YouTube: Platform vs.Content

25 June 2019 | Natalie Bannerman

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YouTube co-founder Steve Chen speaks to Natalie Bannerman about the future of content and the important relationship between carriers and OTTs

With over 1 billion monthly users as of 2018, YouTube is one of the biggest consumers of bandwidth in our industry. It is estimated that YouTube uses anywhere between 1.6MB per minute for video quality of 240p and near to 12MB per minute for a high-definition HD 1080p video.

This year’s keynote speaker for ITW 2019 was none other than Steve Chen, co-founder and former CTO of YouTube. Speaking exclusively to Capacity during the conference, Chen gives us his insights as to the developing content market and how carriers and wholesale fit into it.

A play for gaming?

On the topic of mobile gaming and its impact on bandwidth and data consumption, Chen sees mobile as merely the next platform for content as were its predecessors.

“It’s just the medium for consuming content, just like a traditional desktop on the TV or now on mobile devices, which are now more fluid platforms. You can pretty much do whatever with the mobile phone now.”

As for the content itself and the leap onto to the handheld device, specially-created content for the mobile is on the rise and the professional gamer will still play on more traditional formats.

“There is always going to be the more extreme games that you will just not be able to play on mobile devices. However, the mobile device is fit for media and gaming is one that is a lot more informal,” he says.

“If you’re waiting for that bus to come and you’ve got seven minutes you can just play. So gaming, because of the very nature and the requirements for that, is going to incentivise game developers to be able to create games that can be consumed on the move. Gaming is up there and still continues to climb.”

Augmented reality (AR) and virtual reality (VR) seem a natural fit for a company like YouTube, with the vast amount of bandwidth currently being consumed and an audience that is increasingly engaging with the technology, it would seem to be in the roadmap. I ask him about AR and VR.

“Everybody asks what’s next after video and in terms of bandwidth on the internet – VR/AR is the natural one,” says Chen. “Only because we haven’t got the creativity to come up with something new to use that bandwidth,” he adds jokingly.
Interestingly he believes that VR is going to have a lot more problems than AR due to the things needed to make it accessible for everyone.

“A lot of the technology that is driving VR can also be improved,” he explains. “It needs to be easy in terms of cost, hardware application, usability and needs the network and speeds to support that. With AR you already have the devices that could do that.”

Product over framework

Many YouTube peers in the general over-the-top space have already made their move into the telecoms infrastructure space, bringing the distribution of their content and data in-house for better operating models. Chen however, doesn’t see that as a simple option warning about the complexities and costs associated with doing it all yourself.

“Don’t look at the infrastructure, look at the product,” he advises. “If I were an entrepreneur starting a company I’d think about it as just solving a problem. A new idea built with technology with other co-founders that has small capital, a small number of people and small amount of resources - I would dedicate close to 100% of the resources on building the solution and if there’s any part of it that could be offloaded to a third party I would do that.

Reminiscing about the early days back in 2005 when YouTube first started there are some things that he would do differently. “If I were to do it again, even if I were to build a YouTube today again, it would not be on our own data centre it would be using something else that is provided elsewhere.”

Though there are a number of benefits of bringing the infrastructure in-house, once of course you’ve amassed the scale needed to do so, Chen remains unsure of “when that line is actually crossed to the point when you can do it yourself.”

“It’s certainly not easy to do it in-house, he adds. That’s a business on its own.”

But have we reached the peak in video data demands or is it just getting started? Simply put, Chen says: “I think it will continue to grow but there will be a ceiling, in the same way we saw the change from TV to internet, over the different generations.”

Open internet

As our conversation turns to the subject of net neutrality, Chen becomes notably engaged. Like many of his peers the decision to repeal net neutrality, an order that requires all internet service providers to treat all internet communications equally, is met with criticism from Chen.

“I think net neutrality is the very essence that YouTube needs to survive,” he says. “Network neutrality should be that regardless of where you are in the world, anywhere you’re consuming content, you should be able to receive the highest quality content that you can get on your device without having to think about the distribution network in the middle.

“Without network neutrality the internet wouldn’t be where it is, because once one of these big data providers sees that the likes YouTube or Netflix has been taken down, will they then try to recreate it themselves?”

The relationship between carriers and OTTs is difficult at best, with both trying to manage their respective interests. As someone who has had to balance that partnership, I question Chen about this and how it has evolved over time.

“This is something that has persisted for a very long time – the relationship between content providers and distributors,” he says. “In some ways, Apple is lucky because they sell iPhones and IOS operating systems and then you see billions and billions of dollars of companies building applications on top of this and not paying a single cent back to the operating system.”

However, one can’t exist without the other. “What if we start revenue sharing with the carriers if they do something?” he asks rhetorically. “I don’t know what the solution is.”

Interestingly this issue seems to be reserved for the bigger content players, indicating that that the smaller players are exempt.
“It was not a problem early on when we were a small company,” says Chen. “But when you get to the point when you’re using 10% of their capacity and furthermore that 10% is generating billions of dollars in revenue.”

Does Chen have any insights into how the carrier community can better monetise their networks without any adverse repercussions for the end user?

“Net neutrality will be the norm, that’s something that will be adopted because it is the fairer option,” he says. “There are three parties involved; those who are subscribing and consuming this content, those creating the content and those creating the channels to distribute them.”

Chen’s solution is closer collaboration between all facets of the content ecosystem, which will ultimately result in a bigger user experience for the end customer.

“Potentially a bit more integration between these three parties and maybe there’s something that could be there that remains positive for everyone rather than a threat and a negative thing.”