The Online Video Ecosystem Explained - Who Holds The Real Power In Video Streaming?

BII

Netflix's recent peering agreement with Comcast has ignited a firestorm of debate about the relationship between video companies and Internet Service Providers (ISPs). ISPs operate the "last-mile" of fiber that connects the final segment of the Internet - including bandwidth-intensive video - with end users.

Unfortunately, there's been a lot of misinformation over how peering agreements, including the Netflix-Comcast deal, relate to the wider debate over net neutrality.

To make matters worse, all sides in the debate - transit providers, CDNs, ISPs, and content providers - are guilty of distorting the conversation.

In a new report from BI Intelligence, we take a close look at the online video ecosystem, unpacking how content gets from video service providers like Netflix and Hulu, on to consumers' screens, and determine who holds the real power in video streaming. We also look at what's really going between Netflix and Comcast, and in the broader net neutrality debate, as it relates to video streaming.

As consumers' appetite for streaming video keeps ballooning, the debate over how to best get content onto screens, and who should foot the bill, will keep bubbling up.

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Here are some key takeaways from the report:

• Content providers - everyone from Hulu and Netflix to a mid-sized publisher of Web video - face an array of options and several layers of middlemen to get their content to audiences.
• Transit providers like Cogent, Level 3, and XO Communications provide the basic pipelines for moving video around.
• Content Distribution Networks or CDNs, such as Akamai and LimeLight are the specialists in making sure that the content providers are getting the best video performance at the best price.
• Transit and CDN prices are negotiated on an ad-hoc basis based on a number of factors, including traffic volume, throughput (bandwidth), time of use, and other factors.
• In an effort to gain more control over the quality and cost of moving video around, many content providers have built out their own CDN networks.
• The relationship between content providers, CDNs, transit providers, and ISPs are governed by "peering agreements," which is just another way of referring to the contracts that stipulate the volume of traffic that each player is entitled to at different prices, including free and paid tiers.
• Both content providers and ISPs have misrepresented the economics and mechanics of video streaming in order to advance their agendas in the context of the debates over fuzzy concepts like "net neutrality," and "Internet freedom."
• At heart, the disputes over video streaming fees boil down to who should pay for the exploding popularity of streaming video, and at what quality of service.

The report is full of charts and data that can be easily downloaded and put to use.

In full, the report:

• Provides an overview and infographics explaining the streaming video ecosystem.
• Explains the role and underlying economics of settlement free peering, content distribution networks (CDNs), and transit providers.
• Compares the pricing models that underlie each of these different mechanisms for routing video traffic
• Lays out the landscape of "last-mile" Internet service providers (ISPs).
• Looks at the real place of peering agreements in the net neutrality debate.