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CDN 2014 – 2017: Operations and Analytics

  • May 2014
  • -
  • AccuStream Research
  • -
  • 325 pages

CDN (Content Delivery Network) revenue is projected at $3.36 billion in 2014, up 19%, directed by user appetite for self-selected content, further accelerating linear broadcast, media and entertainment’s transition into virtual paradigms, as detailed in a sector business ops and tech solutions report by AccuStream Research.
The report, CDN 2014 – 2017: Operations and Analytics, deconstructs the sector by media and publishing vertical, provider, solutions, geographies, R & D, bytes delivered, global revenue, product launches and partnerships.

Across the gamut of global operations, double-digit growth through 2017 is animated by: 1) Bandwidth pricing stability expanding topline while lowering COGS; 2) Marginal performance paybacks; 3) Value added services addressing tech complexities--accounts requiring quality, reach and security at scale—deciphering media formats, device fragmentation and monetization tools that improve MRR; and 4) Virtual video (including “live” steaming, VOD, TV Everywhere deployment and the enterprise) is a consumption dynamo.

Total 2013 commercial value of media and entertainment video (views and advertising), movie/TV files, music listening and downloads (including self-hosting entities such as Google and Amazon) stood at $3.35 billion, of which $1.05 billion (31.3%) was delivered through CDN contracts.

Video viewing and advertising (combining self-hosted networks), TV/movies and music accounted for 2.4+ billion gigabytes of data transfer, worth $1.6 billion in commercial market value (bandwidth and co-lo fees only), when priced at prevailing rates and against a volume (gigabytes delivered) model.

Each content vertical component of the market is calculated against transfer volumes, retail pricing and percent delivered by CDNs. Complete video viewing and music listening hour databases are provided in this report.

CDNs include Akamai Technologies, Limelight Networks, CDNetworks, ChinaCache, Mirror Image, Level 3, Highwinds, Cloudflare, Tata Communications and MaxCDN, among others.

This report’s supportive Q & A sections are conducted with senior executives, technology and sales professionals to explain markets, network topologies, capacity, solutions innovation, software, sales and account acquisition strategies.

Table Of Contents

CDN 2014 - 2017: Operations and Analytics
Table of Contents

EXECUTIVE SUMMARY 1

CDN Business Operations, Market Dynamics, Technology and Account Acquisitions Trends 1
The Macro Market: CDN Accounts under Contract Swell by 141.4% in 2013/2014 YTD 2
Graphic- CDN Monthly Recurring Revenue Analysis: 2005 -2013 .. ....2
Graphic- CDN Monthly Recurring Revenue: 2005 - 2013/2014 YTD . .. . 3
Graphic- CDN Accounts: Annual Analysis: 2005 - 2013/2014 .. .......4
Graphic- CDN Annual Accounts: 2005 - 2013/2014 YTD 5
MRR Analyzed by Individual CDN: Average MRR Increased 8.8% in 2013 to $6,719 6
Graphic- CDN Monthly Recurring Revenue Analysis: 2005 - 2013 ..6
Graphic- CDN Comparative MRR Averages: 2005 - 2013 .7
Graphic- Akamai Monthly Recurring Revenue (MRR) 2005 - 2013 8
The CDN Sector Grew by 17.9% in 2013; Double Digit Growth Forecast through 2017 . 9
Graphic- CDN Market Revenue: 2003 - 2017 Retail Contract Value ..10
CDN Terminology Definitions 11

