Accustream Research
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February 2, 2005

ACCUSTREAM RESEARCH: CDN PROVIDERS POST STRONG REVENUE GAINS IN '04 ON INCREASED STREAMING, NEW APPLICATIONS

Monterey, CA Content distribution networks (CDNs) doubled--and in some cases tripled—revenue derived from streaming media operations in ’04 compared to ’03, coinciding with an 80% jump in video streams served for the year and 75% increase in Internet music hours.

Retail contracts to deliver streaming audio and video totaled about $230 million last year, with another $157 million needed to secure sufficient backhaul bandwidth to provision sufficient capacity, according to the CDN Market Share: A Complete Business Analysis ’04 and ’05 published by AccuStream Research.

CDN revenue for both streaming video and Internet radio is estimated to grow at 40+% in 2005, with total retail and backhaul market value of between $450 - $600 million dollars from delivery of news, film, sports, music and entertainment.

The report includes operational analyses of multiple CDNs, including business models, revenue, pricing, server numbers, co-location networks, network topologies, channel partners, core distribution competencies, R&D investments and content contracts.

The number of video streams and Internet music hours delivered by each CDN is broken out to reveal distribution share.

According to the report, the average cost per gigabyte of streaming video transferred in 2004 was $1.75, compared to $2.15 in 2003. The average price to deliver a gigabyte of Internet radio was $1 compared to $1.31 in 2003.

AOL, Akamai, MSN, Real Networks, Limelight Networks and Chaincast Networks are the largest content distributors. Many larger streaming portals such as Yahoo contract directly with directly with carrier suppliers for their capacity.

CDNs often focus on either Internet Radio or broadband video, although Akamai, AOL and Limelight Networks are strong in both categories.

"In 2004, CDNs delivered strong top line revenue growth, were in many cases cash flow positive and even generated positive net income," commented Paul A. Palumbo, director of research at AccuStream.

"CDNs are now full service networks that provide everything from stream authentication and secure content on a global edge basis to music and movie download management, and even sell advertising."

AccuStream Research publishes monthly, annual, semi-annual and custom streaming media reports with extensive data, trend comparisons and expert analysis.

Contact: Paul A. Palumbo, ppalumbo@accustreamresearch.com
(831) 393-1953

Accustream Research
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