The drawing is now closed. Congrats to Trevor K. from San Jose, CA who won the device. I've been playing with the new Roku 2 box over the past few weeks and soon I will be publishing my review of the unit along with my thoughts on whether or not users should upgrade to the newest model. But in the mean time, I'm giving one lucky reader of my blog the chance to win a free Roku 2 XS streaming player. To enter the drawing, all you have to do is leave one comment on this post and make sure you submit the comment with a valid email. The drawing is open to anyone with a mailing address in the U.S. and I will select one winner at random in two weeks. Good luck!

Two weeks ago, I wrote about the discussions I was hearing with regards to Limelight Networks being in talks to get acquired. A week after my post, Limelight Networks reported earnings and missed guidance by $2M, sending their stock to an all-time-low. As a result of the drop in their stock price, it's going to be hard for Limelight to get the kind of buy-out they were hoping for before their stock price took a hit, but they that does not change the fact they are still in the market looking for a buyer.

While I've heard that both AT&T and Microsoft have passed at acquiring Limelight, the bigger news I have confirmed is that Level 3 and Limelight have been in discussions for a few weeks now about joining forces and combining their CDN assets as a joint venture. I also hear that Limelight wants to sell their EyeWonder business and exit the interactive advertising portion of the market, which would be a smart move. I don't know what Limelight will get for the business, but they paid $110M for it last year.

I don't have details on how a deal between Level 3 and Limelight would be structured, if it happens, but it sounds like there are two ways this can go. Limelight could acquire Level 3's CDN business and then own and operate the CDN portion of the network with a guarantee from Level 3 to use the newly combined CDN. In a deal like this, one would expect Level 3 would get a couple of board seats on Limelight's board and have a great deal of say in the business. Combined, Level 3 and Limelight will have over $200M in CDN based revenue this year and taking Level 3's network and Vyvx business and Limelight's content management and web acceleration platforms, both companies would have all they need to double-down on the CDN space. The other option is that Level 3 could just buy Limelight outright. Considering Limelight has no debt and such a low share price, it would be a cheap buy for Level 3 and a deal that could close quickly.

One could argue that the CDN space is too commoditized to ever make a real business of it, let alone a profitable one with the way pricing declines each year, but if you own the network and have the ability to scale at a lower cost, profitability can be reached. Plus, even though CDNs have been offering delivery services for fifteen years, the real surge in demand for video delivery is in the next few years, when we actually have a real penetration and usage of tablets, broadband-enabled TVs and Blu-ray players and more subscription based content services. Traffic volumes are going to skyrocket in 2012-2013 and Level 3 has been betting big on the future of IP based video delivery.

Based on the recent data from my Frost & Sullivan report on the CDN market, we expect the video CDN market alone to have a revenue CAGR of 28% between 2012-2015 with the video CDN market reaching over $1B in 2013. With Limelight's current CDN business expected to grow between 10-12% this year, that's a long way away from the 28% number. But a combined Level 3/Limelight solution that integrates Limelight's platforms with Level 3's network and Vyvx assets, there is no reason to believe the new venture, however it is structured, can't grow the business much more than 10-12% a year.

Right now, Level 3 offers the lowest price in the market, in most cases under-cutting Akamai by 25-30% on CDN deals as Level 3 owns the network and has a lower cost of delivering bits. One of Limelight's biggest costs is the network and if they can merge with Level 3 in some fashion, the cost of doing business will go down a lot for both companies, simply based on the scale and volume of bits being delivered.

While I've heard some suggest that Goldman Sachs, who owns almost 35% of Limelight, wants to dump their shares and get out of the CDN business as quickly as possible, I don't think that's accurate. Goldman could have sold shares back in February, but didn't, when Limelight raised another $71M and offered more shares to the market priced at $7.10 per share. I've also heard some say that Akamai should acquire Limelight and just get rid of their closest competitor. While that sounds good on paper, the problem is that Level 3 is the one creating the pricing pressure, not Limelight. So acquiring Limelight would not solve the price compression problem for Akamai. Also, if Akamai acquired Limelight they would most certainly shut down Limelight's network and move customers over to the Akamai platform. Akamai doesn't value Limelight's technology so any offer by Akamai, if they made one, would put no value in Limelight's platform, only in their customers and revenue. As a result, the price Akamai would offer to acquire Limelight would be too low.

