Why the CDN Market Is Poised to Explode Over the Next 5 Years
The quick explanation for the rapid growth in the Content Delivery Network (CDN) market would be that the economic equilibrium of content is gaining momentum in its shift towards increasing global demand. The more content users consume, the more supply chains should be established along with a reliable and scalable infrastructure.
CDNs form a well-established global backbone for content and thus are subjected to continuous growth. So how has the CDN industry made it to this point?
CDNs and the Flash Crowd Problem
Currently, we are experiencing an ongoing digital transformation of cultures and societies. Creating, distributing and consuming digital media are natural outcomes of the process, where CDNs mostly focus on distribution and consumption and were invented as a response to the flash crowd problem.
Since the dawn of the Internet, the setting where multiple peers request content from a single web entity has become commonplace. The flash crowd problem, however, arises when the necessity to receive pieces of content becomes of extraordinary interest for a large group of peers within a short time. Thus, consumers encounter a spike in individual requests and peer interactions, namely, connections and traffic. And while the bandwidth of Internet resources are limited, web apps either experience service interruptions or get formed in a queue to provide the service, but with increased latency. The added wait time can negatively affect the user experience, and in today’s fast-paced world, it can lead to missed revenue opportunities as significant portions of users will bounce off to the competitor’s offering.
Even if you could predict these spikes, it comes down to a tradeoff between supporting the massive infrastructure or having to leave some users unserved.
Today’s Market and Estimates
CDNs first appeared as physical networks that could lend users resources on demand. From the consumption perspective, having CDN nodes geographically distributed was another good idea. While it could streamline the network experience for their customers, it also provided a better experience for every end-client since the architecture allows media to be requested from the closest edge server. End-clients would then experience lower load-times, less bouncebacks and develop better attitudes toward companies and brands. Although the CDN value propositions haven’t changed much, they now include more appliances like video streaming, VR and more.
As appliances become more advanced, increased bandwidth is needed to satisfy customers demanding better digital experiences. Since CDN providers charge for traffic, we can make market volume assumptions based on the traffic generated by companies and individuals. IDC’s assessment of today’s data created globally is 33 ZB or 3.3 million TB. To transfer the whole amount via a CDN could cost upwards of $8.25B annually, approximately. The current market volume estimation is $10B, and if we account for the IDC’s 2025 predictions, we’re looking at 175 ZB data created globally, resulting in today’s transfer costs of $16.63B to $43.75B. While the CDN traffic prices will likely halve by 2025, the $25B estimation is still rather fair.
What’s more interesting is that the penetration of Public Cloud (currently assessed at 40 percent) is also on track to reach about 60 percent by 2025. This means that CDN technology has to adapt to satisfying individuals, not companies with their multiple processes and requirements. On the other hand, enterprises have also developed new pain points in their digital transformation. In their research, Mike Sutcliff and colleagues identified one of the two core problems as scaling a successful pilot project to the scale of an enterprise.
This brings up two key questions:
- How can individual Internet users benefit from CDN technology?
- How can enterprises use CDN technology to successfully scale pilot projects?
Endpoint-aware CDN technology
This is where the conflict lies. As a CDN provider, you want to serve as much traffic as possible, however, you don’t want high volumes of traffic traveling to users and their Internet devices. One of the main reasons for this is that mobile plans come with limited traffic packages. According to GSMA, 3.5B people are connected to the mobile Internet, with about 750M of them being limited in bandwidth because of the “coverage gap.”
With a total of 4.33B of internet users, according to Statista, this creates problems for serving high volumes of traffic to almost half of the devices worldwide.
CDN providers thus have to form a content supply chain to satisfy end-clients through improving the user experience for their customers in the B2B space. That’s where we come to the customer experience equation, which, for CDNs, means serving the least possible traffic to minimize the web page or application loading times. That’s already a well-established trend with Performance Score being a part of Google’s ranking algorithm. So, the model becomes serving the most satisfying user experience, where momentum in volume can be gained through working with companies in the public niche, like the ecommerce mentioned above.
Other examples of business niches that can greatly benefit from enhanced user experience would include:
- SaaS, to accelerate their web applications and be able to scale and serve more users.
- Media & Digital Publishing, to significantly increase page views and create more engaging experiences.
- Mobile Applications, to streamline content rendering for users scattered across the globe.
The future of CDN technology is about creating a win-win for direct CDN customers and their end-clients. Serving the best user experience for ecommerce businesses is a good example; end-customers get their needs satisfied, ecommerce gets margin and CDN providers gain new revenue streams.
This can be achieved by creating intelligent technologies that adapt served content to any user context such as bandwidth, device and browser type, etc. Implementing AI/ML technologies on the Edge would help understand user context and further improve web application performance by learning context variations and excluding collecting context snapshots from the load times.
The side effects of content adaptivity, such as the instant Performance Score improvement, can generate additional revenue streams for SEO/SEM agencies and IT consultants.
Enterprise-Aware CDN Technology
Studies show that digital transformation in enterprises comes with the two big issues: unspoken disagreement within upper management about overall goals, and a divide between the digital capabilities supporting the pilot and available capabilities to successfully scale it.
Scalability is the real issue that CDN technology should be focusing on. While data is the lifeblood of digital transformation, CDN providers should prioritize having a significant bandwidth capacity scattered worldwide.
However, the future of enterprise CDN technology is about automatically allocating that bandwidth. When pilot projects come out of R&D, they should have a reliable scaling roadmap that creates ways to ensure a positive return on digital investment (RODI). It comes down to minimizing the volume of served traffic through intelligent technology, implementing sophisticated auto-scaling techniques to support infrastructure and being able to withstand DDoS attacks and other security threats. CDN capabilities like intelligent auto-scaling and bandwidth allocation across different geographies can provide maximum value when paired with AI/ML to enhance DevOps routines.
Going beyond content delivery could also help. Analyzing content on the edge, adapting it to every end-user, or implementing edge compute functionality at scale would allow enterprises to focus on their innovations, not surrounding infrastructure.
While only 22 percent of the companies studied by Mike Sutcliff demonstrated higher-than-average business performance in terms of RODI, there’s room to develop ROI-positive technologies that help allocate resources for innovation.
Adaptivity is key. In the future, developing CDN services that are able to adapt to any company or user context can go a long way towards accelerating digital transformation, improving traction and ensuring an unmatched customer experience.
With the CDN market expected to reach $25B by 2025, the entire concept of a Content Delivery Network is evolving as AI and machine learning technologies continue to improve. The future of CDN will ultimately focus more on the user experience, the ability to scale and heavy-lifting tasks yet uncommon for traditional content delivery networks. The forecasted 175 ZB of data created globally is not just an asset to transfer, but fuel for better experiences.