14 DAY TRIAL // Web services are becoming more and more demanding on Internet connections and, while this has been paralleled with a greater adoption of broadband connections and a lowering in bandwidth costs for users, many companies don't have the resources or the reasons to invest in big data centers to handle the load. This is where content delivery networks (CDNs) like Akamai come in. The largest provider of CDN services is adding another big client on its list with Netflix, which now uses Akamai for the majority of its streaming needs.
Apparently, Akamai was chosen as it was able to offer a major discount on its regular rates for Netflix. The CDN provider will charge Netflix only about one and a half cents per GB of streamed data for the first few months, after which it will go back to the regular pricing of six cents per GB. This aggressive strategy has paid off, as Akamai will now handle over 50 percent of Netflix's traffic. Competitors like Limelight or Level 3, both of which are also employed by Netflix, can't match these rates, pundits say.
Netflix started out more than a decade ago with a, at the time, revolutionary service offering DVD rentals by mail in the US. But the market is changing and streaming services are beginning to become popular. Netflix knows this and, while some of its execs seem to think that DVDs will be around for decades to come, it started bundling a streaming service along with the regular subscription.
This has proven quite popular, as Neflix now says almost half of its subscribers also stream movies. In Q4 2009, 48 percent of its customers streamed a movie up from 41 percent in the previous quarter and 28 percent in Q4 2008.
"Netflix changed the way Americans watch movies when we started sending DVDs in the mail to subscribers in 1999. We're revolutionizing movie watching a second time by instantly streaming movies to Netflix members' TVs and computers via the Internet," Andrew Rendich, head of Netflix operations, said. "We chose Akamai as our primary content delivery network because we need a strong partner to deliver movies instantly and to be able to meet our ever-increasing demand."