If Level 3 acquires Limelight, it's a pretty straight-forward deal. But if Level 3 wanted to spin off their CDN business and have Limelight operate it, in order for Limelight to actually acquire Level 3's CDN business, it would be logical to expect them to have to raise more money as the $116 million in cash and short-term marketable securities that Limelight has right now would not be enough to acquire the business and still have operating capital. Selling off the EyeWonder platform might be enough, but I don't know what Limelight would get for it or how much it would take to acquire Level 3's CDN business. Clearly, Limelight knew they would miss earnings weeks before they announced and have been looking at multiple options for their business, as any smart company does. But being I'm not a banker and don't know the inner workings of how complex deals can get done, between cash and stock, someone with a background in finance would be better suited to figure it out. But maybe that's why I was also hearing rumors of Limelight raising money at the same time as acquisition talks.

With the patent lawsuit still on-going between Akamai and Limelight, one interesting thing to watch would be what happens if Level 3 and Limelight merge. When Level 3 entered the CDN space by acquiring the CDN assets of SAVVIS in December of 2006, Level 3 said that for any CDN to be successful over the long term, they’d have to have the intellectual property necessary to protect their investment in the CDN market. Back in 2008 I reported that Level 3 was quietly buying up CDN related patents, including at least 20 from IBM.

In 2008 Level 3 had 50 patents that were pending pertaining to content delivery and already owned over 80 patents specific to content delivery and streaming media technology. Today, those numbers are probably even higher. So I don't think Level 3 is worried about any patent suit from Akamai and if Level 3 merges with Limelight, one has to wonder how that may affect patent suits amongst Akamai, Limelight and other CDNs moving forward.

If a deal between Limelight and Level 3 gets done, it's going to have a lot of impact on the content delivery market overall. Such a combined offering would also give telcos and carriers a run for their money and might also convince a few of them not to spend money to try and build out their own CDN. While it's too early to know all the ramifications of such a deal, it would drastically change the CDN landscape. None of these deals I am hearing about are final and anything can still happen, but I don't think it will be too long before we have confirmation in the market on what the end result for Limelight Networks will be. The natural fit for Limelight is to be acquired or team up with a carrier, and there is no carrier who understands the CDN market better than Level.

Both Limelight and Level 3 declined to comment for the post saying, "we don't comment on these kinds of rumors".

Note: Sometimes, when I write articles about potential acquisitions in the market, I get a lot of emails from individual investors who want to suggest that I have an ulterior motive. If a company does or does not get acquired, I don't make money or lose money. I have never bought, sold or traded a single share of stock in any public company ever. If the share price of a company I am writing about goes up or down, I don't benefit in any way. Also, I won't respond to any requests asking me who my sources are.

Back in 2009 I wrote a post entitled "Why Can't MSNBC.com Fix Their Online Video Offering?" where I pointed out just how bad MSNBC.com's video player was and the problems users were experiencing. Two years later, their website is still routinely having the same problems with the player not loading, videos completely freezing, missing ads, poor encoding and they still have one of the worst designed players on the market today.

Every day I use CNN.com, FOXNEWS.com and MSNBC.com to not only get my news, but also review and compare the differences in the sites. For weeks now, MSNBC.com's video player, which is an annoying pop-up window, will only load half the time. As you can see above, the window loads, but with no player or ad. This is common for the site. Next up, if the player does load and the ad starts to play, many of the ads freeze half way through. They just stop playing 15 seconds in and you have to close out the window and start all over again. If the ad does play all the way through, many times the video itself will never start and just sits at "your video is loading".

