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Amazon's New Video Streaming Service Will Disrupt The CDN Industry (AMZN, AKAM, LLWN)

This morning, Amazon announced that their CloudFront content delivery service now supports Flash streaming as long as the videos are stored on Amazon's S3 service.  —  Amazon has deployed version 3.5.2 …

Silicon Alley Insider Dan Rayburn

Context & Ripple Effects

CloudFront began life as Amazon's edge-delivery add-on to S3, priced by usage rather than by contract. With this confirmed update, videos stored on S3 can now be streamed as Adobe Flash through CloudFront — which pulls Amazon squarely into the video delivery market that Akamai and Limelight Networks (AKAM, LLWN) built their businesses on. Silicon Alley Insider framed the announcement explicitly as a disruption play against both incumbents.

First-order effects

  • Publishers serving Flash video can now point their players at CloudFront URLs backed by S3, swapping dedicated CDN contracts for Amazon's self-serve, pay-per-gigabyte model.
  • Akamai and Limelight immediately lose pricing cover on standard Flash delivery — the high-volume workhorse of the 2009 CDN market — wherever customers are willing to manage their own origin storage.

Second-order effects

  • The incumbents' forced response is to discount committed enterprise deals or bundle services Amazon doesn't ship — analytics, transcoding, managed workflows — because competing on raw delivery price against a hyperscaler's cost base is a losing position.
  • Smaller publishers and startups gain a zero-commitment entry path into video distribution, expanding the total market for streaming while compressing what anyone can charge per gigabyte.

Third-order effects

  • If general-purpose clouds keep absorbing delivery as a feature rather than a product, the CDN industry structurally splits in two: commodity bandwidth at cloud prices, and a thinner premium tier of value-added services at the edge where specialists can still defend margin.

The trend: General-purpose cloud platforms are absorbing specialized network services into commodity bundles, pushing point-provider CDNs to differentiate up the stack or cede the volume business.

Related: Cloud-to-Infrastructure Reversal · Console-to-service flywheel · AKAM · AMZN · CloudFront