Netflix to Build Its Own Content Network (NFLX, INTC, GOOG, AAPL, AMZN, MSFT, AKAM, LVLT, LLNW)

Telecom & Wireless

Published: June 5, 2012 10:28 am

Yesterday’s announcement from Netflix Inc. (NASDAQ: NFLX) that the company would its own content delivery network (CDN) based on the Open Connect standard. White-box provider Intequus will build the servers which will feature 100 terabytes of disk storage, 10 gigabytes on network throughput, and a Quad Core Sandy Bridge CPU from Intel Corp. (NASDAQ: INTC).

Netflix announced the CDN on its corporate blog and noted that Google Inc. (NASDAQ: GOOG) “has long had its own content delivery network” for the company’s YouTube video service. Netflix joins other major Internet traffic generators like Apple Inc. (NASDAQ: AAPL), Amazon.com Inc. (NASDAQ: AMZN), and Microsoft Corp. (NASDAQ: MSFT) among the few companies with enough traffic to warrant building out a private CDN.

The news has hit other CDN providers hard. Akamai Technologies, Inc. (NASDAQ: AKAM) is down -5% in the first half-hour of trading this morning and Level 3 Communications Inc. (NYSE: LVLT) is down about -1.3%. Limelight Networks Inc. (NASDAQ: LLNW) is the hardest hit, down about -9.3%. Netflix generated 11% of Limelight’s revenues in 2011.

It’s hard to see how a private CDN is going to improve Netflix’s bottom line. Netflix needs to expand its content offerings to keep ahead of Amazon and Hulu and the many other streaming video challengers to the company’s once indomitable position. And content now costs more, which has hurt both the top and bottom lines at Netflix. How a CDN helps with that is not immediately apparent.

Netflix shares are up about 1% this morning at $ 65.59 in a 52-week range of $60.70-$304.79.

Paul Ausick

100 Million Americans Are Missing This Crucial Retirement Tool

The thought of burdening your family with a financial disaster is most Americans’ nightmare. However, recent studies show that over 100 million Americans still don’t have proper life insurance in the event they pass away.

Life insurance can bring peace of mind – ensuring your loved ones are safeguarded against unforeseen expenses and debts. With premiums often lower than expected and a variety of plans tailored to different life stages and health conditions, securing a policy is more accessible than ever.

A quick, no-obligation quote can provide valuable insight into what’s available and what might best suit your family’s needs. Life insurance is a simple step you can take today to help secure peace of mind for your loved ones tomorrow.

Click here to learn how to get a quote in just a few minutes.