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The global web hosting services market size was USD 75.03 billion in 2020. The global impact of COVID-19 has been unprecedented and staggering, with web hosting services witnessing a negative impact on demand across all regions amid the pandemic. Based on our analysis, the global market exhibited a lower growth of 11.9% in 2021 as compared to the average year-on-year growth during 2017-2019. The market is projected and expected to grow from USD 83.99 billion in 2021 to USD 267.10 billion in 2028 at a CAGR of 18.0% in the 2021-2028 period. The rise in CAGR is attributable to this market’s demand and growth returning to pre-pandemic levels once the pandemic is over.
Web hosting services are internet services that offer space on a web server for hosting a website. The growing competition among businesses and increasing digitalization are driving businesses to shift to online platforms. Further, due to the increased business competition, small and medium enterprises are investing in augmenting their online presence by launching websites. This is driving the demand for domain names across businesses. For instance, in May 2020, GoDaddy Operating Company, LLC announced the acquisition of Neustar’s Registry business. Through the acquisition, GoDaddy has gained control on both the retail and wholesale sides of the domain name. Neustar has approximately 12 million domains operating under .us, .in, .co, and .biz, among others.
Rapid Adoption of Online Platforms amid COVID-19 to Boost Demand for Web Hosting Services
The COVID-19 pandemic has drastically impacted consumer behavior. The temporary shutdown of manufacturing units, job crises, shortage of resources, and supply chain disruptions have negatively affected the growth of businesses across countries. Various small and medium businesses across the globe have faced either permanent or temporary closure owing to the crisis. As per the National Bureau of Economic Research (NBER) survey, in 2020, 43% of respondents in the United States mentioned the temporary closure of small and medium businesses. Similarly, as per the survey by LocalCircles across India's 90 districts, the pandemic is expected to impact 74% of small businesses and startups in the country. This has significantly impacted web hosting services market growth during the lockdown period.
On the other hand, the demand for online gaming has grown exponentially during the pandemic crisis. The long period of lockdown, quarantine, the closing of workplaces, school & college shutdowns, and restrictions on movement boosted the demand for online and e-gaming solutions. As per ComScore reports, Spain showcased a 44% increase in the time invested over online gaming, whereas Italy stood at 31%, followed by France with 28%. Similarly, considering the changes in customer buying behavior owing to the pandemic crisis, various enterprises have shifted to online channels. The increasing shift towards online businesses is expected to drive the demand for these type of services in the post-pandemic period.
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Rapid Growth of Cloud Technology to Propel Market Expansion
Cloud-based technology offers integration of services and solutions, which helps websites to work efficiently. This is boosting the adoption of the cloud in web hosting services. Cloud-based services offer scalable pricing options, such as pay-as-you-use or the subscription model. It is convenient for expanding businesses to upgrade the package as per the changing traffic on the website. This is expected to drive the growth rate of the cloud-based web hosting services market.
Further, small and medium businesses are also witnessing a growing demand for cloud-based web services. Thus, recognizing the lucrative business opportunities, several companies are entering into strategic acquisitions and collaborations.
With the growing demand for the integration of advanced technologies by enterprises and to keep their own storage space, the demand for cloud services is likely to surge. Moreover, cloud hosting services offer a disaster recovery solution for clients to increase website operational safety. Therefore, the trend of cloud adoption in the market will grow in the near future.
Increasing Number of Small & Medium Businesses to Drive Growth
The number of small and medium enterprises (SMEs) is rapidly increasing owing to improving funding and investments. Governments across countries are encouraging small and medium enterprises by offering growth opportunities and business expansion policies. The G-20 countries, for instance, are primarily focusing on boosting small and medium business opportunities as they help the national economy in creating more job opportunities. Thus, the G-20 countries are supporting investments and trade opportunities for small and medium businesses. For instance, the Government of India has launched the Start-up India scheme to raise the number of start-ups across the country. The growing number of SMEs will, thus, drive the demand for domain names and hosting services in the coming years.
The increasing competition and challenges are driving SMEs to focus on their online presence and activities. To expand the customer base and provide better customer experiences, these businesses are adopting different online expansion strategies. For enhancing online presence, having a domain name and website is essential. Thus, the growing number of small and medium businesses is likely to surge the demand for website hosting.
Rising Security Concerns Might Challenge Market Growth
Companies store their crucial website data, along with their customers and client data, on servers. Thus, securing and protecting the data is essential for companies. However, the increasing number of cyber-attacks and new unidentified threats are likely to challenge the adoption of these type of hosting services. Some service providers do not focus on the required security measures while providing web services to clients.
Similarly, cloud services are more vulnerable to cyber-attacks. Various large enterprises have witnessed threats and security breaches on the hosting services. For instance, in October 2019, hackers breached the network of Pro-service, a web hosting provider in Georgia, and defaced 15,000 client websites. The attack included clients such as banks, government agencies, TV stations, and more. Thus, before opting for or selecting any hosting services, it is essential to check the security level, thus reducing the possibility of a cyber-attack.
High Accessibility Offered by Shared Hosting to Drive Market Growth
Based on type, the market is segmented into shared hosting, dedicated hosting, collocated hosting, virtual private server hosting, and others (reseller hosting, etc.).
The shared hosting segment is expected to dominate the market with maximum share during the forecast period. The shared cloud offers capabilities of shifting to partial-cloud with on-site applications and ease of data migration. With high scalability and accessibility, hybrid hosting offers full control and security of the website. This is likely to drive the demand for hybrid hosting services.
