JumpTV Selling Their CDN: Shows It's Too Expensive To Operate Your Own Network

Implications: Last week, JumpTV announced that it was looking to sell its content delivery network and would be "refining its strategic focus toward high-value sports and Hispanic broadcast content." This is a great example of where trying to own and operate your own network specifically for the delivery of video does not makes sense. In the release, JumpTV said "The content delivery network is currently a significant cost center for the company, and the Company believes its sale will enable it to lower its ongoing operating costs."

Analysis:

When asked by investors who their biggest competitors are in the market, some CDNs choose to say "companies who do it themselves". That may be the case when it comes to the static caching of images and HTML, but for video, nearly no content owner builds out their own CDN. Yes, Google and MySpace deliver the majority of their video content themselves, and AOL does a lot, but how many companies are truly like those three? Certainly not JumpTV.

Delivering video to a mass scale, like JumpTV was doing for over 5,500 live events in the last quarter alone, takes a lot of money, a lot of effort and more resources than most realize. Yes, it is not rocket science anymore, but it is very capital and man-power intensive. For all the investors that think any company with some money can enter the market and easily give the top CDN players a run for their money, it's not that easy. And when any content delivery network says that "customers doing it themselves" is the bigger competition they face, ask them for what service they are talking about. It's not for video.

Think about some of the biggest users of video on the web today; MLB, NBA, CNN, MSNBC, FOX, ABC, CBS etc... none of them are building out their own CDNs for video delivery. The CDNs have no major threat from content owners building out their own distribution networks for video delivery.