After Netflix launch, local video services challenged to raise quality standards

As Netflix goes global, local video portals in the 130 countries where the service was newly launched no longer hold the content monopolies they used to have, and are now challenged with providing a higher quality of video delivery.

Netflix's years of streaming experience allowed the service to perfect its technology. Local portals are having a hard time competing with the popular streaming media provider, with users experiencing buffering and slow video starts. The high costs of distribution, in fact, forces the portals to offer their content - which includes news, sports, and entertainment - in lower resolution formats, such as 480p.

As millions of viewers get used to Netflix, more and more people are likely to abandon local services that don’t meet the new standards of quality imposed by the competition.

Providing HD video content that loads fast and doesn’t buffer is the ultimate challenge for content publishers. Most publishers rely on content delivery networks (CDNs) that may be fast, but typically very expensive (on average, according to a report published by Dan Rayburn, $0.03/GB, spending up to $1M per year). These high costs often force publishers to compromise and offer lower bitrate videos.

Now that Netflix is in the picture, though, consumers will no longer tolerate these low bitrate videos. The portals are facing the challenge of finding a way to increase their quality while remaining within their budget. Although users will not abandon portals overnight, they are likely to use them less over time, which is a serious concern for publishers.

A company named Hola now offers an alternative solution for content publishers. When playing a video, Hola opens several parallel HTTP connections to separate servers located around the world. The initial segments of the video are delivered from the fastest server, while the next ones are delivered from cheaper servers located in other places.

Hola’s content distribution network, already used by several online video publishers, applies this new architecture which improves the delivery speed and reduces the distribution cost to $0.01/GB, enabling the local video publishers to compete with the quality afforded by Netflix, and yet save at least 50% of their budget.

The Netflix global launch poses a set of new challenges to the video distribution market, and raises an important question for publishers: Can they continue relying on traditional expensive technology, or will they adopt emerging alternatives which are fast enough to remain competitive?