I've often wondered if CDNs are going to go out of business in the streaming world, and no longer be relevant, in the world of (rapidly) falling transit costs.
Once transit costs drop below $1/mbit @95th percentile (circa 2014 [1]), it's costing you $1 to transfer approx 300 gigabytes/month. At that point, the management costs associated with all of those distributed CDNs becomes greater than your transit costs. This is somewhat offset by continuously dropping prices of CDNS [2] which is as low as $0.02/Gigabyte on a 500 TByte commit.
What this does tell me is that NetFlix thinks they have an opportunity to save money on CDNs and can beat that $0.02/Gigabyte.
Bandwidth Delay Product(BDP) - keeps CDNs relevant for _downloads_ (iTunes, Software, etc..) - because everybody likes to max out their 100 mbit comcast connection, but you don't need much bandwidth to stream a show. Maybe some value for CDNs in HD or live event streaming.
The minimum for deployment of a Netflix node is 5 Gbps within a metro area. You must also peer with Netflix at a common interconnect so that "loading" is free for them.
By your math they are saving a minimum of $5k per month per deployed device.
Any network not meeting these minimum requirements will be served under existing Level 3/Limelight/Akamai contracts.
Pretty sure CDNs will be around. The value add of a cdn isn't their cheaper commit rates. The value is in location diversity and capital investment in infrastructure and ports in those locations. In new speak CDNs are "bit delivery as a service". The customer pays a premium over raw transit to have the cdn make those capital & management investments.
Even for Netflix or another DIY delivery case a CDN will continue to have value. A couple cases immediately come to mind: Lower first byte latency on first video blocks, then a hinted handoff to the openconnect device. Resiliency/recovery of network events, in a similar manner. "long tail" content that doesn't fit in the open onnect cache width.
A key point of these devices is IIRC they're only available to peered ISPs in one those NA IXs. Netflix is essentially converting 5-8gbs of CDN/transit expense in to $50,000 (WAG) of capital. That's what's really brilliant to me.
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I've often wondered if CDNs are going to go out of business in the streaming world, and no longer be relevant, in the world of (rapidly) falling transit costs.
Once transit costs drop below $1/mbit @95th percentile (circa 2014 [1]), it's costing you $1 to transfer approx 300 gigabytes/month. At that point, the management costs associated with all of those distributed CDNs becomes greater than your transit costs. This is somewhat offset by continuously dropping prices of CDNS [2] which is as low as $0.02/Gigabyte on a 500 TByte commit.
What this does tell me is that NetFlix thinks they have an opportunity to save money on CDNs and can beat that $0.02/Gigabyte.
Bandwidth Delay Product(BDP) - keeps CDNs relevant for _downloads_ (iTunes, Software, etc..) - because everybody likes to max out their 100 mbit comcast connection, but you don't need much bandwidth to stream a show. Maybe some value for CDNs in HD or live event streaming.
[1] http://drpeering.net/AskDrPeering/blog/articles/Peering_vs_T...
[2] http://blog.streamingmedia.com/the_business_of_online_vi/201...
Your calculation doesn't account for the artificial barriers that some ISPs put up by charging the CDNs to peer with them (see Comcast and Level 3).
Isn't that orthogonal to the choice between serving from the edge or from a single mega-datacenter?
The minimum for deployment of a Netflix node is 5 Gbps within a metro area. You must also peer with Netflix at a common interconnect so that "loading" is free for them.
By your math they are saving a minimum of $5k per month per deployed device.
Any network not meeting these minimum requirements will be served under existing Level 3/Limelight/Akamai contracts.
Pretty sure CDNs will be around. The value add of a cdn isn't their cheaper commit rates. The value is in location diversity and capital investment in infrastructure and ports in those locations. In new speak CDNs are "bit delivery as a service". The customer pays a premium over raw transit to have the cdn make those capital & management investments.
Even for Netflix or another DIY delivery case a CDN will continue to have value. A couple cases immediately come to mind: Lower first byte latency on first video blocks, then a hinted handoff to the openconnect device. Resiliency/recovery of network events, in a similar manner. "long tail" content that doesn't fit in the open onnect cache width.
A key point of these devices is IIRC they're only available to peered ISPs in one those NA IXs. Netflix is essentially converting 5-8gbs of CDN/transit expense in to $50,000 (WAG) of capital. That's what's really brilliant to me.
Cogent is already $1/mbps at "retail" pricing, Level3 (better quality) at $3/mbps or less in some cases.