Pay-TV Video Encoders Market – Growth Prospects
Meghali Sharma, Research Associate
Digital Media
Information & Communication Technologies
Frost & Sullivan
August 11, 2009
2
Agenda
• Overview of Frost & Sullivan Encoders-Transcoders Market Coverage, 2009
• Introduction to the Pay-TV Video Encoders Market
• Competitive Landscape
• Industry Challenges
• Market Drivers
• Market Restraints
• Growth Trends
• Market & Technology Trends
• Growth Opportunity
3
Overview of Frost & Sullivan Encoders-Transcoders Market Coverage, 2009
Applications:
Real time streaming, multicasting, video-on-demand
Applications:
Distribution, Video-on-demand,
Applications:
Contribution, Distribution, DTT (digital terrestrial television),
Others (archiving, mastering, redundancy)
Customer Segments:
Enterprise: Corporate, Government, Hospitality, etc.
Internet: Web Portals, Broadcasters, Service Providers
etc.
Mobile: Telco Service Providers, Web Portals, Content Providers
Customer Segments:
Cable, Satellite, IPTV Service Providers
Customer Segments:Broadcasters, DTT Service
Providers
World Enterprise, Internet and Mobile Video Encoders-
Transcoders Market (to be published)
World Pay TV Video Encoders Market
(published)
World Broadcast & DTT Video Encoders Market
(published)
World Video Encoders-Transcoders Market
Source: Frost & Sullivan
4
Introduction to Pay-TV Video Encoders Market
• Cable – most dominant form of pay-TV services in most countries. Several operators still use analog transmission, few digital providers have been using MPEG-2 technology. Faces stiff competition from satellite and IPTV services.
• Satellite – popularly known as DTH. Gained huge popularity in US and is in emerging phases in Middle East, Africa and Asia Pacific Regions. Capability to distribute large number of SD and HD channels.
• Internet Protocol Television (IPTV)-comparatively new as compared to the much established cable and DTH services. Add-ons are VOD, games and interactive applications.
Cable
IPTVSatellite
Pay-TV Market Segments
Source: Frost & Sullivan
5
Competitive Landscape
Source: Frost & Sullivan
Company Cable Satellite IPTV
Anystream* X X X
ATEME* X
Cisco Scientific-Atlanta X X X
ComtechTV –Radyne X X
Digital Rapids* X X
EGT X X
Envivio X
Ericsson - TANDBERG Television X X X
Harmonic X X X
Harris X X
Motorola X X X
NTT X
Optibase X
Telairity X X X
Telestream* X X
Thomson Grass Valley X X X
Viewcast* X X
(*) - Companies with software solutions for Pay-TV application markets
6
Economic recession has forced service providers to restrain their
capital expenditure for next 12 months
Economic recession has forced service providers to restrain their
capital expenditure for next 12 months
Strong demand for SD products in many parts of the world trends to affect the sales of their HD product
line
Strong demand for SD products in many parts of the world trends to affect the sales of their HD product
line
Unable to provide an expanded and interactive
VOD offering due to technical limitations and
are thus losing customers to cable and IPTV
operators
Unable to provide an expanded and interactive
VOD offering due to technical limitations and
are thus losing customers to cable and IPTV
operators
Economic slowdown might push governments in various countries to postpone the digital deadlines, thereby
delaying investments in digital equipment
Economic slowdown might push governments in various countries to postpone the digital deadlines, thereby
delaying investments in digital equipment
IndustryChallenges
SD Legacy to prolong HD transition
Postponem-ent of digital deadlines
Technical Limitations for DTH providers
Economic Recession
Industry Challenges
7
Market Drivers
Medium-highHighHighIncreasing penetration of advanced encoding formats such as AVC in various parts of the world drive the demand for encoding equipment
3
HighHighHigh
Increase in the number of digital channels, HD
programming and launch of video-on-demand (VOD) applications are expected to drive the growth of video encoders market
2
HighHighHigh
Rising adoption of HD content drives the demand for advanced encoding systems
1
5 - 6 Years3 - 4 Years1 - 2 YearsDriverRank
Source: Frost & Sullivan
8
Market Restraints
MediumMedium-highHighReduction in product prices is expected to curtail the market growth rate
4
Medium-highHighHighDelay in HD content distribution suppresses the
adoption of advanced encoding equipment
3
Medium-highHighHigh
