Content Boom Also a Boon to Akamai

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The boom in broadband video and multimedia content is attracting a hoard of new players, but also is widening the business picture for longtime network delivery fixture Akamai Technologies.

Not only has Akamai weathered the Internet Bust of the 1990s, but since then it has grown to be a major power behind the new broadband Internet throne. With a network of 20,000 servers world wide, Cambridge, Mass.-based Akamai quietly supplies the content delivery for about two-thirds of the top 30 media companies, with high-profile customers that range from Viacom Inc. properties MTV Networks and Discovery Networks, to Apple Corp.’s iTunes service.

VOLUME WAY UP

Its business is growing. While the company doesn’t release its numbers, Akamai has seen its streaming media network volume grow six fold in the past two years, according to Suzanne Johnson, senior product marketing manager for Akamai’s media and entertainment solutions. As volume of content rises, Akamai has to run to keep pace with capacity demands, adding more servers as well as digital rights management and content usage products to give content owners a better handle on where and how content is being delivered.

“We’re definitely seeing those pressures, and that is one of our No. 1 priorities moving forward,” Johnson said. “What we’re seeing from where we sit is what everyone is seeing. What has created this perfect content storm is the convergence of the technology that is finally there, the broadband in the last mile and the ability to secure digital assets and much higher quality video.”

One recent example was CBS Corp.’s live Internet streaming video service for this spring’s March Madness NCAA Basketball tournament. Akamai provided the content delivery, and during the two-week tournament it saw its overall network volume hit 200 Gigabits per second, with more than 400,000 simultaneous video streams delivered, Johnson said.

iTUNES UPTICK

Meanwhile, content downloads are also significantly ramping up Akamai’s network traffic, primarily in music downloads from services including Apple Corp.’s iTunes.

Akamai supplies the content delivery for iTunes “so we’ve definitely seen a large uptick based on what’s been going on there,” Johnson said.

Akamai also provides the underpinnings for Starz Entertainment’s Vongo video download service. Vongo is a good example of many video download services that are now boosting the quality — and therefore the bandwidth demand — for the content it offers, Johnson said.

“We’re seeing a lot of that lately,” she said. “The companies want to provide much higher definition movie viewing experiences.”

Content outlets also are looking for better ways to manage the flow of content, so recently Akamai has been adding to its portfolio of content management and tracking services.

LIFT TO STOCK

All of that activity has literally boosted Akamai’s stock among industry watchers. In a recent report, Forrester Research put Akamai at the top of the list among content delivery network providers, citing its significant client list and global network. Investment houses including Piper Jaffray, Lehman Brothers and Prudential Equity Group also have recently upgraded the company’s stock prospects based on the acceleration of broadband content and Akamai’s growing role in supporting that market.

Similarly, its stock price has been on a steady upward march from just $15 in November 2005 to present, where it is trading at about $45.

From where it sits, Akamai also has a good view of some of the trends in Internet video. For example, video quality depends on the outlet fielding it.

While user-generated sites like Myspace are sometimes of lower quality, other download services like Starz’ Vongo have ratcheted up the video quality.

“In some cases, we’re seeing customers want to deliver their content more broadly, but at a lower bitrate because it’s something that is not coming directly from its site and there are no ads,” Johnson said. “So maybe there is a lower service level agreement for people based on where they are coming from.”

Elsewhere, Akamai is seeing major requirements for in-stream video advertising, with sites able to charge between $25 and $30 per insertion.

“That is something as far as a trend goes that we’re seeing,” Johnson said. There is a dearth of available Web ad video right now, “but once that opens up I think you will see more and more advertisers coming on line.”

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