If you are able to play a video, many times the video has been poorly encoded. While it's hard to tell from this screenshot, (I've circled the problem in red, click on the image to see) MSNBC.com's quality control is pretty poor. Many of the videos have jumpiness in them not from the streaming, but from the original source file they encoded and it wasn't corrected during the encoding. That can happen in the encoding process, but MSNBC.com isn't doing a good job in noticing it before it goes on the website as I routinely see videos that would never have passed quality control at other news sites.

That brings me to MSNBC.com's video player. The design and functionality of their player is one of the worst on the web, hands-down. Basic things like pointing your mouse over a video in the playlist brings up a description window that covers up the current video you are watching. It's one of the worst experiences you could have when the video you want to watch is covered up by something else. But it doesn't stop there. If you like the video you are watching and want to email it to a friend, the email link does not work with certain platforms and email clients.

For instance, using Outlook or Eudora on the Mac and clicking on the email link will bring up a window in the email client that says "couldn't figure out that URL". That by itself is bad enough, but it also crashes the email client in Eudora requiring you to force quit the application and restart it. This has been happening since 2007. MSNBC.com has not been able to correct this in four years.I don't get any of these same issues on CNN.com or FOXNEWS.com. I can email any story I want with my current OS/email client, the videos play quickly, there is no freezing and their players are well designed.

Last year, MSNBC.com was porting their poor quality video over to the Xbox platform, which was an insult to the capabilities that the Xbox platform has in delivering good quality video. So apparently MSNBC is all about extending their crappy video experience to other Microsoft platforms as well, which someone at Xbox should keep them from doing. MSNBC.com should not be allowed to infect other Microsoft platforms like the Xbox that actually care about their users and work hard to provide a good video experience.

Clearly MSNBC.com could care less about these video problems. Their offering has been broken for years, not once have they even said what the problems are, when they would be fixed or even reached out to respond to my posts about the poor video experience they offer. They don't have any desire to want to improve the experience, educate the market on why these problems exists, or seem to notice all the other people who complain about the same kind of user experience in the comments section of my posts.

If you are looking for a online video news source, don't use MSNBC.com unless you like wasting your time, getting frustrated, possibly having your email client crash, freezing your browser and not being able to see the video you were actually looking for.

My suggestion to MSNBC.com, get out of the online video business. You're offering is an insult to the online video industry.

Referenced posts:

– February 2010: Why Is MSNBC Porting Poor Quality Internet Video To The Xbox?

– Febuary 2009: Why Can't MSNBC.com Fix Their Online Video Offering?

– March 2008: MSNBC.com Won't Say Why Their Debate Webcast Failed

– February 2008: MSNBC Debate Webcast Constantly Buffering, Poor Audio

– July 2007: MSNBC.com Needs To Dump MSN's Lousy Video Platform

– March 2007: MSNBC.com Video Still Not Supported In Firefox Or Safari For Mac Users

Back in November, Sony lowered the price of their Sony Internet TVs by $200 and in the past few weeks, Sony has lowered the price on them again. If you are looking to upgrade your TV or get one for kids going back to school, these Sony models are one of the best deals I have ever seen on a Internet connected TV, with full support for 1080p. The 24" model is now just $295, down from the $599 price when it originally launched. New pricing on the 32" model is $498, the 40" model is $723 and the 46" model is $961, which is $400 cheaper than last year. (Note: these are the current prices from Amazon – with free shipping.)

Sony confirmed for me that a new lineup of Sony Internet TV's with the Google TV platform are not about to be released and that they simply lowered TV prices to grab more market share. That said, later this summer, Google will launch version two of their Google TV platform, built on Android 3.1, and all of these Sony Internet TV models will be getting that software upgrade. While we all know the Google TV platform still needs a lot of work, once the Google TV software update does comes out, the combination of Sony's set and the Google TV platform will be one of the best combinations in the market, for broadband enabled TVs. And at $295 for a 24" set, you can't go wrong.

I will try to and buy a 24" model in the next few days and raffle it off here on the blog to one lucky reader. I am currently giving away a free Logitech Revue with Google TV, so enter here if you want to try and win that.

