Is CDN Consolidation In the Cards in Next Few Years

The CDN industry is growing at a healthy clip, and many CDNs are experiencing excellent revenue growth. Akamai recorded 24% growth year-over-year in 2014, and start-ups like Yottaa, Instart Logic, and LeaseWeb CDN continue to delivery triple digit growth. Akamai has 30+ competitors globally, including pure-plays CDNs, hybrid CDNs, and non-CDNs, yet they exceed growth expectations quarter after quarter. Akamai is the barometer of the industry, and as long as they continue grow, so does the overall sector. How long will the CDN sector continue to grow? Or better yet, how many CDNs can the market support before it starts bottom out, perhaps leading to consolidation or asset sales? Based on the current trends, we don’t see widespread market consolidation in the next five years.

Presently, there are many positive trends occurring, and emerging that will increase the need for the CDN. The first trend is the recent rise of cyber attacks. The biggest beneficiaries of the skyrocketing DDoS attacks are CDNs. Thanks to DDoS attacks, CDNs now have a new revenue stream that was non-existent a few years back. At one time, DDoS Mitigation was the domain of the Neustars of the world, but not anymore. Another trend is the IoT. In the next few years, the explosion of Internet of Things with its trillion+ devices connecting to the Internet is likely to create another big revenue opportunity for CDNs. Lastly, in the next few years, ultra HD video streaming, online virtual reality, and next-gen online gaming is going to push data transfer rates that blow past Cisco estimates, as the next iterations of GPON, WiFi, and 4G/5G technologies push the boundaries of the imagination.

Content Delivery Infrastructure Market

Ecosystem and Akamai

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