GlobalData’s discussions over the last two years with the telecom wholesale sector emphasized the opportunity that exists for telecom wholesale providers in offering Content Distribution Network (CDN) services across the CDN value chain – a connection service provided by wholesale providers through their global network and footprint, delivering video content services securely.

While opportunities exist, there are a number of hurdles.

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Firstly, the CDN competitive landscape is fairly complex, with an ecosystem of players consisting of content and application providers (e.g., Amazon, Netflix, Apple etc), IP transit providers, interconnection exchanges (e.g. Equinix), content distribution providers (e.g. Akamai, Amazon), and Internet Service Providers. Therefore, what will be required to successfully enter the market is a robust executable business case, and strong brand equity across for example online media, gaming, and B2B (e.g. financial). And where you are able to play in the CDN value chain (capitalizing on your current strengths) will dictate how successful you will be – industry examples include Verizon’s efforts in wholesale CDN, capitalizing on its media telco capabilities with Digital Media Services (VDMS), and leveraging the Verizon EdgeCast Content Delivery Network (CDN; and Tata Communications acquiring Switch Enterprises, a US-based media service provider, to enable Tata to drive its video connect business across Europe and North America.

APAC, North America, and Western Europe are key regions to target

Overall, the chart at the top of the page illustrates strong growth for CDN in the next 2-3 years. Strong regions include the APAC, North America and Western Europe. Asia Pacific presents the largest opportunity reaching $2,3 billion in 2025 (CAGR 5.9%), followed by North America at $1,9 billion (5.9%), and Western Europe at $1,58 billion (5.2%).

Drivers for CDN acceleration include digitalization across online media

GlobalData’s coverage of the CDN wholesale sector and discussions with global CDN wholesale providers over the last two years indicate a number of factors driving growth in CDN wholesale. Firstly, digitalization across the globe has played an important role in the acceleration of CDN. This includes the digital economy, particularly in regions like APAC becoming more integrated to the consumer and business segment, stemming from use cases like online media content and live broadcasting.

Another key trend is the need for a wider range of higher quality multimedia services, with high definition, low latency, and strong interaction in real-time internet settings.

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Summarizing this, ultimately the growth for CDN will originate from two key areas, one being online video and the other being live streaming. With respect to online video, the focus is on providing quality of service which is comparable to traditional TV broadcasting. This includes HD 4K video content, where opportunities stem in regions with a large pool of users requiring higher definition video content. These regions often lack in infrastructure maturity as verified by our wholesale customers, but tend to be sweet spot regions for CDN.  With respect to live streaming, GlobalData are seeing continuation of trends where live streaming and traditional broadcasting are working closely together, as users continue to drive the demand for live steaming.  

Success for players in the CDN market depends on what they can bring to the table

The CDN market is maturing at a fast pace. Key influential factors include increases in media content, online gaming growth and developments in e-commerce.

However, traditional telco wholesalers entering or upselling their current wholesale efforts will require a robust business case – this will entail possessing strengths in geographical footprint that can be exploited in key regions to provide third party connectivity, executing an optimal partner model that can be exploited with key players in the CDN value chain (e.g. Akamai, Amazon CloudFront, and Google Cloud CDN), and a robust portfolio strategy that enables additional revenue pull through for value added services.