According to some industry pundits, OVP’s such as Brightcove, are huge resellers of CDN bandwidth. In some cases, more than 60% of the total OVP cost, is for bandwidth and storage. The CDN piece probably makes up half of the 60%. The remaining 40% is for software licenses (SaaS), and professional services. What does this mean?
OVP’s are CDN’s in Disguise. Plain and simple. And they may not even know it.
The same cost structure most likely applies to other OVP players such Kaltura, Ooyala, & ThePlatform. These four leading OVP players probably have about 10k to 20k customers, and probably push in excess of 100Gbps of sustained bandwidth. They have some of the largest media companies as customers, such as ESPN. There is power in numbers, especially when it comes to consumers of bandwidth.
Individually, OVP’s are small fish in a big content delivery pond. CDNs are the big fish in the content delivery ecosystem, because they control the plumbing and delivery. On the other hand, together, these OVPs can be a power to be reckoned with. Therefore, I propose two radical ideas.
Brightcove, the New OVP Generating $1B in Revenue
First idea: Brightcove can be the Akamai of the OVP industry, if it acquires Kaltura and Ooyala. Comcast owns ThePlatform so that’s out of the picture. Eliminate your competition, and increase the customer base by 2x or 3x. Then, Brightcove can enjoy the economies of scale like never before. At the same time, Brightcove may own 50% to 80% of big media companies that are using an OVP. Then Brightcove can up-sell the media clients, OVP + CDN + a whole lot of other features, and reach “the $1B in annual revenue milestone”.
The Federated CDN of OVPs
The second idea: if option 1 is not viable, why don’t the four leading OVP’s get together, form a coalition similar to the “Digital Cinema Distribution Coalition”, and build a CDN that is to be used exclusively by OVP companies. Together, they can build a robust CDN that spans the globe. Just add another $1.5M to the the cost numbers of $2M in the previous post for a CDN build-out, and that should work. Why in the world would they want to do this? How does this sound?
The CDN cost drops to $.01/GB (1 cent per GB).
Build your own CDN, and your cost per GB delivered, drops dramatically. Now their in the ball game, not only does the top line grow, but the Cost of Revenue drops. Sounds crazy, but definitely doable.