At Streaming Media West, Day Rayburn updated his CDN pricing report for Q3, with interesting results. The biggest drops came at the low end - the 250Tb level - and were 35-50% in a single quarter. I think this drop and the report that many smaller CDNs are now shopping themselves are directly linked. It's a simple relationship: the more revenue you have, the more likely someone will buy you. In such a crowded space with similar products, it is inevitable that pricing will get aggressive and I doubt we have seen the end of it.
It's ironic in a way that Level 3 (LVLT), which was reported last year as a pricing threat, is apparently staying above the fray. Akamai (AKAM) is doing more than staying above the fray, they seem to be watching it from the bleachers. Likely this is because they just aren't after the smaller customers and there are fewer viable bidders for the larger deals, although there was some compression at the 1000Tb level as well. It is also very interesting that the *middle* of the market, the 500Tb and 750Tb levels, was basically flat. This sort of trend can't really continue, either the top and bottom stabilize, or the middle will start to move in tandem.
If you haven't already, please take our Reader Survey! Just 3 questions to help us better understand who is reading Telecom Ramblings so we can serve you better!Categories: Content Distribution · Mergers and Acquisitions