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When Disney+ launches in November, one of the unique features of the service is that 100% of their video catalog will be available via download, for offline viewing. As OTT services evolve, more consumers are going to expect content to be available offline as part of the user experience. While Disney+ won’t include adds within their videos, many AVOD providers are looking at how the feature presents a huge revenue opportunity, especially for mobile. Yet, given how new the tech is, there are many questions AVOD providers have about how the technology works and whether or not it can truly integrate into an ad-supported business model.

For the most part, the reason AVOD providers haven’t offered download capabilities in the past (while some SVODs have) is that delivering video advertising offline adds a lot more technical complexities. Most importantly, any ad-based video download feature must include processes to ensure that ads are always able to remain timely and monetized and it’s harder to do measurement and reporting of ad viewership. If a viewer is served an ad past a date when it can be monetized, time is wasted and money is lost. So if a viewer downloads a video, providers have to be certain the ads attached will still be current, even if the viewer doesn’t watch the asset for two weeks. This is crucial because if the initial ads downloaded with a video asset are, for example, promoting a Labor Day sale at a retail store, they will no longer be relevant if the viewer watches after the holiday, and the ad creative is then no longer profitable.

I recently spend a few hours in-person with Penthera to learn how their platform uses dynamic ad insertion, so that after a video is downloaded onto a user’s device, the ads are regularly refreshed in the background (when the user isn’t using the app but is connected to cellular or Wifi) to ensure that ads served are up to date and monetized. The company says video ads are typically monetized if played within 3 to 4 days, on average. Based on the configured refresh window, Penthera receives a notification that tells their platform to update the ad in the background before the monetization expires, typically about 2 days before. This guarantees that downloaded ads are always timely and monetized when attached to a video stream.

Both providers and advertisers need accurate information about who is seeing ads, but tracking viewership becomes more complicated when users aren’t connected to a Wifi or cellular network. Penthera calls its solution agnostic, which means it can plug into existing ad systems such as FreeWheel, Google Ads, and SpotX. Because of this, the downloaded ads have the same targeting capabilities and analytics reports on ad performance as streaming ads. The ad server is still able to provide all the standard insights into the ad performance, and Penthera’s SDK provides additional analytics around when the downloaded content starts or stops, download progress, and whether the downloaded video was watched. This means, by integrating into existing advertising infrastructure, ad-supported video downloads can act as an extension of streaming ad campaigns.

The success of certain digital ad campaigns isn’t only measured in terms of impressions, but also by viewer click-throughs. Naturally, clicking through to an online landing page is impossible when the user isn’t connected to the internet. But Penthera has come up with an interesting work-around for this, so that offline ads can still promote engagement: their SDK is built to track click-heres. This means that, even when offline, a viewer can click on an ad. Later, once they are connected to the internet again, the viewer receives a notification reminding them that they were interested in the ad content, with a link directing them to the appropriate landing page, website, or App Store.

Penthera says their data shows that a large majority of users watch downloaded video while their device is online. This is an interesting insight, as it demonstrates that users are downloading content because they either value the experience they get from offline playback over streaming or they are generally watching content while on cellular networks in order to limit data plan usage. What this means for advertisers, however, is that in the many instances, playing downloaded video with ads functions much the same as if the user was online. The advertising beacons (the network calls that inform the ad networks that an ad was played) can be reported immediately when the impression occurs, just like existing beacons. However, if the user happens to be offline when they play their video, the technology steps in to support the process. Penthera’s SDK catches the beacons and records the exact moment they were triggered. Then, later when the device gets back online (even if the user doesn’t open the video app again), the beacons and the time they were recorded are sent to the advertising platforms to be recorded. Thus, all offline advertising impressions have a chance to be monetized.

In addition to beacon management, you also have to have to manage dynamic offline advertising loads. The value of advertisements typically diminishes rapidly from the point an ad is initially delivered. The ads with the highest value usually have a short validity window before they don’t pay out. An effective offline advertising platform needs to be able to balance the needs of the publisher to delivery high-value ads with the needs of the advertiser to have ads only display when they’re valid. Penthera’s says their solution allows advertisements, delivered via both server-side and client-side insertion methods, to be refreshed and updated over time, without requiring the video to be re-downloaded. They are also considering the ability to download multiple ad loads simultaneously (some with high value, but short expiry, and some with lower value, but longer expiry) to better insure that when the customer wants to play a video, there’s always the ability to include a monetizable ad.

