An Analysis of the CDN marketing in February 2014. Market Overview, Threats, Opportunities, Projections. CDN strategy examples the appendix

1. Content Delivery Networks
version 9
Chris Van Noy
February 28, 2014

2. Overview
• CDN Landscape
Established Players in CDN Landscape
Emerging / DisrupHve Players in CDN Landscape
• Trends / Forecasts
Pricing / Revenue
Traffic / Video Growth
• Threats
Caching Video CDNs
Large Non-CDN Players
HVEC H.265, MPEG-DASH
• CDN OpportuniHes
OpportuniHes List
Media OpportuniHes Example Slides
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3. Key Takeaways
Trends
• Market consensus is CDN Delivery Pricing (StaHc & Video Delivery) will decline for the 2-3 years. Our
previous view was the pricing would decline for only the next 12-18 mos. However, it appears prices have
already started level off (Sept ’13) due to market realiHes and customer a^tudes
• Dynamic Site AcceleraHon (DSA) not dropping nearly as quickly
• Traffic, and video traffic in parHcular, will increase substanHally between ‘13 – ’17
Threats
• Telcos/MVPDs/3rd ParHes creaHng caching CDNs – Has potenHal to take away significant video traffic
• Large, non-CDN players are real threats to tradiHonal CDNs (Amazon, Google, MSFT, Facebook?, not
Neflix)
• New streaming standards/technologies HVEC H.265, MPEG-DASH (a couple of years)
Opportuni0es
• CDNs must/will diversify into other services or have the CDN business serve another business purpose
• We anHcipate that there are large opportuniHes for CDN and other “nexus” players (remove the
complexity)
• InnovaHon OpportuniHes (moat around CDN business) – transformaHon, further delivery innovaHon,
security (content, site, commerce), analyHcs, internaHonal
• Adjacent Market OpportuniHes – adverHsing, data, B2B secure transport, media warehouse
• Expand Further InternaHonally Chris Van Noy 3

4. CDN Landscape
Established Companies
Data from annual reports and company websites
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* Performance Equity Management (PEM), with parHcipaHon from exisHng investors Menlo Ventures and Steamboat Ventures.
Servers / POPs ‘12 Revenue / Net Rev +- / Net +- Notes
130,000/2,000 $1,300M/$230M +16% / +1.5%
Good Shape, Media, Finance,
Govnt quickly growing.
Old Tech. Poor Cust
RelaHonships
18,000/67
Debt, CDN loses $
Expansion in Lat Am, EMEA, Asia
(Nov ’13), Rev + 37% YoY Q3 ‘13
18,000/80 $180M/($33M) +5% / -23%
Losing $,
ReinvesHng in CDN
???/35 $100M-$200M/(???) +100% / ???
July ’13 $54M new
funding*. AcquisiHon?
IPO?
14,000/26
$205M in debt refinancing (Aug
‘13)
???/25 $100M/(???)
Growing Quickly,
Scale, Explode DSA,
PotenHal DSA concerns
???/24
Cloud services key, CDN not
much focus. Xbox One bump
not coming
AcquisiHon By Verizon Announced Q4 ’13, finalized Q1 ‘14

5. CDN Landscape
Emerging Players / Disruptors
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Founded Descrip0on Disrup0on Customers
2011
SSD Based CDN
Launched Video Streaming
CDN Q3 ‘13
Lowest Latency, Fewer POPs
needed, DSA beuer, Less
Cost. Going into video and
staHc content
Twiuer, Vine,
Shazam,
Etsy, Github
2011
MulH-plaform adapHve
video streaming, Video
encoding, DRM and
EncrypHon, Content
Management, AnalyHcs and
ReporHng, Dynamic ad
inserHon
Does encoding and ad
inserHon more efficiently
taking services rev from
CDNs
Disney/ABC
2008
Dynamic CDN Switching and
AnalyHcs
Allows customers to pay less
for delivery, avoid exclusivity
and have delivery fallback
Many - Neflix, NFL,
ABC,
Univision etc
2010
Third Party Caching CDN for
Video
Allows ISPs to
disintermediate CDNs
from most popular video
Mediacom,
(allegedly
negoHaHng w/
2 Top US cable
companies)
Acquired By Verizon Q3 ‘13

6. CDN Landscape
CDN Market Share, 2013
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7. CDN Trends
Pricing / Revenue
Standard Delivery (Objects, Video)
Customer spending more than $1M (Sept ’12)
Delivered
• 3PB/month, $0.03/GB High, $0.01 Low
Sustained
• 400Mbps/month, $4/Mbps High, $2/Mbps Low
Dynamic Site Delivery/Accelera0on Pricing
Pricing collected from mid-size to large customers, 2 yr
contracts (May ’13)
• 20 Mbps, $150 high, $110 low
• 100 Mbps, $85 high, $50 low
• 250 Mbps, $40 high, $25 low
• 500 Mbps, $15 high, $6 low
CDN Pricing Decline
Dan Rayburn (May ’13)
CVN Predic0on
(Aug ’13)
2009 2010 2011 2012 2013 2013
- 45% - 25% - 20% - 15% - 25% - 5%-10%
Both Standard and Dynamic
delivery pricing has consistently
decreased YoY.
Previously anHcipated decline to
conHnue for the next 12-18 mos.
but CDNs already refusing to
lower prices (Aug ‘13)
Causes for decline:
1. Increased volume
2. Parity of quality in compeHHon
3. Some players compete on price
(Level3, Edgecast)
4. CDN Switchers (Conviva)
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Note: While pricing is important, it appears customers aren’t differenHaHng on price anymore.

