US CDN major Limelight Networks is now offering a service which bundles the popular “browser based” DRMs, making it unnecessary to engage with a CAS or DRM specialist in order to launch an encrypted OTT video service.
This is a piece of news that makes us worry about investments within the OTT video marketplace, because what is happening here is that what was once a $3 billion industry – independent Conditional Access and DRM – which also has the potential to add another $300 million or so of business over the coming 5 years in OTT – is being cannibalized by a neighboring service.
This is an indicator of the poor health of the OTT video sector when a CDN major offers to take out a cost from a neighboring service, purely to give its own service an edge. We’re not saying it is wrong, just that it is an indicator of slimming margins.
It is an acceptance that running authentication and a rights server from each of the major three device resident DRMs – Microsoft’s PlayReady, Google’s Widevine or Apple’s Fairplay – is not a place to make money – instead the money is made by bundling this “feature” into CDNs, which in their own right are delivering cheaper and cheaper data every day.
We saw suggestions that many end to end OTT infrastructure players were in retreat last week, when we analyzed the huge write-down of Ooyala assets and on the surface this looks like another such example.
Strong security players will focus on the fact that just 3 DRMs globally creates three huge homogenous attack surfaces, and that this is not all-round video protection – sure it has hardware support for encryption, but where is the watermarking which will identify these videos if they escape to the wilds of the internet? Where is the fingerprinting that can identify the correct copyrighted version, which your operator issued, so that you can find pirated content and then look for the watermark. And where is the remedy if the content encryption is broken?
Limelight naturally focuses on cost. If you transmux VoD assets from a file to any one of the stream types – HLS, IIS or HDS – but only store it once, as HLS or MPEG DASH, then you are doing two things on the fly – putting the manifest or package together for the remote device and inserting encryption with an encryption key. This, the company says, will cut down substantially on cloud storage. Cloud storage is also coming down in cost on a week by week basis, so it may not make a compelling proposition after all.
So the encoding and encryption of content is done on the fly under the control of Limelight. We are sure Limelight would argue that this is just as secure as the new generation of multi-DRMs that have emerged, such as Castlabs or Axinom, which rely simply on the embedded DRMs in Apple, Microsoft and Android hardware. But that doesn’t make it secure – those major equipment vendors have created their media environments differently purely to own the means of delivering content to their hardware – not to actually offer piracy protection, and to be fair, most of the major pay TV operators are aware of that. But in what could be a race to the bottom on pricing, what happens if Limelight is followed by Akamai, AWS Media Services and other CDN players? This will legitimize the practice and marginalize proprietary DRM entirely.
It may not put them out of business tomorrow, but it will starve them of fresh deals and leave them to live off their past pay TV wins, pretty much as the previous generation of conditional access suppliers were forced to before.
It does much the same for specialists in Just In Time Packaging – if your CDN provider is going to do this for you (and AWS Elemental also does this), then you don’t need to spin up a cloud instance for a Wowza or Anevia packager.
So slowly, but surely the OTT video market place is moving on to mass commoditization – major companies which do everything in the sequence of video preparation and distribution, and a handful of surviving specialists.
What these companies have to do is shift their focus away from areas that are being commoditized, and open fronts in areas of this market where the right way of doing things is still unclear – and innovate like hell – analytics, advertising insertion, personalization, store front creation, service management and cloud security.
Limelight pushed the idea on the back of piracy reduction saying that revenues lost to online piracy will double between 2016 and 2022 to $51.6 billion and that unlike other approaches which force customers to act as systems integrators and deploy and maintain their own license servers, Limelight’s Multi-DRM On the Fly includes all the server-based licensing, software, and implementation services needed for quick deployment.
One of the watchwords in a Netflix era is “quick” because every operator is faced with suddenly failing SVoD and TV Everywhere operations which need a shot in the arm, and broadcasters have the same problem with viewing figures on broadcast catch-up – once they have spotted what is wrong, it becomes there is only so much time to fix it.
Limelight says that its Multi-device Media Delivery On-Demand system is trusted by some of the world’s leading content distributors and it has case studies from Magine, NTT DoCoMo, the UK’s Channel 4 and Daily Motion on its website.
It says that its system simplifies the creation and distribution of video on demand content by automatically transmuxing MP4 files into streaming media formats and then adding Multi-DRM On the Fly, so it is easier to secure content without worrying about which browser, device, or platform is being used.