Nokia revealed this week that it is its Velocix CDN, inherited when it acquired Alcatel, which drives the OTT video traffic for Sky. The system has just been upgraded from simply taking OTT content to the set top – by far the hardest part of the job – to taking on Sky Go and Now TV’s traffic as well.
Faultline counts Sky’s OTT service as one of the largest in Europe, up there with Liberty Global’s Horizon Go and associated services such as MyPrime, which our Rethink OTT Intelligence service rate as the two largest paid OTT services in Europe after Netflix.
Sky has about 7.5 million regular users of its various OTT services, and increasingly we see almost all of Sky’s 12 million plus UK’s customers embracing OTT streams. If you include its German and Italian operations that adds another 4 million regular users, taking it ahead of Liberty Global’s approximately 8.3 million regular paid OTT customers. By contrast Netflix has 19.2 million subscribers in Europe – about the same as the other two put together, and between all 3 that makes up about 44% of paid OTT traffic in Europe.
And that’s set to rise massively as last week Sky let it slip at its results meeting that it will offer a broadband only service, giving access to all of its 270 channels OTT, planned for 2018, when it can then do away with satellite set top boxes and save a ton of money in both set tops and installation charges.
This opens up another 6 million additional European homes to Sky, including 2 million in the UK, where satellite dishes are not currently allowed.
At present free to air services in Europe dominate in OTT usage and the BBC iPlayer has at least 17 million active accounts, with similar numbers for multiple free to air channels in the UK, Germany and France – so these numbers dwarf the total paid OTT traffic and most of them terminate at a set top, either YouView or HbbTV. Even so this must be one of the most plum contracts for CDN traffic in Europe because of the paid nature and its need to guarantee quality, and if it manages this switch to the full bouquet over the same CDN, Nokia’s business there will continue to scale.
Paul Larbey head of the video business unit at Nokia told us, “Sky has deployed our CDN to better manage UK VoD traffic,” and when asked about whether or not Sky in fact used multiple CDNs, he told us, “There is a mix of CDNs and they will still continue to have a role. But the Velocix CDN now also chooses when to use them.” Larbey is referring to the use of pure play CDNs such as Akamai, Limelight Networks and Level 3 – and the fairly modern practice of using some measure of load balancing for when any dominant CDN finds it has too much traffic at one particular location and routes that traffic through a rival CDN.
Essentially Sky has used the Velocix software to build its own CDN because it owns its own broadband network and as Larbey adds, “The cost of ownership is lower if you own your own CDN and take control of it, and put your cache where you have most network traffic, that’s where the real savings are.”
Nokia (as Alcatel) has worked with Sky since the end of 2015, and it was only recently that a business case was put together to add the traffic of Sky Go and Now TV. Larbey claimed that Velocix also provides the CDN to 10 out of 12 countries for Liberty Global in Europe. Now that depends on which subsidiaries use something else, because Unity Media is by far the largest paid OTT user among Liberty Global countries, at roughly 2.3 million regular users with Virgin on around 1 million, so even if these units’ CDN went to rivals, the Liberty Global CDN would account for at least 5 million regular OTT video users.
For years Larbey while at Alcatel told us that it was the leading CDN provider in Europe, but has always been unable to give out customer names – but these two show just how well penetrated Nokia now is in CDNs. In our Rethink OTT Intelligence service, we currently have Liberty Global showing a wide collection of CDNs, many of which include the use of Akamai CDNs, so the Liberty Global moves may also be unannounced.
Nokia is also providing Managed Service expertise – via its CDN Network Operations Center – to assure faster time-to-market for Sky, which then takes control of design, implementation, and operations.
Larbey added in a written statement, “The Sky project represents a milestone for Nokia as it’s the first deployment for a nationwide broadcaster and builds on Nokia’s number one position in the service provider CDN market.”