Outstanding revenue growth is due to the efficiency gains and cost savings the industry offers its customers
Melbourne, Australia (PRWEB) February 22, 2013
The Content Delivery Network Operators industry in Australia has had a remarkable past five years. Industry revenue is estimated to grow by an annualised 20.9% over the five years through 2012-13 to reach $260.4 million. According to IBISWorld industry analyst Aries Nuguid, “industry revenue is expected to grow at a similarly speedy pace of 25.8% over 2012-13”. The outstanding growth is due to the efficiency gains and cost savings the industry offers to its customers. As websites continued to feature more user generated and customised content, the need for fast and efficient networks grew, which benefitted demand for content delivery networks. Furthermore, online traffic is increasingly data intensive with higher resolution images, videos and live streaming. The industry is able to deliver this content cheaper on behalf of website operators. The cost saving from using content delivery network operators stems from their economies of scale.
Expeditious network expansions by operators in the Content Delivery Network Operators industry enabled them to improve their margins. Nuguid adds, “industry operating profit margins are estimated to have increased as content delivery network operators spread their fixed costs over a larger network and customer base”. The wide margins have attracted many new entrants to the industry while operators have established new nodes around Australia. Market share concentration is medium and the major player in the industry is Akamai Systems Pty Ltd.
Industry operators are expected to continue to invest in network capacity, which will enable them to spread their fixed costs over a larger user base. The economies of scale will enable industry firms to widen their margins. However, increasing competition is expected to dampen the profit widening and start the initial steps of consolidation within the industry. Online content is expected to continue to become increasingly customised and user generated, increasing the need for content delivery network operators. Greater bandwidth requirements of data-intensive content, such as video and live streaming, will boost demand for industry services in the five years through 2017-18.
For more information, visit IBISWorld’s Content Delivery Network Operators report in Australia industry page.
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IBISWorld industry Report Key Topics
Companies in this industry provide content delivery network (CDN) services to website operators. CDNs host multiple copies of content (e.g. video, pictures, audio) on a network of servers and distribute them to end users based on proximity. Hosting content on third-party servers takes pressure off of a site’s own servers, improves transmission speed and efficiency during periods of increased demand, and provides redundancy in the case of technical issues.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
About IBISWorld Inc.
Recognised as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every Australian industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Melbourne, IBISWorld serves a range of business, professional service and government organisations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com.au or call (03) 9655 3886.