The dedicated hosting segment is likely to gain rapid growth of the market during the forecast period as it offers flexibility in customizing the server. This helps in upgrading requirements as the business grows in the future. Further, the complete administrative control offered to the customer in dedicated hosting is driving its demand.
Similarly, the collocated hosting and virtual private server hosting segments are expected to gain steady growth due to their cost-effective services.
Increasing Online Gaming to Fuel Demand for Online Applications
The market is categorized into a public website, mobile application, intranet site, and online application based on application. The public website segment is expected to lead the market owing to the increasing number of small and medium enterprises. The rapidly growing competition among SMEs is driving the demand for online websites to expand their business presence.
The online application segment is expected to gain rapid growth during the forecast period. The growing adoption of online and cloud-based gaming is driving the demand for online applications.
Similarly, the increasing smartphone and internet penetration is driving the growth of the mobile application and intranet site segments.
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Subscription-based Pricing Option to Boost Public Cloud Demand for Web Hosting Services
The market is classified into the public cloud, private cloud, and hybrid cloud, based on deployment. The public cloud segment is expected to dominate market share during the forecast period. The public cloud offers various subscription options along with high flexibility. The increasing business operations and growth opportunities for enterprises are driving the demand for the public cloud.
The hybrid cloud segment is expected to gain traction during the forecast period owing to the increasing availability of platform-based services. For instance, the rapidly increasing e-commerce platforms are expected to drive hybrid cloud demand to maintain business websites and servers.
North America Web Hosting Services Market Size, 2020 (USD Billion)
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By region, the market has been grouped into North America, Europe, Asia Pacific, the Middle East & Africa, and Latin America.
North America is expected to dominate the web hosting services market share in terms of revenue during the forecast period. The high business competition in the region is boosting business focus on maintaining an online presence. The growing adoption of smartphones and social media is boosting the demand for dedicated websites for businesses. This is surging the demand for web hosting services. Further, advancements in cloud technology are driving the regional market growth. The US is amongst the top web hosting countries due to the presence of various key service providers in the country.
Europe ranks second in terms of market share during the forecast period. The growing governmental support for businesses in improving internet connectivity, infrastructure, digitalization, and IT outsourcing is likely to drive market expansion. For instance, with the increasing growth opportunities in Finland, in May 2019, Google Cloud announced an investment of USD 670 million for building a cloud data center. This is expected to drive the European web hosting market.
The rising focus on small and medium businesses in Latin America is likely to fuel the demand for web services in the region. Also, high investments in cloud technology are expected to boost the regional market growth.
The Asia Pacific region is expected to gain rapid growth during the forecast period due to the increasing shift of businesses towards online platforms. The governments of countries such as Singapore, South Korea, India, Australia, and China are focusing on expanding small and medium enterprises to boost job opportunities. For instance, in 2019, China announced a special investment of USD 894 million for SMEs. Similarly, in 2020, it announced an investment of USD 140 million for developing start-ups in the country. This is expected to drive market growth in the region.
The Middle East & Africa region is expected to showcase steady growth due to its increasing focus on digitalization. For instance, in May 2019, AT&T, Inc. completed a partnership with Synacor Inc. in EMEA to offer cloud-based offerings, web hosting, and video streaming services. This is likely to drive market expansion in the region.
Key Players to Focus on Cloud-based Services to Accelerate Business Growth
The prominent players of the market, such as GoDaddy Inc., Amazon, Inc., Alibaba, AT&T Inc., Google Inc., Cloudflare, and DreamHost, among others, are focusing on business expansion through the adoption of cloud technology. The companies are heavily investing in integrating advanced technologies such as the cloud, artificial intelligence, and machine learning. Through acquisitions, these players are expected to gain expertise in the market and are likely to achieve a vast loyal customer base. The companies are not aiming only to share house knowledge, domain management, local infrastructure, and gain more clients, but they are also concentrating on providing more value-added services to the client.
November 2020 – Cloudflare announced the launch of Cloudflare Pages, its own cloud-based hosting services. Integrating the company’s latest product JAMstack, the services are expected to offer quicker and more collaborative ways of building a website.
November 2019 – A key player in the web hosting services domain, Endurance International Group was acquired by Clearlake Capital Group in the United States. The company gained 5 million clients of Endurance through the purchase of the company for USD 3 billion.
An Infographic Representation of Web Hosting Services Market
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The web hosting services market research report highlights leading regions across the world to offer a better understanding to the user. Furthermore, the report provides insights into the latest industry growth trends and analyzes technologies that are being deployed at a rapid pace at the global level. It further offers some drivers and restraints, helping the reader gain in-depth knowledge about the market.
Value (USD Billion)
Type; Application; Deployment; and Region
According to Fortune Business Insights, the global market size is projected to reach USD 267.10 billion by 2028.
In 2020, the market value stood at USD 75.03 billion.
The market is projected to grow at a CAGR of 18.0% during the forecast period.
The public cloud segment is expected to be the leading segment in the market.
The increasing number of small & medium businesses is the key factor driving the market growth.
Google Inc., AT&T Inc., GoDaddy Operating Company, LLC, DreamHost, Amazon.com, Inc., Alibaba Cloud, Hostinger International, Ltd., 1&1 IONOS Inc., Digitalocean, Inc., and Liquid Web LLC are the top players in the market.
North America is expected to hold the highest market share.
Asia Pacific is expected to grow at the highest CAGR during the forecast period.
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