I’ve been getting a lot of calls all day regarding the coverage put out by Jefferies & Company this morning which stated among others things that Akamai’s web acceleration outage "was down for a significant amount of time in Q1." Akamai has confirmed to me that this is not the case and the web app network has not been down at any time in Q1.
Sponsored by
Move Networks announced today that it has raised $46 million in a Series C round led by Benchmark Capital which includes Cisco and Comcast and Televisa, as well as previous investors Steamboat Ventures and Hummer Winblad Venture Partners.
While many sites, including TechCrunch, are reporting that Move Networks has raised $91.3 million to date, some bloggers are doing the wrong math. Move raised $11.3 million in 06′, $10.0 million in 07′ and $46 million in 08′. While many announced that Move had raised $34 million back in Q4 of 2007, this was not the case. Move raised no money in Q4 of last year.
The $67.9 million is still a large number, but a lot less than over $90 million. Move is an interesting company to watch. Last month I had the opportunity to sit down with Move’s CEO John Edwards and was able to get a really great insight into their current business and details on what Move is working on with Microsoft. There are some really interesting things that Move is thinking about in terms of where content delivery is going, how to scale it and what the broadcasters are going to require. We should see some very interesting announcements from Move later in the year.
Cruising some websites on Sunday I noticed that Limelight Networks launched a new website over the weekend. The new site contains a lot of video and has a lot more defined message around Limelight’s core product offerings as well as their new slogan "deliver brilliance". The biggest piece of new content is the focus Limelight is placing on the ecosystem. A new section on their site talks to all of their partners for web development, transcoding, content management, ad insertion and various other solutions in the stack.
I’ve mentioned before that to me, Limelight was not previously doing a good job of really letting customers and the market know that they deliver more than just video. The new website address this by giving details on the types of content they deliver and how it applies to specific business problems for specific verticals. They also talk a lot more to object delivery, website acceleration, document distribution, online software fulfillment and online game distribution.
Additionally, Limelight has added new verticals on their site including corporate (enterprise) and government. Previously, Limelight had only focused on the media and entertainment market so the addition of enterprise and government is a new focus and potentially a new revenue stream for the company, if they can show some traction with customers in those new industries. It will be interesting to hear if Limelight has newly dedicated account managers to focus solely on government business, a segment of the market that Akamai has ruled to date, and whether or not Limelight is currently or will soon be a certified GSA vendor.
It’s good to see Limelight begin to deliver a lot more messaging to the industry and I expect they will soon follow this up with specific messaging and new data for Wall Street. They know it is desperately needed and I expect they will address the need shortly. With most of the trial motions expected to be over within the next few weeks, I think we’ll begin to hear a lot more from the company in regards to customers and product announcements. In addition, it makes the acquisition talks that are talking place more relevant since some of the questions around Limelight’s appeal will be clearer. While I’d still like to see Level 3 make the acquisition, if Limelight gets acquired at all it’s going to come from a telco like AT&T or BT. I’d be willing to bet anyone a steak dinner it won’t be Akamai or Microsoft.
Disclaimer: Content delivery networks Limelight, Akamai, Internap, Level 3, EdgeCast, Ignite Technologies and NaviSite have all sponsored the blog or are current sponsors.
I originally wrote this article last month which appeared on the GigaOm.com website.
Over the past few weeks, an ongoing patent dispute has meant most of the focus in the content delivery market has been on Akamai and Limelight. In the meantime, however, Level 3 has been quietly expanding its CDN services, adding capacity to its network and signing up one large customer after another. In fact, when it comes to CDN patents, Level 3 is the one to watch. In addition to the 50 patents pertaining to content delivery it has pending, Level 3 owns over 80 patents pertaining to content delivery and streaming media technology — including 20 it recently bought from IBM.
Level 3 and IBM last month said they’d signed a long-term patent cross-licensing deal whereby Level 3 gets licenses to 42,000 pending and issued patents from IBM and IBM gets licenses for more than 850 pending and issues patents from Level 3. What was not disclosed was that Level 3 also purchased 20 patents pertaining specifically to content delivery and streaming technology.
I’m about to put the finishing touches on a story detailing why Level 3 is not affected by Akamai’s 703 patent, so I’ve been doing a lot of research on CDN patents lately. Sifting through prior court rulings and patent filings, I noticed that the USPTO web site lists IBM as the owner of 20 patents pertaining to CDN and streaming. It also claims they’re in the process of being transferred over to Level 3. I contacted Level 3 and they confirmed this was indeed true.
Most of the patents date back to ‘97 or ‘98 and concern the way video, multimedia or digital content is delivered. Some of the patents have to do with encoding and processing, encryption, load balancing and methods for caching. There are also numerous references peppered throughout the patents regarding the best methods for routing traffic, how the media servers load balance the traffic and the effect that has on the end user experience.
While I still need to read the fine print of all 20 patents before I will truly understand the effect they may have on others in the industry, it’s already clear that Akamai isn’t the CDN its competitors should be worried about. Level 3 when they entered the market made no bones about the fact that for them or any other 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. And with the acquisition of the SAVVIS assets — including the Sandpiper patent, which predates Akamai’s 703 patent — Level 3 is clearly in the driver’s seat.
