Dan Rayburn, writing on Streamingmedia.com reports that the average reduction in CDN video delivery charges was on average down by 20% in 2010, as compared with 45% in 2009. While a decline, the trend appears to be slowing suggesting demand for online video delivery is resilient despite the tighter global economic conditions. Rayburn also expects pricing to remain relatively stable in 2011 also. Another interesting observation was CDNs diversifying their offer to include more value added services:
“For next year, I expect video pricing to decline only 15%-20% on average because for many CDNs, pricing has already come close to hitting rock bottom. CDNs can’t afford to give this away and while some think this is about the “low cost leader”, it isn’t. CDNs have to make money and they know they can’t become profitable based purely on CDN services. That’s why all of them are working very hard to diversify their revenue to come from more services outside of just CDN. When we see that happen in the market, for any service, we know pricing is at a point of where it can’t get too much lower, without a substantial new volume of traffic.” [Read More]
It is to be expected that some of these value added services may include Digital Asset Management (especially on the video side). The prevalence of numerous Open Source DAM platforms now makes it quite straightforward for CDNs to enter this market. In addition, we would anticipate more partnership between DAM SaaS providers and CDNs as there are obvious synergies across both business models and opportunities for de-duplication of costs.