PeerCDN buyout beefs Yahoo! video play

Michelle Clancy | 20-12-2013

Yahoo! has purchased content delivery network (CDN) provider start-up PeerCDN for an undisclosed fee. PeerCDN has been working on delivering site resources through a peer-to-peer (P2P) network compiled by website visitors.

"As demand for CDN services is on the rise due to the constantly rising traffic, companies look for innovative ways to meet those demands while minimising costs," said Stelios Kotakis, an analyst at IHS. "Recent deals such as Verizon's purchase of Edgecast reveal an increasing trend for companies towards insourcing CDN services in order to boost their online operations."

Yahoo!, which receives more than half a billion hits per month, could use PeerCDN's code to reduce bandwidth costs, and at the same time improve its webpage functionality and speed by simply dividing hosting load to its roamers, he explained.

"P2P technology can also be used supplementary to already established infrastructure as it is both easy to apply and cost effective," Kotakis added. "Using PeerCDN's delivery method could as well imply reduced demand for server capacity, which is challenging when having to confront growing requests for sufficient space."

Since its new CEO took charge in July 2012 Yahoo! has obtained a significant number of start-ups like Stamped, Evntlive, Ptch, Qwiki and OnTheAir.

"Those acquisitions have improved the company's competitive outlook and underpinned its potential to expand its online video content offering," the analyst added. "The PeerCDN acquisition could further support those attempts, and moreover enhance Yahoo!'s plans to provide faster and better rich media content, a plan that would inevitably lead to increased needs for bandwidth. As Yahoo! looks to bounce back to the online video industry arena, further development regarding its environment will be required, and its recent acquisitions reflect its planning for this eventuality."