Streaming Media - August/September 2008 - (Page 86)

analyze that Each issue, we’ll pose a pertinent question to a group of market analysts to give you a better sense of how the financial services sector perceives developments in the streaming media industry. Here’s this issue’s question: Q uestion With more and more content delivery networks (CDNs) entering the market—by some counts, there are close to 50 of them right now—what do you anticipate the rest of 2008 will bring in terms of market consolidation and attrition? Should we be looking for serious M&A action, or is that still a ways off? There will be, inevitably, a contraction in the number of CDN service providers, but I don't believe the consolidation and attrition will begin in earnest until mid-2009. So far, there is still a good pool of well-funded customers to be served, but a recession could start to claim some victims among the customer base by the fourth quarter 2008. That would impact the CDNs by 2009, which should be about the time that some of the smaller CDN startups will need more funding and will either seek to be acquired or might fold altogether. Jim Davis Senior analyst, networks and media • Tier1Research.com We think the CDN market is saturated or close to it. Only a few CDNs today can handle large-scale content deliveries, which represent the majority of the market. Hence, the smaller CDNs will be competing for a relatively small market share and will find it difficult to achieve meaningful scale or profits. Further, the credit market remains tight, and this could make it difficult to get new funding for all but the strongest players. Aaron Kessler Senior research analyst • Piper Jaffray & Co. The key to a consolidation wave is taking share from the market incumbents. Our checks indicate that pricing has reached unsustainable levels, but that the leading vendor is not chasing after unprofitable business. If this is the case, widespread consolidation is unlikely to occur. Challengers will need to grow their businesses to a size where incumbents are forced to compete on price. Additionally, cash reserves must support the business model so this competitive threat is long-term in nature. By taking revenue from the incumbents and posing the threat of long-term margin decline, it will be cheaper to acquire than compete. That said, there are no signs that it will be happening in the near future. David Eller Principal • Reuters 86 STREAMING MEDIA August/September 2008 http://Tier1Research.com

Table of Contents Feed for the Digital Edition of Streaming Media - August/September 2008

Streaming Media - August/September 2008 Table of Contents No Doubt - Editor's Note Mo’ Videos, Mo’ Money: Solving the Problem of Network Cost Why Good Design Matters More Than Ever: Just. Press. Play. Technology and Business Trends by the Numbers High-Touch Encoding With Microsoft Expression Encoder 2 The State of the Content Delivery Market, 2008 Get a Life: New Tools Put Lifecasting Within Anyone’s Reach So Many Codecs, So Little Time: Comparing H.264 Files Using Codecs From Apple, Dicas, and MainConcept Writing an RFP for Maximum ROI: Things to Consider and Questions to Ask When Writing a Request for Proposal for a Corporate Webcasting System The Patent Wars Producing Screencams in Camtasia Studio Analyze That Using Video to Communicate Change for Business Success Intellectuals’ Property Rights

Streaming Media - August/September 2008

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