Mobile video monetization and MWC14 wrap up

This year's Mobile World Congress proved itself extremely busy, with many vendors graduating from slides to demos and customer announcements in the mobile video field.

As usual, my "Mobile Video monetization and optimization 2014" report, now in its 3rd edition, will be released at the end of March. It features the dominant market (net neutrality, privacy, sponsored data, service prioritization...) and corresponding technology trends (analytics, big data, NFV, encryption, TCP, web and video optimization, DASH, LTE broadcast, H.265, VP9, SPDY. HTTP 2.0, 4K...) as well as in depth analysis of vendors strategy in this market.


Haven't had a chance to look through all the mobile video related announcements at mobile world congress?

Here is a list of releases issued by some of the companies followed in this blog.

As it is now customary, Allot releases its "mobile trends report" in time for the show. It features a few interesting findings such as the facts that laptop dongle users seem to be more tolerant of stalls than smartphone users, continuing to watch videos after repeated stalls where smartphones tend to stop. Additionally, it shows that in the case of the network studied, the network was inefficiently allocating bandwidth, unable to recognize larger devices, video encoding and hungry video containers to alleviate video stalls...

Avvasi was one of the busiest companies in mobile video, with no less than 4 announcements, including 2 named customers: Video minutes solution launch, Wind Canada customer announcement, Virgin France customer announcement and GSMA award shortlist. The 2 named customers are both for the product launched last year to manage mobile video. Complete analysis of the solution in my report.

Citrix-ByteMobile released its latest Mobile Analytics report at the show as well. Findings include the fact that video constitutes now 32% of social networks traffic and statistics showing that while mobile advertising in 2013 doubled its audience from 2014, only one in twenty subscriber is likely to see today a mobile video ad. In other news, the company launched a new offering in the analytics space with ByteMobile Insight, fruit of a partnership with Zettics. Big data analytics seemed to be a recurring theme with many vendors this year, with virtualization a close second.

Busy with Mobixell Network's acquisition, Flash Networks nonetheless made a noticeable change in its communication and positioning with the launch of its "game changer" campaign and the celebration of Layer8, its successful carrier OTT monetization tool now deployed commercially in several networks.

Openwave Mobility launched a new engagement tool, for customer self care and operator notifications as well as the new release of its media optimization solution.

Opera-Skyfire were not overly present on the PR front, beyond an announcement related to poor video quality in Russia's 3G networks. They will certainly be able to announce new customer wins shortly.

Vantrix made the news with two releases. A follow up to their standing partnership with Kontron on NFV and big data analytics, backed by the customary product new release announcement.

All these companies, together with Affirmed Networks, Connectem, Divi Networks, Ericsson, Huawei, Mahindra Conviva, NSN, Saguna Networks, Vasona Networks... and many others in the "Mobile video monetization and optimization 2014" report.

All packets are not created equal: why DPI and policy vendors look at video encoding

As we are still contemplating the impact of last week's US ruling on net neutrality, I thought I would attempt today to settle a question I often get in my workshops. Why is DPI insufficient when it comes to video policy enforcement?

Deep packet inspection platforms have evolved from a static rules-based filtering engine to a sophisticated enforcement point allowing packet and protocol classification, prioritization and shaping. Ubiquitous in enterprises and telco networks, they are the jack-of-all-trade of traffic management, allowing such a diverse set of use cases as policy enforcement, adult content filtering, lawful interception, QoS management, peer-to-peer throttling or interdiction, etc...
DPIs rely first on a robust classification engine. It snoops through data traffic and classifies each packet based on port, protocol, interface, origin, destination, etc... The more sophisticated engines go beyond layer 3 and are able to recognize classes of traffic using headers. This classification engine is sufficient for most traffic type inspection, from web browsing to email, from VoIP to video conferencing or peer-to-peer sharing.
The premise, here is that if you can recognize, classify, tag traffic accurately, then you can apply rules governing the delivery of this traffic, ranging from interdiction to authorization, with many variants of shaping in between.

DPI falls short in many cases when it comes to video streaming. Until 2008 or so, most video streaming was relying on specialized protocols such as RTSP. The classification was easy, as the videos were all encapsulated in a specific protocol, allowing instantiation and enforcement of rules in pretty straightforward manner. The emergence and predominance of HTTP based streaming video (progressive download, adaptive streaming and variants) has complicated the task for DPIs. The transport protocol remains the same as general web traffic, but the behaviour is quite different. As we have seen many times in this blog, video traffic must be measured in different manner from generic data traffic, if policy enforcement is to be implemented. All packets are not created equal.

