The success of Verizon's (NYSE: VZ) online video streaming partnership with Redbox still remains to be seen, but it is likely not the biggest OTT play in the carrier's book. Verizon, along with other major ISPs like Comcast (NASDAQ: CMCSA), may be looking to challenge content delivery network providers like Akamai.
According to The Information, Verizon has been "aggressively building" Verizon Digital Media Services, the unit created following its purchase of Edgecast, a CDN provider, and Uplynk, a video transcoding service. Comcast has likewise been building up its CDN service offering.
In a release issued Wednesday, Verizon Digital Media stated that it has expanded into Sao Paulo, Brazil, as well as 20-plus cities worldwide, adding points of presence (PoPs) in Warsaw, Stockholm, Milan, Vienna and Helsinki; Melbourne, Australia; Kaohsiung, Taiwan; and Batam and Jakarta, Indonesia. It also has added POPs in existing cities like London, Madrid, Paris and Amsterdam. The expansion adds to the capabilities of its Edgecast CDN, according to the release.
While the price of content delivery has been steadily dropping, making it practically a commodity service according to The Information's Tom Dotan, the two ISPs may see an opportunity in offering value-added services targeted toward OTT video providers.
It's a strategy that may not only threaten the dominance of Akamai, which pioneered CDN technology, but could further consolidate the power of these telecom giants, the article said.
Akamai, for its part, is continuing to tack on services for its customers. The CDN provider is currently providing online video delivery services of the World Cup to more than 50 rights holders worldwide. That's double the amount of rights holders to which it delivered online video during the Sochi Games earlier this year.
In any case, Verizon and Comcast's strategies are in line with OTT trends, and are at the very least a way to ensure they can stay competitive. A recent Cisco study predicts that by 2018, nearly 80 percent of all Internet traffic will be online video, streaming to about 1.9 billion users.
- The Information has this story
- see this press release
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Article updated June 25 to include new information on Verizon Digital Media's expansion.