A few weeks ago, I posted on the topic of content delivery providers with a post entitled "Comprehensive List Of Stream Hosting Providers". I put an asterisk next to Level 3 as I had not heard much from them as to where they stand in the CDN market since their acquisition of the SAVVIS CDN assets about four months ago.
This week I got an opportunity to speak to Level 3 at length and got an overview of what they plan on doing with regards to their content delivery product offering. As anyone who follows this industry knows, it's a good time to get into the content delivery market due to the high demand for delivery services and the fact that there are only about half a dozen providers or less who truly provide global delivery via streaming and progressive download.
After hearing Level 3 give their take on the what they want to accomplish, they are an interesting one to watch for a few reasons and should have a few unique advantages when they bring their product to market:
- They own and operate their own network and data centers. I know this model well from my days at Globix where we owned and operated our own network and data centers and use to sell to customers that "we can control your content from creation to distribution". It's a different value proposition and one that resonated well with our customers at the time and I expect still does with many content creators today.
- They own the Vyvx business which allows them to be able to ingest content directly into the Level 3 network. Add a few encoding studios, and customers have the ability to ingest, encode, host and deliver their content through one provider. That's something that no other delivery network has the ability to offer today.
- They have contracts with many of the big media companies already for other services like data and networking that gives them an immediate sales pipeline for a content delivery offering or any new product for that matter. In addition, they can provide customers with the build out of smaller networks for some of the content creators who are building out their own private delivery networks.
That's not to say they can do all of this tomorrow or that they will automatically be successful, but I think they have a good shot at being a serious player in the industry if they put the right pieces in place and move fast enough. They are going to have to roll out functionality of the network in phases and I expect they will start to talk about what they have to offer very shortly, if not next week at the Streaming Media East show where they are exhibiting.
When it comes to the CDN business and assets that they bought from SAVVIS, the only real value there was the assets for the delivery of static content, not video. Anyone who knew the SAVVIS streaming network knows how old and outdated it was since it was mostly the legacy infrastructure from the Cable & Wireless days which is who SAVVIS acquired it from. So Level 3 has a lot of work to do building out basically a new CDN for streaming as well as adding all of the services that goes along with it like reporting, storage, content ingestion etc.... not to mention all of the internal work that needs to be done to sell and support such a service. But done correctly, with all of the right pieces, it will be a valuable offering in the market.
While it won't put the other content delivery networks out of business (there is enough business out there for everyone) they do have the opportunity to be a serious player in the game with an offering that talks to more than just the delivery of bits. For the most part, it's a different kind of offering where they can sell the service to full-fill more of an entire ecosystem need to content creators, as opposed to just selling the delivery aspect. This is a trend we are seeing all of the CDNs move to as they begin to add more services to their offering like content management and transcoding.
In my opinion, the biggest competitor to Level 3 will be themselves. Many big companies never really get a product off the ground to mass market adoption because they move too slowly, have too much internal politics and red tape and take too long to decide on anything. For the most part, the smaller content delivery networks have been able to grab market share by staying quick and nimble. If Level 3 can combine the advantages of being a big company with the ability to move fast like a small company, then this can be the real deal. We'll be watching.
Limelight Networks has started its roadshow this week and investors have started calling asking for details on the content delivery market as a whole and what the competitive landscape looks like. Limelight has also set its proposed IPO terms and will be offering 14.4 million shares between $10-$12 a share. It plans to trade on the Nasdaq under the symbol LLNW.
