The Content Delivery Networks (CDN) segment is poised for growth and is expected to create a number of opportunities for existing telco connectivity providers. This is driven by continued innovation in products and services, according to an analysis conducted by GlobalData.
Rajesh Muru, Principal Analyst at GlobalData, comments: “The CDN market has evolved into a fairly mature segment globally, that is served by a host of technology providers that make up the CDN ecosystem. The market presents growth opportunities in the next two years, with Asia-Pacific (APAC), North America and Western Europe witnessing the largest opportunities.”
GlobalData analysis finds innovation in products and services will fuel revenue growth, and that the challenge for existing CDN telco providers will be is where to place their bets in the CDN value chain, which will be influenced by infrastructure investment, geographical footprint, current area of play across the CDN segment, partnerships and wider technological capabilities.
Muru continues: “Telcos should drive differentiation in CDN through the value of their network in providing back-end and last-mile connectivity. A strong value proposition needs to be developed around telcos’ network credentials in providing faster traffic throughput, low latency and a large footprint in key regions. Its wider capabilities in security on the network layer and network management capabilities need to be fully exploited to strengthen the overall proposition.”
GlobalData expects key application segments for CDN will ultimately influence demand in the future. Segments like internet streaming and over-the-top (OTT) services are further influenced by growing 5G mobile subscriptions (expected to reach 5.5 billion, or 48% of total mobile subscriptions, by 2027). Gaming will also be a key growth engine (valued at $470 billion by 2030) and mobile gaming accounting for over 50% of the lions share over the period. Lastly, e-commerce will be influenced by the role disruptive technologies play. This potentially covers artificial intelligence (AI) (over 2,000 AI patents in e-commerce were granted in the first nine months of 2022), the metaverse, cybersecurity, robotics and digital payments.
Muru concludes: “Back-end connectivity in the CDN network architecture plays a fundamental role in the successful delivery of CDN services. Therefore, telcos and internet service providers (ISPs) play a critical role in the CDN ecosystem. Telcos can really differentiate as they are pivotal on the technical merits regarding CDN connectivity, i.e., reducing latency, improving quality of service (QoS), supporting real time video feeds, security, and in data ownership over the network (though data regulation and privacy laws will affect this).
“Telcos are also best placed to exploit opportunities in big data, analytics, AI, 5G and edge services. Portfolio differentiation (including value added services) will be key as well as telcos market positioning against leading content distribution providers like Akamai and hyperscalers like Amazon.”