Just like Instart Logic, Incapsula needs to find the next killer product or service that fuels its revenue growth for the next 2-4 years. Since Incapsula is already a leader in CyberSecurity, the only option left is video. Video delivery is an interesting service, in that it helps the CDN lower its bandwidth cost structure, as more video is delivered, but large volume video delivery is also dominated by the likes of Akamai, Level 3, EdgeCast and Limelight Networks. These four CDNs easily deliver more than 350 Gbps of sustained monthly bandwidth for video delivery. At that bandwidth range, their bandwidth cost is very low. If a startup CDN doesn’t approach video in the right way, they will have a difficult time making traction.
There are three types of video delivery: one time live streaming events, consistent live streaming events and VOD delivery. The one time live streaming events are best served by the likes of Akamai and Level 3, especially for big events with tens of thousands of concurrent viewers. One time live events are not a good fit for the startup CDN, because they use up a lot of bandwidth and resources for a short period of time, than the business disappears. The one time live streaming event is a one time revenue pop that negates the cloud service model of predictable revenue streams. It’s just not worth it for the startup CDN. Nothing wrong with a CDN passing on a one time live streaming event.
The consistent live streaming events like a TV show that airs twice a week for a year is good business for a startup CDN. The CDN can do much better capacity planning for bandwidth utilization around this type of business, which in turn helps the CDN when they buy IP transit. VOD delivery is the best kind of video delivery, since it is not as delicate as live streaming. Live streaming requires a lot of redundancy at the client site including redundant encoders, IP connections, and so on. However, with VOD delivery, customers just need to upload the video to the CDN, and let the CDN worry about delivery.
Incapsula would be wise to start off by offering VOD video delivery sooner rather than later. After it gets some video experience, than they can start offering live streaming for consistent events. As far as transcoding is concerned, it’s best they create API’s that integrates into encoding.com. Cloud transcoding is a really difficult service to sell for a CDN, as it is too competitive, with too much work to maintain the transcoding infrastructure, and very little money to be made in it. The resources are better spent doing something else. Part 2: Decision Time for Instart Logic and Incapsula