CDN shifts from price war to technology war, will video cloud rewrite the market landscape?

Just as the rise of e-commerce was premised on the layout of warehousing and logistics systems across the country, today's increasingly smooth interactive experience on the Internet is also inseparable from the support of CDN (Content Delivery Network) technology.

CDN technology has been invented by Akamai for nearly 20 years. It has grown along with the Internet industry. Its core value is called "Can Do Network", which means to do everything possible to "accelerate". The changes in the form of Internet products have brought new challenges to CDN technology. Nowadays, mobile network video on demand, live broadcast, and short video have become another entertainment venue after PC video websites. With the reduction of traffic charges for video sites by operators, it is expected that the video industry will continue to explode.

Due to the fragmentation and frequent switching of the mobile browsing environment, the access of massive users has made content platforms bear the biggest cost, which is the sky-high bandwidth fee. Last year, the most popular unicorn "Inke" was acquired by XuanYa International, which shows that online video services have always been a game where giants burn money, and CDN is a rigid technology and service related to user experience.

Internet giants are pouring in regardless of cost, and CDN industry profits are hitting a ceiling

The backgrounds of current players in the domestic CDN industry are diverse and complex. There are traditional CDN manufacturers that have been listed for more than ten years, such as Wangsu and ChinaCache; there are also Internet giants that have coveted the CDN market, such as Alibaba Cloud and Tencent Cloud; and there are also emerging CDNs that are "born for video content" such as Vision Cloud.

Wangsu is a representative of traditional "resource-driven" manufacturers. It purchases bandwidth from basic operators and builds distribution nodes in various places to establish a physical chain. Based on its "first-mover" advantage and brand accumulation from long-term operations, the company currently still maintains relatively high prices, but its market share has been snatched away by a large number of CDN manufacturers that have flocked in. The sharp drop in its stock price has also forced Wangsu to transform into the cloud computing market.

Alibaba Cloud is a typical "strategic investment" + "cloud CDN" vendor, and is a killer that continuously cuts down industry prices. In order to ensure its top position in the domestic public cloud market, Alibaba Cloud has incorporated CDN into the cloud ecosystem. In the CDN battlefield, BAT has formed a rare "invisible alliance" against traditional CDN vendors (Tencent Cloud and Baidu Cloud are more due to the urgent need for enterprise-level big data as an application scenario for "artificial intelligence" (AI). At present, the three companies have tacitly adopted the "low-price strategy" to grab land, dragging the CDN industry into a vicious competition of blindly cutting prices to compete for customers.

The "fight" between traditional CDN vendors and Internet giants has "heated up" the relatively obscure industry, which is not necessarily a bad thing. From the perspective of the trend of innovative video formats, cloud CDN is growing faster, and the market share of traditional CDN vendors has been compressed; and the Internet giants are affected by the staged group strategic goals. Professional video CDN teams such as Vision Cloud only focus on serving the vertical field of video platforms, surviving in the gap between traditional industry giants and Internet cloud giants.

The winners in the live broadcast + short video trend, the three major factions of technical CDN

There were more than 300 live streaming platforms at the peak in 2016, but due to the vulgar content of most live shows, the number had dropped by one-third by the end of last year under the strict control of the new live streaming regulations. After the irrational enthusiasm has cooled down, the customer base of CDN manufacturers will not be affected.

First, national-level applications with hundreds of millions of users have built-in live broadcast functions, such as New Live on mobile QQ, Taobao Live, Huajiao Live on 360 mobile browser, Yizhibo on Weibo, etc. Some vertical apps such as Maimai's "Zhibo" and Fangzongguan's rental live broadcast, etc., show that live broadcast products have become standard across social, e-commerce, entertainment and other platforms, and these platforms have an urgent demand for CDN.

Secondly, this year short videos have become the focus of traffic support for video platforms and information terminals. Short videos are easier for anchors to do post-editing and have a better sense of "work". Kuaishou, Huoshan, etc. have surpassed Inke and Douyu, representing the trend of on-demand video exceeding live broadcast. Tencent invested $350 million in Kuaishou, Alibaba's Miaopai and UC Short Video, and Toutiao spun off Huoshan Short Video; major information terminals such as NetEase News, Sohu News, Phoenix News, and Interface all have short videos on their homepages. Top self-media teams such as Papi Jiang, Yitiao, and Chen Xiang Liudianban have received huge financing; massive short videos that can be watched anytime also need cloud video CDN acceleration. The acceleration service for short video recording and broadcasting scenarios has become an incremental market for CDN.

(The left picture is Miaopai, the middle picture is Kuaishou, and the right picture is Douyin)

The most common user experience issues affecting massive UGC content platforms such as live broadcasts and short videos are freezes and delays. The recently popular "Tik Tok" short video actually has a rock style with violent shaking of the screen, which is almost impossible without CDN acceleration services. Live broadcasts and short videos are also big customers (KA) that major CDN manufacturers are competing for.

