AccuStream Research: CDN Sector Sees Double-Digit Growth

Content Delivery Networks (CDNs) are generating double-digit top line revenue growth in 2010, a convincing turnaround from the single-digit increase in 2009, and CDNs are writing new contracts at a 26.7 percent annualized pace, poised to produce $1.5 billion in 2010 revenue, according to an industry report by AccuStream Research.

The report "CDN 2011" shows 8.2 percent revenue growth in 2009 was accompanied by 25 percent account expansion, though not sufficient to overcome sharp declines in retail bandwidth pricing.

The U.S. market currently accounts for 55.6 percent of the $2.7 billion global CDN revenue total. Major providers like Akamai and Limelight Networks generate up to 30 percent of revenue through international contracts. Additional CDNs analyzed in the report include Abacast, BitGravity, CDNetworks, CacheFly, Edgecast, Internap, Level 3, Cotendo, Mirror Image and Highwinds, among others.

Wholesale bandwidth costs continue to decline as a percentage of COGs, while retail prices are stabilizing. Moreover, considerably more bytes are being delivered to an expanding universe of fixed and mobile devices. Combined, those market trends are expected to improve both CDN gross margins and produce double-digit top line increases through 2012.