I’ve written before about the importance of download as a feature within OTT services and how it may be a big business opportunity for AVOD providers. But this will only hold true if the technology can work seamlessly with existing apps and ad-based revenue models. From what I’ve learned about Penthera, it appears as though they’ve solved for some of the biggest challenges of taking AVOD offline. Now we just need more OTT services, both AVOD and SVOD, to start including downloads as an option, to enable additional monetization options.

There is an immediate opening for a Solution Architect, Front End Development, with one of the largest public M&E companies in the world($200B+ market cap). They have multiple live/VOD OTT offerings and will coming out with more. I am helping the person you will report to find the right candidate for this job, which is based in NYC (not negotiable) and pays $130k-$150k. This job is not currently listed online. I’ll also add, your boss is someone you would want to work for. I know them on a personal level and they have a very unique background. You would learn a lot from them and be given an opportunity to be amongst some extremely smart individuals. If you are interested in learning who the company is and more about the job, please email me or just give me a call anytime at 917-523-4562. Candidates are being interviewed immediately.

In the second quarter of this year, Dish, Comcast, Spectrum and DIRECTV combined have lost 1.3M pay TV accounts. Add in what Verizon may have lost in Q2, when they report earnings on Thursday, and we could see a number near 1.5M pay TV subscribers lost in Q2. Projections are that combined, the cable TV and satellite companies will lose about 5M pay TV subscribers in 2019.

While no one can debate these numbers, the big disconnect is that live OTT services aren’t seeing a big percentage of cord cutters sign up for their streaming services. This begs the question, where are all these cord cutters going and do consumers really care about live TV anymore, outside of sports and some other specific big events? In the first six months of this year, Sling TV gained 28,000 subscribers. DirecTV Now lost 520,000. We don’t know how many subs YouTube Live, Hulu Live, PlayStation Vue, fuboTV or Philo have, but combined they didn’t gain 2M subs that left pay TV and DirecTV Now in Q2.

As viewers content habits have shifted to an on-demand world over the past few years, one could argue that without sports content, live streaming would be a thing of the past. The Grammy’s, Olympics, news and some other one-off events would still garner interest, but it’s clear that the live OTT services simply aren’t resonating with consumers in large numbers. A big part of that is due to the rising costs of live OTT services and the constant change in channel lineups and packaging. Make no mistake, live OTT is simply the new pay TV bundle. It can be called something else, but in reality it is priced like pay TV, bundled like pay TV, and has more restrictions than pay TV, with a limit on the number of concurrent streams from one account. Many will say the benefit is that OTT services have no contracts, which is true, but some pay TV providers don’t have them anymore either.

That’s not to say live content is dead completely and personally, I love live content because it’s a different type of viewing experience. Twitch and other platforms like ESPN+ are seeing some great growth in consumption, but that content is targeting a very specific user demographic, with specific content, and isn’t hitting the largest swath of the market. Facebook is seeing huge growth in live, but most of that is short-form content. As an industry, the real question we have to ask is, what does the future of live video consumption look like and who’s going to control the market?

At some point, Disney will offer a bundle of their Disney+ service in with Hulu Live. And HBO Max will bundle live content in, or offer some kind of add-on option for live streaming. One could debate if the new streaming aggregators like AT&T and Disney will end up controlling the live viewing experience or if the majority of consumers will still stick with pay TV from traditional cable and satellite providers. We could also see a world where live TV isn’t that important anymore, outside of some specific large-scale live events and sports, with more money being put into original content creation for on-demand viewing. This year alone it’s estimated that more than $10B in being spent on original content creation across all the major SVOD services in the market.

Consumers viewing of live TV has drastically changed and as an industry, we need to re-think the impact that consumers content choices, wallet spend and viewing habits are going to have on live TV, in any form. This is an important topic and one that we’re going to discuss and debate more, with many of the leading OTT providers in the space, at the next Streaming Summit, as part of the NAB Show New York, taking place October 16-17. You can join the debate and register with the discount code of “streaming” to get another $100 off your ticket, and pay only $595, if you register before September 12th.

In June, I completed a survey of 238 customers using on-prem and cloud based security solutions from Akamai, Fastly and Cloudflare. The survey collected data on customer’s deployment architecture, spend per year, preference for bundling security with other cloud/CDN services, pricing changes, transition from on-prem to cloud, and which vendors are being used, amongst other data points. If you are interested in purchasing the full set of data, please contact me for more details.

