Dan Rayburn provides a good overview of the deal and its significance over at the Business of Video. “For content owners, it used to be that the answer to most website performance problems was either to add more hardware, use a CDN, or re-engineer their backend application code,” Rayburn writes. “But for a number of reasons, investing in backend optimization is now providing diminishing returns. Google’s research shows that for many popular sites it’s the front-end that accounts for over 90% of a users wait time. Content delivery networks help to address part of this problem by reducing network latency, but even larger performance gains can be achieved through front-end optimization techniques that streamline the Web page HTML code and resources.”

Earlier this year Dan wrote a deep dive into front-end optimization. For more on the topic, see my 2010 video interview with Joshua Bixby of Strangeloop Networks, another player in this space.

Lucas Oil Stadium in Indianapolis is connected directly to Level 3’s advanced fiber-optic network, giving NBC the ability to acquire and broadcast the game without having to build or manage its own network. In total, more than 3,000 hours of video content will be acquired, encoded and transported across Level 3’s Vyvx VenueNet+ platform for Super Bowl coverage.

In addition to delivering the game, Level 3 will also carry the pre-game and post-game feeds to NFL operations centers in Mt. Laurel, N.J., Culver City, Calif. and NFL Network master control facilities in Atlanta, as well as other broadcast networks and satellite teleport sites for global distribution.

“The Super Bowl is the preeminent sports event in the country, and the fact that Level 3 has delivered the game for nearly a quarter century is a testament to the level of trust the NFL and broadcasters have in us to provide exceptional service,” said Mark Taylor, vice president of Content and Media at Level 3. “We know reliability is crucial when broadcasting live video from a sports venue, which is why we continue to focus on every aspect of our delivery to ensure a flawless viewing experience.”

Level 3’s Vyvx VenueNet+ technology is engineered to provide HD and SD digital video services, and is used in all 31 professional football venues across the country.

“For more than 20 years, Level 3 has provided the critically important broadcast backbone needed to deliver the Super Bowl to viewers around the country,” said Mike Meehan, senior vice president of Sports Network Operations at NBC. “A television event like this, which continues to set viewership records every year, leaves no room for error. Level 3’s Vyvx VenueNet+ service provides us with the performance, reliability and simplicity we need to ensure a successful broadcast.”

 Heard on the Street (Wall Street Journal): You don’t see deals this successful very often. Akamai is buying smaller rival Cotendo for just $268 million, about six times next year’s revenue estimates industry expert Dan Rayburn. Yet Akamai’s market cap jumped as much as $1 billion today on the news. Wall Street is psyched because Akamai’s business has been under assault and this is a quick and simple way to fight back.

Rob Powell (Telecom Ramblings): “Cotendo has been driving innovation at the high end of the CDN marketplace with its integrated web and mobile acceleration services. … For its part, Akamai has been working doggedly to tranform its business into a cloud-based managed services company that also happens to run the largest content delivery network. Commoditization at the lower end of the CDN space had made a move up the food chain a necessity as competition had cut into the company’s growth.  But challenges from the likes of Cotendo at the high end of the market were squeezing things more than a little bit. Acquiring the source of that competition clears things up a bit, and brings in their customer and partner list – especially that big AT&T relationship.”

Dan Rayburn (The Business of Video): “Because AT&T re-sells Cotendo’s technology to run on the AT&T network, AT&T did have right of first refusal to purchase Cotendo. But from what I hear, AT&T never made a serious offer for the company and Akamai wasn’t bidding against anyone else. To me, it’s a bad sign for AT&T that they didn’t step in to acquire Cotendo as it would have shown they are serious about the overall CDN space. … It is expected that AT&T will stop re-selling Cotendo once Akamai acquires them and that AT&T will now default to EdgeCast for some of these same services since EdgeCast’s software is running directly on AT&T’s network.” Rayburn also noted that the deal may not sit well with Cotendo customers who saw it as an alternative to Akamai.

Venture Capital Dispatch:  ”Akamai Technologies’ decision to buy Cotendo is another reminder that patent infringement claims in technology are less a sign that a start-up is engaged in nefarious or shady practices and more a sign that it has made it. Barely a year ago, Akamai filed a patent infringement lawsuit against Cotendo. Now it’s buying the company for $268 million in cash—obviously Akamai sees a business that has more value than just a re-interpretation of its own intellectual property.”

Boston Globe: In the past, an Akamai strategy has been to neutralize competitors by purchasing them, said Melanie Posey, an analyst at IDC Research, headquartered in Framingham. “Cotendo has only been around for a couple of years and has made a big splash in the market.’’ Akamai also had patent suit against Speedera Networks Inc. before buying that Santa Clara, Calif., company for $130 million in 2005. Akamai has bought 10 companies since it was founded in 1998. The latest deal is its second largest since it bought InterVU Inc. in 2000, which was a stock-for-stock transaction estimated at the time to be worth $2.8 billion.