• The first challenge is to recognise that a packet is video. DPIs generally infer the nature of the HTTP packet based on its origin/destination. For instance, they can see that the traffic's origin is YouTube, they can therefore assume that it is video. This is insufficient, not all YouTube traffic is video streaming (when you browse between pages, when you read or post comments, when you upload a video, when you like or dislike...). Applying video rules to browsing traffic or vice versa can have adverse consequences on the user experience.
• The second challenge is policy enforcement. The main tool in DPI arsenal for traffic shaping is setting the delivery bit rate for a specific class of traffic. As we have seen, videos come in many definition (4k, HD, SD, QCIF...), many containers and many formats, resulting in a variety of different encoding bit rate. If you want to shape your video traffic, it is crucial that you know all these elements and the encoding bit rate, because if traffic is throttled below the encoding, rate, then the video stalls and buffers or times out. It is not reasonable to have a one-size-fits-all policy for video (unless it is to forbid usage). In order to extract the video-specific attributes of a session, you need to decode it, which requires in-line transcoding capabilities, even if you do not intend to modify that video.

Herein lies the difficulty. To implement intelligent, sophisticated traffic management rules today, you need to be able handle video. To handle video, you need to recognize it (not infer or assume), and measure it. To recognize and measure it, you need to decode it. This is one of the reasons why Allot bought Ortiva Wireless in 2012, Procera partnered with Skyfire and ByteMobile upgraded their video inspection to full fledged DPI more recently. We will see more generic traffic management vendors (PCRF, PCEF, DPI...) partner and acquire video transcoding companies.

Video optimization market shares 2013

This is the time of the year, when, after releasing the mobile video optimization 2013 report, I provide a little insight on the movers and shakers of that market segment and their progress over the past year.

As usual, I provide market share calculations in term of deployment per vendor, the unit being one operator / country. For instance, Verizon Wireless counts for one deployment, even though the operator might deploy 40+ data centers. Groups such as Vodafone, Deutsche Telekom or Telefonica count for each of the properties where the technology is deployed.

The market share calculations are based on a proprietary {Core Analysis} database, collecting data such as vendors, resellers, value of the deployment in term of total cost of ownership for the operator, operator name, country and region. These data are cross-referenced from vendors' and operators' individual disclosures. This database also includes over 150 opportunities in video optimization that are at different stage of maturity (internal evaluation, vendor trial, RFI, RFx...) and will close over the next 18 months.

The market share is valid at the time of publishing but change on a weekly basis, as new deals are awarded.

The market share in term of revenue is not published here but is available as part of my workshop on the video optimization market. The rankings in term of revenue per vendor are quite different from the installed market share, as different price strategies and different geographic markets are considered.

Market shares

• ByteMobile

ByteMobile is still the market leader in this segment, post Citrix acquisition. The company, with an estimated 35% market share remains stable and has grown with the market in the last year.

• Mobixell Networks

Mobixell Networks ascends this year to the second place in our ranking, with 19% market share. The company has grown faster than the market in term of share acquisition.

• Flash Networks

Flash Networks is in third place with a 15% market share. The company has seen its market share grow slower than the market last year.

• Venturi Wireless

Making its entry in fourth place this year is Venturi Wireless, who claims most of its deployments through an OEM channel with a market share of 10%. The company has been growing faster than the market last year.

• The rest

The remaining 21% is shared between (by alphabetical order) Allot, Avvasi,  Mahindra Comviva,  Openwave Mobility, Opera Skyfire and Vantrix.

Question? comments? please do not hesitate to contact me.

The sampling this year is larger than last year, as a result from new disclosures from emerging vendors that were stealth / not public last year. As a result, market shares are a little different and should not be directly compared with last year's, since some of the disclosures show deployments that predates last year's calculations.

{Core Analysis} advises Opera on Skyfire's acquisition

{Core Analysis} is pleased to announce that it acted as the exclusive technical advisor to Opera Software in its acquisition of Skyfire Labs.

Mountain View, California,  Oslo, Norway and Montreal, Canada — February 15, 2013

The acquisition price includes a mix of cash and stock, with an upfront consideration of US$50 million (including US$8 million of cash on the Skyfire balance sheet) and performance based earn-out payments over three years, including US$26 million in cash held in escrow and funded upfront, that can bring the total deal size to $155 million.

The Opera acquisition of Skyfire is expected to close before March 15, 2013.

Skyfire, headquartered in Mountain View, California,allows mobile operators to leverage cloud computing to optimize virtually any video and other multimedia on crowded cell towers, including 3G and 4G LTE networks. Rocket Optimizer on average provides mobile networks a 60 percent boost in capacity by reducing the size of video and other multimedia content as needed to fit the available bandwidth. 

