The over-the-top (OTT) video market is hot, and the desire to compete with pure OTT services is driving the current wave of acquisitions from operators like AT&T (which took in Quickplay) and Google (which bought Anvato). In a pair of related reports, ABI Research looked inside the trend, finding that much of this year's merger and acquisition (M&A) activity is fueled by a desire to rush new products to market or improve existing platforms in order to stay ahead of the competition.
The M&A wave isn't over. "Limelight, a CDN, has been struggling lately, and so may be in position for acquisition as well, as their presence is still significant," says ABI senior analyst Eric Abbruzzese.
The consolidation wave will negatively impact smaller players who aren't in a position to be acquired, perhaps due to less competitive offerings, Abbruzzese says. Others can either work toward acquisition as a business plan or focus on differentiation to be the best in their area.
"Acquisition will continue to thin the herd and it will be survival of the fittest, with those left out perhaps left to innovate, pivot, or otherwise try to compete with larger organizations," Abbruzzese says.
Total video delivery revenues for the global OVP, MVP, and CDN market will reach $5.6 billion U.S. in 2021, ABI finds. CDN revenue will grow at around 13 percent CAGR (compound annual growth rate) from 2016 to 2021, as compared to 6.3 percent for OVPs. North America's market share of cloud video delivery revenue will decline from 60 percent in 2015 to 54 percent in 2021. ABI sees EMEA (Europe, Middle East, Asia) gaining thanks to ad revenues with OTT platforms and new broadcast distribution forms in pay TV.