“If Akamai acquires Cotendo it would be a great win for the company on multiple levels,” writes Dan Rayburn at the Business of Video. “Akamai has really fallen behind when it comes to launching new products in the market and is getting beaten by the smaller and more nimble Cotendo. Acquiring Cotendo would be one the best acquisitions for Akamai that they could make as it would allow them to take their number one competitor for non-CDN services out of the market.”

Akamai (AKAM) has often expanded through acquisitions of competitors, including Nine Systems, Netli and Velocitude. Rayburn, who has closely tracked the content delivery market, recently noted that Akamai needs to adapt to changing conditions in the content delivery sector.

Implications for Pricing?

While a deal for Cotendo might help Akamai, Rayburn says it could have implications for the broader market for CDN services. “Akamai would see almost no pricing pressure for their value add services going forward, margins would remain high and they would capture a larger share of the market for value add services,” writes Rayburn. “Of course while all of this would be good for Akamai, it would be bad for the industry and customers as a whole since no other vendor is yet able to compete with Akamai on these services at scale. The outcome would be higher pricing in the market and not a lot of alternatives other than Akamai for customers to use.”

Rob Powell at Telecom Ramblings noted that the rumored pricing could provide a successful exit for Cotendo’s investors. “Funding rounds for the company were just $9M in 2009, $12M in 2010, and $17M in 2011,” Powell writes. “Maybe there were others I don’t know about, but it seems unlikely to change the fact that $300M would be a very attractive return on investment for those early investors. We’ll just have to see if this supposed price holds up.”

Cotendo and Citrix Accelerate.  Cotendo announced the availability of Citrix NetScaler CloudConnector for CDN within the Cotendo Acceleration Cloud. NetScaler CloudConnector for CDN combines Cotendo’s cloud-based acceleration services with Citrix NetScaler to create unique new solutions that seamlessly extend the traditional networking footprint beyond the four walls of the enterprise datacenter to points of presence all over the world – creating a true end-to-end service delivery fabric. “While other vendors have talked about on-site/cloud offerings that benefit both enterprises and content publishers, the hybrid networking solution offered by Cotendo and Citrix provides this capability as a service, not an integration project,” said Melanie Posey, research vice president of hosting and managed network services, IDC. “This hybrid networking solution – available as a seamless end-to-end offering — provides a compelling set of benefits for enterprises and content providers with Internet-facing applications.”

Radware provides ADC for Juniper. Radware (RDWR) announced that it has provided advanced application delivery control (ADC) software for use with the Juniper Networks MX Series 3D Universal Edge Router. With the full integration of the ADC with Juniper’s Junos operating system users can improve their service delivery capabilities while avoiding the cost and complexity of deploying ADC-appliances. The new ADC software is the latest addition to the Service Delivery Gateway (SDG), Juniper Networks’ comprehensive set of advanced applications that are easily added to MX 3D Series Universal Edge Routers. ”Juniper sets the bar in high performance networking and we are proud to partner with a company that shares this common vision,” said Yossi Vardi, Vice President, Business Development, Radware. “The ADC application provides Juniper customers with service optimization, resiliency, and scalability, enabling faster, more efficient service delivery and improved subscriber experiences.”

Nasuni: Global multi-site access. Nausni announced the addition of multi-site access to its Data Continuity Services. Multi-site allows organizations with several locations to work on a single set of shared data. It is a controller architecture that allows multiple storage controllers to have live access to the same volume of snapshots. The new capabilities extend Nasuni’s already strong file-level snapshots to create an industry first:  a controller architecture that allows multiple storage controllers to have live access to the same volume of snapshots. “This could be game changing,” said Terri McClure, Senior Analyst at ESG. “Being able to decouple logical volumes allowing for many controllers to have simultaneous access to the same data set and yet maintain data consistency opens a whole new model for branch office support and disaster recovery. Being able to stream file changes from multiple locations and having those changes automatically consolidated into a single snapshot history makes for a safe, cost effective and practical way to handle data protection and distribution.”

Infineta Pay-as-you-go WAN Optimization: Infineta Systems announced today the availability of its Data Migration Accelerator, a first-of-a-kind, pay-as-you-go WAN optimization service offering built around the company’s flagship Data Mobility Switch (DMS) solution. The DMA service allows enterprises cut migration project times by 80 percent or more, without any additional capital expenditures or long term financial commitments. On the WAN link they are at 10 Gbps rates, while expanding WAN capacity by 5-10X and guaranteeing network capacity for critical inter-data center traffic flows. “Infineta’s DMA service offering is an innovative use of optimization technology. Its ability to accelerate massive data migrations and minimize the time to value for new data centers and equipment should definitely be welcomed by both enterprise IT and storage vendors. Anything to reduce the amount of time, the cost and the risk associated with data migrations between data centers is a good thing,” commented Bob Laliberte, senior analyst at Enterprise Strategy Group (ESG). “This is a smart move by Infineta to leverage its technology as a service offering and will help to introduce its capabilities to a much broader audience.” The DMA service is available immediately and is offered as a 3-month initial rental.

