The content delivery network (CDN) service provider market was valued at nearly $3.6 billion in 2012. The global market for content delivery network hardware is expected to reach nearly $6.9 billion in 2017 after increasing at a five-year compound annual growth rate (CAGR) of 13.9 per cent, according to BCC Research.
The US segment is the largest, accounting for $1.9 billion in 2012, and is expected to grow to $3.6 billion in 2017 with a CAGR of 13.6 per cent. The Asia-Pacific segment is the second-largest,with a value of nearly $1.1 billion in 2012, and it is expected to total nearly $2.1 billion in 2017 with a CAGR of 14 per cent.
The CDN market is being powered primarily by growth in the video delivery segment, which is expected to grow more than 30 per cent in five years as a result of the surging popularity of over-the-top video. This represents a robust growth opportunity for networking, server, and specialized hardware providers, with four trends causing explosive growth. These trends are mobile device capacity growth, advances in networked home, cloud services, and user-generated content.
These trends are driving demand for traditional network switches, routers, storage devices, and servers as well as dedicated content network appliances. CDNs solve the problem of delivering delay-sensitive and high-volume content required by users distributed globally or nationally. CDNs implement traffic management and caching systems that replicate the content closer to the user. This minimises the number of network nodes the content must traverse and thereby decreases delays, improving performance. This capability is vital during peak periods where the network traffic spikes due to high demand for content during certain time periods or in certain locations.
As with many digital migrations, a cadre of pure-play CDN providers, led by Akamai, stepped into the gap, deploying their own servers, caching technology and traffic management algorithms to service the content providers’ requirements. The business model has been working well, with the content provider paying for the privilege to use the pure-play CDN.
Transport service providers, led by national and international telecom companies and Internet service providers, found themselves facing disintermediation once again. They were moving the CDN traffic for a subscriber and sometimes a CDN provider fee, but they were not reaping the full value of delivering the content over their expensive infrastructures.
So, most major transport service providers have entered the CDN market, either by building their own networks or partnering with CDN pure plays to extend their national points of presence. This is good news for suppliers, led by router, switch, storage, and server suppliers who provide the critical technology to enable CDNs.
As the market grows globally, suppliers of all kinds are gaining traction, led by Cisco, which dominates the routing and switching installed base. But telecom equipment providers, content software providers, and media asset management companies are all playing roles in a dynamic ecosystem that is constantly improving the ability of end users to receive improved content quality.