Futurewatch: Content Delivery—A Sea Change in the CDN Market
CDNs: Everyone Wants a Piece of the Pie
It is no coincidence that nearly 20 companies entered the CDN market from 2006 to 2008, including large public entities with distributed businesses in media and telecom. With enough bandwidth at the average consumer’s disposal, content delivery is no longer about just delivering bits and images but distributing large files, games software, and, of course, video. The deployment of such applications online in a seamless and secure manner is challenging. But at the same time, it’s too lucrative for telcos to ignore.
Self-hosted content delivery methods still comprise a large percentage of worldwide content delivery. But they are unlikely to sustain themselves through consistent infrastructure upgrades, especially as a wide range of applications are moved online and upgrades demand huge capital expenditures.
For telco service providers and IP infrastructure companies, CDN is a natural extension of their services that they can provide to thousands of their customers. Despite price competition, the high volumes of content to be delivered over the web promise a favorable opportunity.
After Level 3 and Internap entered the market through acquisitions in 2006 and 2007, 2008 saw the beginning of another chapter in the CDN market—that of large telcos and internet media companies such as AT&T, Tata Communications, and Amazon initiating services in the market. Interestingly, if these large vendors are not applying an in-house solution, they are partnering with incumbents for their technology rather than a complete takeover of the CDN business.
Frost & Sullivan believes this to be just the tip of the iceberg. The next 2 years are expected to see many more telcos across multiple regions launching their CDN services.
Table 2 shows the revenue-split between pure-play CDN vendors and other companies in the world video content delivery networks market in 2007 and 2008.
Table 2. Video content delivery networks’ market revenue split between pure-play CDN vendors and other companies (worldwide),2007 and 2008
Video: The Trump Card for CDNs?
"Over the past 24 months, CDN vendors have raised over $400 million in capital and have launched multiple new offerings to the market. With so many new players, trying to figure out exactly what they offer, what business models they have, and how they distinguish themselves from one another is still very challenging," says Rayburn.
Video is touted by all small and large CDN vendors as the killer application that requires customers to warrant their services. But the challenges are numerous. While customers want to deliver video, they need a score of products and applications that can enable ingestion, transcoding, and management—all the way through delivery.
CDN services comprise a small portion of a content creator’s CAPEX for online video delivery compared to other investments that may be required, such as hardware and software solutions for transcoding, media asset management, video publishing, and ad insertion. Many customers, therefore, explore possibilities of a one-stop shop, at competitive prices.
CDNs have no option but to scale their in-house services or tie up with video platform companies if they want to capitalize on this opportunity. While some vendors such as Abacast, Akamai, Ipercast, Technicolor, Level 3, BitGravity, CDNetworks, Velocix, J-Stream, NTT Communications, and Qbrick provide bits and pieces of the video ecosystem, only a few among these provide an end-to-end platform. Others such as Limelight Networks have synergies with a number of video service platform providers such as Brightcove, Move Networks, and The FeedRoom, among others.
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25 Oct 2010