Yesterday morning, Brightcove and Akamai (AKAM) announced an alliance to work together giving Brightcove another CDN besides Limelight (LLNW) to deliver traffic over, and giving Akamai customers the ability to use Brightcove's video platform service. Unfortunately, when the deal was announced, instead of fellow bloggers being interested in getting the story accurate, many of them stated that Brightcove was leaving Limelight for Akamai, which is not accurate.
This morning, when I spoke to the companies involved in the deal (Brightcove and Limelight), one of them mentioned that not a single blogger who had published a post about the announcement had even spoken to them or asked to verify any details of the deal. So you have half a dozen posts about the deal with not a single one of those reporters even talking to the companies involved Limelight or Brightcove about Limelight losing traffic. I'm not going to call out the bloggers by name, they know who they are, but that's a really poor job on their part. The business of blogging now seems to be who can get the story up first, or who can write for the best headline as opposed to who can get the story right. (see: The Business Of Blogging Is Ruining The Medium)
Brightcove is not taking their customers off of the Limelight network and moving them to Akamai. In fact, Brightcove has written that they are "adding Akamai on an non-exclusive basis" in addition to Limelight. The deal allows Brightcove to work with the number one and number two CDNs in the market, which will enable Brightcove to further grow their business. In a call with Brightcove Wednesday morning, the company explained to me that they wanted to work with both CDNs to leverage the strengths of each network in specific geographic regions. Brightcove commented that they do see a difference between the Akamai and Limelight networks in certain regions of the world and that working with each company allows them to offer the best solution to the market in that region.
In addition, while I didn't raise this subject with Brightcove in my call with them, if the company is truly gearing up to go public sometime soon like we expect, you can't have all your eggs in one basket and be tied to one CDN. Having an agreement in place with the number one and number two CDNs in the market is something Brightcove would have to have in place to be able to show diversity. It's a smart deal for them on multiple fronts and one that really should not come as a surprise to anyone.
For those that wonder what the price difference is for Brigthcove between Akamai and Limelight, I can't say. But Brightcove did go on record to say that they are, "not charging a premium for Akamai services" and that their rate card won't change due to the Akamai relationship. Akamai won't be reselling Brightcove's service, but rather will be bringing Brightcove into deals when customers need the Brightcove solution and will then allow Brightcove to sell direct to the customer. This is quite different from many of the other deals Akamai has announced with OVPs where they are directly reselling their solution. In those cases, like with Ooyala, those deals are exclusive with Akamai, where as the deal with Brightcove is non-exclusive.
If Brightcove was moving all of their traffic from Limelight to Akamai, anyone who covers the space closely enough would know that a transition like that would have a negative impact on Limelight's earnings. Yet last week, Limelight said on their earnings call that they expect their CDN revenue would grow 15% quarter over quarter in Q3 and Q4. That's some very good growth projections for them, which would not be possible if they had just lost a big customer like Brightcove like some are implying.
There were also some assumptions by bloggers that Limelight's acquisition of Delve Networks was the driving force behind Brigthcove wanting to work with Akamai, implying that Limelight was now going to compete with Brightcove. For starters, the Delve Networks solution is more focused on enterprise than anything else and even Brigthcove said, "we did not see them in very many deals at all, simply because they were a small player with limited resources." Not to mention, on Limelight's earnings call last week, Limelight's CEO made reference to having spoken to Brightcove's CEO about the Delve purchase before it happened, so it's not like Brightcove didn't know about the deal. Also, let's not forget that Akamai has its own OVP in house already, the Stream OS platform which they acquired from the Nine Systems acquisition. So if Brightcove was so worried about Limelight having the Delve OVP in-house, they would have the same issue at Akamai who has the Stream OS platform in-house.
This deal is very straight-forward. Brightcove wants to have more flexibility to work with multiple CDNs, not to mention increase their revenue, and Akamai wants to be able to offer their customers the services Brightcove offers. Akamai has been wanting to work with Brightcove for some time and their sales reps have constantly told me that they hated not being able to sell the Brightcove solution like Limelight sales reps have had. Akamai's in-house Stream OS platform has never materialized like the company expected and working with Brightcove is a natural fit for them to offer a better solution than they have in-house.
This deal is not complex or hard to understand and does not contain a lot of the drama that some bloggers are implying. It's a smart move for both Brightcove and Akamai and one that should bring value to both companies.
Updated: Akamai customers have always been able to use Brightcove with their Akamai account. When I said it "gives Akamai customers the ability to use Brightcove's video platform service," I made it sound as if this was a new feature when it isn't.
Disclosure: No positions