Market Size For Video CDN Was $450-$500 Million This Year: Should Grow To $800 Million For 2008

As we near the end of 2007, I've seen a few reports estimating the CDN space to have been anywhere between $800 million and $1.4 billion for the year. The reports I have seen do not break out what specific "CDN" products they are talking to and how those numbers were calculated. So with that in mind, here is how I sized the market for 2007 and the data I used to come up with the number. This does not include revenue numbers for P2P only based vendors.

The number I am talking to is for the outsourced delivery of video in the U.S. market and is specific to video delivery, be it streaming, progressive download, live or on-demand. I also looked at all outsourced CDN services and not companies who sold products or services for internal delivery, such as Cisco's CDN solution.

While not all of the companies listed below provide public data on their revenue, many of them tell me off the record what they are billing or I have other data to know their revenue. In these cases, I have grouped some of those companies together below so as not to expose data they have given me privately. In no particular order:

- Internap (run rate of about $24 million for 2007, nearly all of which comes from the U.S.)

- Limelight Networks (estimated to do about $105 million for 2007 and I estimate about $95+ million of that to be from the U.S.)

- Akamai (it is estimated that about $400-$450 million of their approxiametly $625 million $900 million in revenue comes from their CDN offering. What percentage of that $400-$450 million is specific to video and comes from the U.S. market is up for debate, but I estimate it to be about $300 million.) Note: The $900 million number I originally quoted is their 2008 revenue guidance, not 2007.

-  Level 3 (didn't do much in the way of video delivery in 2007 since their streaming product only recently launched, however their CDN product for video downloads has been around for about half the year. Estimated 2007 revenue about $2 million.)

- VeriSign (why I don't have exact numbers for VeriSign, taking the European business out of the picture, I estimate the CDN revenue in the U.S to be about $8 million for the year, the majority of which was P2P based from the Kontiki product.)

- Mirror Image, CacheLogic, Panther Express, CacheFly and Advection.NET (combined, they will do about $20 million in video delivery for 2007, U.S. based.)

- EdgeCast, CDNetworks and BitGravity (combined, I estimate these companies did about $5 million for the year as would be expected since they all just recently launched their services in the later half of the year.)

- PEER 1, NaviSite and Ignite Technologies (combined, I estimate they did about $8 million in 2007 for video delivery services in the U.S.)

- Regional service providers. While not typically not classified as CDNs as they tend to go after small and medium sized business, they still provide outsourced video delivery services and tend to focus in the U.S. market in particular. (all of these companies combined did under $20 million in 2007.)

So based on that data, the market for outsourced video delivery services in the U.S. for 2007 comes in at $482 million. Factor in an error margin of $20-$25 million and the market for video delivery services in the U.S. for 2007 was between $450-$500 million. Very different than the $800 million and $1.4 billion number that is being reported.

The real question is what it will grow to in 2008? Based on what I am seeing in contract terms, increased volume of bits, higher bitrates, etc... I expect to see the U.S. video delivery market grow to about $800 million for 2008. If you factor in the revenue for P2P delivery networks in the new year, that number could go up another $50 million.

I know some may disagree with my market size numbers and that is fine, but if you can't provide the data to back up the number you published in a report, it's hard for anyone to take that number seriously. Anyone who wants to quote any of my numbers above in a report, press release, on their website or any other format is welcome to do so as long as they attribute it to me by name.
 

Comments

[Davis Freeberg]

This is a really great post. Sometimes its hard to dig into all of these numbers and your article does a good job of outlining the trends, while justifying your assumptions. The only thing that I didn't understand was why you focused exclusively on the US? Shouldn't we be looking at the international growth of online video? It seems to me that a video stream overseas should be just as valuable as in the US. Can you help me better understand why you feel its helpful to break down this market by geography?

[Dan Rayburn]

Hi Davis, I break it down based on geographic location due to the fact that in other parts of the world, you have many different vendors. For instance in Asia, there are CDNs that don't offer services in the U.S., so it is different companies to track. Not that I can't track other parts of the world, but I have the most data and insight into the U.S. and Europe.

The other issue that makes it hard to track revenue is that most companies don't split out where their revenue comes from for a specific product like CDN. So that makes tracking CDN revenue outside of the U.S. even more difficult. Also, the U.S. market for CDN services pertaining to video is the largest market, so tracking that one will give you some trends of what can be seen in other parts of the world.

Thanks for reading and commenting.

[grinsandfun]

Dan -

Your numbers are pretty close on the size for STREAMING video. (I know that is what your focus is on & what you deem as a CDN... though the true CDN's are doing more than just streaming videos, it is also object delivery / software delivery and helping the experience of using the web more effectively thru a partner).

I do have to point out that your overall # for Akamai is a bit high on the revenues. They are closer to a 615-625 MM company for 2007. (and CDN Networks has been around for 7 years with the majority of their revenue wrapped around object and software delivery for the US)

[Dan Rayburn]

Thanks for pointing that out. I quoted their 2008 revenue estimates, not 2007. I have corrected that.

Also, please note these numbers are not for "streaming" delivery but rather video delivery. Streaming is just a protocol, so these numbers include all forms on online video delivery, streaming or downloading, live or on-demand. But you are right in that I don't track the other forms of content delivery like apps and image hosting.

[Alex Wolfe]

Dan,

Useful figures, do you have any for the European market or the rest of the world?

e.g NTT, BT, France Telecom, Telefonica, T-Systems or Belgacom?

Alex Wolfe
Astream.com

[Edmund Lee]

Interesting breakdown. I think you would be surprised how much activity is happening in Asia related to Content Delivery. I realize that your numbers are US specific. However do not underestimate companies like Chinecache (China) and CDNetworks (South Korea). These asian companies tend to have less visibility but they are doing deals left and right that serve local audiences. A lot of asian countries have very very fast 'internal' connectivity and move lots of bits - putting US infrastructure to shame. Some Asian telcos are also getting into the game but I am doubtful of their ability to execute in this space. Also I see no mention of up and coming US players like Voxel or PantherExpress both of which are doing real revenue and have real customers (unlike some other companies you have mentioned). In addition a lot of companies are using S3 to deliver video. I know S3 is not a CDN but the writing is on the wall there, especially with their European expansion. Nice blog and keep up the good work
-efl

[Jeff]

Nice review... you did't include other CDNs like

http://www.valuecdn.com/ http://www.chinacache.com/

and many others. Thanks for the overview & market share.