Our take...
Adobe's Flash player has been widely deployed for many years and now enables all sorts of rich media from browser-based games to online video on sites like YouTube and the BBC iPlayer. The release of the Flash player 10 beta marks a significant upgrade for Adobe's ubiquitous multimedia application player. As a gaming platform the addition of 3D effects and GPU hardware acceleration should help to strengthen Adobe's position in the casual/browser-based games market. However, it is the inclusion of the p2p elements that stands to be more disruptive.

The incorporation of p2p technology opens up the potential for cost-reduction and quality improvements in browser-based video streaming services. A number of online TV services already utilize some form of p2p delivery. For example the UK-based ioko supplies the Kontiki p2p platform as part of its suite of services to BBC's iPlayer, BSkyB's Sky Player, and Channel4's 4oD. However uptake of the p2p element of broadcasters' services and online video start-ups like Joost and Bablegum has been hindered by the requirement to install the client and the effort in loading it in order to watch content. Consequently, when both browser-based and application-based services are offered, it is common for those based on the browser solution to outnumber those using applications by a ratio of at least 8:1. As a result of this comparatively low usage the savings that come with using p2p have been minimised as, even within the application environment, much of the content delivery has to be done from a CDN's servers rather than from the cloud of other p2p users.

However, inclusion of p2p in Flash should enable companies to benefit from the savings at scale that p2p provides, thus reducing one of the key obstacles to the profitability of online video. But it is important to recognise that these savings will come from hit content that is viewed and in turn distributed by a large number of users rather than obscure titles from the long tail where there will be a much lower number of peers to share the content distribution load.

Counter intuitively, in the short run, content CDNs are unlikely to be affected by Adobe's move. Most CDNs, especially the ones based on centralised server storage, derive a significant share of their revenues from their traditional businesses (traditional websites, software updates, etc.). Moreover, p2p solutions often encounter difficulty serving users behind firewalls; these users will continue to require more traditional delivery. Likewise, p2p distribution of mainstream video services would result in major pressure on ISP infrastructure, which only increases the need for local caching and traffic optimization – a CDN specialty.