Web publishers distributing streaming content and media files rely on Content Distribution Networks such as Akamai, Limelight or Level 3 to scale cost effectively. As Web 2.0 has become richer in content, naturally CDN traffic has grown commensurately. In fact, new research from AccuStream Research estimates CDN market revenues at $1.37 billion for 2009, up 16.4 percent from 2008. CDN contract volume increased 23.3 percent over 2008, another strong growth indicator.
Another analysis by Streaming Media supports this finding, showing a market where “more content is being consumed, more often, at higher bitrates for longer periods of time on more devices.” Revenues for 2007 through 2013 are estimated to grow on a CAGR basis ranging from a conservative 21.2 percent to as high as 32.5 percent.
However, pricing is in decline, forcing CDNs to manage their margins with new efficiencies and cost cutting. For example, witness Google’s recent purchase of the video compression firm On2 Technologies for $106.5 million. Bandwidth compression can help reduce costs and network resources utilization.
As pricing becomes more competitive, look for more aggregation and exits, and more efficiency-related acquisitions to help manage costs and keep margins relatively healthy in the CDN space. All this is probably good news for CDN customers, at least in the short run.
Rick Ducey is the managing director for BIA/Kelsey. He is an expert in digital media innovations, competitive strategies, new product development and new business models, including digital ecosystem collaboration strategies.
Ducey oversees the firm's consulting, research and advisory services areas. He is also the program director for BIA/Kelsey's Video Local Media advisory service. This program provides coverage and analysis of how online, mobile and broadcast video technologies, competition, shifting consumer demographics and media usage trends are driving changes in the media ecosystem and SMBs and other advertisers can be successful in the new environment. Ducey assists clients with their business planning and revenue models, strategic research, market assessment, and designing and implementing digital strategies. He is also a cofounder of SpectraRep, one of BIA�s companies, which sells a patent-pending IP-based alerting system that he co-invented.
Prior to joining BIA in 2000, Ducey was senior vice president of NAB's Research and Information Group. In this position, he was in charge of the association�s new technology assessment, audience and policy research, strategic planning and information systems, including all Internet operations, and he also developed publications and seminars.
Before joining NAB in 1983, Ducey was a faculty member in the Department of Telecommunication at Michigan State University where he taught and did research in the areas of emerging telecommunication technologies and strategic market research. He also served on the graduate management faculties of George Mason University and George Washington University in telecommunications management and the University of Maryland, where he taught strategic market management and research methodologies. Ducey was selected as the Spring 2011 Shapiro Fellow at George Washington University where he teaches entrepreneurship in new media. He has published a number of research articles and papers in these areas and serves on editorial boards of leading scholarly journals in the communications field. He has also worked at radio stations WSOQ-AM/WEZG-FM and Upstate Cablevision in North Syracuse, New York.
Ducey received his Ph.D. from Michigan State University, M.S. from Syracuse University and B.A. from the University of Massachusetts at Amherst.
