuristic algorithms. These algorithms in turn instruct the encoder frame by frame, bit by bit to encode the video bit rate to the available delivery bit rate.

In the above diagram, you see a theoretically perfect implementation of DBRA, where the platform follows network variations and "sticks" to the up and downs of the transmission rate.

The difference between each implementation depends largely on how aggressive or lax the algorithm is in predicting network variations. Being overly aggressive leads to decreased user experience as the encoder decreases the encoding faster than the decrease in available bandwidth while a lax implementation results in equal or worse user experience if the platform does not reduce the encoding fast enough to deplete the buffer, resulting in buffering or interruption of the playback.

Theoretically, this is a superior implementation to adaptive streaming, as it does not rely on content providers to format, maintain streams and chunks that might not be fully optimized for all network conditions (wifi, 3G, EDGE, HSPA, LTE…) and devices. It also guarantees an "optimal" user experience, always providing the best encoding the network can deliver at any point in time.

On the flip side, the technique is CAPEX expensive as real time encoding is CPU intensive.

Vendors such as Mobixell, Ortiva and others are proponents of this implementation.

Network-controlled Adaptive Streaming:

Unlike in ABR, where the device selects the appropriate bandwidth based on network availability, some vendors perform online transcoding to simulate an adaptive streaming scenario. The server feeds to the client a series of feeds whose quality vary throughout the connection and fakes the network feedback readout  to ensure a deterministic quality and size. The correct bitrate is computed from TCP connection status. More clearly, the network operator can decide at what bit rates a streaming connection should take place, spoofing the device by feeding it a manifest that does not correspond to the available delivery bit rate but to the bit rate selected by the carrier. 

This technique uses ABR as a Trojan horse. It relies on ABR for the delivery and flow control, but the device looses the capacity to detect network capacity, putting the carrier in control of the bandwidth it wants dedicated to the streaming operation.

These alternative implementations give the carrier more control over the streaming delivery on their networks. Conversely, handsets and content providers relinquish he capacity to control their user experience. The question is whether they really had control in the first place, as mobile networks are so congested that the resulting user experience is in most cases below expectations. In any case, I believe that a more meaningful coordination and collaboration between content providers, carriers and handset manufacturers is necessary to put the control of the user experience where it belongs: in the consumer's hands.

Video optimization 2.0, market reset

On the heels of broadband traffic management's show in London last week, I thought it was time to take stock of that market segment as most vendors have launched their second generation product recently.

The market leader, Bytemobile (with 55% market share of deployments), started the trend this summer, when launching their new dedicated appliance, the T-3000. While this is not strictly a new version of their Unison product, it is a new computing platform sold as an appliance, departing from the software infrastructure business model. It is a first step towards solving some of the scalability issues experienced by the former solution, that saw dpi, policy, charging, web and video optimization inextricably amalgamated, whether you wanted to use all products or not. It gets rid as well of these expensive load balancers that were a high cost low yield proposition. Bytemobile is not the only one to experience price pressure and to take the knife to load balancing as the bandwidth requirements increase.

Mobixell, with 16% market share, seems to be at last in a position to digest their 724 solutions acquisition. While both product lines were quite complementary and had little overlap, it was a tough proposition for Mobixell to acquire 724, rationalize the technologies and workforce and face the ire of their traditional resellers and OEM (NSN, Huawei, Ericsson...). These were weary to see their supplier compete head to head with them in mobile broadband as Mobixell was rolling out 724 seamless gateway proposition along with their streaming and transcoding platform. The result saw Mobixell practice a tough price attrition in the market, helped by a low cost structure (724 solutions technology comes with integrated routing and inter process UDP-based communication that provides great scalability at low cost). Mobixell announced the launch of the new product release, called EVO, taking some of the computational power to the cloud. While some are skeptical about how much can be accomplished in the cloud for real time video optimization, it certainly is a good step towards cost and CAPEX containment worth exploring.

Flash networks with 8% has been quite busy on the market, silently plowing ahead, upgrading existing customers and winning a handful of deals. They have announced the new version of their product and are as well taking a big step in technology investment in that space.

Ortiva wireless with 3% market share has seen some very good progress this year, bagging some good high profile accounts, nearly tripling their year on year revenue, from an admittedly small footprint. The company has not announced a new version of their product yet, staying on their existing appliance model.

Skyfire labs, with 2% market share, a very innovative start up with a cloud based approach, evolved from their tablet and smartphone browsing app has also been able to grab some high profile tier 1 carrier, together with high profile VAR agreement with infrastructure vendors.

Openwave, with 1% market share, as you know, has had a very busy year on the corporate and financial front (here, here, here, and here), but has not announced much from a product, technology or customer standpoint. They are fighting for their survival and seem to be focusing to a return to financial stability (PS revenue increase, licensing of their patents to Microsoft) before investing further in technology or customer acquisition.

NSN has been developing their homegrown technology, wanting to end the reliance on their traditional partners in the space and came out with a very basic first attempt, focused around loss-less transmission. Nowadays, they are trying to push their "liquid" network concept and seem to be going at it in a fairly scattered manner.

These new product announcements signal, beyond the usual technology investment from start ups and established vendors, a market reaching a level of maturity fast, only 2 years after inception. Some might even say that this segment is commoditized before having really taken off. According to my calculations, this is a market that has generated about $90 millions for vendors this year. We can see from the number of players why price attrition plays an important role, even though traffic is increasing fast. We will see some consolidation and attrition in that space soon, as insufficiently capitalized vendors wont be able to sustain the market growth.

RGB networks, Juniper, Cisco, Huawei, Acision are all active in this space too, while others are preparing to enter the market. The market share are {Core Analysis} calculations, part of an upcoming report on the mobile video optimization space. Details and questions can be addressed here or at patrick.lopez@coreanalysis.ca.

Ortiva Wireless raises $2M

In a SEC filing dated October 24, Ortiva Wireless raised $2 million in convertible debt.

Ortiva Wireless, who is a specialized video optimization shop has been growing substantially lately, due to a string of interesting deals. No doubt, this convertible debenture is to be used to finance the surge of operational expenses as projects need to be delivered before revenue can be recognized.
Ortiva had raised a $2.5M convertible debt in June.