CDNs, Computer Platforms and IP Data Services 2017 – 2020: Revenue and Operations Analytics

  • ID: 4339964
  • Report
  • Region: Global
  • 80 pages
  • AccuStream iMedia Research
1 of 5
A Total of $8.3 Billion in Capex was Invested in Infrastructure Updates/Expansion, including Amazon in 2016

FEATURED COMPANIES

  • Akamai Technologies
  • CenturyLink
  • Facebook
  • Hulu
  • Level 3
  • Microsoft
  • MORE

A complete analysis of the sector the report 'CDNs, Computer Platforms and IP Data Services 2017 - 2020' details industry players, their service offerings evolution, bandwidth pricing, operational performance, revenue, revenue per account, number of accounts, servers installed, CapEx, R & D and contains briefings with key executive talent.

CDN and adjacent computer platform and IP Data vendor marketplaces, including AWS/Cloudfront, are forecast to reach $33.1 billion in 2017 revenues, rising to $39.8 billion in 2018, framing a 15-year CAGR (2003 – 2018) of 31%.

Excluding AWS, the sector is primed to produce a $16 billion business, growing at a 15% run-rate for the year, including Level 3 where CDN and IP/Data service units contribute 47% to topline revenue.

A nuts and bolts business ops analysis of the sector report: CDNs, Computer Platforms and IP Data Services 2017 – 2020, examines industry players, value –added service offerings, bandwidth price changes, benchmarking performance metrics, revenue, revenue per account, total accounts, server infrastructure, CapEx, R & D, augmented by insightful briefings with key executive talent.

Operations analysis for each services vendor date from 2003 through 2016, with market projections cast out to 2020. The opportunity for CDN and related telecom, networking and compute platform service vendors remains large, as geographical and operational economies of scale compel industry players to get big or get bought out.  

Throughput volumes, particularly video, continue to swell across the globe, including China and India, and account win competition remains red hot, thrusting the sector into another round of consolidation in 2016, with CenturyLink, ChinaNetCenter and StackPath stepping up as major consolidators.

Akamai Technologies has been one of the most aggressive acquisitors in the sector, buying across a wide range of product solutions (from pure play CDN, to security, acceleration and OTT software), augmenting its internal development stack. 

A spend/cost analysis associated with digital video hours delivered in 2016 though CDN and self-hosting platforms (i.e.; Facebook, YouTube, Netflix, Hulu, Instagram and Twitter) based on gigabytes transferred and Mbps pricing (retail and backhaul) leading to total available commercial market value is included.

CDN gross margins range from 40% to 65%, while the largest components to COGS continue to be bandwidth and co-location fees, even as bandwidth prices continue to fall at the retail level, reaching as low as $0.01 per gigabyte for an aggressively priced volume-based contract signed this year.  A total of $8.3 billion in CapEx was invested in infrastructure updates/expansion, including Amazon in 2016. The self-hosting giants, including Microsoft, invested $16 billion in infrastructure in 2016.

CDNs also benefit from growth in the self-hosted part of the market, and provide network redundancy/failover, hosting, transport, IP services and multiple backend services support to OTT operators like Netflix.

CapEx investments are aimed at scaling the network and cost control/efficiency improvements. Upgrades include servers, faster chips, better memory and capital software developed in-house or acquired. CDNs report that improving the quality of end user experience is a high priority.

READ MORE
Note: Product cover images may vary from those shown
2 of 5

FEATURED COMPANIES

  • Akamai Technologies
  • CenturyLink
  • Facebook
  • Hulu
  • Level 3
  • Microsoft
  • MORE

EXECUTIVE SUMMARY

  • CDN ANLYTICS AND OPERATIONS BENCHMARKS 2017 - 2020
  • CDN REVENUE FORECASTS THROUGH 2020: DOUBLE-DIGITAL SECTOR GROWTH
  • CDN REVENUE AND MARKET SHARE BREAKOUT: HISTORICAL PERFORMANCE 2010 - 2016
    • Get big or get out: StackPath acquires revenue and operations scale in 2016/2017
  • THE U.S. CAPTURES 60% OF TOTAL CDN REVENUES IN 2016
  • EFFICIENCY: CDNs OPERATE AT SCALE ACROSS THE GLOBE
    • Filling unused capacity across time zones and geographies does not require additional CapEx
    • Delivery peaks and valleys: Content delivery that can be scheduled (i.e. game downloads, software updates) is a popular file format and business segment
  • BILL AGAINST GIGABYTES DELIVERED
  • MEASURED UNITS FOR VALUE-ADDS
  • AS THROUGHPUT VOLUMES INCREASE, RELENTLESS FOCUS ON MARGINAL INTEGRITY, OP EX COST CONTAINMENT
    • CDN segment MRR averaged $17,699 for 2016, up 5.4%
    • Akamai is a pure-play CDN that has evolved its business model and suite of services to grow topline and MRR
    • Limelight Networks' MRR performance was at the average benchmark level for the segment
  • CDN COGS ANALYSIS: WHERE THE MARGIN BATTLE IS WAGED AND DIVIDENDS WON
    • As throughput volumes increase, CDNs must aggressively manage bandwidth and co-lo expense CDN is a business with healthy gross margins
  • CDN Terminology and Definitions