8. $-
$2.0
$4.0
$6.0
$8.0
2011 2012 2013 2014 2015 2016 2017
Revenues (US$ Bil)
CDN Revenues
Source: (Market and Market)
Global
CDN Trends
Forecasts: CDNs are predicted to do well from ‘13 – ‘17
CDN Revenues ‘17: NA: $4.6B, Global $7.4B
CAGR: 24.6%
Source: MarketandMarkets
Video CDN Rev ‘16: $1.2B
CAGR: 15.2%
Source: Frost & Sullivan
By ‘17 Over 50% of internet traffic through a CDN
Source: Cisco VNI
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CVN Note:
The rev and CAGR here
seem very low

9. CDN Threat
Caching Video CDNs - Disintermediates TradiHonal CDN Delivery
Cached CDNs
Advantages for ISP/MVPDs/Telcos
1. Frees up upstream capacity
2. Predictable Neflix flow
3. Higher QOS
4. Higher Content Quality
5. Saves Costs
6. Neflix Open Connect
is Free
Results in lower potenHal traffic for CDN’s which is not always bad (Neflix)
Verizon, Time Warner Cable, Comcast, Neflix, Google all building.
Qwilt is third party service aimed at MVPDs/ISPs
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• User rouHng is done by
control servers, not
dependent on client
DNS configuraHon
• Request is routed to the
nearest available
Cached CDN Server
• ISP could control client
to cache server config
Video Provider
Control Servers
3. Client connects to local
video cache
4. Local cache delivers
video stream
Cached CDN
Server
Broadband ISP
CDNs
Disintermediated
CDN Gap

10. CDN Threat
Caching Video CDNs - Disintermediates TradiHonal CDN Delivery
Neflix January, 2012
Neflix June, 2012
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In the six months since Neflix launch of caching CDN (Open Connect)
massive traffic rerouted through the caching CDN

11. CDN Threat
Large, Non-CDN Players Coming Into the Space
We believe these are big technology players that already have a large enough internal need
that building their own CDN makes sense.
Advantages:
1. Since already
using capacity
can price
below market
2. Can take Hme
to iterate and
launch features
3. Unique insight
into needs
4. Scale
Rolling out Open Connect Caching CDN. Not interested in
commercializing service for other content providers
CloudFront is already at $100M at 3yrs. DSA just launched.
PotenHally can affect ~75% of market with scale, pricing and
educaHon of market
No tradiHonal external CDN service but has the infrastructure and
business reason (gathering data) to do so.
Less than 2% of web traffic not likely to move in to the CDN space FB
has an edge network to push photos
Azure the Cloud Plaform, is becoming more central in MSFT but
the CDN is not a focus. Xbox One will not change that.
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• In our view, Amazon Cloudfront seems expensive
• Cloudfront doesn't do true DSA. Only pull, not post
• Does not have many DSA POPs. Co-lo'ed on some EC3 servers
• DSA not a priority, AMZN has very few resources focused on it (Aug ‘13)

12. CDN Threat
New Streaming Technologies
MPEG-DASH
(Dynamic AdapHve Streaming over
HTTP), a standard for adapHve
streaming over HTTP can potenHally
replace Microso| Smooth Streaming,
Adobe Dynamic Streaming, and Apple
HTTP Live Streaming (HLS). A unified
standard would be a boon to content
publishers, who could produce one
set of files that play on all DASH-
compaHble devices.
HEVC H.265
is a video compression standard, a
successor to H.264/MPEG-4 AVC . It
was designed to substanHally improve
coding efficiency i.e. to reduce bitrate
requirements by half with comparable
image quality, at the expense of
increased computaHonal complexity
Reduce Complexity Compress Bandwidth/Increase Quality
These technologies are likely to take effect 2-3 years out and not really threats but could
undermine the revenue potenHal of CDNs. Conversely, the technologies will likely
encourage more video delivery and need for services
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13. CDN OpportuniHes
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1. Interna0onal
• LaHn America – Brazil, ArgenHna, Colombia, Mexico
• Asia – China (difficult), India (difficult)
3. Quickly Growing Ver0cals For CDN Services
• Financial Industry
• Government
• Enterprise (Pharma etc.)
• Retail
5. Expanding Past CDN Delivery
(Telco/Mobile, MVPDs, Private)
4. Expanding More Deeply into Media/
Entertainment Industry
• Back into content creaHon - B2B i.e. Media
Warehouse, Secure Media Delivery
• Forward with services - B2C
(see following slides)
2. Con0nue to Develop Value Added
Services on CDN Plaaorm
• Security (Content, Site and Infrastructure)
• Data
• Commerce
• Media TransformaHon
• Private Cloud CompuHng
• Cable MPEG2 Delivery
• Mobile AcceleraHon
• Massive Content Storage/TransformaHon

