Video CDN Market to Grow to More Than $1 Billion in 2012
While video traffic continues to grow, prices will keep on dropping, keeping the annual compound growth rate for the video CDN market to between 40-45% for the next two years.
Video content delivery is shaping up to be a more than $1 billion market in 2012, said Streaming Media executive vice president Dan Rayburn at this year's Content Delivery Summit. He added that, despite marketing hype about how huge and "revolutionary" the proliferation of online video and connected devices is, that's still a relatively small number—telcos, for instance, often do $5 or $6 billion in business on a single product.
Right now, the video content delivery market—as opposed to the gross content delivery market that includes audio, applications, and other data—is approximately $752 million, with a compound annual growth rate of 38%. Back in 2008, Streaming Media predicted the market size this year would be just over $1 billion, and Rayburn says that the market didn't grow as large as expected for two reasons: Significant price drops in 2008 and 2009 (especially 2009, when prices fell on average 45%), and the global economic crisis that began in late 2008. Rayburn says he expects that the market will grow to more than $1 billion in 2012.
Rayburn is predicting a 40-45% growth rate in 2012 and 2013, noting that even though video traffic is expected to rise significantly, with every spike in traffic comes a drop in pricing, keeping the overall growth rate down. In Q4 of 2010, for 500TB-per-month deals, the average high price was about 5 cents per GB delivered, with a low of about 1.5 cents per GB delivered. In Q1 2011, Rayburn says he saw low prices of .75 cents per GB, and a high of about 3 cents per GB. At a petabyte or more per month, Rayburn says he's seeing an average price of about 1-1.5 cents per GB. An "average customer," with 750-800 TB per month, is likely to see prices in the 3-3.5 cents per GB range.
Rayburn provides much more context, many caveats, and plenty of insights into these trends in the video below. Click here for the slides from the presentation, called "CDN Data: Pricing, Contract, Volume, and Market Sizing Trends."
CDN Data: Pricing, Contract, Volume and Market Sizing Trends.
This presentation will share the latest data on the size of the content delivery and transparent caching markets, as well as expected growth forecasts for both revenue and traffic volumes. Attendees will also learn the current pricing points for video delivery services and hear about the market drivers and trends that will determine what customers pay in the future. There will also be an extensive Q&A session, so this is your chance to ask questions pertaining to current or future CDN pricing and market drivers.
Speaker: Dan Rayburn, Executive Vice President, StreamingMedia.com
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