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Pay-TV Video Encoders Market – Growth Prospects

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A presentation by Frost & Sullivan describing its coverage of the Encoders-Transcoders Market in 2009, as well as and introduction to Pay-TV Encoders market. The presentation will cover the …

A presentation by Frost & Sullivan describing its coverage of the Encoders-Transcoders Market in 2009, as well as and introduction to Pay-TV Encoders market. The presentation will cover the competitive landscape of the market, the industry challenges and market drivers, growth trends and restraints on the market, technological trends, and the growth opportunity in the Encoders-Transcoders market.


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  • 1. Pay-TV Video Encoders Market – Growth Prospects Meghali Sharma, Research Associate Digital Media Information & Communication Technologies Frost & Sullivan August 11, 2009 meghali.sharma@frost.com
  • 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 2
  • 3. Overview of Frost & Sullivan Encoders-Transcoders Market Coverage, 2009 World Video Encoders-Transcoders Market World Broadcast & DTT Video World Pay TV Video Encoders World Enterprise, Internet and Encoders Market Market Mobile Video Encoders- (published) (published) Transcoders Market (to be published) Customer Segments: Customer Segments: Customer Segments: Broadcasters, DTT Service Cable, Satellite, IPTV Service Enterprise: Corporate, Providers Providers Government, Hospitality, etc. Internet: Web Portals, Broadcasters, Service Providers etc. Mobile: Telco Service Providers, Web Portals, Content Providers Applications: Applications: Applications: Contribution, Distribution, DTT Distribution, Video-on-demand, Real time streaming, (digital terrestrial television), multicasting, video-on-demand Others (archiving, mastering, redundancy) Source: Frost & Sullivan 3
  • 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 Cable 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. Satellite IPTV • Internet Protocol Television (IPTV)- comparatively new as compared to the much established cable and DTH services. Add-ons are VOD, games and Pay-TV Market Segments interactive applications. Source: Frost & Sullivan 4
  • 5. Competitive Landscape 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 Source: Frost & Sullivan 5
  • 6. Industry Challenges Economic recession has forced Economic recession has forced Industry service providers to restrain their service providers to restrain their Economic capital expenditure for next 12 months Challenges Recession capital expenditure for next 12 months Unable to provide an expanded and interactive Unable to provide an expanded and interactive VOD offering due to technical limitations and VOD offering due to technical limitations and are thus losing customers to cable and IPTV are thus losing customers to cable and IPTV Technical operators operators Limitations for DTH providers Postponem- ent of Economic slowdown might push governments in various digital Economic slowdown might push governments in various countries to postpone the digital deadlines, thereby deadlines countries to postpone the digital deadlines, thereby delaying investments in digital equipment delaying investments in digital equipment SD Legacy Strong demand for SD products in many parts of the to prolong Strong demand for SD products in many parts of the HD world trends to affect the sales of their HD product world trends to affect the sales of their HD product transition line line 6
  • 7. Market Drivers Rank Driver 1 - 2 Years 3 - 4 Years 5 - 6 Years 1 Rising adoption of HD content drives the demand for advanced encoding systems High High High 2 Increase in the number of digital channels, HD programming and launch of video-on-demand High High High (VOD) applications are expected to drive the growth of video encoders market 3 Increasing penetration of advanced encoding High High Medium-high formats such as AVC in various parts of the world drive the demand for encoding equipment Source: Frost & Sullivan 7
