Akamai closes office, offloads streaming preproduction
 
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Akamai is offloading its costly live events streaming business and closing its San Diego office as it strives to control costs and move toward profitability.
The content delivery network (CDN) service provider last month announced it would cut up to 25% of its staff in an effort to rein in expenses. At that time, George Conrades, chairman and CEO of Akamai, said the staff reductions would save the company some $30 million annually.
Rob Batchelder, an analyst with Gartner, suspects a large part of the staff reduction will happen in the San Diego office, where much of Akamai's streaming operations are headquartered. "It's not like they're getting out of the [streaming] business," Batchelder says. "It's just that they need a fraction of [the staff]."
"It's true that the live event streaming business has many high costs, such as signal acquisition, production and encoding. And it is people-intensive," Akamai says. "We have automated many of these functions, and have also outsourced the rest to reseller and fulfillment partners."
Mike Quinn, general manager of enterprise content delivery at Akamai, says the company is basically phasing out its media services group, which handled pre-production and operation work surrounding the creation of live streaming feeds. Going forward, Akamai will use resellers and other partners for pre-production work, he says.
"What is core for Akamai is to have a network available so that [streams] can be delivered," he says. "What is not core to Akamai is doing all the pre-production, signal acquisition, encoding piece."
He stressed, however, that Akamai will still serve live feeds and currently has several media and entertainment streaming customers. The new focus, however, will be more squarely on the enterprise.
Quinn says streaming remains core to Akamai's offerings, both with EdgeSuite, a service that lets companies deliver not only static content but also dynamic content and applications from the network's edge, and through Enterprise Communications, which offers streaming services both inside and outside the firewall. The company currently has several enterprise streaming customers, including Schwab, John Hancock, Unisys and SAP, and has seen an uptick in demand for streaming services such as Webcasts since Sept. 11, Quinn says.
Analysts say the enterprise streaming market, already strong, is expected to grow. Research firm HTRC Group recently interviewed 100 enterprise users about their use of CDN technology and streaming media and found 72% currently stream video and 71% stream audio. Next year, 97% of respondents planned to stream video and 88% planned to stream audio, the study found.
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