14. Contact InformaHon
Chris Van Noy 14
Chris Van Noy
chris.vannoy@gmail.com
@chrisvannoy
www.cvnnyc.com
For More InformaHon:

15. APPENDIX

16. CDN OpportuniHes
Media/Entertainment Industry
• HTTP
Object
Delivery
• Large File
Delivery
• AnalyHcs
• Streaming
• MulHcast
support
• Stream
prioriHzaHon
Site, App
Accelera0on
Cloud Storage
Mobile Delivery
Professional
Services
Security
Content
Management
Core + Premium
• Cellular Net
OpHmizaHon
• OpHcal
Network
OpHmizaHon
• MVPD
Capacity
• Streaming
Network Extension
B2C B2B
Mone0za0on
• IdenHty
Layer
• AdverHsing
• Payment
ProtecHon/
facilitaHon
Licensed CDN
Content
Transforma0on
Content Crea0on/
Commerce
• Secure
Transport
• Secure
Display
• CollaboraHon
• AccounHng
Data
Security – Site, Content, Commerce
Tracking – Commerce, AccounHng etc.
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17. Media Warehouse
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18. Accelerated, Secure Media Delivery
564
Broadcast
Partners TV
SyndicaHon
HE
VOD
The Managed CDN SoluHon
Pre-configured servers or so|ware deployed that would include the automated
workflow so|ware, opHmized for the Akamai network and security services – WAF, IPA etc.
The network would be maintained by Akamai – Maximizing Efficiency and Minimizing Complexity
Workflow Tools CDN
File AcceleraHon
Management
Security
1 + 1 = 3
Scale
Reliability
Infrastructure Mgmt
One Network
Removes Complexity
Lower Cost
MCDN
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19. Studios
(Theatrical, HE
Combined)
Metadata
File
Mezzanine
File
Supplemental
Material
Enhanced Services,
Fulfillment &
DistribuHon
Theaters
InternaHonal
DistribuHon
Display
Systems
Contract Management
Business Intelligence
Product Metadata
Rights & Avails
Fulfillment
Metadata Mgmt
Transcoding
EncrypHon/DRM
Storage
Enhanced Services
Packaging
SubHtling
Dubbing, etc.
QC
DistribuHon
Fast Transfer
Physical
Satellite
Billing & Finance
OperaHons/ReporHng
Digital Asset Management
Theatrical Workflow - Physical
ProducHon
File
Archive
Long Term Archive
Disaster Recovery
Retailers
Cable /
Broadcasters /
Satellite
Digital Cinema
Closed Networks
DVD
Distributors
Film
Asset
DVD / Blu-
Ray
MPEG 2
Development
Pre-ProducHon
Sales
Manufacturing
MarkeHng
Stream Screeners
Ancillary Media
AdverHsing
Measurement
Post-ProducHon
Transport Mezz
Enhance Video
OperaHons
Archive
Transport Mezz
Externally
ProducHon
Transport Video
Stream Dailies
AccounHng
Asset Tracking
Royalty/Rights
Tracking
Tape
Asset
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20. Development
Pre-ProducHon
Sales
Manufacturing
Studios
(Theatrical, HE
Combined)
Metadata
File
Mezzanine
File
Supplemental
Material
Enhanced Services,
Fulfillment &
DistribuHon
Intermediary
Display
AdverHsing
Payment
Authen/Author
Metadata MGMT
DRM
RecommendaHons
Asset Rights Data
E-Retailers
E-Retailer
Servicing
Storefront/
Inventory
Storage
CMS
Media ID
Media
Recommend
Secure CE
delivery
Ad MGMT
Cloud
POS
Royalty Statements Intermediaries
Contract Terms
Pricing
Promos
DistribuHon Availability
Systems
Contract Management
Business Intelligence
Product Metadata
Rights & Avails
Audience Measurement
Royalty/Revenue
Tracking & Fulfillment
Asset profitability
Measurement
Fulfillment
Metadata Mgmt
Transcoding
EncrypHon/DRM
Watermarking
Storage
Enhanced Services
Packaging
SubHtling
Dubbing, etc.
QC
DistribuHon
Fast Transfer
Physical
Satellite
MarkeHng
Stream Screeners
Ancillary Media
AdverHsing
Measurement
Post-ProducHon
Transport Mezz
Enhance Video
OperaHons
Archive
Transport Mezz
Externally
ProducHon
Transport Video
Stream Dailies
AccounHng
Asset Tracking
Royalty/Rights
Tracking
Billing & Finance
OperaHons/ReporHng
Digital Asset Management
Theatrical Workflow - Digital
ProducHon
File
Archive
Long Term Archive
Disaster Recovery
Mezzanine
or Display
File
Metadata
File
Supplemental
Material
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