At present, the functions of live broadcast and short video are becoming increasingly rich, and the application scenarios are becoming more and more complex. In different business scenarios such as sports events, celebrity concerts, game competitions, shows, cross-border live broadcasts, etc., the acceleration service is more demanding; and innovative detailed functions such as microphone connection, instant switching, small window preheating, dynamic stream screenshots, sharing on Moments, live broadcast time-shifting, etc. require a lot of R&D efforts. At present, Huajiao alone has a technical team of more than 200 people, and it also needs to rely on professional CDNs such as Vision Cloud for assistance.

"Technology" has gradually replaced "price" as the most critical factor for CDN vendors in negotiations with customers. CDN services with higher technology can reduce CDN bandwidth costs and improve user experience, thereby winning in live broadcast and short video competitions. Currently, CDN technology is divided into three major schools: stability, all-round, and performance.

1. The "stable faction" believes that CDN services should maintain the stability of content distribution, strengthen technical accumulation in integration technology, weak network acceleration technology, service quality and performance fluctuation monitoring, intelligent fault diagnosis, etc., rather than deliberately pursuing advanced functional effects. For example, when customers need anti-hotlink updates, they can be informed in real time and the impact of failures can be reduced. This is more attractive for live broadcasts and short video scenarios such as events and concerts. The main representative manufacturer is Wangsu.

2. "All-rounders" provide end-to-end complete solutions for live broadcast and on-demand broadcasting. In addition to CDN services, they also include comprehensive one-stop services such as domain name registration, website development, IDC, cloud communications, mobile services, cloud security, monitoring and management. The main representative manufacturers are Alibaba Cloud, Tencent Cloud, etc.

3. "Performance" means achieving the goal of improving performance through self-developed core, optimized node selection and network deployment. In fact, even if the overall network speed is improved by 0.1 seconds, it is necessary to conduct research and development and investment in improving the response speed of the core cache, improving the response speed of the scheduling system, reducing the latency of network nodes, improving download speed, and reducing the distance between network nodes and users. The performance improvement of a single link can meet the stringent requirements of live broadcast and short video platforms for CDN. Typical manufacturers in this regard are Baishan Cloud and Vision Cloud, which takes stability into consideration.

Live and short video platforms will choose to cooperate with two or more CDN vendors with different backgrounds for disaster recovery and prevention of abnormal situations. Video platforms can choose what they need from the three major CDN technology schools, or they can jointly bid and combine CDN vendors based on price and performance requirements to select CDN partners while ensuring stability.

Converged video cloud services are popular, and intelligent network distribution of content is the future

In fact, my country's overall Internet speed is still outside the top 50 in the world, and the proportion of domestic CDN acceleration services does not exceed 20%, and video website corporate users currently dominate. CDN itself should be considered a blue ocean market, but the domestic market has seen rapid compression of industry profits due to the strategy of Internet giants to expand their ecosystem, but this is inconsistent with the industry characteristics of CDN, which is high cost and strong resource dependence. In the future, the entire CDN industry will gradually shift to a technology-driven, continuously raising entry barriers, and shifting from price wars to "technology wars."

Moreover, the current video content distribution platform will gradually transform into one where live broadcast and on-demand services go hand in hand and complement each other, requiring double improvements in CDN acceleration and in-depth services. Introducing a professional technical team for CDN outsourcing is an inevitable move.

Pure "cloud CDN" and pure traditional resource-dependent ones are not good. The former is on-demand and low-cost, but it is prone to high latency, network congestion and other drawbacks; the latter has a high anchor point for mobile cellular network IP address allocation, and node base stations are difficult to address. In the long run, integrated cloud CDN services are a major trend. Vertical video CDNs such as Vision Cloud, which are oriented to the vertical field of video and pursue technical services such as (live broadcast, on-demand) cloud distribution and cloud storage, cloud transcoding, etc., will become more and more common. Currently, Alibaba Cloud is also redefining CDN, and the "C" has been widely recognized from "content" to "cloud".

From the perspective of the development of video content, on-demand and recorded broadcasting based on PC+mobile phones are currently the main focus. In the future, VR, 4K and other video content will have higher requirements for bandwidth and network speed, as well as higher requirements for core algorithms for content distribution. Edge computing, fog computing, and intelligent pipelines are becoming new technical directions for the industry to explore.

Artificial intelligence (AI) will also profoundly change the face of the CDN industry. Entering the second half of the mobile Internet, almost all Internet products are transforming into content. The explosion of massive UGC content has provided big data application scenarios for artificial intelligence deep learning, and has also brought more imagination to artificial intelligence in CDN intelligent and scenario-based distribution.

Conclusion:

The explosion of the video content industry has led to a price war in the CDN industry, and industry players have become diverse and complex. Only by truly solving the many pain points in the user experience of current live broadcasts and short videos can CDN manufacturers effectively help corporate customers reduce costs and improve operation and maintenance efficiency.

As for the core CDN technologies focusing on live broadcast and short video content distribution, some emphasize stability while others emphasize performance. However, integrated cloud CDN for vertical fields is the development direction of the industry. Whether the entire CDN can return to its essence of enterprise services depends on the continuous breakthroughs in core technologies. The market structure is uncertain and the dividends for technology innovators still exist.