SECTION ONE

  •  CDN MARKET SECTOR 2017 - 2020: ENTERPRISE HARDENED TECHNOLOGIES PROVIDE SLA SERVICE AND QUALITY AT SCALE
    • Expanding scope of CDN in 2017: Compute platforms and IP Data services included in revenue analytics
    • Self-hostng heavyweight: Netflix and YouTube are the twin pillars of digital video viewing hours, one subscription and the other ad supported
    • Giant self-hosting audience platforms: Facebook and Instagram are evolving toward more video centric programming; expect both ad-supported and pay-as-you go services rollout over the next several years
    • CDNs can and do benefit from self-hosting partnerships
  •    ONLINE VIDEO VIEWING HOURS EQUALED 14.6% OF EQUIVALENT LINEAR/TIME-SHIFTED TV TIME IN 2016
    • Netflix, YouTube, Facebook/Instagram and Twitter viewing hours dwarf those delivered by broadcast/cable brand extensions online
    • A Deeper Analytics Dive: Excluding OTT boxes and duplicate hours: A 14.6% comparable piece of linear viewing in 2016
    • Non-linear video viewing analysis shows TV/Movie and social media dominance in market segmentation scenarios
    • Netflix alone delivers the equivalent of 6.8% of total linear/time-shifted television
    • In a complex, highly innovation-driven market environment, CDNs simultaneously compete and partner with large self-hosting entities
  •     CDN REVENUE FORECASTS THROUGH 2020: DOUBLE-DIGITAL SECTOR GROWTH
  •     AWS USHERS IN A NEW ERA OF CDN-LIKE BUSINESS WITH COMPUTE AND DISTRIBUTION SCALE AND SOLD AS RAW INFRASTRUCTURE
    •     AWS has ignited the CDN sector growth: A 2011 - 2016 CAGR of 35.5%
    •    Excluding AWS, the 2011 - 2016 CAGR comparable is 24.2%
  •     CDN REVENUE AND MARKET SHARE BREAKOUT: HISTORICAL PERFORMANCE 2010 - 2016
    •   Selling In: what the market is buying, where and why: 2017 - 2020
    •   Prices per gigabyte transferred hover under $0.10 in 2017
    •   95/5 (Mbps) pricing below $5 for volume accounts, and lower for backhaul
    •   Digital video commercial market value (including self-hosting networks) worth the equivalent of $1.4 billion to $4 billion
    •   Digital video delivery analysis comparison 2016: Gigabytes transferred and Mbps

SECTION TWO: CDN OPERATIONAL PERFORMANCE AND BENCHMARKING

  • OPERATIONAL ANALYTICS: CDN/COMPUTE PLATFORM AND IP DATA INFRASTRUCTURE PERFORMANCE: 2017 - 2020
  • EFFICIENCY: CDNs OPERATE AT SCALE ACROSS THE GLOBE
    •         Filling unused capacity across time zones and geographies does not require additional CapEx
    •         Delivery peaks and valleys: Content delivery that can be scheduled (i.e. game downloads, software updates) is a popular file format and business segment
  •     BILL AGAINST GIGABYTES DELIVERED OR ON A MEASURED UNIT BASIS FOR VALUE-ADDS
  •     AS THROUGHPUT VOLUMES INCREASE, RELENTLESS FOCUS ON MARGINAL INTEGRITY, OP EX COST CONTAINMENT
    •  CDN segment MRR averaged $17,699 for 2016, up 5.4%
    •  Akamai is a pure-play CDN that has evolved its business model and suite of services to grow topline and MRR
    •  Limelight Networks' MRR performance was at the average benchmark level for the segment
  • CDN COGS ANALYSIS: WHERE THE MARGIN BATTLE IS WAGED AND DIVIDENDS WON
    • As throughput volumes increase, CDNs must aggressively manage bandwidth and co-lo expense
    • CDN is a business with healthy gross margins
  •     CDN, COMPUTE AND HOSTING PLATFORM CAPEX JUMPS 76.1% IN 2016
    •  A total of $8.3 billion in CapEx was invested against infrastructure updates/expansion
    •  Deployed CDN, compute and IP data servers increased 23.4% in 2016/2017, and number over 1 million
    •  Facebook, Apple, Netflix, Google and Microsoft deployed over $16 billion in infrastructure CapEx in 2016
    •  Including StackPath, Akamai, AWS/Cloudfront and Level 3, CDN annual contracts increased by 38% in 2016
    •  Sector revenues grew by 31.9% in 2016, account growth by 38.1%
    •  Infrastructure efficiencies seen in 2016, driving better balanced server/account growth comparisons
  •     CDN PROVISIONING AND SERVICES: SUMMARY REVENUE, ACCOUNT, PERFORMANCE METRICS AND INFRASTRUCTURE PROFILE AND ANALYSIS 2003 - 2020
    • Sector benchmarking analytics, broken out by CDN

NOTES/LEGEND TO CDN OPERATIONS ANALYSIS

  •     CDN PROVISIONING AND SERVICES: SUMMARY REVENUE, ACCOUNT, PERFORMANCE METRICS AND INFRASTRUCTURE PROFILE AND ANALYSIS 2003 - 2020 (Part 2)
  •     CDN PROVISIONING AND SERVICES: SUMMARY REVENUE, ACCOUNT, PERFORMANCE METRICS AND INFRASTRUCTURE PROFILE AND ANALYSIS 2003 - 2020 (Part 3)

INDUSTRY BRIEFINGS / Q & A's

  •     AKAMAI TECHNOLOGIES
  •     LEVEL 3
  •     LIMELIGHT NETWORKS
  •     STACKPATH
Note: Product cover images may vary from those shown
3 of 5

Loading
LOADING...

4 of 5
  • Akamai Technologies
  • Apple
  • CenturyLink
  • ChinaNetCenter
  • Facebook
  • Google
  • Hulu
  • Instagram
  • Level 3
  • Limelight Networks
  • Microsoft
  • Netflix
  • StackPath
  • Twitter
Note: Product cover images may vary from those shown
5 of 5
Note: Product cover images may vary from those shown
Adroll
adroll