With the launch of the Disney+ streaming service taking place November 12th, there has been a lot of speculation on Wall Street on what the value of that video traffic might be to Akamai and other CDNs. Two weeks ago, PiperJaffray put out a report saying that by 2024, the Disney+ traffic business “could result in $68M in revenue for Akamai.” And when combined with traffic from Hulu and ESPN+, Disney could be a “>$100M Media customer by 2024.” I’ve been getting so many questions about these numbers that I thought a blog post that details some of the costs and deployment details would be helpful. There are also some statements made in the Piper report that are inaccurate and need correction.

No one, including Disney, knows what the company will spend to deliver Disney+ video traffic five years from now. It’s high-level speculation since we don’t how many subscribers they will have, how many hours each subscriber will watch, what the average bitrate will be across all devices, and what percentage of Disney’s traffic will be served by third-party CDNs. Disney could build their own CDN long before 2024 if they wanted to and they could also work directly with ISPs to cache Disney+ content inside last-mile networks, like many of the large OTT platforms do today.

It is inevitable that at some point Disney will do it themselves, especially since they have the in-house expertise to go DIY and Disney+ content is all on-demand. With the expectations for the success of the Disney+ service, scale and economics will dictate they go DIY. Some OTT providers have suggested that when a service gets to 20M subscribers, that’s the threshold from a size and scale standpoint of when it makes sense to consider building your own CDN. Piper’s report says the probability of Disney building their own CDN is “low” suggesting “it would take >5 yrs for Disney to get full distribution.” Of course, that’s not the case at all and Piper doesn’t understand the costs or time involved in deploying a purpose-built CDN.

One of Piper’s arguments in their note against Disney going DIY is the argument that, “Akamai has been transparent that it would take a new “do-it-yourself” (DIY) service at least five years and over $2B in capex to come close to being able to deliver static content,” but they are taking what Akamai has said out of context. At no time has Akamai suggested it would take Disney $2B to build out their own CDN. That reference Akamai has made in the past is their belief on what it would cost a company to do a DIY offering that would compete with Akamai from a services standpoint, with Akamai’s scale, which of course isn’t what Disney would be building. Disney could build out a CDN for the delivery of Disney+ content for under $100M in initial CAPEX costs. It’s not costly or difficult for Disney to do, especially for VOD content, hence why companies like Blizzard, Apple, Netflix and others have done it.

Disney Streaming Services are like the Special Forces of the video industry and are the best at what they do. They built the first OTT video service in the market 17 years ago with MLB.TV and if they wanted to build their own CDN, they could do it quickly and cost-effectively with a great quality of service. Piper also suggests that [third-party] “CDNs now provide a lower-cost option compared to the pre-DIY wave“, but that’s not what Disney cares about. Cost isn’t their focus, quality is. Disney isn’t looking for “lower cost options”, they want the best user experience they can provide.

Disney will go DIY with their video delivery, the question is when. For Piper to suggest the probability is “low”, that’s a bad bet to take. What Disney’s DIY deployment will look like from an architecture standpoint is unknown, but come 2024, third-party CDNs will not be delivering the majority of Disney+ traffic. It should also be noted that the senior technical team at Disney Streaming Services are behind an open caching initiative via the Streaming Video Alliance and not only helped write the technical spec, but Disney’s CTO for their Streaming Services group sits on the board of the SVA and is the President. There is a reason why Disney Streaming Services are helping to design and push an open caching initiative, because it would help themselves and others in the industry.

When Disney+ launches multiple CDNs will be used to stream and download the on-demand videos. Of all the CDNs, I’m told CenturyLink (formerly Level 3), has the largest percentage of Disney’s traffic as it stands today, based on volume. It’s widely known that Disney Streaming Services and CenturyLink have had a great working relationship for a very long time. Akamai is also one of Disney Streaming Services primary CDNs and I expect when Disney+ launches internationally, Disney will use at least four CDNs including CenturyLink, Akamai, Limelight Networks, and Fastly, with the latter two being critical for Disney’s international launch. I would not be surprised if Disney also uses Fastly’s Media Shield product, which would allow Disney to optimize their multi-CDN deployment across all providers.

What percentage of traffic each CDN will get for Disney+ traffic is unknown, because for Disney, service quality is paramount and they will shape traffic across a multi-CDN strategy based on how CDNs perform, just like they have always done. So traffic share will shift amongst CDNs based on performance, potentially as often as each day. The PiperJaffray report says that Akamai’s management team expects to receive the “lion’s share” of Disney+ traffic, however their report doesn’t quote an Akamai person by name and it contradicts what I’ve been told directly. I have personally heard Akamai say they will work hard to try and get as much of Disney’s traffic as possible, but at no time have they implied or suggested that they “expect” to get the “lion’s share”. If Piper is going to quote Akamai on that, I suggest they give attribution, otherwise it’s hearsay.