Skyfire currently counts three large U.S. mobile operators as customers for its Rocket Optimizer and Skyfire Horizon solutions, and is in trials with ten other operators around the world.

“Opera and Skyfire are a natural fit,” said Lars Boilesen, CEO, Opera Software. “Both companies have evolved far beyond their browser roots. Skyfire adds capabilities to our portfolio around video, app optimization, smartphones and tablets, and strength in North America. With video expected to consume over two-thirds of global mobile bandwidth by 2015, and as time spent on Android and iOS apps explodes, we are excited to extend Opera’s solutions for operators.”

“Opera practically invented cloud compression to improve mobile user experience, and the team at Skyfire is proud to join forces and advance cloud solutions together,” said Jeffrey Glueck, CEO of Skyfire. “Opera’s over 100 carrier relationships, global sales team, and delivery organization can accelerate the global commercialization of Skyfire’s technology. Opera´s Mediaworks advertising unit with AdMarvel, Mobile Theory and 4th Screen Advertising will strengthen Skyfire Horizon by offering mobile operators a complete turnkey solution including ad optimization, ad sales, and rich analytics. The synergies across all the product lines for both companies are tremendous.”

“The market opportunity for video/media optimization solutions geared towards operators and consumers is significant. After a thorough evaluation of this market, we strongly believe Skyfire is the clear leader for the future in this space”, said Erik Harrell, CFO/CSO of Opera.

This transaction is a proof of {Core Analysis}' market leading strategic and technological know-how in video OTT, mobile video and video optimization M&A.

For More information, please contact Patrick Lopez.

Patrick Lopez
CEO
{Core Analysis}
patrick.lopez@coreanalysis.ca

2013: the year of Big Video

In September of 2012, Vodafone Germany shocked the industry in announcing that video was consuming 85% of its LTE network.
As we have started a brand new year and vendors and operators alike are finalizing plans for Mobile World Congress, I thought it would be timely to review what the main vendors of video optimization were up to in 2012.

Allot / Ortiva Wireless:
The company, with the acquisition of Ortiva Wireless in April and Oversi in July has certainly made great strides in their strategic plan to provide a one-stop-shop traffic management solution to its customers. Between DPI, policy management, charging functions, transparent caching and video optimization for mobile, enterprise and fixed broadband, the company has a large tool set and addressable market. The challenge will be in the integration of the acquired technologies and talents, together with the formulation of a differentiating, competitive solutions offering that goes beyond analytics, charging, managing...

Avvasi:
The company has entered the fray with a fresh outlook. Leader in mobile video QoE measurement, they have been asked by their customers to help manage the video QoE and have launched a new product (Q-SRV) to "measure, manage and monetize" the video experience in mobile networks. One to watch in 2013.

Bytemobile / Citrix: 
The acquisition of Bytemobile by Citrix last year was a big shock for the market segment. The leading vendor in market share was acquired by an industry's outsider under the rationale to enter the mobile market. Citrix is definitely starting to tickle F5 and Cisco with Netscaler as a load balancer / proxy in mobile networks. What best introduction in the mobile space than the leader in mobile internet and video optimization? It will be interesting to watch how the replacement of Unison platform by the T3000 series, together with the suggested replacement of F5 by Netscaler plays out in the coming months...

Flash Networks:
The company started the year with a bang with 3 large tier 1 customers in video optimization (MTS russia, Globe telecom and Telekom Austria Group) announcements. Since then, it has been quiet, but the company has been busy upgrading and up selling their existing customer base. It will be interesting to see whether the company will take advantage of some of the market deals coming this year.

Huawei:
The secretive Chinese vendor has seen its market share in browsing gateway increase dramatically over the last 3 years with over 114 operators and this is the traditional Trojan horse for video optimization to enter the market. Mobile internet is becoming a focus on the company's strategy in the core network and it looks like the slides on video optimization presented last year in Barcelona are morphing into a product offering. It is still early days, but Huawei can move fast when needed.

Mobixell Networks:
The company has digested its 724 solutions acquisition and made good progress in converting its installed base and winning new deals in video optimization. Not enough to satisfy its investors, apparently, with the replacement of its CEO in December last year. The company is clearly looking for different growth parameters and it is likely that we will see more strategic activities from them in 2013.

NSN:
Not much to report for the Nordic giant, struggling to impose its vision of self organizing networks in core. The sale of its OSS/BSS division to Redknee will either see a refocusing or spin off of the video assets.

OnMobile:
The company acquired Dilithium assets in 2010 and has been struggling to have a video strategy since. They briefly considered video optimization, but video is no longer a focus for the company in 2013.

