CDN Consolidation Could Be 'Imminent'

Reports from Streaming Media West suggest a major consolidation in the CDN market is "imminent." Did Amazon's launch of its own CDN prompt a rush to deals?

Industry analysts who track the content delivery sector have been warning for months that the explosion of new companies in the sector would inevitably result in a consolidation. In May the list of CDN providers reached 50 companies, and Dan Rayburn predicted a shakeout would occur in the next 18 months.

It appears we won't have to wait nearly that long. Ryan Lawler of Contentinople reports from Streaming Media West show that that deal rumors are flying:

There was clear talk of term sheets being passed about, which led one CDN exec at the show to quip, "Half the companies here are shopping themselves." Another said that strategic talks between attendees dramatically could change the face of the conference in the next 12 months. "The big question, if you look around the room, is how many of these companies will be here next year," he said.

But who will the buyers be? Market leader Akamai (AKAM) has often bought smaller rivals with promising technologies, and there's been steady speculation that major telcos would buy up CDN providers.

What's driving the sudden deal frenzy? One factor could be Amazon's recent decision to launch its own CDN. As we noted at the time, Amazon's entry into the CDN market is problematic for the newer players, and especially so for those positioned as a cheaper alternative to Akamai.

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