CDN 2014 – 2017: Operations and Analytics

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Date: 28-May-2014
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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’ stransition 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:

  • Bandwidth pricing stability expanding top line while lowering COGS;
  • Marginal performance paybacks;
  • Value added services addressing tech complexities–accounts requiring quality, reachand security at scale—deciphering media formats, device fragmentation and monetization tools that improve MRR; and
  • 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, Cd Networks, China Cache, Mirror Image, Level 3, High winds, Cloud flare, Tata Communications and Max CDN, 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.

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  34Graphic – 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 & 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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