With all that said, let’s look at the numbers in the PiperJaffray report and break those down based on the estimates they used. Disney has said they expect between 60M-90M subscribers for Disney+ in five years. The report also suggests users will watch two hours of video per day and that by 2024, 9% of the traffic will be in SD, 61% in HD, and 30% UHD. Based on that blend and hours of viewing, PiperJaffray expects each user to consume 2.4Tbps per year, or 200GB per month. But nowhere in the report does it say what bitrates they used to come up with the total bits delivered number or what percentage will be on a smaller screen. The bitrate for HD on an iPad versus a TV is very different in size so just saying 61% of viewing in HD isn’t detailed enough. They do say that “HD and UHD generate ~3.6x and ~8.4x more bytes compared to SD”, but they don’t break out what bitrates they are comparing that to. 3.6x more than what?

But using their numbers and the average bitrate per SD, HD and UHD, that most would default to in the market today, (SD 800Kbps, HD 4Mbps, UHD 12Mbps) the total number of bits delivered would equal 158GB per month, or 1.9TB per user, per year. That’s 20% fewer bits than they suggest. And on top of the lower number, videos delivered to mobile typically take up 70-75% fewer bits than to a TV screen. So you have to factor in the percentage of hours each month that a user will watch on a mobile device, something the Piper reports doesn’t include.

Even if you estimate that only 10% of total viewing time per user, per month, is on mobile, that drops the total number of GBs delivered per month to 120GB, per user. That’s 40% fewer bits than the Piper report suggests. And that’s without factoring in the possibility that five years from now, Disney+ content could be encoded using Av1, which could reduce the current number of bits delivered by at least 30% or more.

On the pricing front, the Piper report is way off on what Disney would pay on per GB delivered model. The report says, “we believe in today’s pricing world, Akamai would be charging ~$0.006 globally per GB per month to deliver this volume of traffic.” That number is too high. The report goes on to say that, “Given typical annual pricing contraction in the space is 20-30%, our base case assumes Akamai would be charging $0.0011 globally on average per GB per month in 2024. Our downside and upside cases imply 30% and 20% annual pricing declines, resulting in $0.0007 and $0.0016 per GB per month, respectively.” This is way off. Piper is using incorrect numbers to make their estimates both on total GB delivered per month, per user, and the cost per GB Disney would pay today, and five years from now.

Based on Piper’s numbers, they say Disney would spend $196M in total in 2024, to deliver Disney+ traffic to 75M subscribers and that Akamai would get 35% of that traffic, making the business worth $68M in revenue to Akamai in 2024. There’s also an odd reference in the report to Akamai’s pricing saying that Akamai is “charging ~$0.006 globally per GB per month to deliver this volume of traffic“, saying that pricing “would represent an over 80% discount to what lower-quality competitors are offering at scale today.” Akamai isn’t at an 80% discount on any of their services and Piper doesn’t define what they mean when they say “lower-quality competitor“? There is also another instance where Piper says, “with Akamai expected to receive the “lion’s share” [of Disney+ traffic] (not necessarily the majority share.)” Lion’s share means, the largest part of something and majority share means, the greater part, or more than half, of the total. So how is the lion’s share not the majority share?

The Piper report also makes multiple references to Netflix trying to compare pricing to their delivery before they went DIY, which is simply incorrect. In one instance they say, “When Netflix chose Akamai to deliver its streaming traffic in 2010, IHS reported that for the first few months, Akamai would charge Netflix $0.015 per GB per month. After the promotional period, the price would increase to $0.06 per GB per month.” In 2009 I wrote a detailed blog post on Netflix’s cost to stream their videos and the average price point from third-party CDNs was $0.03, or half of what Piper suggests. [Detailing Netflix’s Streaming Costs: Average Movie Costs Five Cents To Deliver] The average bitrate in 2010 wasn’t anything near what it is today, nine years later. Piper is using data that can’t be correlated or compared to today’s market conditions in any capacity.