SECTION ONE ...17

Network Availability, Security, Quality and Scale: Selling CDN Services: 2014 - 2017 . ...17
Graphic - Akamai COGS Analysis: 2007 - 2013 ....18
Graphic - LimeLight Networks: COGS Analysis 2008 - 2013 ... .. .18
Graphic - Entertainment Media Revenue Share of CDN Market: 2006 - 2013 . ..20
CDN Business Operations, Market Dynamics, Technology and Account Acquisition Trends ..21
Account Acquisition, New Entrants and Competitive Forces 21
Retail and Transit Bandwidth Pricing Indicators: 2014 - 2015 22
Video Formats and Adoption Trends ..22
International Markets, Competition and Account Wins ..23
The Macro Market: CDN Accounts under Contract Swell by 141.4% in 2013/2014 YTD .23
Graphic - CDN Monthly Recurring Revenue Analysis: 2005 - 2013/2014 YTD 24
Graphic - CDN Accounts: Annual Analysis: 2005- 2013/2014 . . ..25
Graphic - CDN Annual Accounts: 2005 - 2013/2014/YTD .26
MRR Analyzed by Individual CDN: Average MRR Increased 8.8% in 2013 to $6719 . .. ..27
Graphic - CDN Monthly Recurring Revenue Analysis: 2005 - 2013 .. . 27
Graphic - CDN Comparative MRR Averages: 2005 - 2013 .. .. ..28
Graphic - Akamai Monthly Recurring Revenue (MRR) 2005 - 2013 ...29
Graphic - CDN Revenue and Market Share: 2010 - 2013 30
Graphic - CDN Revenue Analysis: 2010 - 2013 ....31
Graphic - CDN Cap Ex Investment: 2007 - 2013 ..32
Graphic - CDN Cap Ex Investment: 2007 - 2013 in $Millions ..33
CDNs Continue to Deliver Cap Ex Investment Efficiency Balanced Against Account Additions .34
Graphic - Cap Ex Analysis: Server Deployments and Account Growth: 2006 - 2014 ..34 Graphic - Server Deployment and Account Growth Comparison: 2006 - 2013/2014 .35
The CDN Sector Grew by 17.9% in 2013; Double-Digit Growth Forecast through 2017 36
Graphic - CDN Market Revenue Analysis: 2003 - 2017 . ..36
Graphic - CDN Market Revenue: 2003 - 2017 Retail Contract Value .37
Media and Entertainment (audio/video-excluding games) Contract Value Increased
By 5.4% in 2013 . ..38
Graphic - Total Media and Entertainment CDN Contract Value 2006 -2013 . .....38
Graphic - Total Media and Entertainment CDN Contract Value: 2006 - 2013 .. .39
Graphic - Media and Entertainment Percent CDN Revenue: 2006 - 2013 .40
Graphic - Media and Entertainment Market Value: CDN Segment 2006- 2013 .41
Graphic - Entertainment Media Revenue Share of CDN Market Value: 2006 - 2013 .42
Graphic - CDN Bandwidth Services Category Share: 2013 .44
Entertainment and Media Commercial Market Value at $3.35 Billion in 2013 . . ..45
Graphic - Commercial Bandwidth Market Value: Media and Entertainment 2006-2013 ...45
Graphic - Bandwidth Provisioning: US Commercial Market Value Audio/Video 2006-2013 ..46
Domestic CDNs are Forecast to Reach $3.36 Billion in 2014 Revenue ..47
Graphic - CDN Market Revenue Analysis: 2003 - 2017 47
Graphic - CDN Market Revenue: 2003 -2017 Retail Contract Value 48
Graphic - CDN Revenue Growth Rates: 2003 - 2017 49
Graphic - CDN Revenue and Account Growth Rates: 2006 -2013 .50
Graphic - CDN Revenue and Account Growth Rate Comparison: 2006 - 2013 ..51
International CDNs Estimated at $1.4 Billion in 2013 Contract Billing:
2014 Forecast at $1.76 Billion ..52
Graphic - CAGR US and Global CDN: 2006 - 2013 ..53
Graphic - CDN Global Market Value Comparison: 2006 - 2013 . 54
Graphic - Global CDN Market Value (Delivered by Domestic vs. International CDNs) 54
Graphic - Global CDN Market Value: 2006 - 2013 (Retail Contract Revenue) .55
Graphic - Global CDN Contract Revenue 2006 - 2013 ..57
Graphic - Global CDN Revenue Comparison: 2006 - 2013 58
Graphic - Gigabyte Pricing Increments: Annual Average 2006 - 2013 .60
Graphic - Retail Contract Pricing: Gigabyte Delivery and Annual Unit Declines 2006 -2013 .61
Graphic - Mbps Retail Contract Pricing: 2006- 2013/2014 62
Graphic - Retail Pricing: Mbps Delivery and Annual Unit Declines ..62
Graphic - Retail versus Transit Cost Decline Trends Comparison: 2006 - 2013/2014 64
Graphic - Retail and Transit Bandwidth Pricing Declines: 2006 - 2013 65

SECTION TWO ..66

Entertainment and Media: Video Drives Bandwidth Provisioning Billings and Total Commercial Market Value 2013 / 2014 ....66
Graphic - CDN Bandwidth Services Category Share: 2013 .. ..68
Graphic - Bandwidth Services: Commercial Market Value Share by Format 2013 . ... ....69
Graphic - Total Media and Entertainment CDN Contract Value: 2006 - 2013 . .....70
Graphic - Total Media and Entertainment CDN Contract Value: 2006 - 2013 .. ....71
Media and Entertainment Account for 37.3% of Total CDN Contract Value in 2013 . ...72
Graphic - Media and Entertainment Market Value: CDN Segment 2006 -2013 .. . .73
Commercial Market Value Analyzed against a Retail-Priced (Volume/Gigabytes Delivered Model)
Reveals a $3.35 Billion Potential Market . 74
Graphic - Commercial Bandwidth Market Value: Media and Entertainment 2006 - 2013 .75
Graphic - Bandwidth Provisioning: US Commercial Market Value Audio/Video 2006-2013 ....76
2013 Commercial Market Value: Entertainment and Media Bandwidth Analysis
By Content Category 77
Graphic - Digital Desktop and Mobile Music and Track Play Listening Hours:
Bandwidth Services Analysis and Market Size: 2013 .. . 78
Graphic - Virtual Video Views: Bandwidth Services Analysis and Commercial Market Value'13 80
In-Stream Video Advertising (pre/mid/post roll) produced 36.9 million gigabytes and traffic, and a bandwidth services market worth $39.9 million in 2013 .. . 81
Graphic - In-Stream Virtual Video Advertising:
Bandwidth Services, Provisioning Analysis and Value 2013 . 82
Graphic - In-Banner Video Advertising: Bandwidth Services and Provisioning Analysis 2013 ..83 Graphic - Download Music/TV Bandwidth Services and Provisioning Analysis 2013 ....84
2013 Transit Commercial Market Value: Media and Entertainment Bandwidth Analysis .85
Graphic - Digital Desktop and Mobile Radio: Backhaul Bandwidth Services Market Value ..85
Graphic - Virtual Video Views 2013: Transit Bandwidth Services Market Value 86
Graphic - In-Stream Video Advertising 2013:
Pre/Mid/Post Roll Transit Bandwidth Services Market Size . .87
Graphic - In-Banner Video Advertising: Transit Bandwidth Services Market Size 2013 . ..88
Graphic - Music/Movie/TV Download Transit Bandwidth Services Market Size 2013 ..89

