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Netflix Launching Own Content Delivery Network

5 Jun, 2012 By: Erik Gruenwedel

Netflix will develop a proprietary content delivery network in an effort to reduce reliance (and streaming issues) upon third-party CDN providers.

In a June 4 blog post, Netflix said it would continue to deliver its data (i.e. streaming) through CDN providers Akamai Technologies, Limelight Networks and others “for the next few years” while it develops an in-house “open connect” network (openconnect.netflix.com). About 5% of Netflix data already is served by Open Connect.  

“The world’s other major Internet video provider, YouTube, has long had its own content delivery network,” wrote Ken Florance, VP of content delivery at Netflix. “Given our size and growth, it now makes economic sense for Netflix to have one as well.”

Florance said that through the new CDN, Netflix would be sharing its hardware design, including the more cost-efficient designs, which he said are suitable for any high-volume provider of large media files.

“We welcome commentary and improvements, which will be shared with the community with the goal of a faster, less expensive Internet for all,” he wrote.

Limelight generates about 11% of its revenue from Netflix, according to Wall Street reports, while Akamai has been with Netflix since the by-mail disc rental pioneer began operations.

Separately, Netflix shareholders approved an independent shareholder’s proposal calling for the elimination of classified board of directors — putting an end to the company’s directors having staggered terms.

The vote, which took place at Netflix’s annual shareholder meeting in Los Gatos, Calif., was 26.8 million votes in favor of the proposal and 8.9 million against. Classified boards typically have board members voted in at different times, a policy, critics say, allows for the board and senior management to become too compliant.

From now on, Netflix’s board will be voted in or out at the same time.

Following last summer’s public relations snafus regarding a price increase and aborted spin-off of its disc rental service — actions that saw Netflix shares nosedive — shareholders have attempted to exert greater say on management.

Another proposal calling for special shareholder meetings passed with 19.1 million votes in favor versus 16.6 million votes against.

Other measures voted in included ratifying the appointment of Ernst & Young LLP as Netflix’s independent registered public accounting firm, the election of Richard Barton to the board until 2015 and approval of Netflix’s executive officer compensation plans.

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