Dan Rayburn, Principal Analyst in Frost & Sullivan's Digital Media group, delivers a presentation on the market for video content delivery networks. Market size, forecasts, trends, pricing, and industry outlook are presented.
CDN Market Improving, But Latest Pricing Data Shows Challenges Still Lie Ahead
CDN Market Improving, But Latest
Pricing Data Shows Challenges Still Lie
Dan Rayburn, Principal Analyst
Frost & Sullivan’s Growth Consulting can assist with your growth strategies
• Current Market Size and Forecasts (2007-2012)
• Latest Trends In Video Consumption
• CDN Pricing: Survey Results
• What The Carriers Are Up To
• Problems The Carriers Face
• Impacts: HD Video, Video Advertising, Live Events, Devices
• Industry Consolidation and Outlook: 12-18 Months
Current Market Size and Forecasts (2007-2012)
Current Market Size and Forecasts (2007-2012)
Latest Trends In Video Consumption
• More content being consumed, more often, at higher bitrates, for longer
periods of time, on more devices
• Even with many devices in the market, Xbox 360, Roku, TiVo, VUDU,
PS3 etc. the device market is small. Won’t have a major impact for a few
• Content owners seeing more traffic, at higher bitrates, for longer periods
of time, but growth CAGR in 08’ was not as high as 07’
• Average customer saw CDN pricing drop 35% for 08’ compared to 07’,
but average traffic growth rate less than 25% in 09’
• Looks like average pricing decline in 2009 will be 20%, compared to
35% last year
CDN Pricing Survey Results
• The results analysis includes answers from all respondents who took the
StreamingMedia.com survey in the 51 day period from Wednesday,
August 12, 2009 to Friday, October 02, 2009. 812 completed responses
were received to the survey during this time.
• Survey asked the following questions:
• Which industry vertical does your company best fall under?
• How are your videos being delivered across CDNs?
• How many CDNs do you currently use for video delivery?
• What is your current contract length with your CDN?
• How much has your total video traffic grown so far this year, compared to last year?
• On average, how much do you pay per month to CDNs for video delivery?
• How much has your video delivery pricing declined from last year or since your previous contract?
• Are you paying CDNs on a per GB delivered model or per Mbps sustained model?
• How much do you pay per Mbps sustained or per GB delivered?
• On average, what is your video delivery traffic per month?
• What bit rates is your content encoded for?
• What is the one thing you think CDNs need to do a better job of?
2008 Results: 69.9% said flat
2009 Results: 60.1% said flat (below)
2008 Results: 28.4% said
down less than 20%
2008 Results: 7.6% said
2008 Results: 4.2% said
down more than 40%
2008 Results: 24.2% said more than 1 Mbps
2009 Results: 33.6% said more than 1 Mbps (below)
What The Carriers Are Up To (see: www.cdnlist.com)
• Most carriers partner or resell service from pure-play CDNs
• Global Crossing (reselling Limelight and EdgeCast)
• Deutsche Telekom (partnered with EdgeCast)
• Pacnet (partnered with Internap)
• Reliance Globalcom (partnered with Internap)
• Tata Communications (partnered and invested in BitGravity)
• AT&T, BT, NTT Communications, PCCW, TeliaSonera are all working to build
their own CDN offering
• So far only Level 3 has been able to grab a lot of market share and is offering a
real ecosystem offering
• Telcos and carriers are eyeing the market, testing the waters and getting familiar
with the offering. Expect them to want to control the service 12-18 months from
Problems The Carriers Face
• Focus and quick reaction to the market are essential to being successful
within the CDN sector and historically, that’s not something carriers have
been very good at
• While many say that owning the network gives the carriers a cost
advantage, until they can show the industry they are making money with
their CDN services, it's pure speculation
• Content owners need an entire video ecosystem offering, not just the
delivery of bits. Carriers need to understand the entire stack and
develop applications for video
• You can't just roll out a CDN with a bunch of boxes and have true scale,
capacity and performance overnight. Will take carriers years to compete
in the market
Technology Impacts: HD Video, Video Advertising, Live
• HD getting some traction, but won’t make major impact for another 24
months as it pertains to traffic being delivered by CDNs
• Video advertising is the key to content owners being able to monetize
their content and deliver more of it, but progress is slow
• Live events get a lot of exposure and coverage, but count for very little in
the way of revenue for CDNs, but are showing that
• Devices are not yet playing a real role in the market and while this will
change over time, it won’t impact the CDNs anytime soon
Industry Consolidation and Outlook: 12-18 Months
• Acquisitions are always possible, but most CDNs don’t have enough
revenue, applications or IP to make them an acquisition target over the
next 18 months. Only four CDNs are doing more than $50 million in total
CDN revenues for 2009.
• Emergence of heavy weight telcos within the CDN space make
incumbents such as Limelight Networks and EdgeCast prime
• Bottom line, CDNs need to build some apps and create real value. Case
in point, Nine Systems acquisition by Akamai.
• In 2000 we had over 50 CDN vendors. In 2002, about a dozen. In 2004
there were six. In 2008 we had 50 again and already the number is
going down. Many CDN vendors won’t make it 24 months from now and
some are already closing up.
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For Additional Information
Dan Rayburn Jake Wengroff
Principal Analyst Director of Corporate Communications
Digital Media Information & Communication
Frost & Sullivan Technologies
(917) 523-4562 (210) 247-3806
Global Program Manager
Information & Communication