A new report from Informa Telecoms & Media (publisher of IP&TV News) finds that pure-play Content Delivery Network (CDN) Akamai remains the largest of the traditional CDNs, both in terms of revenues and number of network servers, but adds that it faces growing competition, specialisation and consolidation threats.
Perhaps the biggest competition comes from network-operator CDNs, which have entered the space by purchasing pure-play CDNs (such as the 2011 purchase of an 85.5% stake in South Korea-based CDNetworks by Japan’s KDDI).
Also emerging are so-called ‘infrastructure-lite’ CDN service offerings by a growing number of IT and Web-hosting companies, some of whom have reseller agreements with the larger CDNs.
Some of the world’s largest technology companies, such as Amazon, Microsoft, Google, are also investing in their own CDNs, primarily to deliver their own content, but also to offer CDN services to others.
Since CDNs first became commercially available in 1996, the market has been dramatically transformed by the parallel trends of consolidation and growing competition, according to Informa.
Some early movers have merged (such as Sandpiper Networks and Digital Island in 1999), and others have been acquired (such as the resulting merged company Digital Island in 2001).
If the larger CDNs are to survive, they will have to shift their focus towards more lucrative premium services, and consider partnering up with the network operator-CDNs, the report advises.
Growing competition and falling “bit” delivery costs are believed to have prompted increased specialisation among larger CDNs, which have subsequently shifted their focus towards more lucrative “premium” services.
The future growth of the CDN industry as a whole is believed to depend on several factors, including the continued growth of online traffic and the rate at which businesses invest in online technologies.