Could content delivery networks run by rivals like Amazon Web Services threaten Akamai? One analyst thinks so, noting that Comcast (NASDAQ: CMCSA), which moved into the CDN market segment in 2014, plans to triple its CDN capacity next year.
Akamai also competes with the likes of Verizon (NYSE: VZ), Level 3 Communications, Limelight, and other providers, some of whom have been in the CDN game for a while, and others who only recently added a content delivery management component to their owned networks.
Content delivery networks, of course, help speed online video delivery to users by managing how the video is delivered over various network paths. Akamai was a pioneer in CDN tech in the late 1990s. However, other providers have added CDN components of their own -- to improve the reliability of content delivery, have more control over that delivery, and save a bit of money, not to mention the opportunity to compete with established CDN providers.
As a result, Akamai and other providers have seen CDN pricing pressures increase over the past few years.
"A key takeaway was that the competitive landscape remains intense, as Comcast looks to triple its CDN capacity next year," Goldman Sachs analyst Heather Bellini said in a note to investors the day after attending the Content Delivery Summit in New York. Bellini maintained Akamai's rating at "sell" following the conference.
Amazon is also investing more into its Cloudfront CDN, shifting delivery of its own video content to the Cloudfront network, she noted. At the summit, Streaming Media VP and analyst Dan Rayburn estimated that the cloud services giant will see $1.8 billion in revenue, specific to Cloudfront, in 2016.
Akamai is not unaware of the continuing competition, however. The provider has been branching into other product and service offerings for the past few years, with the most recent being the launch of its new Broadcast Operations Control Center, a facility at its Cambridge, Massachusetts headquarters that monitors online video delivery across the network.
- see this Investors Business Daily article
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Updated May 15 to clarify Amazon revenue estimate and sources.