Overview: Theta Network resolves Content Delivery Network (CDN) costs for video providers with the ability to offload UP TO 80% of the CDN costs for streaming platforms. Users on the network will share excessive bandwidth in exchange for token rewards.
(CDN) refers to a group of servers working together to provide fast delivery of Internet content.
Market & Background: CDN methods are inefficient due to growing populations and expanding the internet into new regions. Video distribution relies on data centers and placing servers as close as possible to end-users. To increase distribution speed, data centers must be placed in specific locations (near a significant ISP) — these centers are a drain of capital and time.
CDN costs depend on how much data is being requested. Therefore, video resolution and quality are determinants of CDN cost. With the data requirements of 4k, 8k, VR, and other live streaming technologies under construction, CDN costs are expected to increase. YouTube as an example, 1080p requires ~ 3.04GB / hour while 4k requires ~ 16GB / hour to stream video.
Video streaming accounts for over 67% of all internet traffic and is expected to jump to 82% by the end of 2022. Furthermore, in 2019, the global video streaming market’s market size was $42.6B and is expected to grow at 20.4% CAGR through 2027. Video streaming is growing, and viewers want better quality with less buffering times. Providers will be forced to distribute additional bandwidth-heavy content increasing total CDN expenses.
As of 2019, CDN’s charge an average of $0.001/GB, and companies such as Twitch.tv spend ~$5M / month on CDN’s.
Perhaps a more significant value add is to use tokens as an end-user incentive mechanism to drive viewer and streamer engagement, increasing revenue streams.
Business Model & Strategy: Theta runs on a native Blockchain utilizing proof-of-stake consensus. Theta’s ecosystem involves two tokens, Theta and Tfuel (Theta Fuel). Theta is used to stake, validate blocks, and secure the network. Staking Theta earns Tfuel, the utility token used to reward network users for relaying live stream content peer-to-peer, ultimately reducing CDN costs.
Currently, the Theta team is focused on video gaming and esports markets. In 2015 the Theta team founded Sliver.tv (rebranded Theta.tv), a live streaming platform for video games and esports content. Theta.tv runs on-top of the Theta protocol. To attract other streaming platforms, Theta must leverage Theta.tv to prove CDN cost reduction and display an increase in user engagement relative to similar streaming platforms based on new token incentives.
Theta has run various test streams in partnership with Maeil Broadcasting Network (MBN), Tencent, and Samsung VR. Samsung VR has its own Theta.tv channel on which they run VR 360 test streams.
- Direct → Livepeer, Videocoin, BlockCDN, and NOIA network
- Indirect → Akamai, Amazon, and Cloudfront
GitHub activity among direct competitors except Videocoin has been decreasing. For example, BlockCDN had 0 contributions within the last year. Furthermore, Videocoin does not utilize a peer-to-peer method and therefore has no reward or incentivization mechanic to use the token.
Indirectly Theta is competing with centralized providers in the live VOD space. However, price margins are already incredibly low, making it hard for centralized providers to reduce service costs even further if Theta proves their claim of cost reductions.
Primary Barriers to Success: A crucial stepping stone to Theta’s success is gaining market adoption. Right now, Theta.tv is powered by the Theta protocol, but the protocol must gain market adoption outside of Theta.tv. Additionally, Theta claims to reduce CDN costs by up to 80%, which encompasses an extensive range. Theta should be more concise concerning what its protocol is capable of so as not to mislead end-users.