Limelight Networks (Nasdaq: LLNW), one of the earliest and most prominent players in the content delivery network space (CDN) and a frequent acquirer of other companies, reportedly has been talking to CDN-focused network operator Level 3 Communications (Nasdaq: LVLT) about forming some kind of CDN joint venture, according to Frost & Sullivan analyst Dan Rayburn at the blog, StreamingMedia.com.
Rayburn says that AT&T (NYSE: T) and Microsoft (Nasdaq: MSFT) may have already passed on the opportunity to acquire Limelight, which along with Akamai was one of the early dedicated CDN players (as opposed to a carrier dabbling in the market as sideline, as Level 3, AT&T, Verizon Communications (NYSE: VZ) and others have been doing in recent years.)
Limelight has run into trouble of late. The company reported quarterly earnings last week, missing analyst expectations as it admitted that its net loss ballooned from $2.3 million to $13.9 million. Its stock price subsequently was hit hard. The earnings disappointment came after Limelight had been busy earlier this year making acquisitions of companies such as AcceloWeb and Clickability.
The CDN market has become increasingly crowded in the last few years with the entry of telcos and other companies, and while some consolidation may be welcome, the ongoing explosion of video content and applications to many different devices suggests the sector will continue to be rich with opportunities. Frost & Sullivan has said the video CDN market will have a compound annual growth rate of 28 percent from 2012 to 2015, with the total market hitting $1 billion in 2012.
Rayburn said it is unclear how a potential joint venture between Level 3 and Limelight would be structured.
- read this StreamingMedia post
Level 3 has been pretty successful in the CDN market
The CDN market was flooded with new entrants in 2009