Why disruption to the CDN market is good news for sports streaming？

With few exceptions, streaming platforms (aka direct-to-consumer content providers) have long depended on third-party content delivery networks (CDNs) to, well, deliver video content to their subscribers. 

Most have adopted “multi-CDN” strategies wherein they use multiple CDNs and allocate traffic according to real-time quality of experience (QoE) metrics. This multi-CDN approach ensures that content providers maximise QoE while also securing better resilience and extra capacity should things go sideways with one of their CDNs (as opposed to streaming platforms with in-house CDNs and nowhere to go when QoE suffers). While the multi-CDN approach makes technical sense, it assumes the presence of a healthy and robust CDN market. 

Unfortunately, streaming platforms employing multi-CDN approaches have also attempted to steadily reduce the fees they pay their CDN suppliers. What this has done is pushed many of their CDN suppliers – who perform a strategically vital function in the streaming value chain – into insolvency. While the incentives to reduce costs are understandable, simply pushing fees down without altering underlying technology only serves to severely weaken a market upon which content providers are strategically dependent. 

Most surviving CDN suppliers have been able to maintain financial health only by branching into other businesses (e.g. security, edge computing) and marginalising their CDN businesses. From the standpoint of the streaming platforms, this business decision by CDNs works against their own best interests. It means their CDN suppliers – upon whom their businesses depend – are adopting business strategies that make them less reliant on the streaming platforms and less likely to invest and innovate in ways that benefit them. 

As much as content providers are utterly disrupting the ecosystem for video entertainment, a disruption of the CDN market is required so that more dynamic, cloud-like, flexible, scalable, and cost-effective content delivery can truly be achieved. 

Requirements for a disruptive CDN 
1. Focus on video quality 

Streaming platforms, especially those providing live streaming of tier-one sports events at scale, require CDNs that specialise in video. CDNs have been part of the internet landscape since almost the very beginning. But delivering TV series and movies on demand or live streaming major sports events to tens of millions of viewers requires specialisation and innovative technical approaches if QoE goals are to be met. 

2. Breadth and depth of capacity 

The need for full-scale global capacity is obvious. What is less so is the need for capacity extending down to the largest network in the world: the last-mile network to which subscribers are actually attached. Without last-mile visibility or caches embedded in ISP networks themselves, streaming platforms will be challenged to meet subscriber quality expectations. 

3. Disruptive technology 

Ultimately, in order to avoid economic turmoil and improve the strength and health of their strategic suppliers, content providers need their CDN partners to marshal technology in such a way that their economic and subscriber QoE metrics are satisfied. This means that CDNs need to be able to provide capacity in a spin up/spin down, on-demand fashion. What got certain CDNs in financial straits was the dependence on expensive, fixed capacity in the face of declining unit revenues (per-GB fees). If cloud technology has taught us anything it is that dynamically provisioning resources (capacity in this case) is always the more economically viable approach. 

The future 
Online content providers are well on their way toward a massive disruption of the entertainment ecosystem, cutting out middlemen and offering a more finely tailored, direct-to-consumer alternative. This is especially the case with sports. According to Emarketer, by 2027, 63 per cent of sports programming will be consumed via over-the-top (OTT) streaming. The losers in this equation are linear TV operators and regional sports networks. While this is a positive trend for consumers, expecting that level of disruption to leave the CDN market unscathed would be a mistake. 

The utilisation of multiple CDNs to deliver their precious cargo to subscribers has been a boon for most content providers, helping them maintain a more resilient delivery infrastructure as compared to their in-house CDN competitors. 

However, just as the ecosystem for video entertainment is being disrupted, so too is the CDN ecosystem, and this is a positive trend for all market participants. Better performance, improved QoE, and a more economically sustainable CDN market are prerequisites for a thriving streaming video market. 
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