Akamai Technologies Inc. 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 percent 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 US$30 million annually.
Rob Batchelder, an analyst with Gartner Inc., 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."
The company also stresses, however, that streaming remains core to its 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.
Akamai says it is focusing its streaming efforts on the enterprise market, which has proved to be more profitable. The company currently has several enterprise streaming customers, including Schwab, John Hancock, Unisys Corp. and SAP AG.
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 percent currently stream video and 71 percent stream audio. Next year, 97 percent of respondents planned to stream video and 88 percent planned to stream audio, the study found.