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NBC, Online Media Providers a Boost for Akamai

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The more we see monetization behavior from Internet and data content providers, the more we will see a huge boon for Akamai and other companies of its kind.

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Recent news points to Akamai (AKAM) not standing still, and developing technology to serve very large emerging market opportunities like HDTV to the Internet and large file downloads.

In summary these news releases talk about getting large files and HD content (file sizes of 5-8 GB or larger) to the end-user more quickly and efficiently. AKAM uses many techniques to do this (software optimization), such as file parsing, partial content location uniquely positioned within their network and offering support for the newer video and HD viewing standards. This combined with increasing investment in its hardware platforms (network) gives the company the ability to try and reach its goal... "Akamai's goal is to be able to support 100 Terabits per second of traffic."

Interestingly, the move by NBC (GE) (to ad-supported streaming video) should not be a significant surprise and could be the first of many more such deals. The content providers will try many avenues to monetize their content over the next few years. As they aggressively move to monetize their content they will need support to get this content transferred to computers, handheld devices and IP-enabled TVs. This is very bullish for the bandwidth facilitators.

The danger for the content providers is they will be too aggressive and hurt their own prospects. For example, if Apple (AAPL) is correct and NBC wants to more than double prices it could face some very tough sledding. Heroes is a great series, but there is no way I'm paying $4.99 for a download. Now, ad-supported viewing is another story and I think that will find a very broad audience, as will reasonably priced downloads for purchase.

Bottom line, the more we see this kind of monetization behavior from the content providers, the more we will see a huge boon for Akamai and other companies of its kind.

One thing I've always wondered is why the networks don't resell their sports content. That is a potentially huge market. Imagine a world where you could download the final round of you favorite golfer's last couple of victories. This is just a tip of the iceberg as every sport would have a similar opportunity. You think about this for about three to five minutes and you can think of 20 good revenue streams – and that is from just sports alone.

In the middle of all this is high-speed Internet, content that is "trapped" in a bandwidth constrained world. Akamai is providing solutions to help alleviate all of the above.
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Position in AKAM and AAPL

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