Netflix eats bandwidth the way a pack of hungry fifteen years old eats pizza. Indeed, Netflix’s streaming-video entertainment is so popular it now takes up almost a third of peak downstream traffic in North America. So, how do they keep delivering the TV and movie goodies to customers without breaking the bandwidth bank? They’ve decided to do it by starting their own Content Delivery Network (CDN) and their own co-located video data servers at ISPs.
Netflix’s CDN caught the financial markets by surprise. The other big CDNs, like Akamai, Limelight Networks, and Level 3 Communications, were all hammered in the markets. That was rather silly because, as important as video is to us at home wanting to see an old episode of Dr. Who, it was already old news in the CDN world. Besides, as analysts Craig Labovitz and Dan Rayburn have both separately pointed out, mass video content is not a money maker for CDNs any more.