“The speed and quality with which our content is delivered to our gamers can make or break a game, and as we look to expand the reach of World of Tanks, the ability to quickly meet customer demand is crucial for our continued success,” said Victor Kislyi, chief executive officer at Wargaming.net.

CDN Handles Upgrade Traffic

The expanded relationship comes after Level 3’s successful delivery of a major content upgrade within World of Tanks in which the company’s content delivery network (CDN) rapidly scaled to handle a flash peak of nearly 70 Gbps of caching capacity.

“We understand gamers increasingly demand richer content, live and on-demand streams and low latency, even during peak traffic, and we’ve designed our services with those factors in mind,” said James Heard, president of European Markets for Level 3.

New Service for Gaming Companies

It is for this reason that Level 3 introduced Bandwidth Optimizer – a service which combines a global High Speed IP transit network the company’s content delivery network platform to optimize bandwidth efficiency.  The service offers access to both HSIP transit and CDN services interchangeably which will reduce risk of service delays during game launches and updates.

“We have worked on a number of game launches and patches, and know how much speed and reliability can dictate the success of a customer’s product,” said Mark Taylor, vice president of Content and Media at Level 3.  ”Our new Bandwidth Optimizer solution was built to address industry needs, and allows game developers and publishers to spend more time focusing on creating the best gaming experiences possible.”

For more information Level 3’s Wargaming.net services, see Wargaming.net Selects Level 3 to Support Expansion.
For more on Level 3’s Bandwidth Optimizer, visit Level 3 Introduces Bandwidth Solution.

“While I’ve heard that both AT&T and Microsoft have passed at acquiring Limelight, the bigger news I have confirmed is that Level 3 and Limelight have been in discussions for a few weeks now about joining forces and combining their CDN assets as a joint venture,” Dan writes. “If a deal between Limelight and Level 3 gets done, it’s going to have a lot of impact on the content delivery market overall. Such a combined offering would also give telcos and carriers a run for their money and might also convince a few of them not to spend money to try and build out their own CDN. While it’s too early to know all the ramifications of such a deal, it would drastically change the CDN landscape.”

Read Dan’s full account and analysis over at the Streaming Media blog.

As expected, Limelight (LLNW) says it “does not comment on rumors or speculation.” Rayburn says that it’s possible Limelight is raising a new round of funding. “While it’s not unreasonable to think the company could raise another round, my bet is on Limelight getting acquired,” Dan writes, citing Verizon, AT&T and Microsoft as the most likely acquirers. Check out Dan’s full story at StreamingMedia.com.

Meanwhile, Rob Powell at Telecom Ramblings looks at the list of potential acquirers.

Last week Dan Rayburn from StreamingMedia.com had several important stories about the evolution of the content delivery market and the relationship between telecom companies and network operators.

First, Dan reported that telcos and carriers are in discussions to combine their CDN operations to create a federated content delivery network called the Open Carrier Exchange (OCX).

Carriers Covet Control

“While this idea has been circulating in the market for many years, with little to show for it, carriers now appear to be more serious about the idea,” Rayburn writes. “The idea of the OCX is for carriers and telcos to share ideas, come up with some CDN standards and allow one another to connect their CDN networks, in a yet to be determined fashion. As we heard from carriers and telcos directly at last month’s Content Delivery Summit, they now want to compete with traditional CDNs and take control of delivering video across their own network.”

Dan also takes a look at Akamai’s response to competition from the telco sector: a licensed CDN offering that will allow telcos and ISPs to license Akamai’s software to build their delivery networks. The move is largely seen as a defensive strategy for Akamai as  more carriers turn to a build-your-own approach.

Challenges Face Akamai LCDN

But it may not be an easy market to crack. Rayburn takes a comprehensive look at the challenges and opportunities facing a  licensed CDN offering from Akamai. One stumbling block may be cultural.

“I have spoken to many Akamai customers that feel the company’s service operates too much as a black box and that customers have very little transparency into how Akamai’s network actually works,” Rayburn writes. “So if Akamai really wants to play in the telco CDN space, they are going to have to participate in the telco RFI/RFP process, and respond in detail on their capabilities, processes, roadmap and the like. In addition, they are going to have to allow the telco to deploy, operate, maintain, and report on the inner workings of the CDN, because it will be their product. This is not something Akamai is accustomed to culturally, and will represent a significant shift in their actions if the want to sell into the telco space.”

“More and more businesses are relying on video, pictures and animation to get consumers excited about their products and services,” said Sam Farraj, Assistant Vice President of AT&T Digital Media Solutions, AT&T Business Solutions. “Our CDN technology not only delivers videos and other attention grabbers at ‘lightning like’ speed, but it delivers them efficiently and at low cost.”

Streaming Media’s Dan Rayburn explains that the AT&T cloud-based CDN is based off of technology from Cotendo and EdgeCast. Dan also has a very detailed look into Cotendo and exactly what a mobile acceleration service is. Cotendo recently completed a $17 million round of funding and launched their CloudLet Platform, a fully customizable, high-performance and globally distributed cloud application environment.