Revenue Forecast

The base year revenue estimate is $14.95 billion, with a CAGR of 8.8% for the study period from 2023 to 2030.

The Impact of the Top 3 Strategic Imperatives on the CDN Industry

Innovative Business Models

• Why:
  • Traditionally, CDN's operated on the business model of charging per byte of traffic. While this model persists, it is increasingly commoditized.
  • CDN providers have adapted to decreasing margins in the traditional line of business by expanding the range of services they can sell to customers, leveraging emerging technologies, and creating more subscription-based packages.
• Frost Perspective:
  • Large CDN providers are diversifying their portfolios with higher value-add networks and security services, reshaping the space to consider a wider view of infrastructure across the internet.
  • At the other end of the spectrum, a range of new niche or specialized providers are gaining traction by offering managed services and simplified pricing.

Competitive Intensity

• Why:
  • Top-tier providers are competing to craft feature or function innovations and enhancements to draw in new customers and expand existing relationships into wider ranging packages.
  • Upstarts provide simplified services by running a software stack on top of multi-cloud infrastructure, bare-metal virtual machines, or even another provider’s network.
• Frost Perspective:
  • Venture capital funding has slowed; therefore, the mid tier of the sector is hollowing out.
  • In recent years, infrastructure-based providers have consolidated, with large providers getting even larger. At the same time, the upstarts are gaining traction by easing the complexity of setup and management and minimizing petty charges.

Industry Convergence

• Why:
  • Competition and cooperation are common among CDN operators, cloud service providers, and network operators as the landscape meets the varieties of needs of customers assembling multi-CDN deployments.
• Frost Perspective:
  • CDN providers see opportunities in edge computing, increasingly mingling in a space where hyperscale cloud providing and telecommunications providers are moving and competing for a fast-growing total addressable market.

Scope of Analysis

• This study examines the market of CDN vendors.
• A CDN is a group of interconnected servers distributed across a wide region that stores content closer to the end user.
• Utilizing a CDN shortens the distance between the server and the end user, accelerating content delivery and making the end user’s experience with a website, video, or application faster.
• This research examines commercial CDN providers (those caching content in their own or partnering networks of servers), considering telco CDN providers (telecommunications operators using their own transit and server infrastructure) and a new type of cloud platform providers leveraging a CDN and serverless functions.
• Platforms such as over-the-top (OTT) video-on-demand services that build and operate their own in-house CDNs have been excluded.
• Revenue figures represent the revenue of vendors whose core service and background are in CDN as well as the CDN division or a portion of companies offering other services, such as cloud, telecommunications, or enterprise services.

Segmentation

Total CDN Industry

Delivery

• Traditional delivery remains necessary despite its declining margins.
• Indeed, delivery is resilient in the face of challenges and will remain an essential service and a large portion of market revenues.

Edge Compute

• Edge development has been somewhat slower than some expected. Hyperscale cloud services have been able to supply capacity and functional performance to applications.
• Inference AI workflows now seem poised to supercharge edge workflows.

Security

• Security services are a key new revenue driver for many providers and an essential part of the value proposition for most providers overall.

Growth Drivers

• Demand for digital content continues to grow as global audiences consume online video and spend time gaming, working, shopping, and increasingly embracing digital transformation. Global audiences expect low-latency performance, which enterprises see as a differentiator.
• As organizations build more complex systems, cybersecurity risks increase. Consequently, CDN providers leverage their distributed networks to furnish a widening range of integrated security services.
• Enterprise customers recognize the importance of advanced security and real-time data processing and increasingly prefer integrated functions from a single vendor with distributed architecture.

Growth Restraints

• While CDN providers would like to expand their global reach, many are deferring investments in hardware and software in light of high interest rates and constricted budgets in many areas of the tech industry.
• Some internet service providers and internet exchange points are reluctant to work with external networks and charge high fees, adding obstacles and complexities for CDNs seeking to expand and speed coverage.
• Data sovereignty and localization concerns add to the friction and complexity to global content delivery.