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Futurewatch: Content Delivery—A Sea Change in the CDN Market
The CDN market has grown an a remarkable rate thanks to the increased prominence of online video, and that trend doesn't appear to be slowing down.
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The fact that online video is growing tremendously is an obvious cliché, but it continues to be one of the more exciting trends in the digital industry since internet traffic has grown several times over in the last 3 years because of web video. User-generated content burgeoned everywhere and provided millions of videos to consumers globally. Flash Video transformed the way people consumed content through a browser-embedded experience.

Consumers now truly have access to video on any platform—no holds barred. Video compression is consistently improving, perpetrating this reality. With high-quality streaming and progressive downloads coming to consumers via TVs, computers, phones, and gaming consoles, the future is bright for video delivery.

Delivering video content has been a differentiator for many CDN vendors. As far back as 2002, companies such as Limelight Networks and VitalStream (now part of Internap) entered the market, offering video delivery solutions only. Video that required high bandwidth and the usage of multiple formats and resolutions made it a niche application.

However, a combination of several factors, such as aggressive broadband adoption worldwide and a sudden boom in user-generated video portals in 2005, led to a tremendous spike in demand for seamless video content delivery services over the web by enterprise as well as media and entertainment companies. Today, video delivery is a vital application offered by most CDN vendors.

From 2005 to 2007, the CDN market grew at a compound annual growth rate of 48% globally, while some vendors boasted of growth rates of more than 60%. While there are a number of content delivery applications that have contributed to the growth of the total market, video has been a key driving force.

"As video content continues to be consumed more often, for longer periods of time, at higher quality and on more devices, there is an increasing demand for video content delivery services," says Frost & Sullivan principal analyst and Streaming Media executive vice president Dan Rayburn. "As new devices like the Xbox 360, TiVo, and Roku allow more consumption of video, content owners will continue to make progress with online video business models involving video on demand and video advertising. As the adoption of these devices and business models grow, the need for content delivery networks is only increasing."

In a recent research report on the video content delivery networks market, Frost & Sullivan analyzed the growth in video content delivery across regions and industry verticals and provided insights into various market trends (www.cdnreport.com).

Frost & Sullivan estimates that the video CDN market will grow from nearly $400 million in 2008 to more than $1,500 million in 2013 as the industry projects an aggressive and unhindered cycle of demand and supply of solutions for web-based video delivery.

Table 1 shows the growth trends in video CDN revenues and the total CDN market from 2007 to 2013. The ratio of video to total content delivery is increasing exponentially.

Table 1
Table 1. Video content delivery networks’ market growth trends in video CDN revenues in total CDN market (worldwide), 2007–2013

Frost & Sullivan has also analyzed an alternative scenario in the research that evaluates the possible impact of the global recession on the market and how it will affect the forecasts; that analysis is available in the report at www.cdnreport.com.