Streaming Success: Too Much of a Good Thing?

By Ken
Kerschbaumer

The
challenges facing online distribution of live sporting events was front and
center at the SVG DSports Conference, held last week in

New York City.

Keeping
distribution costs within reason as every additional online viewer adds an
incremental amount to the online delivery costs continues to be a major
challenge, especially for live events. That leaves online sports sites hoping
for a large audience but also fearful of runaway success that could drive up
delivery costs while ad revenues lag. But there are some positive trends.

“The costs
have been coming down for the past seven or eight years and if iTunes was
distributed at the 2000 rates for [delivering and streaming content] it would
have been a massive loss for Apple,” says Brad Rinklin, Akamai VP of marketing.
In fact, as streaming continues to become more popular Akamai and others could
move from charging per kilobyte to charging on a CPM basis.

For
companies like CBS Sports that shift could be a boon. Mark Kortekaas, CBS
Interactive CTO, points out that in

New
York City a primetime program like “CSI” could
typically attract 1.5 million viewers. While WCBS New York can reach all 1.5
million with one signal if the equivalent audience was watching the program
online it would require 359 TB of data to be served in one hour. “That’s enough
to use up the total online capacity in

New
York,” he adds.

It’s also
one reason peer-to-peer services hold allure. By offloading distribution demand
from Akamai and other network servers to local computers (ala Napster)
companies like Akamai, and the consumers, win.

“Unfortunately
while there are a lot of peer-to-peer services in the market few give media
companies the controls they want over content,” adds Rinklin.

Bill
Wohnoutka, Level 3 Communications VP of business development, content markets,
says that peer-to-peer technology currently won’t support distribution of live
events. “The closer to real time you get with a peer-to-peer service the less you
get out of it,” he adds. Client-side applications like accelerators, however,
could improve the quality of the live streaming experience.

One
solution to the “too successful” dilemma is to rely on subscription models like
MLB.com. The consistent revenue can guarantee that streaming costs are recouped
and also lay the groundwork for actual profitability.

Entrique
CEO Jan Steenkamp adds that security in advertising is also a big challenge.
“An ASP solution that can secure the content, publish it, monetize it, and
scale it is what is needed,” he says. His company is currently doing just that
with the WWE, NBC Olympics, and broadcasters like BSkyB.