Network Functions Virtualization (NFV) on Horizon to Unify CDN Fragmentation

Oyster Bay, New York - 11 Sep 2013

Content Delivery Networks (CDNs) have evolved into multiple different but related markets around diverse business needs. Over the Top (OTT) video providers such as Netflix, as well as large enterprises such as Microsoft (for Windows update) now deliver enough content to justify building their own international and cross-network CDNs, while major service providers such as AT&T, Deutsche Telekom, and Comcast have both in-house CDNs around their own content, as well as leased CDNs they provide to their customers. Classic managed CDN providers such as Akamai, Limelight, and Level 3 sit in the middle.

The most significant market segmentation within CDN markets is owned CDNs purchased as equipment versus rented CDNs purchased as a managed service. The service CDN market for premium video will grow from 1.2 billion in 2013 to 2.8 billion in 2018 (CAGR 17.8%) while the hardware CDN market for video services will grow from 1.0 billion to 1.7 billion (CAGR 11.8%) in the same timeframe. Video delivery is responsible for about 46% of the total CDN market, which includes website acceleration for e-commerce, software downloads, enterprise, education, and government services.

“Owned CDN vendors such as Cisco and Ericsson are looking at how to transition their business models from hardware-centric to software and service-centric business models, while Amazon Web Services and Microsoft Azure Media Services have a slight lead on cloud distribution of video,” according to ABI Research practice director Sam Rosen. “Operators, meanwhile, are looking to open source CDN technologies to reduce the upfront costs and vendor tie-ins for the short-term, while they are investing in Network Functions Virtualization (NFV) in the long-term which can allow CDNs supporting multiple business cases to flexibly share a common hardware platform.”

These findings are part of ABI Research’s Cloud Video and Video Hardware Research Service.

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