It was a busy day on Monday for some of the content delivery companies in the industry. He's a recap:

Limelight Misses Earnings: Limelight reported earnings after the market closed and missed their forecast by $2M. Limelight said they lost $1M in revenue due to one of their customers having a security breach in the quarter and while Limelight didn't want to mention the customer by name, clearly the customer was Sony. With the Sony PlayStation Network (PSN) outage, Limelight lost about $1M in expected revenue towards their CDN business. The other $1M in lost revenue was a lower booking of revenue due to a delay in Limelight rolling out a new version of their EyeWonder platform, which has now been pushed back to Q1 of next year.

Limelight also forecast Q3 revenue below analysts expectations and their stock is getting hammered after hours, trading down to $2.40 a share. Considering how bad the entire market has been over the past week, it was the worst possible timing for Limelight to miss guidance. That said, if Sony didn't have the network outage, Limelight would have met their revenue projections for their CDN business, which is 60% of their revenue, so the revenue miss is not a sign that the CDN market in general is having problems or slowing down.

But, at no time on the call did Limelight reinforce the comments they made earlier in the year when they said their CDN business could grow 12% in 2011. It's still possible, but being we're already six weeks in the the third quarter I think Limelight would have mentioned if they were already starting to see an uptick in traffic, which they didn't. It now appears that 12% growth for their CDN business for the year might be high, with a more realistic expectation being about 10% growth in CDN.

While I don't normally blog about vendors earnings, I'm already hearing that Limelight is in discussions to be acquired and now, with Limelight missing earnings and their stock being close to their at an all-time low, this is the ideal time for someone like Verizon or AT&T to come in and acquire the company. I think we'll hear more about what the company is up to sometime this month.

Akamai Has An Outage: Late in the day on Monday, Akamai experienced a DNS related outage on their network forcing many of their customers websites, including apple.com and others, to be unavailable for about 30 minutes. While outages like this are never good, the positive thing to note is that I can't remember the last time Akamai's network had an outage of this magnitude.

The company emailed me more details on the outage late last night saying that the cause of the outage was as a reuslt of, "a configuration change to take some DNS servers out of service started to propagate to the production network. This otherwise routine change caused some DNS servers to restart repeatedly. The change was introduced at 19:12GMT, and at approximately 19:18 GMT, alerts promptly fired in the Akamai NOCC. A response team identified the issue and reverted the configuration change. The configuration change was reversed at approximately 19:42 GMT. The DNS issue lasted approximately 30 minutes from first impact to return to expected service. We do not anticipate that it will cause further issue."

Amazon Has An Outage: Late on Monday night, a portion of Amazon's EC2 service went down affecting quite a large number of customers, including Netflix. Amazon acknowledged that they were, "investigating connectivity issues for EC2 in the US-EAST-1 region" when the outage was reported and the company resolved the issue about 45 minutes later.

One thing the Akamai and Amazon outages should prove to everyone is that even though all the CDNs always talk about the redundancy built into their networks, ALL networks have outages at one time or another. There has never been a network that hasn't had a major outage and there is no such thing as 100% up-time, no matter what any CDN claims or guarantees in an SLA.

XO Settles With Level 3: When Level 3 announced their intentions to acquire Global Crossing, XO Communications raised concerns with the FCC and made it well known that they were against the pending merger. Apparently that's all behind them now as on Monday, both Level 3 and XO Communications filed a joint document with the FCC saying that the two companies have "reached an agreement that addresses all of XO’s concerns raised in its comments to the Commission about Level 3′s acquisition of Global Crossing."

I'm working on a post with more details on what the Global Crossing acquisition could mean to Level 3 as well as an update on their CDN business from my recent chat with Level 3's CEO Jim Crowe.

