Netflix announced this week that it is building its own content delivery network, dubbed the “Open Connect Network,” an indication that the company wants to be able to deliver content on its own terms.
“Around the world, people are enjoying nearly a billion hours per month of movies and TV shows from Netflix. We’ve been delivering these petabytes of data exclusively through commercial content delivery networks,” wrote Netflix vice president of content delivery, Ken Florance, in a blog post.
“Now, in addition to these general-purpose commercial CDNs, we are enabling ISPs to get Netflix video data from Open Connect, a single-purpose Netflix content delivery network we’ve established,” he said.
“The world’s other major Internet video provider, YouTube, has long had its own content delivery network. Given our size and growth, it now makes economic sense for Netflix to have one as well.”
Netflix’s move will likely create challenges for its current content delivery partners, many of which generate a majority of their revenues through Netflix contracts. Shares of content delivery firms Akamai Technologies Inc. (AKAM) and Limelight Networks Inc. (LLNW) fell to yearly lows on the news.
However, Netflix said it would not immediately end its current contracts, but would instead continue using these commercial networks for some time.
“We’ll continue to work with our commercial CDN partners for the next few years, but eventually most of our data will be served by Open Connect.”
Like commercial CDNs, Open Connect will provide the Netflix content at no cost to the locations the Internet service provider wants. ISPs can also choose to get the Netflix data at common Internet exchanges, Netflix said.
Netflix said it would also share its hardware design and the open source software components of the server.
“These cost-efficient designs are suitable for any high-volume provider of large media files,” Mr. Florance said.
“We welcome commentary and improvements, which will be shared with the community with the goal of a faster, less expensive Internet for all.”
Roughly 5% of Netflix data is currently being served by Open Connect. Additional details about the network can be found at openconnect.netflix.com.