Openwave Mobility:
After a rough couple of years, seeing its CEO replacement, and the spin off to an equity venture, the company is starting to re focus and to reboot its traffic management and video optimization strategy. They have a few references in the space and are working to update their browsing gateway's installed base with video optimization. It will be interesting to see if they are up to the challenge in 2013.

Skyfire:
The company took the market by storm by launching cloud-based video optimization and simultaneously announcing Verizon Wireless as a customer and investor. Since then, with a fresh round of financing, the company has been expanding its reach to Europe. It will be good to see how cloud takes in mobile networks.

In September of 2012, Jens Schulte-Bockum , CEO Vodafone Germany shocked the industry in announcing that the 10% of their customer base who have elected to shift to their LTE network had a fundamentally different usage pattern than their 3G counterparts:

“Voice, text, other messaging and data - everything that makes money for us - uses less than 15%. The bit that doesn’t make money uses 85% of the capacity. Clearly we are thinking about how we can monetise that. ”

“The bit that does not make money for us” is mobile OTT video. As mobile video threatens to overgrow every other traffic types, operators start to look at ways to alleviate the costs associated with the necessary capacity upgrades to meet the demand, as well as strategies to monetize this large, untapped opportunity. I will be releasing my report "Mobile Video Optimization 2013" on March 15 where I will examine the latest strategies from the dominant vendors in the space.

Flash in the cloud

Flash Networks announced today that it is making its Harmony Mobile Internet Services Gateway optimization and monetization solution available in the cloud. The solution that was traditionally deployed in mobile core networks will soon be deployed in private and public clouds.

"Harmony Mobile Internet Services Gateway integrates web and video optimization, analytics, traffic management, web monetization, content control, cell-based congestion awareness, centralized caching, service orchestration, and an intelligent policy engine in a single gateway. "

I spoke today with Merav Bahat, VP Marketing and Business Development at Flash Networks and she adds: "We wanted to introduce the capability for our customers to use cloud services and cloud computing with our platform. Harmony will continue to be deployed in the core networks and in conjunction, can be deployed in private and public clouds. We have been able to duplicate several functions from our platform such as caching, storage and CPU-intensive transcoding and put them in the cloud to offer great additional savings , higher hit rates and enhanced quality of experience".`

As seen here and here, Flash Networks is the third company in the video optimization space who has announced plans to offer a cloud-based solution. Caching, transcoding, content recommendation are some of the services that Flash Networks will perform in the cloud, to benefit carriers with multi-sites or multi-networks footprint.

Cloud-based video optimization is gaining traction, as more and more mobile network operators  see the necessity to deploy video optimization (over 80 have selected vendors to date) but balk at the CAPEX and footprint necessary to enable a good quality of experience.

Cloud deployments and cloud computing were, until recently, seen as an improbable technology to deploy real time video encoding services, but a few tier one operators have tested and are deploying the technology as we speak. It seems that the technology is reaching market validation stage and is getting a much larger acceptance from the carriers' community. It is a good move from Flash Networks to capitalize on this market trend and expand their offering in that space.

Skyfire welcomes Verizon with $8m series C financing

Skyfire labs announced today that it has raised $8m in a series C financing event with Verizon Ventures, Matrix Partners, Trinity Ventures and Lightspeed Ventures. Verizon is a new strategic investor in the company who has raised $31m to date.

Jeff Glueck, president and CEO of Skyfire commented: “Skyfire’s Rocket Optimizer product is delivering an average of 60 percent savings for operators on video bandwidth. We welcome the participation of Verizon, which is renowned for its network planning sophistication.”


"Rocket Optimizer 2.0, the latest iteration of Skyfire’s powerful carrier-grade network video and data optimization platform, was launched in October 2011. With mobile video demand expected to rise steeply over the next three years, Rocket 2.0 aims to help carriers solve capacity issues linked to the rapid rise of mobile video streaming. The solution offers real-time optimization of mobile video to enable smoother streaming, and can be applied to specific cell towers or backhaul regions as soon as congestion is detected. Rocket Optimizer 2.0 also offers the broadest support for video formats, including the world’s first instant MP4 optimization (which comprises more than 50 percent of today’s mobile video, including most HTML5 and iOS video). By leveraging cloud computing power, Skyfire’s solution is highly cost effective to scale on both 3G and 4G LTE networks".


The company is planning to use the proceed of this round to expand international sales, after bagging two tier 1 carriers in North America, it is ready to expand to Europe and Asia and has already started to increase their sales efforts and teams in these regions.


Skyfire is the first company to promote cloud-based computing to resolve the video tide that is threatening to engulf mobile networks. This market space is seeing a lot of strategic activity (here and here) these days. No doubt more to come as we near Mobile World Congress.