SECTION THREE .. ..90

CDN Revenue, Accounts and Operational Analytics . . .. …90
Graphic - CDN Market Revenue: 2003 - 2017 Retail Contract Value . . . …91
Graphic - CDN Market Revenue Analysis: 2003 - 2017 . . ….. .92
Graphic - CDN Revenue Growth Rates: 2003 - 2017 .93
Graphic - CAGR US and Global CDN: 2006 - 2013 . . .94
Graphic - CDN Revenue Share: 2010 - 2013 . 95
Graphic - CDN Revenue and Market Share: 2010 - 2013 ..96
Graphic - CDN Sector Revenue Analysis: 2010 - 2013 …97
Graphic - CDN Revenue and Account Growth Rates: 2006 - 2013 100
Graphic - CDN Revenue and Account Growth Rate Comparison: 2006 - 2013 .101
Democratizing CDN: Large Numbers of Smaller Account adds Impact Sector MRR Averages .102
Graphic - CDN Monthly Recurring Revenue Analysis: 2005 - 2013 ..102
Graphic- CDN Monthly Recurring Revenue: 2005 - 2013 .103
Graphic- CDN Comparative MRR Averages: 2005 - 2013 105
QOS Performance and New Product Launches Signal Double-Digit Infrastructure Growth through 2017 .. 106
Graphic - CDN Server Infrastructure Deployed: 2005 - 2013/2014 .. ….. ..106
Graphic - CDN Total Server Infrastructure Deployed: 2005 - 2013/2014 107
Cap-Ex Investment Rose by 21% in 2013/2014 108
Graphic - CDN Cap Ex Investment: 2007 - 2013/2014 .. … 108
Server Deployments Increase by 15.8% in 2013/2014 ..110
Graphic - Cap Ex Analysis: Server Deployments and Account Growth: 2006 - 2014 ..110
Graphic- Server Deployment and Account Growth Comparison: 2006 - 2013/2014
Capital Efficiency Analysis 111
Cost Containment, Managing Bandwidth and Operational Efficiencies Key to Marginal Performance Improvements in 2014 - 2017 …112
Graphic - Akamai Gross Margin Analysis: COGS 2007 - 2013 .. ..112
Graphic - Akamai COGS and Gross Margin Analysis: 2007 - 2013 . . 113
Graphic - Akamai COGS Analysis: Bandwidth Component Cost Breakout . .115
Graphic - Limelight Networks: COGS and Gross Margin Analysis 2006 - 2013 .. 116
Graphic - Limelight Networks: COGS Analysis 2008 - 2013 . . …..118
Graphic - CDN Provisioning and Services: Summary Revenue, Account, Performance Metrics and Infrastructure Profile and Analysis 2003 -2017 (Part One) .. .119
Graphic - CDN Provisioning and Services: Summary Revenue, Account, Performance Metrics and Infrastructure Profile and Analysis 2003 -2017 (Part Two) .. .123

SECTION FOUR .. 127

Complete 2013 Desktop/Mobile Video Views by Site, Network, Channel,
Aggregator and Service by CDN Contract . 127
Graphic - Virtual Video Views 2013: Complete Professional, UGC and Social Destination Traffic
By Month and CDN Contract . . 128

SECTION FIVE .. .. 237

Complete 2013 Music Listening and Song Play Hours by Site, Channel, Network,
Aggregator and Service by CDN Contract . . 237
Graphic - Digital Desktop and Mobile Listening Database:
2013 Complete Year by Month and CDN Contract .. . . 238

EXECUTIVE FORUM: SECTOR Q and A'S . .. 260

Akamai .. . . 260
CDNetworks 267
ChinaCache . 274
Highwinds . 279
Level 3 .287
Limelight Networks 292
MaxCDN .298
Mirror Image ..302
RRSAT .. 309
TATA Communications 314
Verizon Edgecast .320
Yottaa .325

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