How can the CDN industry break through the era of negative gross profit?

Since the Ministry of Industry and Information Technology started issuing a new round of CDN licenses in 2016, as of April 13, a total of 114 companies have obtained CDN licenses issued by the Ministry of Industry and Information Technology. In 2016, a lot of capital poured into the CDN market; in 2017, the CDN price war broke out in full swing, and the fierce competition between new and old forces led to a huge change in the CDN industry structure, which has now presented a three-legged situation of "traditional CDN service providers, Internet giants, and shared emerging CDN service providers."

After emerging from the shadow of the "price war", what new trends will the CDN industry see in 2018? How should enterprises seize the new opportunities?

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Policy supervision will once again reshape the industry landscape

As the global CDN market continues to expand, the importance of CDN is gradually increasing. The Ministry of Industry and Information Technology will clarify the regulatory objectives of the CDN market:

• Clean up and rectify the self-built transmission market. The price war has caused the loss of enterprises to expand. In the next two years, as the proportion of CDN business in cloud computing continues to increase, and the rigid cost of CDN, namely bandwidth cost, cannot be further compressed, the cost of traffic will increase linearly as the scale of CDN expands. The focus of the CDN market will inevitably shift from price to quality service competition.
• In terms of the legality and compliance of cross-border data communications and overseas networking, CDN companies must conduct cross-border data communication business in accordance with strict regulations.
• A nationwide cleanup and standardization effort is being carried out on the Internet network access service market, mainly covering two aspects: qualification management and resource management.

At the 6th Asia-Pacific CDN Summit, Hu Haibo, deputy director/senior engineer of the Industry and Planning Research Institute of the China Academy of Information and Communications Technology, said that in the next step, the Ministry of Industry and Information Technology will carry out three aspects of work on the CDN market supervision: First, strictly implement prior access, and focus on investigating and punishing enterprises that operate without a license or exceed the scope of operation; second, improve the interoperability standards between source station customers, CDN service providers, and basic operators, as well as CDN-Https industry standards; third, set up a CDN research group under the technical standards group of the "Cross-border Data Communication Industry Alliance" to conduct research on cross-border connection, delivery and service specifications, continue to increase supervision of the CDN market, and ensure the healthy development of the CDN industry.

Artificial intelligence, 5G and edge computing usher in new technological trends for the CDN industry

At present, the entire CDN industry is facing difficulties due to the obvious trend of market concentration, the difficulty of industry survival under the price war pattern, the high investment cost and the need for CDN vendors to meet users' higher service demands. In addition, after experiencing the baptism of price wars, the entire CDN industry began to enter the era of negative gross profit in 2018, and how to gain a foothold has become a problem that companies must think about.

New technologies such as artificial intelligence, 5G and edge computing are developing rapidly and are beginning to be applied to the CDN industry, bringing profound changes to the industry.

1. The application of artificial intelligence in CDN is reflected in two aspects:

• In terms of content search and person/object identification, AI open general capabilities (such as voice, face, and image recognition) are used to search for specific objects (people, objects, videos, etc.) based on the CDN content library. Video surveillance applications can track and identify specific people or uncivilized content in real time.
• In terms of content navigation and push, the navigation input interface of IPTV & 2.OTT is redesigned, and navigation such as voice recognition, eye tracking, gesture recognition, expression recognition, and context awareness are implemented (to meet the needs of special groups of people); and based on user preferences, CDN nodes intelligently push the content that users want to watch.

2. Multi-access edge computing (MEC) platform helps realize the sinking of CDN functions and content:

• Most of the content is migrated to edge CDN nodes, and real-time transcoding can be performed at the edge to meet different needs;
• Various controls and scheduling of the CDN system are moved to the edge, and various scheduling and operations are completed at the edge, which greatly improves the user response speed and improves the user experience.

3. In the 5G era, the deployment architecture of mobile Internet and CDN will be more consistent. 5G technology will enable CDN nodes to be directly extended to wireless base stations. On the other hand, the high-bandwidth access advantage of 5G ensures that the CDN edge nodes can be interconnected through network virtualization and network slicing.