In what could be a key partnership for both the CDN and Vyvx sides of its content business, Level 3 announced today that it is expanding its video cloud services into China. They are working with China Telecom to both gain and give access to the world’s largest market.
The arrangement will see new CDN nodes for Level 3 in China, starting in Hong Kong but moving onto the mainland as well. China Telecom will also be providing access to Level 3’s suite of services for its content customers. That’s more than CDN of course, and includes their broadcast video acquisition, encoding/transcoding, analytics, and storage.
People often talk about the Chinese market’s raw size, but really don’t have much of a concept of how video and content is produced and distributed in the country. As someone who has spent more than his share of the past decade in the country, I can tell you that the video business here (whether broadcast, cable, or internet) has evolved incredibly rapidly in the past 10 years. It’s pretty self-contained, increasingly complex and sophisticated, and of course highly regulated.
It’s a lot harder for outsiders to get a viable foot in the door in China than people realize, especially when it comes to this side of the business. Having a high profile partner is really the only way, and it takes quite some time to develop the necessary relationships to get that far. Level 3 has probably been working on this one for several years now.
With the tw telecom deal set to give Level 3 a big boost in the enterprise business, it’s interesting that they chose to highlight a deal in the Far East this week. Perhaps Europe isn’t the only place we ought to be looking for their next acquisition candidate. Maybe a bid for Pacnet is not such a longshot? Hmmmm…
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