Market Insight

Verizon introduces multi-platform managed service

April 18, 2011

Merrick Kingston Merrick Kingston Associate Director, Research & Analysis, Digital Media & Video Technology
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Verizon has unveiled a content preparation and propagation service, called Verizon Digital Media Services (VDMS), which aims to provide content owners and operators the means to deliver content, firstly to operator headends, and ultimately to connectable consumer electronics (CE) devices. The managed VDMS service consists of two main offerings:

i)Overseeing the content management workflows that are necessary for preparing and transcoding content for multiscreen delivery in conjunction with technology partners Technicolor and Motorola.

ii)Distributing content leveraging Verizon's multi-national IP backbone, with help from Alcatel-Lucent - which will provide adaptive bitrate streaming technology - and HP.

VDMS sits across asset management, video transport, online video platform and CDN businesses and potentially brings Verizon into competition with the likes of RedBee and thePlatfrom for asset management; Arqiva and BT for video transport; Ooyala and Brightcove for online video platforms, and CDNs like Akamai and Limelight. In reality, however, such distinctions are not cut and dry; these companies are increasingly encroaching upon each other's turf as they improve and diversify their product offerings and compete for customers.

IHS Screen Digest believes that Verizon's long term aim from VDMS is to differentiate itself from the rapidly commoditising CDN market and to establish itself in both CDN and the market for broadcast and pay-TV managed services. Opportunity in the latter market is ripe for the picking; the market was worth $1.8bn worldwide in 2008 and is set to grow at an average, compound annual rate of 5.6% through 2012 - according to the IABM market study authored and researched by IHS Screen Digest. However, within this marketplace, the IP transport and asset management market is growing particularly fast.

Typically, multiscreen managed services consist of solutions for the back-office. One of the most logistically challenging aspects of cross-platform delivery lies in managing numerous asset profiles, and the metadata associated with these profiles. With VDMS, Verizon has very explicitly added a distribution component to what would otherwise be a transcode and back-office content management service that resembles existing solutions.

How and whether IP video distribution can meaningfully differentiate managed multiscreen service providers will depend on the buyer. For channel networks and content owners, distribution is of obvious importance. Traditional TV networks tend not to own IP networks, and as such, rely implicitly on 3rd party distribution to reach connectable CE devices; Verizon is in a position to help ensure quality distribution, even if last-mile delivery will in many instances occur beyond its network.

For pay-TV operators, the attractiveness of distribution services is more variable. For operators who already own and manage wired infrastructure - cable and IPTV operators - on-net distribution is already within their capability. By contrast, VDMS would also allow operators to deliver outside the confines of their broadband access networks - that is, to deliver off-net.

However, unless operators display a willingness to secure the additional rights consistent with wide-scale, off-net distribution, the opportunity is moot. Moreover, for any type of buyer, the fact is that distribution can also be secured via traditional CDN, albeit with lower video quality guarantees; it is not necessarily the case that complex multiscreen content delivery will lead to economies of scale.

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