Fastly, the cool startup from the Valley, has decided to throw in the towel and get into the streaming business. This is a big move for a CDN to take, especially one coming from delivering small files such as images, CSS, and JS.
Why does a CDN decide to enter the streaming business? Streaming adds layers of complexity and requires a whole different skill set; from an engineering, operations and sales standpoint. It’s a double-edged sword, it adds complexity, but it is also a necessity from a cost perspective.
When you’re buying bandwidth from the likes of Level 3 or other carriers, pricing is based on your monthly commitment. The more you commit monthly, the lower the price/Mbps. For example, an ad network that generates billions of impressions every month, also pushes very little bandwidth because ad files are small. It might peak at 100Mbps.
At the other end, for a video-based website streaming to 1,000 visitors for many hours per month, the bandwidth utilization will be high. It might reach 5Gbps./month. What does that mean to a CDN? Streaming video cuts your bandwidth cost dramatically, sometimes more than 70%.
On the bright side, streaming video is a lot of fun. You get to learn about codecs, video players, streaming protocols, encoders, and a whole lot more. I’m sure Fastly will pick it up in no time. And they must because streaming video is extremely competitive. They will be competing with the streaming powerhouses Akamai and Level 3 on one end, and free on the other end from the likes of Vimeo, Youtube, and Ustream.