An analysis by GlobalData, a leading data and analytics company, indicates that the Content Delivery Networks (CDN) segment is poised for significant expansion, giving various chances for existing telecom connectivity providers. The report credits this upbeat forecast to continuing product and service innovation in the CDN sector.
Rajesh Muru, principal analyst at GlobalData, commented, “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.”
According to GlobalData, continuous product and service advancements will boost revenue growth in the CDN sector. Existing CDN telecom providers, on the other hand, face the difficulty of selecting where to focus their efforts within the CDN value chain. Infrastructure investment, geographical footprint, existing market position, collaborations and overall technology capabilities all influence their decision-making.
“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,” said Mr. Muru.
GlobalData anticipates that important CDN application sectors will eventually influence demand in the future. Growing 5G mobile subscriptions (estimated to reach 5.5 billion, or 48% of global mobile subscriptions, by 2027) are also influencing segments such as internet streaming and over-the-top (OTT) services. Gaming will also be a crucial growth engine (worth $470 billion by 2030), with mobile gaming accounting for more than half of the lion's share. Finally, the role of disruptive technologies will have an impact on e-commerce. This could include artificial intelligence (AI), the metaverse, cybersecurity, robotics and digital payments (nearly 2,000 AI patents in e-commerce were issued in the first nine months of 2022).
Mr. Muru concluded that back-end connectivity in CDN network architecture is critical for successful CDN service delivery. Due to their technological qualities, such as latency reduction, quality of service (QoS) improvement, real-time video feed support and network data ownership, telcos and internet service providers (ISPs) hold a vital place within the CDN ecosystem. Telcos are also well-positioned to capitalize on prospects in big data, analytics, artificial intelligence, 5G and edge services. They should focus on portfolio differentiation, including value-added services, to differentiate themselves from major content distribution providers like Akamai and hyperscalers like Amazon.