Limelight CEO: Self-contained Netflix doesn't threaten content delivery firms

A Netflix (Nasdaq: NFLX) with its own network for streaming movies and TV shows isn't the massive threat to content delivery network providers (CDNs) that some--especially in the markets--have made it out to be.

"To us, the whole Netflix thing is much ado about nothing," Limelight Networks (Nasdaq: LLNW) CEO Jeffrey Lunsford said in a Reuters article. "We've plenty of opportunities to replace their traffic and we are growing other services."

Limelight, like Akamai and Level 3 Communications (NYSE: LVLT), saw its stock shaken and stirred after Netflix revealed that it would use its own network to stream movies and TV shows. The initial market reaction was what made sense for Netflix didn't make sense for its traditional network conduits. Now that thinking is coming around as analysts question how quickly, and how well, Netflix can pull it off.

"This is not Netflix's first effort at bringing CDN capabilities in-house, so there will be questions on credibility," Aaron Schwartz, an analyst with Jefferies & Co., said.

With contracts in place, the traditional CDNs have time to look elsewhere for business that might be even better because, as Lunsford put it, "usually your largest customers are your lowest margin customers."

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