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Cable Technology Feature Article

September 27, 2013

Netflix Drops CDN Requirement for Super HD, 3D Streaming

By Tara Seals, TMCnet Contributor

Netflix has decided to bury the hatchet with ISPs, uncoupling its streaming 3D and Super HD programming from its Open Connect content delivery network scheme. When the higher-quality streams launched in January, ISPs were required to use Netflix's Open Connect CDN in order to carry them (Cablevision, Clearwire (News - Alert), Frontier and Google Fiber made the list). Now, the streaming giant has dropped that requirement.

"Leading-edge ISPs around the world such as Cablevision, Virgin Media (News - Alert), British Telecom, Telmex, Telus, TDC, GVT, among many others, are already participating in Open Connect to provide the highest-possible quality Netflix service to consumers," Netflix CEO Reed Hastings said at the launch. "Our goal is to have all of our members served by Open Connect as soon as possible."

While Open Connect is free to ISPs, some ISPs were not pleased with the carrot-and-stick measure. Time Warner (News - Alert) Cable said that Netflix was asking for “preferential treatment” through Open Connect and that it was “wrong for Netflix to withhold any content formats from our subscribers.”

Now, while the company will still encourage ISPs to use Open Connect, which caches content closer to subscribers to boost quality of service, “based on the performance data we’ve seen, and in response to member requests, we are now expanding availability to give all our members the ability to enjoy Netflix in the best possible quality,” Netflix director of corporate communications Joris Evers wrote in a blog post.

Apple TV, Roku, Wii U, Windows 8 and most other devices that can play Netflix video at 1080p are compatible with the Super HD service, and and the Sony PS3 and LG smart TVs support 3D.

CDNs are expected to generate $175 million in 2013 as quality management continues to emerge as an important service differentiator.

Pay-TV operators have been moving an increasing amount of their content online through TV Everywhere or multiscreen services, as well as seeing an increasing amount of Internet streaming via OTT services like Netflix and Hulu (News - Alert), according to Multimedia Research Group. As a result, cable, IPTV and satellite operators are seeing an increased need to manage what’s happening in their networks, and how to deliver premium video more cost effectively and with higher quality. So, CDN services for pay-TV operators will increase by a CAGR of 57.5% through 2017, the firm found.

“CDNs are a system of computers and caches that place copies of content (web pages or audio/video) in various places around a network in order to more effectively and efficiently deliver that content,” MRG explained. “CDNs can help service providers and content owners by reducing delivery costs, as well as ensuring higher quality delivery of content.”

MRG found that multiscreen and OTT video are the biggest market drivers for implementing a CDN among pay-TV operators. Asia will be the largest user of CDN services among pay-TV operators by 2017, with 27.4 percent, followed by Western Europe (23.9 percent) and North America (21.8 percent). Asia will also show the largest growth as well with a 76.6 percent CAGR during the forecast period.

Managed CDN services from vendors like Akamai (News - Alert), Level 3 and Limelight account for about 57 percent of total forecasted revenue by 2017. MRG does expect continued growth of open source CDNs from operators like Comcast as well as growing use of caches from Netflix's Open Connect CDN.

Edited by Rachel Ramsey

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