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Level 3 Lands Netflix Streaming Business, Will Double Its Storage Capability

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On-demand streaming of movies and TV shows is a booming business, and Netflix is positioned well to further capitalize on its pioneering digital streaming efforts. The company this morning confirmed earlier rumors that it’s going back to Level 3, after three years of Akamai, to serve as a primary content delivery network provider for online streams.

The deal is aimed to accommodate Netflix’ expected future growth and to support storage for the company’s entire, ever-expanding library of content (currently more than 20,000 titles).

As a result, Level 3 says it plans to accelerate investments in its CDN capacity. Level 3 says it intends to effectively double its storage capacity and add 2.9 Tbps of globally available CDN capacity, which is in addition to the 1.65 Tbps that was deployed in the third quarter of 2010.

Over the course of November and December, the two companies will move the content library to Level 3 storage in preparation for serving traffic beginning Jan. 1, 2011.

Netflix in a statement says its subscriber base will exceed 19 million in North America by year’s end, and that they expect more growth and international expansion in future years.

Yesterday’s rumors of the Netflix/Level 3 deal had sent Level 3 Communications’ share soaring, and Akamai’s dropping. Expect that trend to continue.

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