benefits from popular sports events, like the recent Winter Olympics and the upcoming 2010 FIFA World Cup, which provide the company an opportunity to demonstrate the capacity and reliability of its content delivery network to potential new media customers.
ESPN, a sports channel owned by
, will be simulcasting 52 out of 64 World Cup Soccer 2010 matches on its Web site, ESPN360.com. The content for ESPN360.com is delivered via Akamai's network.
Delivering media (videos, images) is an important part of Akamai's business, accounting for
. We expect the amount Akamai earns from an average media customer to go up over time, as more high-definition video content becomes available through the Internet and new media customers adopt value-added services offered by Akamai.
Akamai Shows Media Capabilities at Winter Olympics
Akamai streamed the recent Winter Olympics for
, delivering Olympic coverage to online audiences over Akamai's high definition network.
indicates that Akamai streamed more than 5,000 hours of live and on-demand video over a period of 17 days, amounting to total streamed data of about 12,000 terabytes. At its peak, Akamai was streaming at a rate of 374 Gbps.
Apart from providing a mild boost to its Media Content Delivery revenues, the Olympics helped Akamai enhance its visibility amongst potential media customers by demonstrating the capabilities of the company's network.
We believe that Akamai's ability to stream important and popular events to Internet users will continue to play a part in attracting customers to Akamai. You can modify the forecast below; see how Akamai's stock depends on the number of media customers the company has.
Akamai Will Earn $630K From Each Media Customer
We estimate that Akamai had about 925 media customers in 2009 and earned an average of about $400,000 from each media customer. Although the company is getting competitive on pricing, we expect the
to rise steadily and reach over $630,000 by the end of the Trefis forecast period, driven by the following two factors:
1. Increasing amount of video content moving online due to a shift in consumer preferences. For example, online video sites like Hulu, YouTube and Netflix are expanding their streaming services.
2. Increasing demand for Akamai's value-added services, like advertising decisions, application performance and content security.
how Akamai's stock can be impacted if its revenue per customer growth turns out to be more aggressive than our forecast.
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