Akamai’s Announcement Might Be A HTTP Based Flash Video Delivery Platform

After speaking to various folks in the industry this morning, it appears that Akamai's announcement tomorrow could be the unveiling of a new HTTP based Flash delivery platform. While I don't know all of the details, there are a bunch of implications this could have on Akamai depending on how they plan to offer the service. Even if this is not announced tomorrow, it's very clear that Akamai has been working on deploying this new platform internally and will offer the service before too long.

Akamai's move to the HTTP protocol to deliver Flash video makes a lot of sense since today, the 3.5 version of Adobe's Flash Media Server does not support HTTP streaming and still has some instability, something many of the CDNs have complained about. This is something that's widely known amongst the CDNs and only a few weeks ago, Level 3 discussed the benefits they saw in deploying HTTP based streaming platforms over proprietary ones. While Adobe has not yet announced it, we do know that come next year, Adobe will have support for HTTP based streaming with their Flash Media Server.

For Akamai, deploying such a service makes a lot of sense since they can leverage all of their entire HTTP infrastructure and provide a better customer experience using standard protocols. While some might suggest this move will also allow Akamai to reduce their internal costs, since they would not have to pay Adobe a FMS license fee, that cost savings would be nominal to start. Within the past few quarters, Adobe has already been working very aggressively with many of the CDNs to reduce their FMS license fees. And with Akamai delivering more Flash video than any other CDN, clearly they already have very good licensing terms with Adobe. So while Akamai may see some internal cost savings, it won't be anytime soon and would not be drastic.

Over time, it could have a much bigger impact on Akamai's P&L since they could spend less on hardware and servers and leverage more of their already built HTTP infrastructure. When it comes to having to add more capacity and scalability, Akamai would be able to spend less to do so. As for how much less, there's no way for me to know, but it could be a significant amount for the company over the span of multiple quarters.

But the real positive impact this could have on Akamai is if they decide to lower their pricing in the market, based on them reducing their internal costs. If they don't change their pricing model, then this new platform, if announced tomorrow, won't have that much of an impact on their numbers and won't help them close new business. Yes, it will be easier for them to support, will enable them to leverage a larger portion of their network infrastructure and should help them reduce some of their costs over time. But that's nothing like the impact it would have if they came to the market with a lower priced service. They have to do something to jumpstart their M&E business again and this new service would be a great marketing message for them to rally behind.

The other important thing to remember is that without lowering their pricing, a new Akamai based HTTP platform really has no impact on the customer. Most customers don't know and don't care whether their video is being delivered via HTTP or RTMP. And since most of the other CDNs already charge the same price to deliver Flash streaming or Silverlight streaming, most content owners already pay the same price for both. While a HTTP based Flash platform is a big deal for Akamai internally, unless they find a way to make the value relevant to customers, most of them could care less. So the company has to be able to show the content owner a lower price, a much better level of quality that can be measured or some other value add to where customers are going to demand HTTP based delivery. Without that, this announcement is only relevant to Akamai internally, Adobe and folks within the online video industry who cover infrastructure.

I'm guessing there will be more to the announcement and I'm sure there are details I don't know. But whether or not such an offering by Akamai is going to be seen as a value to the customer is really all that matters. The bottom line anyone should care about is how does the announcement help content owners, what's the value and how will it help Akamai grow their CDN business.