The report also brings Disney property Hulu into the mix saying, Hulu could be a ~$33M customer for Akamai by 2024. All-in, Disney’s properties of Disney+, Hulu, and ESPN+ could result in Disney being a well-over $100M Media customer by 2024.” But nowhere do they break out how they come up with the $33M revenue figure, especially considering some of Hulu’s traffic is live, which has very different pricing methodology behind it and very different data consumption.

Piper also suggests that, “one trend we could see over the next few years is the shift of Akamai’s Media business for OTT and online gaming specifically shift towards subscriber-based pricing.” Their rational for that is that cloud and email security companies have historically been successful with this pricing model. What does email security have to do with OTT video delivery? Beats me, but OTT providers are not going to move to a per-user pricing model for purchasing video delivery from third-party CDNs as they won’t want to pay for something a user might not use. It’s not an efficient model at all for SVOD OTT providers.

So what is the value of Disney+ video delivery to third-party CDNs in 2024? No one knows since we don’t have enough details on the service. But looking at real numbers like average viewing hours per month, a realistic split of viewing on mobile versus large screens and the fact that the traffic will be split out amongst multiple providers, in different regions of the world, we can take a more realistic guess at the numbers for next year. Based on 15M subscribers, with 30% of viewing on mobile, and 60 hours of viewing a month, with 10% of usage being in UHD (all of which are high estimates for viewing and UHD split) the total spend for Disney in 2020, to deliver just the video bits to 15M Disney+ subs, would be about $4M in total. [90GB per month, per user, at $0.0025 per GB delivered] This is per month, so $24M for the year.

Added July 7th: It will take Disney time to ramp to 15M subs by the end of 2020. Since they won’t have that, I don’t think, by January 2020, their monthly spend would not be $4M a month right off the bat, hence why it’s not $4M x 12 months. So you have to take into account the scaling to 15M subs, which is what the $4M a month number is based off of.

Note that the $4M per month figure would be just for pure bit delivery and Disney could have some additional charges on top of that for other functionality or services tied to the delivery of video.

If you have further questions on this topic, feel free to reach out to me at any time. mail@danrayburn.com or 917-523-4562.

Disclaimer: Outside of Netflix, Apple and Facebook, I have never bought, sold or traded any shares in any other public company and have never owned shares in any CDN.

I am pleased to announce that I will once again chair the Streaming Summit, a two-day event that focuses on the business and technology of OTT video, in conjunction with the NAB Show New York conference, taking place October 16-17 in NYC. The call for speakers is now open along with discounted registration and sponsorship opportunities.

The Streaming Summit will feature 100 speakers, across two-tracks and will be a combination of fireside chats, best practices technical presentations, case studies and round-table sessions. Unlike other events, the Streaming Summit’s content will be extremely focused on the real-world challenges and opportunities in today’s OTT market. No sales pitches and no sessions with seven speakers crammed onto one panel. We’ll also have some great networking opportunities around the event and expect more than 500 attendees, out of the 10,000+ attendees to the NAB Show in NY.

Attend the event and learn how to capitalize on direct-to-consumer (DTC) offerings and hear how some of the largest companies in the world are monetizing their video library and building a brand relationship with their customers. In addition to the Streaming Summit’s focus on business models, on the tech side, consumers expect the best video quality on their devices and TVs anywhere, anytime. Hear how video providers are continuously improving their video workflows to give their audience the best possible viewing experience across packaging content, transcoding, media management, playback, and analytics.

Those interested in moderating should reach out to me with their ideas now! and anyone looking to get involved, speak, sponsor, or attend can reach out to me directly at 917-523-4562 or mail@danrayburn.com. I will begin placing speakers immediately and we’ll also have some great industry partners involved in the event this year, helping to produce content around topics pertaining to AVOD, SOVD, advertising metrics and bringing in brands and agencies to share their expertise.

And of course, we’ll still have many of the best OTT platform, broadcast, publishing and live linear companies represented as speakers, with last year’s lineup including: Hulu, Amazon Prime Video, NBC Sports, Disney, CBS Interactive, Discovery, AT&T, Google, Facebook, LinkedIn, Roku, NBA, FOX Sports, Sling TV, Comcast, Fubo TV, Viacom, Washington Post and many others. 

Thursday night, CDN provider Fastly will price their shares and go public Friday morning under the ticker FSLY, looking to raise around $170M, with shares expected to price between $14-$16 a share. At the higher end of the price range, it would value Fastly at around $1.4B. The company has raised $219M to date and ended 2018 with 449 employees.

