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Global Licensed/Managed Content Delivery Networks (CDN) Market

Telcos and operators fail to get into the content delivery networks (CDN) business


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2014-04-04 06:02:02 - Global Licensed/Managed Content Delivery Networks (CDN) Market - a new market research report on companiesandmarkets.com

Many telcos and operators have been talking about getting into the content delivery networks (CDN) business but to date, almost none has entered the market with a commercial CDN offering. Nearly all who have tried have failed, (for example, AT&T), and decided it made more sense to resell CDN services from a traditional CDN like Akamai. But outside of commercial deployments, nearly all large scale telcos have already deployed or are building out CDNs internally to handle the flow of video across their network. It´s a move they all had to make for cost savings and quality of experience (QoE) benefits and while most of them are simply deploying boxes from major hardware vendors, or building it on their own,

 

 

some telcos are working with vendors who offer a licensed and/or managed CDN offering, so they don´t have to start from scratch. While there has been an uptick in the number of Licensed CDN (LCDN)/Managed CDN (MCDN) deals in 2013, the market opportunity is very small, in the tens of millions of dollars this year.
The market for LCDN/MCDN services will never be large and there are only a few vendors who even offer the service, with most of them doing it for ancillary benefits to their core business and not for generating a lot of revenue from licensing the software or doing a managed CDN build out. Market opportunities and perspectives of telcos with regards to the CDN value chain has changed lot in the last months. Most wanted to build their own and sell it to multiple types of customers, use it for internal purposes for cost savings and some even had ideas of wanting to compete with Akamai and EdgeCast being commercial operators.
All telcos who attempted to get into the CDN business used different paths and while a small handful succeeded, most didn´t. Only Level 3 has a material commercial CDN business that´s contributed to their overall business and has been tiered into their core services. It is observed that many telcos leverage their CDNs for internal video delivery deployments, especially for IPTV, where they deploy boxes sold by Cisco and others. By using these solutions and technology like transparent caching, some service providers are able to reduce costs and gain savings to an extent. But most telcos are neither good at selling commercial CDN services, nor entirely successful with the build-it-yourself CDN model.
In this universe, it is found that the LCDN/MCDN model is still evolving and its success as a stand-alone offering is still to be determined. The market will never be a large opportunity in terms of revenue, but LCDN/MCDN is starting to become more a check box for CDN service providers to help strengthen their core business.
Most telcos and carriers are not expected to offer commercial CDN services, but will likely leverage LCDN/MCDN for internal CDN deployments. Very few vendors offer a true LCDN/MCDN solution; those who do, provide it as it offers ancillary benefits to their core business. LCDN/MCDN is a small market today with at most, two or three dozendeployments. LCDN/MCDN offerings are mostly being sold by commercial CDNs, but over time, should be offered by hardware vendors already selling to telcos and carriers. It won´t take long for LCDN/MCDN to go away as a stand-alone offering and instead, be sold as part of a larger solution set.  

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