Legacy equipment and long sales cycles restrains the growth of the video encoders market
2
HighVery highExtremely
high
Global economic slowdown restrains investments in broadcast equipment including video encoders
1
5 - 6 Years3 - 4 Years1 - 2 YearsRestraintRank
Source: Frost & Sullivan
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Growth Trends: Cable Video Encoders Market
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
2009 2010 2011 2012 2013 2014 2015
Year
Revenue G
row
th R
ate
(%
)
• In 2009, the cable video encoders market is estimated to decline by 5.3 percent
• The world cable video encoders market is expected to cross $250 million in revenues by 2015
• The market will grow at a low single digit CAGR over the forecast period
• Saturated demand in U.S.; EMEA and Asia Pacific regions to grow at a higher CAGR
Source: Frost & Sullivan
10
Growth Trends: Satellite Video Encoders Market
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
2009 2010 2011 2012 2013 2014 2015
Year
Revenue G
row
th R
ate
(%
)
• In 2009, the satellite video encoders market is estimated to decline by 1.6 percent
• The world satellite video encoders market is expected to cross $150 million in revenues by 2015
• The market will grow at a low single digit CAGR over the forecast period
• Asia Pacific regions to show higher demand; Negligible growth in the Americas
Source: Frost & Sullivan
11
Growth Trends: IPTV Video Encoders Market
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
2009 2010 2011 2012 2013 2014 2015
Year
Revenue G
row
th R
ate
(%
)
• The world IPTV video encoders market is expected to cross $160 million in revenues by 2015
• Americas are to decline by nearly 14 percent in 2009; however, the total market is expected to show growth of nearly 2 percent
• EMEA and Asia Pacific regions are expected to show a higher growth rate
Source: Frost & Sullivan
12
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
2009 2010 2011 2012 2013 2014 2015
Year
Revenu
e G
row
th R
ate
(%
)Growth Trends: Total Pay-TV Encoders Market
Effects of Economic Slowdown and
maturing US market
Increased uptake of pay-TV service
fuelled by HD, VOD, Advanced encoding
formats
• Decline of over 2 percent expected in 2009; recovery from 2010 onwards
• The market is expected to grow at a CAGR of over 4 percent
• Historically prices have fallen by 15-20 percent and are expected to fall further over the next 12-24 months
• Most growth expected from EMEA and Asia Pacific
Source: Frost & Sullivan
13
Growth Trends: Geographic Segments – Total Market
Americas
Over $165 million in 2008
Expected CAGR of more than 2 percent
EMEA
Over $153 million in 2008
Expected CAGR of approximately 5 percent
Asia Pacific
Over $110 million in 2008
Expected CAGR of approximately 6 percent
Source: Frost & Sullivan
14
Market & Technology Trends
Technology TrendsEfficient Server-based Software Solutions
Server-based software solutions will enable a service provider to conserve overall costs as well support easy upgradeability of products.
Emerging Companies: Broadcast International and Elemental Technologies
Market TrendsMergers/Acquisitions:
• Harmonic acquires Rhozet, Entone Technologies and recently, Scopus
• Tandberg Television acquired by Ericsson
� Scientific Atlanta acquired by Cisco Systems
• Thomson divests its stake in Grass Valley
15
Growth Opportunity
• Increasing Penetration of High-definition (HD) content
HDTV Service Penetration (World), 2007
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
UK US France Canada Japan
Countries
Tele
vis
ion
Ho
us
eh
old
wit
h
HD
TV
(%
)
Source: Canadian Association of Broadcasters,
Frost & Sullivan
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Growth Opportunity – contd.
• Transition from MPEG-2 to MPEG-4/AVC/H.264
2006
38.3% 61.7% 43.1% 56.9%
2007
2008
58.9%41.1%
Key:
MPEG-2
MPEG-4/AVC/H.264 Source: Frost & Sullivan
17
Pay-TV Operators
Growth Opportunity – contd.
• Convergence
Internet Videos
Mobile Videos
Digital Video RecordersAnd Gaming Consoles
Source: Frost & Sullivan
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Next Steps
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For Additional Information
Jake Wengroff
Global Director
Corporate Communications
(210) 247-3806
Craig Hays
Sales Manager
Information & Communications Technologies
(210) 247-2460
Mukul Krishna
Research Director
Digital Media
(210) 247-3850