CDNs Vendors Raised Nearly $300 Million In Past 18 Months

In the past year and a half, more than 15 video delivery vendors, including P2P based providers, have raised almost $300 million in capital. CDNetworks, EdgeCast, Panther Express, Grid Networks, Highwinds, Velocix, Itiva, Move Networks, Pando Networks, Rinera, BitTorrent, ChinaCache, Rawflow and Oversi combined raised $282.85 million in 07' and 08'. And that number does not take into account other CDNs who have already raised money but have not yet announced details. In addition, there are also at least four providers, some new, some not, who are out in the market raising a new round.

When all is said and done, at the end of this year, I expect we'll have over $400 million raised by CDN vendors for 2007 and 2008. And with the market size for video delivery services in the U.S. being around $450 million in 2007, that's a lot of money raised as compared to the size of the market. I'm afraid that many investors are going to need the CDN market to grow a lot faster than it can in order for them to see the kinds of returns they are probably expecting.

Comments

[HankG]

Time for a shake. I think most hope to be bought by bigger CDN's. The ones that survive are the ones with the deepest pockets and the ones who actually make money. I bet that 3 our of 4 CDN's won't be profitable in the next few years. As a potential customer I would not want to bet on a loss leader.

[Andy]

HankG, you obviously work at a CDN, most likely Akamai, so why don't you just come out and post openly and make your case. You have a valid point so man up and put your name behind your brand rather than trolling.

[JohnTeal]

Clearly, with all the talk about video and streaming media over the web, mobile devices and 'convergence', it's not too difficult to look a step or two into the future and see that while the hardware technologies are in great flux, the bedrock uniform player in the marketplace is going to be the need for a CDN. Many of these newer players are, as HankG suggests, simply speculators. The CDN space, however, like food and engery, is the 'no-brainer' investment opportunity.

As for your comment, Dan, alluding to a limited market size for CDN, that's like saying -- standing on the edge of the Western frontier in 1850 -- that the future is on the East Coast. Give me a break. The CDN space may be a little 'Wild West' currently, but that's what makes it so exciting -- it's the land of opportunity. "Go west, young man -- Go West!"

[hankG]

Andy, I don't work for Akamai but I am in the streaming business.
And I am still wondering why this blog is so focussed on:

1) the USA
Look at Europe and Asia!

2) Big CDN's who are losing money
It's nice that xxCDN made $100m this year. But how much did they lose? Again?
As potential customer I would prefer to use a profitable CDN. I prefer a private CDN that does 5m in revenue and 2m profit above a public CDN that does $100m revenue and $50m loss. Investors who put their money in public CDN's should open their eyes. Bubble 2.0 is around the corner.

[Dan Rayburn]

Hank, maybe you have not read the blog for awhile, but I have covered many smaller CDNs who are private. Also, can you show me who is a profitable CDN with data to prove it? Private companies don't give out that info to the public so you are asking me to highlight, non-public companies with data that does not exist in the market.

As for Europe and Asia, again, I have at least 5 companies on my list from those regions. You keep saying I should have more yet aren't saying who those companies are. I am open to adding to the list but don't see you suggesting any.