IBEM Pushes Content Delivery -- A look at the market:
Story Filed: Wednesday, July 12, 2000 12:08 PM EST
New York, Jul 12, 2000 (123Jump via COMTEX) -- The fertile province of streaming media has many companies questing after profits. In particular, the content delivery market has become a site of increased competition for several firms. iBEAM Broadcasting Corporation (NASDAQ:IBEM) is looking to carve out a niche in this market by offering both distribution and production services.Here, 123Jump looks briefly at the market and what iBEAM has to offer.
The Internet Research Group expects the content delivery network (CDN) services sector to grow by over 120% in the next five years, topping $6 billion by 2004. Network traffic has increased greatly, growing by a factor of 10 in the first quarter of this year and another 40% in April alone. This represents a huge opportunity for companies with the resources and initiative to carve out a market share for themselves. iBEAM is one company seeking to profit in this market. Founded in 1998 in Sunnyvale, California, the company offers a diverse set of products and services. The company employs over 450 people and has arrangements with over 90 ISPs including America Online (NYSE:AOL) and Excite@Home (NASDAQ:ATHM).
What iBEAM Has To Offer iBEAM's delivery system is based on a hybrid terrestrial/satellite model, with inherent advantages and disadvantages. iBEAMs system utilizes a series of "Maxcaster" caching servers to deliver content from regional and master servers to end users. In theory, this system allows iBEAM's flow of data to avoid the potential bottleneck of intermediary networks between the core (where the data is stored) and the client (where the information is requested). The company is a first mover in satellite based CDN services, providing some pricing advantages. The reality is that the cost advantage of satellite based systems is not realised until a sufficient number of servers are linked to a single satellite. Thus iBEAM's success depends on its ability to sustain high volumes of packet deliveries on a continuous basis. At the moment, iBEAM's network is sorely underutilized, with only 5% of data currently carried being satellite based. This means that the company could significantly increase network traffic without major investment. iBEAM is in a good position to profit from this setup, as bandwidth improvements are unable to keep pace with the increasing quantities of traffic.
New Services, New Revenues In recent months the company introduced a series of new services and products. Their OnTarget Ad Insertion platform enables ISPs and content providers using iBEAM's Maxcaster technology to insert targeted and non-targeted ads into streaming broadcasts. At the moment, iBEAM broadcasts more than 100,000 ads daily through their system. As advertising on the Web continues to expand, no doubt this revenue stream will prove very profitable.
iBEAM has been actively pursuing the growing Web commerce market as well. The company recently acquired ServerSide Technologies Inc. in a $3 million stock deal. With this purchase iBEAM upped its presence in the digital rights management arena and gained access to a wide range of revenue streams as well as increasing the level of security present in their CDN. iBEAM can now offer encoding, secure packaging, hosting, distribution, payment management and transaction and reporting services to their clients. Further, iBEAM has acquired ServerSide's clients which include Liquid Audio (LIQD), CDNow (NASDAQ:CDNW) and RioPort. Last month iBEAM rolled out its "Activecast" interactive streaming platform, a series of solution bundles for corporate communications, distance learning and web-based seminars. This service accommodates both live and on-demand broadcasts. Cisco (NASDAQ:CSCO), John Deere (NYSE:DECR5J01) and Bristol Myers (NYSE:HMY) have all made use of this system. Recently the company signed a streaming media distribution agreement with the MTVi group which provides customizable music streams for Internet appliances. Also, MTV will use iBEAM's OnTarget ad system.
iBEAM signed nearly 100 distribution services customers in the March quarter, bringing the total to 170. Another 55 signed in April and May of this year. iBEAM has planned an international rollout of its edge delivery system in over 50 countries during the next 18 months.
When evaluating iBEAM's long-term chances, it is important to consider highly capable competitors such as Akamai (NASDAQ:AKAM) and Digital Island (NASDAQ:ISLD). iBEAM represents a considerable investment opportunity, but it remains to be seen who will best take advantage of the thriving CDN market.
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