Fastly had $144.6M in revenue in calendar 2018, up 37.8% from its $105M in revenue in 2017. The company lost $30.9M in the 2018 calendar year, down 4.7% from $32.5M in losses in 2017. As of December 2018, 84% of Fastly’s revenue is derived from 227 enterprise-sized customers with each of those customers accounting for $530,000 in yearly revenue. [S-1 Filing]

On Wall Street, the biggest question I’m being asked is whether or not Fastly can become a $500M company in 3 years and hit $1.5B in revenue within 10 years, while also increasing margins in the 70% range. While it’s too early to be able to answer the question, based on what I see in the market I think the 3-year target for Fastly is doable. I closely track the size and growth rate of the markets Fastly is in, talk to and survey over 1,000 customers a year who use these services and I see the use cases that are coming with compute at the edge. 

All of this data adds up to a much bigger growth opportunity for these services over the next few years as more customers demand greater flexibility and better performance across their entire IT business stack. I’ve also known Fastly as a company for a long time, and am impressed by how disciplined they have been over the last few years from an operational level, across product, sales and marketing. The company has done an amazing job over the last 2-3 years disrupting on performance, ease of use, flexibility, and price. But make no mistake, Fastly isn’t selling on price. The company is winning on performance, the functionality of their services, being extremely quick and nimble, and simply doing it all at a lower price than competitors. 

Fastly is very good at passing on business that isn’t strategic and/or is priced too low and they don’t sign contracts simple to “fill the pipes”. Fastly isn’t trying to have a product portfolio for every sized customer, in every vertical and for every use case. They are very strategic on how they roll out services into new markets and target certain sized customers with use cases that solve specific problems. As a result of Fastly’s success to date, most are naturally wondering what impact Fastly is having on Akamai as Fastly raises more money, and what that competitive threat looks like going forward as Fastly continues to grow. 

While Fastly is pressuring Akamai in many segments of their business, winning deals on performance, price, and ease of use, there is only so much business Fastly can take from Akamai each year, simply based on their size. By my estimates, Fastly gets exposed to about 10% more of Akamai based contracts each year. So Fastly isn’t going to take a huge percentage of Akamai’s business overnight. But that doesn’t mean they can’t disrupt the entire market by forcing other CDNs to do a better job competing on price and performance, which they are doing.

Fastly has done a great job growing their business past the $100M revenue mark, which is where most CDNs in the past have stumbled. But from day-one, Fastly’s been a different CDN, targeting and specializing in the web performance market, not video streaming. From a network standpoint, Fastly has built a very different underlying network architecture, and as a result, is adding capacity without anything close to the CAPEX costs others CDNs are spending. Fastly has no routers or switches and its strength is the fact that they operate a software defined network with a footprint of 1,596 servers (as of March 31, 2019) across 60 POPs. If you want to geek out on how Fastly deploys their infrastructure, check out this video presentation by them from last year.

A big difference between Fastly and Akamai is the fact that Fastly is one network, for all of their services. A single network. Akamai has many networks, all built for a specific use case, for instance video, TLS, etc. which makes it hard to achieve efficiency at scale when you are buying and operating so many networks for each purpose. But one of the most important aspects of Fastly’s network deployment is the fact that they are a programmable edge. And while everyone uses the term “edge” without ever defining it, here’s how to think of the uniqueness of Fastly. 

If a customer builds their own DDoS, paywall, or image optimization service, they can run it from the edge on Fastly’s network. Nearly every other CDN requires the customer to have to use their DDoS, or image optimization service and doesn’t support the running of third-party applications on their infrastructure. Running applications and compute at the edge, that’s where this market is headed, which is why Fastly calls themselves an “edge cloud”. And CDNs that don’t have that functionality at scale, with flexibility and performance, are going to struggle to grow their business as more customers in the market require the functionality. This is exactly why it’s an area Akamai has said they are “increasing their investment” in that functionality.

Fastly is on a great path to continued growth but we need to watch how they scale their business over the next few years. As they begin to enter new verticals like banking and finance, a vertical that Akamai downright owns, how quickly can Fastly grow their revenue in new markets? How much can they grow their wallet share with current customers and increase their margins? Fastly rightly deserves credit for what they have already done and the expertise they have proven in the market. But now their work really begins to take their business to a whole new level and scale their network, revenue and customer base, with the target of being profitable. They will be a fun one to watch.

Note: I have never bought, sold or traded a single share of stock in any public CDN company ever. I am not receiving nor buying any shares in Fastly. My stock purchases have been restricted to Apple, Netflix, Facebook and NVIDIA.