Akamai: Q3 video traffic grows 40% due to OTT linear/live content demand

Akamai's Broadcast Operations Control Center
Akamai said that revenue growth was solid across most of its business due to the higher-than-expected uptick in Media Division traffic and continued strong growth in our Cloud Security Solutions.

Akamai is clearly reaping the rewards from its broadcast customers broadening their OTT video offerings, with traffic growing over 40% during the third quarter.

Frank Thomson Leighton, CEO of Akamai, told investors during the earnings call that traffic growth was driven by increasing demand from OTT linear/live content.  

“Year-over-year traffic growth on the Akamai platform accelerated in Q3 to the highest levels that we've seen in two years,” Thomson Leigthon said during the earnings call, according to a Seeking Alpha transcript. “In fact, Akamai's traffic grew faster than the 24% year-over-year growth rate that Cisco estimates for the internet overall; and our video traffic grew at nearly double that rate.”

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RELATED: Akamai, Limelight report varying second-quarter traffic patterns

However compelling the traffic growth was, Akamai reported revenue declines in its Media Division and Media Deliver Solutions segments. Media Division revenues came in at $273 million, down 1% year-over-year but up 3% sequentially, excluding the impact of the large internet platform customers. Likewise, Media Delivery revenues declined 3% year-over-year, but up 2% sequentially.

“This growth rate is an improvement over Q2 levels, driven by traffic acceleration throughout the quarter,” said James Benson, CFO of Akamai.

The company continues to test the boundaries of how much traffic it can support on its network. Akamai supported a single media event that drove over 17 Tbps in traffic, for example. During that day, Akamai delivered 60 Tbps overall on its platform.

Thomson Leigthon said that the traffic it supported at that media event set “a new record for our business.”

But the company is not resting on its laurels.

To improve the video service experience for its content customers and viewers, Akamai introduced a new media client software that draws content from multiple sources to produce an optimal viewing experience for end users, while also providing cost advantages for customers at its recent customer conference.

“The idea that we can do live and linear broadcast ahead of satellite is a pretty big change over what is otherwise available with OTT streaming typically being 10 seconds to 90 seconds behind the satellite broadcast,” Thomson Leighton said. “The new capabilities from the client side software to be able to take sources of the content—multiple sources, integrate that and provide a seamless viewing experience for the user and at a lower cost point for our customers is important.”

The company says future growth in its Media Division will be driven by video.

“There will always be software and gaming delivery, but really the future is the adoption of OTT at real scale,” Thomson Leighton said. “We're really at the beginning of that. And when we see the video traffic growing, that's something that we see as a very positive sign for us.”

From an overall financial perspective, Akamai’s third-quarter revenue was $621 million, up 6% year-over-year.

Akamai said that revenue growth was solid across most of its business due to the higher-than-expected uptick in Media Division traffic and continued strong growth in our Cloud Security Solutions.

Looking forward to the fourth-quarter, Akamai expects to report revenue in the range of $638 million to $656 million. This guidance assumes roughly 1.5 months of revenue from its recent acquisition of Nominum.

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