  • 8. Market Restraints Rank Restraint 1 - 2 Years 3 - 4 Years 5 - 6 Years 1 Global economic slowdown restrains investments in broadcast equipment including video encoders Extremely Very high High high 2 Legacy equipment and long sales cycles restrains the growth of the video encoders market High High Medium-high 3 Delay in HD content distribution suppresses the High High Medium-high adoption of advanced encoding equipment 4 Reduction in product prices is expected to curtail High Medium-high Medium the market growth rate Source: Frost & Sullivan 8
  • 9. Growth Trends: Cable Video Encoders Market 10.0% 8.0% 6.0% Revenue Growth Rate (%) 4.0% 2.0% 0.0% 2009 2010 2011 2012 2013 2014 2015 -2.0% -4.0% -6.0% Source: Frost & Sullivan Year • 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 9
  • 10. Growth Trends: Satellite Video Encoders Market 6.0% 5.0% 4.0% Revenue Growth Rate (%) 3.0% 2.0% 1.0% 0.0% 2009 2010 2011 2012 2013 2014 2015 -1.0% -2.0% Ye ar Source: Frost & Sullivan • 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 10
  • 11. Growth Trends: IPTV Video Encoders Market 9.0% 8.0% 7.0% Revenue Growth Rate (%) 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 2009 2010 2011 2012 2013 2014 2015 Year Source: Frost & Sullivan • 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 11
  • 12. Growth Trends: Total Pay-TV Encoders Market 8.0% 6.0% Revenue Growth Rate (%) 4.0% Increased uptake of pay-TV service 2.0% fuelled by HD, VOD, Advanced encoding formats 0.0% 2009 2010 2011 2012 2013 2014 2015 -2.0% Source: Frost & Sullivan Effects of Economic Slowdown and -4.0% maturing US market Year • 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 12
  • 13. Growth Trends: Geographic Segments – Total Market EMEA Asia Pacific Americas Over $153 million in 2008 Over $110 million in 2008 Over $165 million in 2008 Expected CAGR of Expected CAGR of approximately approximately 5 percent 6 percent Expected CAGR of more than 2 percent Source: Frost & Sullivan 13
  • 14. Market & Technology Trends Market Trends Mergers/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 Technology Trends Efficient 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 14
  • 15. Growth Opportunity • Increasing Penetration of High-definition (HD) content HDTV Service Penetration (World), 2007 Television Household with 25.0% 20.0% HDTV (%) 15.0% 10.0% 5.0% 0.0% UK US France Canada Japan Countries Source: Canadian Association of Broadcasters, Frost & Sullivan 15
  • 16. Growth Opportunity – contd. • Transition from MPEG-2 to MPEG-4/AVC/H.264 38.3% 61.7% 43.1% 56.9% 2006 2007 41.1% 58.9% Key: MPEG-2 MPEG-4/AVC/H.264 2008 Source: Frost & Sullivan 16
  • 17. Growth Opportunity – contd. • Convergence Pay-TV Operators Internet Videos Digital Video Recorders And Gaming Consoles Mobile Videos Source: Frost & Sullivan 17
  • 18. Next Steps Request a proposal for a Growth Partnership Service to support you and your team to accelerate the growth of your company. (myfrost@frost.com) 1-877-GoFrost (1-877-463-7678) Join us at our annual Growth, Innovation, and Leadership 2009: A Frost & Sullivan Global Congress on Corporate Growth, September 13-16 2009, Hyatt Scottsdale Resort & Spa at Gainey Ranch, Scottsdale, AZ (www.gil-global.com) Register for the next Chairman’s Series on Growth: The CEO's Growth Team™: The CEO’s Growth Survey and its Economic Outlook for 2010 (September 3, 2009) (http://www.frost.com/growth) Register for Frost & Sullivan’s Growth Opportunity Newsletter and keep abreast of innovative growth opportunities (www.frost.com/news) 18
  • 19. Your Feedback is Important to Us What would you like to see from Frost & Sullivan? Growth Forecasts? Competitive Structure? Emerging Trends? Strategic Recommendations? Other? Please inform us by taking our survey. 19
  • 20. For Additional Information Jake Wengroff Craig Hays Global Director Sales Manager Corporate Communications Information & Communications (210) 247-3806 Technologies jake.wengroff@frost.com (210) 247-2460 craig.hays@frost.com Mukul Krishna Research Director Digital Media (210) 247-3850 mukul_krishna@frost.com 20