Worldwide Video CDN Revenue $400 Million In 08, Grow To Over $1.4 Billion By 2012

Yesterday, on my Frost & Sullivan webinar (stream archives here) (download audio here) about the video CDN market, we released preliminary data from the upcoming Frost & Sullivan report entitled "World Content Delivery Networks Market". Due out next month, this report will break out the worldwide CDN revenue, specific to video delivery in the North America, Europe and Asia Pacific regions.

The preliminary data shows that the worldwide video CDN revenue will be a little more than $400 million in 2008, increasing at a Compound Annual Growth Rate (CAGR) of more than 30%. As the slide below shows, we expect the worldwide video CDN revenue to grow to more than $1.4 billion by 2012.

These numbers are very specific to revenue obtained for video delivery services by CDNs and does not include revenue from P2P based networks or any type of content outside of video. While the report, when released, will also break out P2P based revenue and include additional types of content like gaming, these numbers are for video delivery only. To obtain these numbers, we spoke to every major CDN provider in North America, Europe and Asia and obtained revenue numbers or guidance, from nearly every one, on what percentage of their revenue came from just video and from what region.

While there have been a lot of reports put out lately on the CDN market, I had yet to see one that breaks out revenue for just video delivery, which as everyone knows, is one of the fastest growing segments of the overall CDN industry. Delivering video is a completely different animal than delivering other types of content and we think it is important to treat it as such and provide data specific to that market. When released, the report will also detail the market drivers, restraints, market share, competitive analysis, and industry challenges specific to the video delivery industry.

Eight months ago, I wrote a post on my blog that gave out numbers on the size of the video CDN market. These Frost & Sullivan numbers are more accurate and more specific since we spent a lot of time interviewing every CDN, including those outside the U.S. Also, my previous numbers from last year contained revenue from some P2P based services and other content such as gaming, which is not really classified as video and should be put in the application category. These numbers also contain more realistic growth projections based on having spent weeks speaking to every major CDN.

That being said, what factors going forward have the ability to affect and alter these numbers? Clearly, many forces are at play in the market and faster adoption of HD content, mobile video and other consumer facing content services have the ability to grow the market faster. While some may assume that the market will grow larger by the entrance of new CDN players, like carriers or telcos, that won't change the market size, only the market share.

Putting exact numbers to any industry, let alone a specific segment of the industry like outsourced video delivery, takes collecting a lot of data and speaking with every vendor in the market on a regular basis as well as speaking to hundreds of customers. Once the report is finalized and ready for release, it will provide a lot more granular details on the data and will talk about market factors that could change the market sizing either way. Frost & Sullivan will be tracking the CDN market very closely over the next 12 months and we'll update these numbers based on new data we collect. I will also be doing additional webinars on the CDN market so I can answer as many questions as possible about the market and the industry's growth. You can always find the latest data we have on the size of the video CDN market at www.cdnmarket.com

Market sizing data from this post can be used by anyone as long as you credit Frost & Sullivan.

Comments

[Randy Stackhouse]

Dan, thanks for this post and for the webinar you did. It was really helpful and gave me a lot of insight into the market. I appreciate all the work you do to try and bring education to the video market. Look forward to more data from Frost on this. Cheers.

[Gerben Hazelaar]

Dan,

do you know the volume that the CDN's currently do in video delivery?

I'm interested in number of streams per month and how much traffic they generate.

[Yossi]

Dan,
Thanks for the post and for the focus on video delivery
Are slides from the webinar avaialable anywhere ? Missed it due to a holiday
Yossi

[Dan Rayburn]

Hi Gerben, I don't know the volume on total GB's pushed or total streams delivered for most of the CDNs. They don't give out that info and even if they did, it would not give us any indication if they are going to be profitable. Many years ago a CDN named iBEAM was always quick to publish stream numbers and claimed to be the first to delivery 1 billion streams. Great number, but they didn't make money and went under during the bubble burst.

[Gerben Hazelaar]

Hi Dan, as a potential customer, I'd like to poke through the marketing fog and see what a CDN really can deliver. CDN's who don't publish their volumes or actual capacity, have something to hide, IMHO.

Being profitable is another question. I know that most the public companies are not profitable. Actually, they are buying customers right now, just to show to shareholders that they are growing. In the long run, they are going down this way. I'm not confident to outsource my content delivery to a company that can be killed by it's shareholders within in a year or two.

[James Conrad]

Hi Dan, thanks for the report. Can you estimate how much of this amount is live (e.g., March Madness, MLB, Olympics, etc.) v. on-demand (e.g., YouTube)? Thanks!

[Dan Rayburn]

Hi James, sorry, I have no break out on what is live versus on-demand as far as revenue goes. The problem is that while the CDNs know what percentage of their overall traffic is live, they don't charge differently for the traffic. They are all the same bits so no easy way to break it out.

[Michael B.]

Hi Gerben,

Nice piece. I agree that a research study specifally detailing the video segment has been long overdue. Does the report make any mention of the total revenue share breakdown among the different stakeholders in the video market (not just the CDN vendors but Telcos, content developers, etc)? What would a typical rev share breakdown look like for this market?

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[Dan Rice]

Hi Dan
I saw this webcast the first time around, but the archive no longer seems to work. Do you know if Frost has released the report yet? It didn't obviously show up at frost.com when I searched for "World Content Delivery Networks Market" Thx Dan

[Dan Rayburn]

Hi Dan, the archives still work. I just clicked on the link and listened to it.

The report is not out yet, I am waiting to hear the date of release and will post that date as soon as I get it. Thanks.