CDN Pricing Stable: Survey Data Shows Pricing Down 15% This year

Dan Rayburn | Wednesday September 5, 2012 | 12:01 AM | Comments (12)

[Updated: Pricing from 2013 can be found here] At the Content Delivery Summit in May, I presented findings from my recently completed CDN pricing survey, with data collected from over 700 customers that use content delivery networks for the delivery of video. For those who didn’t attend the event, this post will re-cap all of the data I presented and I have also included links to a PDF of my presentation and the video of my presentation from the show. (note: you can always find my latest pricing post at www.cdnpricing.com – Previous Quarters: Q4 11, Q2 11 Q1 10, Q2 10, Q4 09, Q1 09, Q4 08, Q3 08, Q2 08, Q1 08. For a complete list of all the CDNs in the market, see www.cdnlist.com)

The key takeaway from the data is that pricing for video CDN services is very stable and that all of the major CDNs are pricing contracts close to one another. I expect pricing to decline by 15% this year, for the average sized customer. Last year I saw an average decline of about 20%, so the rate of decline this year has been a bit less.

Since I collected data from customers both large and small, I broke down the pricing based on small customers who spend under $100K-$250K per year, medium-sized customers spending $250-500K per year, and large customers who spend more than $1M per year. I also have data from those who spend less than $100K per year and use resellers and regional service providers to stream their video. All of the survey data was collected from March-April 2012 with a total of 725 qualified responses. You can see a list of the questions asked in the survey at the end of this post. Here are the results.

32 customers spending more than $1M per year (all M&E)

  • 22 customers using Akamai (multi-vendor), 16 customers using Level 3 (multi-vendor), 12 customers using Limelight (multi-vendor), 1 customer using Amazon (multi-vendor), 2 customers using Akamai exclusive, 1 customer using Level 3 exclusive
  • 22 customers have their CDN contract bundled with other non-video CDN services, 10 customers don’t have their CDN contract bundled with other non-video CDN services
  • 24 customers have contracts are 12 months in length, 8 customers have contracts that are 18 or 24 months in length
  • on average, pricing was down 18.9% this year when compared to last year’s contract
  • on average, customers expect traffic to grow 126.6% this year over last year
  • on average, a customer doing 3PB a month, is paying a low of $0.01 per GB delivered, high $0.03 per GB delivered
  • on average, a customer doing 400Mbps a month is paying a low of $2 per Mbps sustained, high $4 per Mbps sustained

253 customers spending $250-$500K per year (all M&E customers)

  • 120 customers use Akamai, 62 customers using Level 3, 32 customers using Limelight, 14 customers using EdgeCast, 8 customers using Highwinds, 17 customers using Limelight and Level 3 (multi-vendor)
  • 216 customers don’t have their CDN contract bundled with other non-video CDN services, 37 customers have their CDN contract bundled with other non-video CDN services
  • 202 customers have contracts that are 12 months in length, 51 customers have contracts that are 18 or 24 months in length
  • on average, pricing was down 11.4% this year when compared to last year’s contract
  • on average, customers expect traffic to grow 48.8% this year over last year
  • on average, a customer doing 500TB-1PB a month, is paying a low of $0.02 per GB delivered, high $0.06 per GB delivered
  • on average, a customer doing 200Mbps a month is paying a low of $6 per Mbps, high $11 per Mbps

123 customers spending $100-$250K per year (all M&E customers)

  • 47 customers use Akamai, 18 customers using EdgeCast, 12 customers using Level 3, 8 customers using Limelight, 3 customers using Highwinds, 35 customers using Limelight, Level 3, Amazon, EdgeCast (multi-vendor)
  • 63 customers don’t have their CDN contract bundled with other non-video CDN services, 60 customers have their CDN contract bundled with other non-video CDN services
  • 81 customers have contracts that are 12 months in length, 42 customers have contracts that are 18 or 24 months in length
  • on average, pricing was down 10.6% this year when compared to last year’s contract
  • on average, customers expect traffic to grow 73.3% this year over last year
  • on average, a customer doing 250TB-500TB a month, is paying a low of $0.04 per GB delivered, high $0.12 per GB delivered ($0.06 per GB average)
  • only a handful of customers paying per Mbps delivered, not enough data to provide high and low pricing on per Mbps delivered model

Additional Survey Findings

  • 317 customer spend less than $100k per year.
  • For customers spending under $100K per year, Amazon dominates with more than half the contracts, followed by EdgeCast, Limelight, Level 3, Highwinds and those who buy CDN services via third-party resellers.

While I hear many people and vendors talk a lot about connected devices when they speak of the growth of online video, the fact is that in the past 3 years, all of the CDNs have seen a big growth of video traffic on their networks, yet none of them have seen any large jump in revenue from that traffic. There still aren’t enough devices in the market, being used for the consumption of online video, for any CDN to see a big growth in revenue over a short period of time. When that big growth in revenue does happen, many people will say it happened overnight when in reality, it is something that took 4-5 years to really grow. As to what 2013 will hold in terms of pricing declines and traffic growth, it’s too early for me to speculate on that until Q1 of next year.

Survey Questions

1) Which industry vertical does your company best fall under?
2) What is your contract length for video CDN services?
3) If you have a contract for CDN services, when did you last renew it?
4) Is your video CDN contract bundled with other non-video CDN services?
5) How much has your price for video delivery declined versus your previous deal?
6) How much do you expect your total video traffic with CDNs to grow this year versus last year?
7) On a YEARLY basis, how much do you spend with CDNs for the delivery of video?
8) On average, how much video do you deliver per month?
9) On average, how much do you pay per GB delivered OR per Mbps sustained for video delivery?
10) Which CDN vendors do you use for the delivery of video?

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