Video CDN Trends: Latest Pricing, Customer Challenges and Growth Opportunities

Presented by: Dan Rayburn - Principal Analyst, Frost & Sullivan - Chairman, NAB Show Streaming Summit - Author, StreamingMediaBlog.com

[email protected] – 917.523.4562 Market Trends: - Overall traffic growth specific to video on third-party CDN networks was up between 12%-20% in Q2, has since leveled off and is back to normal organic traffic growth at pre-covid levels.

- From Q4 2019 to Q4 2020, five major OTT services launched in the market; Peacock, Apple TV+, Quibi, Disney+, HBO Max. All have helped to fuel the growth of bits over third-party CDNs in this time, but Disney+ is the only one with significant traffic.

- Live linear streaming services have struggled to grow with Sling TV, AT&T TV NOW and Fubo all losing subs in each quarter of this year. While YouTube TV grew from 2M subs at end of 2019 to 3M subs and Netflix has grown subs each quarter, 100% of that traffic is not via third-party CDNs.

[email protected] – 917.523.4562 Growth Opportunities: - While it’s too early to predict video traffic growth in 2021, we don’t have any new OTT services coming to the market next year and no catalyst to see more than what should amount to organic video growth on third-party CDNs.

- Disney is doing their own DIY CDN buildout and by my estimates could bring as much as 50% of their video traffic in-house for Disney+, Hulu, ESPN+ and Hotstar, by the end of 2021.

- New console launches by Sony and Microsoft in November will provide some third-party CDNs with some additional large software download traffic in Q4 2020 and Q1 2021. Both Sony and Microsoft use a multi-CDN approach and Microsoft also uses Azure Front Door, their cloud CDN platform. So the traffic will be spread amongst multiple vendors.

- The return of live sports in 2021, along with more original content coming back to OTT services will help overall video CDN traffic grow, but it won’t be a tidal wave. Realistically we have to expect small, steady growth in the New Year.

[email protected] – 917.523.4562 What are the top issues you are experiencing as you start to scale the number of viewers?

Measuring the Viewer Experience 35%

Increased delivery costs 21%

Operational inefficiencies 21%

Complex transcoding & player support 16%

Not enough ad inventory/ low CPMs 7%

*Survey conducted by Dan Rayburn, Q2, 2020 with 300 respondents [email protected] – 917.523.4562 Latest CDN Pricing Trends

Key takeaways from my Q4 2020 CDN pricing survey of over 600 customers using third-party CDNs for video and software downloads:

- Pricing is stable across the industry, expect as you get to the top 50 largest customers who are seeing an average pricing reduction in the US of about 20%-25% year-over-year (2019 vs. 2020). Pricing in APAC, LATAM and India still more expensive with much less discounts, even with growth.

- CDN capacity in regions outside the US and Europe still varies widely from provider to provider, especially in places like Japan and Australia.

- Some of the largest customers commit on a 95/5 model based on per Mbps, not per GB delivered and all large customers are using a multi-CDN approach, so even as their traffic grows, it doesn’t mean all CDNs benefit.

[email protected] – 917.523.4562 Latest CDN Pricing Trends

Key takeaways from my Q4 2020 CDN pricing survey of over 600 customers using third-party CDNs for video and software downloads:

- Lowest pricing data collected from survey was $0.0007 per GB delivered, for one of the largest customers in the world of third-party CDNs. Some customers are now asking for $0.0005 per GB delivered, which CDNs are saying no to.

- Most CDNs have an internal cost of $0.0003 - $0.0005 per GB delivered, so the largest customers can’t expect pricing to drop much further. CDNs will NOT take on traffic at a loss and have done a good job of passing on business. Some say that all customers get a 25% pricing reduction each year but that is NOT an accurate statement.

- There are a lot of variables when it comes to CDN pricing, please see my blog post for more details at www.cdnpricing.com and contact me if you’d like some more details on the data. [email protected] – 917.523.4562 Video CDN Trends: Latest Pricing, Customer Challenges and Growth Opportunities

QUESTIONS?

Contact me at any time: [email protected] - 917.523.4562