What to watch out for when running a cloud based OTT service?
Working on larger projects with Tier 1 operators brings one common question to the table: Is it possible to run a fully cloud-based OTT operation and enjoy the “freedom” that the cloud service provides? The short answer is YES. Having everything hosted in the cloud is possible, but there are a few things that have to be done right.
The idea of leaving all the hassle with hardware, server rooms, installation, etc., to a cloud provider sounds very promising. But keep in mind you still need someone to take care of the virtual software and, most importantly, understand how it works. Negotiating the correct terms of the cloud hosting contract for the hardware is crucial. Since most OTT services transcode using GPU cards, you will need robust and likely expensive hardware hosted on the cloud. This will bring a monthly cost to the table that you need to account for. When talking about a monthly cost, it is very important to negotiate a reasonable rate for the cost of bandwidth. When moving to OTT, you will need great distribution to your end-users.
Operators tend to think that a cloud-based OTT means externally managed OTT. A cloud-based solution is the same solution you would have installed on premises. That means you still need to have the proper training to set everything up, service the system, and manage the subscribers. The only difference is that you don’t have to worry about the hardware, and you can focus on operations. For operators that are not yet 100% sure how to handle operations and need assistance, we provide an optional operation service that will help you set up and manage the whole OTT system. This is available for both on-cloud solutions and on-premises solutions.
When launching a full cloud OTT solution, all the content (live TV multicasts and VOD) has to be delivered from the headend to the cloud provider. If we take an example of 100 channels, each with a bitrate of 8 Mbps before transcoding, we get an 800 Mbps upload stream to the cloud that will be used to bring the content to the cloud. There, the content will be transcoded and stored, and after that, it will be distributed to the front-end devices (clients). For this example, we will use an operator with 150,000 users. Let’s say only 10% are using the system at the same time, so we get a number of 15,000 concurrent users. Even when using ABR and doing the calculation with the lowest profile of 400 kbps (400 kbps x 15,000), we end up with 6 Gbps. This is again considering the lowest ABR profile in SD. If we look into the same use case with HD, we get a bitrate of 2500 kbps per user, so the total traffic (2500 kbps x 15,000) would be 37.5 Gbps. If you have these numbers in mind and have negotiated the correct conditions for your bandwidth distribution, then you are ready to launch a cloud-based OTT platform.
Based on our experience in the industry, it will be a challenge to negotiate reasonable conditions for the cost of hardware and bandwidth so that everything makes sense on paper. Cloud providers and cloud CDNs are not yet ready to offer a reasonable price per bandwidth that will make sense for an OTT provider. With the cost per Gbps as it is today, it doesn’t make sense to offer a full cloud-based solution for any client. The bigger you are, the higher the cost will be, and you will have to pass the burden of these costs to the end-users. This will increase your service price and lower the overall demand.
When it comes to the return on investment for hardware on premises compared to a cloud solution, you will usually see that in a couple of months (4-6), you will have the investment back. This will give you the margin that is needed to provide an OTT service and focus on marketing and operations.
What does make a better sense, and we have a lot of experience with, is running a hybrid model cloud-based solution. This is great for larger countries that have a cloud server present in the location. When this is available in your location, you can install the middleware, database, and Subscriber Management System on the cloud while keeping your transcoding and CDN (distribution) on premises under your control. This way, you have control over the traffic, and you don’t have to worry about the bandwidth. The control part of the system takes just a little bandwidth. This is an ideal solution for operators who are covering multiple areas, have different locations with different content while running a fully redundant transcoding and storage solution.
For operators targeting one region, we strongly suggest a fully redundant on-premises solution. This will give you not only full control of the system but will also provide your customers with great feedback, latency, and responsiveness.
Advantages of a OTT cloud setup:
- Scalability: Cloud platforms enable seamless scaling of resources, allowing providers to accommodate fluctuating demand and sudden spikes in viewership without the need for significant upfront investments in infrastructure.
- Global Reach: Cloud OTT distribution eliminates geographical constraints, enabling content providers to reach audiences worldwide. This democratisation of content delivery contributes to increased market penetration and revenue opportunities.
Disadvantages of a OTT cloud setup:
- Bandwidth: The success of cloud OTT distribution relies heavily on robust and reliable internet connectivity. Adequate bandwidth is crucial to ensure high-quality streaming experiences and minimise buffering issues. Negotiating great terms if crucial for deployment
- Quality of Service (QoS): Maintaining consistent QoS across various devices and network conditions is a challenge. Adaptive streaming technologies, such as ABR (Adaptive Bitrate), helps to optimize the viewing experience by adjusting the quality of the video based on the available bandwidth.