There are a lot of choices in the market when it comes to devices that stream video to the living room. Dedicated streaming media boxes, broadband enabled TVs and Blu-ray players and tons and tons of tablets. Even for those of us in the industry, it really is a full time job trying to keep track of what content is offered on each device, the business model offered and the quality of the platforms that power the content experience. (see www.StreamingMediaDevices.com for help)

So just imagine what it is like for a consumer who doesn't write about these technologies and platforms every day. The fragmentation in the market continues to increase and it won't get better any time soon, only worse. While stores like Best Buy and Costco should be educating consumers, they really aren't. When was the last time you walked into a big box retailer and tried out an Apple TV or got hands on with Boxee's platform before you purchased it? Broadband enabled TVs on display are rarely hooked up to the Internet and you can't sample any of the content choices available on the device.

Even Costco, a store I really love for devices, has the Samsung Galaxy Tab on display, but inside a lucite case, locked down to a shelf, that keeps anyone from being able to touch the screen or device in any way. You can't see the ports, thickness of the device or what the backside looks like. TVs on display don't call out which content platforms are bundled with the sets and those that are broadband enabled, list those specs in small lettering alongside tons of other info. None of them are actually connected to the Internet. Go to any Costco and spend a few hours in the TV aisle and you'll hear the kinds of questions consumers are asking as they try and make their choice. Most will even let you help them pick the right device, even if you don't work there, as the Costco employees typically have never used Google TV or a Roku.

Retailers are missing a huge opportunity to sell more devices and as a result, are hurting the growth of our industry. I can't tell you how many times I have personally helped someone buy a device at Costco who said they would have not bought anything had I not happened to be in the aisle to help them. This is a service that these stores should be offering and having even one employee who knows the device space well would pay off big time for someone like Costco. I guarantee they would sell a lot more merchandise as I literally help sell something every time I go to their store, and I don't even work there.

All retailers should also have a few computers connected to the Internet so that any shopper can read reviews of the devices from websites and decide which model is best. I know retailers don't want you doing comparison shopping online in their store, but a retailer like Costo almost always has the lowest price on any electronic device they carry and they double the manufacturer's warranty when you buy from them. There are more positives of helping to educate the customer with reviews than negative ones.

My friend was recently down south and said the Tiger Direct store he was at had rows of devices, all connected and ready for any consumer to try out before they buy them, so it sounds like they are doing a good job. Are you listening BestBuy and Costco? If there was a Tiger Direct around here, you'd be getting your butts kicked on electronics.

I don't plan to open up a retail store any time soon, but what I would like to do is open up a small location in NYC that would be stocked with all these devices and any member of the media or person from the industry could come by and use any device, free of charge. These days, so many members of the media are writing stories about devices and platforms they have never used or even seen in person and it shows. I think it would really help our industry to have one place where the media could get hands-on help, do side-by-side comparisons and better understand what they are writing about.

I could stock the place with devices, get support from the manufactures and probably get Verizon to install a FiOS connection. The real issue would be the space, which is not easy to come by in NYC, but I think this would be something a lot of people could benefit from and I'm game to try it if anyone wants to help. We've had Bloomberg, FOX Business News and other TV stations come to our Streaming Media shows just to be able to film some of these devices in action, so I could also see this location being used for a lot of on-air interviews. Not to mention, a lot of device companies come to NYC to do road shows and demo their devices and this location could be used by any company in the industry and would have the kind of private setup they need.

Maybe I am thinking too big here, but I think setting up something like this is completely doable and I see tons of upside potential for the industry, the media and all of the content, platform and device companies in the space that would benefit from it. If you think you can help or know of a better way to do this, I'd love to hear from you.

The drawing is now closed. Congrats to Joey Cossack from Corona, CA who won the device. On Sunday, the price of Logitech's Revue box with Google TV, officially dropped to $99. But I'd got an even better deal for you – FREE! One lucky reader of my blog is going to win a brand new Logitech Revue, still sealed in the box. To enter the drawing, all you have to do is leave one comment on this post and make sure you submit the comment with a valid email. The drawing is open to anyone with a mailing address in the U.S. and I will select one winner at random in two weeks. 

And keep an eye out on my blog as August is going to be the month of giveaways with some new Roku's up for grabs, a Western Digital WD TV Live box as well as a Netgear Roku.