Grid Joins the P2P CDN Party

[qi:020] The hybrid P2P-CDN business model is becoming increasingly popular with content distributors, largely due to rapid growth in the demand for online video.

Even pure-play P2P companies like Pando have started dabbling with P2P CDNs. Content Delivery Networks (CDN) have become a highly competitive market, and existing players are trying to find ways to differentiate their offerings and stay above the commoditization fray.

This hasn’t gone unnoticed by investors. Grid Networks, a Seattle, Wash.-based company we first wrote about last fall, has raised $9.5 million in Series A Funding from Panorama Capital (see related disclosure at the end of the story).

The company, which was started by executives with rich experience in building Internet infrastructure, has developed its own unique P2P protocol, and a player that allows it to deliver HD-quality video as part of its GridCasting (managed Internet TV delivery) service. The company was co-founded by Jeff Payne (now CTO) who built the Real Broadcast Network for RealNetworks (RNWK) — arguably one of the first content delivery networks — and Noel Edmond.

Tony Naughtin, the recently appointed president and CEO of Grid, says the company is focusing on network operators and large content companies. They plan to embed their technology into network devices, set-top boxes and even consumer devices.

Grid wants to become a key P2P component of the cable networks. It uses CDN infrastructure to seed the video files, which can either be downloaded or streamed across the network. It isn’t, however, going to be easy for them — they’ll be competing with players such as BitTorrent, which has adopted a device-centric approach as well.

Elsewhere, Akamai (AKAM) is making a big push into the P2P-CDN business; VeriSign (VRSN) is looking to make a splash as well. Other players, such as Cachelogic, have been working with carriers and are already hawking their P2P-CDN offerings. CacheLogic, for instance, today announced that it is working with Babelgum, to deliver video over its Velocix Network, a P2P-CDN service that Cachelogic claims will radically change the economics of content delivery.

Disclosure: Grid Networks is funded by Panorama Capital partner Allan Leinwand, who is a guest columnist for GigaOM. Panorama has also backed Federated Media, which is our sales partner.