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EyeIO: Netflix’s secret weapon against bandwidth caps?

Palo Alto, Calif.–based video encoding startup EyeIO left stealth mode on Wednesday with the announcement that it has licensed its technology to one of the biggest players in the online video space. Netflix (s NFLX) is using eyeIO’s encoding technology to cut down on the bandwidth of its streams, allowing the company to deliver HD video without busting subscribers’ bandwidth caps or overwhelming networks in emerging markets.

EyeIO has been operating stealthily since the end of 2010, and it was able to win Netflix as a customer last summer. Netflix hasn’t said where and in which capacity it is exactly using the technology it has been licensing from eyeIO, but the company’s VP of Product Development, Greg Peters, said in a press release that eyeIO is “an important part of the technology [Netflix uses] to improve video quality and overcome bandwidth challenges presented by Internet infrastructure.”

Standard-definition Netflix streams can consume up to 2.2 Mbps of bandwidth. Netflix’s 720p HD videos come in at roughly 3.8 Mbps, and 1080p videos go up to 4.8 Mbps. EyeIO CEO Rodolfo Vargas told me during a phone conversation on Tuesday that his company’s encoding technology can achieve better-looking results than most established encoders with 20 percent bandwidth savings and that eyeIO can still deliver similar quality to other encoders with up to 50 percent bandwidth savings. Content in 720p could be streamed using 1.8 Mbps, he explained. The company does this by optimizing the encoding process, which means that the results are regular, albeit smaller, H.264 files that can be played by end users without any need for additional plug-ins.

Bandwidth savings like these could be crucial to a company like Netflix both in wired as well as wireless networks. Netflix has been struggling with ISPs’ imposing bandwidth caps, and it is allowing its subscribers to voluntarily degrade their streaming quality to avoid hitting those caps. The company also started an aggressive international expansion last year, rolling out its service throughout Latin America, where average network speeds are often lower than in the U.S.. And finally, Netflix has also seen significant traction on mobile devices, where bandwidth caps are often much lower than on fixed networks.

EyeIO was founded by online video technology veterans; Vargas used to be the senior program manager for video at Microsoft, (s MSFT) and one of his co-founders, Robert Hagerty, used to be the chairman and CEO of teleconferencing provider Polycom. (s PLCM) The company is privately funded and currently has fewer than 10 full-time employees but is looking to expand over the coming months.

8 Responses to “EyeIO: Netflix’s secret weapon against bandwidth caps?”

  1. Robert Reams

    Streaming Appliances’ Kinetix video pre-conditioner offers superior 720p performance at 768kb/s (multi-pass file base)using legacy H.264. The trick is to reduce entropy within the JND limits of human foveal vision…no free lunch, just an improvement in perceptual coding.

  2. I called Netflix Canada to inquire about this new technology and their 1st level tech support team had not heard about this. I was just curious if they were using eyeIO in Canada yet, where caps are rediculously low.

  3. Doningos

    This is bad news for Canada’s telco regulator (CRTC). Cap limits are now in full effect in Canada mainly to restrict how much foreign (read American) content Canadians can consume online.
    CRTC is concerned Canadians will engage in cord cutting cable tv subscriptions without low cap limits. If this new technology is employed by Netflix Canada, the CRTC censors will need to implement a new method to control the amount of American produced content Canadians are permitted to consume. Otherwise the current tv policy mandated by the CRTC which limits American programming may become unenforceable. Thus their current iron-fisted distribution model will come crashing down like a house of cards.
    But the CRTC always has that last ace up its sleeve. They will go to Canada’s corrupt Federal Court and appoint a judge they know will rule in their favour. They already played this dirty trick a few years ago when they went to the Federal Court to make it illegal for Canadians to subscribe to American satellite services. Of course, subscribing to Asian or Pakistani satellte sevices is not a concern for the CRTC and therfore not enforced in Canada.

  4. I would be very interested in hearing what precisely they do that is any different from other h.264 solutions, especially if they are truly “standards compliant.”

  5. There is no free lunch. AVC and VC1 already employ all techniques (spatial and temporal compression) for general video image processing.

    Lower bandwidth means lower video quality. This is just a scam by a company scrambling to keep its business afloat while congress sells them out to cable companies and telcos (congress is trying to block net neutrality, so cable/telco can squeeze out competitors and keep consumer video business for themselves).

    If you want real Bluray level HD quality you need to send a lot of bits. Period.
    Put your bluray player into diag mode some time and see what it says. Typically 24 frames/sec movies are encoded at 1080P using avc or vc1 at average rate of 25Mbps, with peaks to 40Mbps. Thats what it takes to get even marginally good image fidelity.

    Directors have recently announced that they will be shooting some movies at 48average frames/sec to improve temporal resolution. That will push up bandwidth demand (and need for 100Gbyte discs?).

    They are already showing 4k (3840×2160 and beyond) projectors and flat panel displays at CES. And Japan’s NHK has built a prototype 8k system. Since new movies are being shot in 4k, it is reasonable to assume that will become available for home use at some point.

    All of these trends point toward the need for MORE, not less, bandwidth for each video stream. Netflix, Google Youtube and other providers should be POUNDING on congress for net neutrality, and pressure infrastructure providers to augment and expand the nation’s IP network infrastructure. We consumer citizens should also pound on congress! The nation needs more capacity built; NOT bandwidth caps and rate shaping trickery.

    Telecom companies should either build real capacity, or get out of the way and let municipalities and other entities build the data highways that this country needs to stay relevant and competitive in the second decade of the 21Sst century.