Level 3 seems to be taking the same tactic as Akamai, to date filing suit against the only company they view as a competitor — also Limelight. And while some of the other existing CDNs could one day become competitors too, right now none of them are turning in more than 20 percent of Limelight’s total 2007 U.S. revenue. There is a huge revenue gap between the No. 2 CDN, Limelight (Akamai is No. 1), and No. 3. That gap needs to shrink and these smaller players need to start posting CDN-based revenue to the tune of $50 million a year before they will become worthy of concern.
Some don’t give Level 3 a chance. They say Level 3 has too much debt, is having problems integrating some of its acquisitions, or simply maintain that since it’s a telco, it won’t understand content delivery, anyway. But looking past the debt (which most companies have), and the mistakes other telcos made in the past (Qwest and MCI tried and failed to operate their own CDNs), Level 3 has a real shot at dominating the content delivery market for years to come. And given their massive portfolio of content delivery patents, if I was another CDN whose goal it was to give Limelight a run for their money, I’d be most worried about Level 3.
The numbers of the patents being transferred to Level 3 are: 5996025, 6189039, 6195680, 6226618, 6263313, 6272566, 6398245, 6418421, 6460082, 6463454, 6463508, 6587837, 6763377, 6859791, 6963910, 7103564, 7110984, 7117259, 7188085 and 7206748.
With all the talk of online video advertising and the projections people are making, one of the biggest downsides to it is that just about every independent content producer thinks they should be making money. But the reality it, most of them are not making any money today and never will, even year’s from now when there are more eyeballs online.
Monetization is now the word that seems to be used in every discussion and in every article, yet rarely do we hear or read about any content producers who are making money from their content. We know of the success that some major broadcasters and those with very unique brands and content like MLB are having, but aside from those, there are very few content creators making any money.
One of the biggest reasons for this is that much of the content on the web today stinks. Not all content, but much of it is really bad, poorly produced and quite frankly, will never make any money no matter how much this industry grows. Content creators think that just because they can create content it must be worth something. When I speak to content creators I use the analogy of TV content. Lots and lots of shows are produced for TV yet many never make it. Only a small fraction of content on TV lasts and makes the networks any money. Now I know many will say that does not apply since the costs for TV style production is so much different than content produced for online, but the principle is still the same. Not all content is something people want to watch, let alone pay for.
Having a discussion with a content producer earlier in the week they said, “Media reviews of our site and customer feedback is very positive. Everyone thinks the idea is wonderful and they love the quality of the videos. We give website visitors two free views of the videos of their choice and then prompt them to sign up for a subscription. However, when it comes time to haul out the credit card to purchase a subscription the enthusiasm wanes.”
The questions we need to be addressing are is the subscription-based approach working for anyone, or is sponsorship/ad-supported the only potential option for generating a reasonable ROI? Is the ad-supported model generating revenue for small
producers who don’t have tens of thousands of viewers per month? Does this revenue amount to anything more than pocket change? Must the small producer partner with a platform provider, e.g., Brightcove, in order to have a chance of success, or is it feasible to “roll your own” website realizing that most small players don’t have ad sales staffs and experience in selling ads?
In the long run, the small content producer is still going to struggle to make any money from their content. Viral marketing, syndication and other forms of promotion can help, but not for the majority of those making video. Putting all of the business models aside I still think the biggest problem facing the industry is that there is not enough quality content on the web today.
The comments section is open and I’m sure many have their own take on the subject, so feel free to get the conversation going.
Over the next six weeks leading up to the Streaming Media East show in May I will be highlighting some of the speakers and sessions we have confirmed for the show. This year we have a lot of content producers, aggregators, new independent content studios and lots and lots of content demos.
One of the sessions I am personally interested in seeing is entitled "Monetizing And Aggregating Niche Video Content". The bottom line is that content creation is important but if the content is not promoted and does not generate revenue of some kind then this whole business model is broken. This session will show examples of ways to develop niche vertical sites without having to hire tons of new personnel and will discuss how to reach audiences on social networking sites like Facebook and others. Confirmed presenters are:
Six years since we took over the StreamingMedia.com business and we’ve still managed to keep the conference very affordable for everyone to attend. Registering before April 25th gets you a full two-day conference ticket for only $795.
Today, Adobe announced the immediate availability of version 1.0 of their new Adobe Media Player specifically for content owners looking to make Flash video content playable offline. For Adobe, this is a major move to finally take the Flash video platform offline to allow viewers to consume downloadable Flash based content. As usual with an announcement like this, Adobe also announced a bunch of broadcasters and major content publishers including CBS, MTV Networks, PBS, CondeNet, and Scripps Networks amongst others.
One of the biggest things that Adobe is promoting about the new player is the ability for you to be able search within the player for free content you can to subscribe to and the new features for monetization and branding options. Content owners now have the ability to take downloadable Flash content and include offline advertising, customize the look of the player and collect measurement data of offline content consumption.
I just downloaded the player and have begun to check out some of the content available and so far, the player works as advertised. The one thing I have noticed however is that the quality of the videos are not what I expected. Many of them seem to be encoded at low a low bitrate with a small window size. Since they are not encoded with the same specs it makes the experience very inconsistent in terms of the quality. Not sure if this is the case just because it launched or not but I would think Adobe would want to set some quality standards that content owners would be forced to follow.
Adobe also announced the launch of a new portal called Adobe TV that provides instructional videos for many of the Adobe line of products and contains over 200 videos.