Two-party competition in China’s CDN market, traditional manufacturers are suffering

The global CDN market is expected to reach a value of $12.1 billion by 2019, and more than 50% of internet traffic will be accelerated through CDN according to research published by Marketsand Markets. The global CDN market is growing year over year, and the Asia-Pacific region has become the fastest growing market. Among these markets, China, as the world’s largest internet user market is an indicator of the global development trends of CDN.

Since 2008, with the appearance of video application modes such as OTT and IPTV, the global CDN market began to move into the fast lane. The scale of e-commerce and SNS platforms, as well as the arrival of live broadcast and short videos has led to a comprehensive blowout of CDN application requirements. The global CDN market is expected to reach $12.1 billion by 2019, and more than 50% of internet traffic will be accelerated through CDN according to research published by Marketsand Markets. The global CDN market is growing year by year, and the Asia-pacific region has become the fastest growing market. Among them, China, as the world’s largest internet user market is an indicator for the global development trends of CDN.

With the rise of live broadcasting, Mobile gaming, videos and various other mobile applications in China, the diversification of demand has created a huge capacity needing CDN. Creating excellent conditions for cloud service providers to support the market needs. China’s CDN market has formed two major parties against each other: One party is the traditional CDN service provider represented by Wangsu Science & Technology and China Cache; while the other party is represented by Alibaba Cloud, Tencent Cloud and Kingsoft Cloud.

In China, the rapid development of the network video industry highlights the CDN scale effect. In 2017, the number of short video and live broadcast users in China reached 422 million, with an annual growth rate as high as 22.6%. In the same year, the market share of traditional CDN manufacturers represented by the Wangsu Science & Technology and China Cache duopoly was officially surpassed by cloud service providers. Behind the development trend is the cruel reality that the technology and service capacity of traditional CDN manufacturers have been eliminated by needs in the marketplace.

Upgrades in technology and development is the foundation and core of CDN service providers to maintain competitiveness. Mainstream cloud service providers have advantages in resources and technology research and development that traditional CDN enterprises do not have. For example, in the scenario of the video market, the CDN service provider are outclassed, and the traditional CDN indicators like  slow speed ratio, same province and same network are no longer viable.

The advantages of cloud manufacturers are highlighted and have been validated. Tencent Cloud has integrated technologies such as live broadcast, on-demand broadcast, and cloud communication into various live scenarios, providing commercial realization solutions for video live streaming platform. Kingsoft Cloud is the first cloud service provider in China to realize the commercial use of H.265. This technology can significantly reduce the bandwidth transmission cost by 30%-50%, bringing low-cost, high-definition and smooth experiences. Traditional CDN manufacturers are unable to provide a full set of comprehensive services in the face of customer demands and have lost the battle.

On one end, CDN is connected with the entrance of cloud computing, and on the other end it is connected with big data, which is of great commercial value for enabling Chinese cloud manufacturers with a larger volume to gain development potential energy. With the deep integration of CDN and cloud services, cloud manufacturers can build CDN nodes on the newest technology architecture,. This solves various problems in live broadcasting through more flexible resource allocation and stronger mass data processing capacity. Which can also provide customers with more services supporting services like data mining and visual monitoring. After experiencing the long-term monopoly of traditional CDN, the price-dividends brought by cloud service providers also becomes the last signature on the death warrant of traditional CDN manufacturers.

For China, there is a great demand for customization with a larger market,  and a need for extensive services and increased classifications. The diversity of service products to the scenarios of understanding the business, these are all things that traditional CDN vendors cannot adapt to or implement quickly. With the emergence and rapid development of new technologies such as artificial intelligence and edge computing, the advantages of cloud service providers is the slam dunk in the last second of the Basketball game. It is over and Cloud wins. 

For China’s cloud service providers, entering the CDN industry is by no means a play ticket. CDN has become a basic product as important as cloud host, storage, security and other products, and is also a manifestation of the core capabilities of cloud service providers. 

On the one hand, China’s three major cloud computing enterprises are busy with network construction and node layout. At present, Alibaba Cloud, Tencent Cloud and Kingsoft Cloud have each over 800 CDN nodes in China, and they are all actively embracing intelligent CDN and exploring industrial potential while innovating constantly. In China, the cloud service provider has comprehensively achieved curve overtaking, becoming the absolute leader of CDN track.

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