broadcast video encoders: maturing market, drivers
TRANSCRIPT
Broadcast Video Encoders: Maturing Market, Drivers and Challenges
Vidya S Nath, Senior Industry AnalystDigital MediaJuly 23, 2009
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Agenda
• Overview of Frost & Sullivan Encoders-Transcoders Market Coverage, 2009
• Introduction to the Broadcast & DTT Video Encoders Market
• Digital Deadlines Worldwide
• Industry Challenges
• Market Restraints
• Regional Trends
• Market Drivers: So where is the opportunity?
• Market Trends
• Technology Trends
• Competitive Landscape: Changes Expected
• Conclusions
• Questions
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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
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Introduction to the Broadcast & DTT Video Encoders Market
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Digital Deadlines, Broadcast Standards and Compression Formats in Use (World), 2008
Canada – 2011;
ATSC;
MPEG-2 and
H.264United States;
2009;
ATSC; MPEG-2 and
H.264
Australia – 2013; DVB-T; MPEG-2 and H.264
Brazil – 2016; ISDB-T;
H.264/MPEG-4, AVC
Hong Kong – 2012;
DMB-T/H;
MPEG-2/H.264
Japan– 2011;
ISDB-T;
MPEG-2
Malaysia– 2015; DVB-T;
MPEG-4/H.264
Mexico – 2022; ATSC;
MPEG-2, H.264/MPEG-4
South Africa– 2011; DVB-T; H.264/MPEG-4
UK – 2012; DVB-T;
MPEG-2 and H.264
Italy– 2012; DVB-T;
MPEG-2 and
H.264
Czech Republic – 2010;
DVB-T; MPEG-2
Key:Country name; Digital
Deadline Year; Broadcast Standard;
Compression format in use
China– 2015;
DMB-T/H;
MPEG-2
Source: Frost & Sullivan
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Advertising Market Trends (World)
-15%
-10%
-5%
0%
5%
10%
2005 2006 2007 2008 2009 2010 2011 2012
Year
Gro
wth
Ra
te
Industry Challenges
• Economic Recession: advertising revenues decline- major cost restructuring
• Likely Postponement of Digital Deadlines
• Promising HD Demand; but challenged by the standard definition legacy
Source: Internet Sources such as Adage.com, PWC; Frost & Sullivan
Media Companies Growth Rate (Quarterly)
-10%
-5%
0%
5%
10%
15%
Q1 '08 Q2 '08 Q3 '08 Q4 '08 Q1 '09
Source: Internet Sources & Annual Reports of companies such as Disney and News Corp.
Ad revenue for Network TV from top 100 leading advertisers, (U.S.,) 2008
$26.71 Bn
Source: Adage.com
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Market Restraints
-40.0%
-30.0%
-20.0%
-10.0%
0.0%
10.0%
2008 2009 2010 2011 2012 2013 2014 2015
Year
Gro
wth
Ra
teBroadcast Video Encoders Growth Rate (2008-2015)
External Restraint•Global Economic Slowdown
Further intensifiesother existing
restraints
Legacy equipment and long sales cycles
Interoperability issues
Reduction in product prices
Reduced Demand
Source: Frost & Sullivan
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Regional Trends
Total Broadcast Video Encoders Market: Region-wise Revenues
(World), 2008-2015
-
20.0
40.0
60.0
80.0
100.0
120.0
2008 2009 2010 2011 2012 2013 2014 2015
Year
$ M
illi
on
Americas EMEA APAC
• Americas to decline at a CAGR of 20% till 2011
• EMEA to decline at nearly 13% till 2011
• APAC demand will weather the storm- still single digit CAGR over forecast period
Source: Frost & Sullivan
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Market Drivers: So where is the opportunity?
MPEG-2, 58.3%
AVC/H.264, 41.7%
HD, 48.8%
SD, 51.2%
Source: Frost & SullivanSource: Frost & Sullivan
• Demand for products- especially in the newsgathering/ contribution category-for high resolution
• Even emerging (typically price-sensitive) countries transitioning to HD workflows
• New products supporting H.264 AVC/ JPEG2000 etc. in demand
• High demand for software-intensive solutions-that are highly scalable, easily upgradeable; cheaper, and can sit on top of server systems
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2006-2009:
�Comtech acquires Radyne
�Thomson divests its stake in Grass Valley
�Harmonic acquires Rhozet, EntoneTechnologies and recently, Scopus
�Tandberg Television acquired by Ericsson
�Motorola acquires Tut Systems and Modulus Video
�Scientific Atlanta acquired by Cisco Systems
Market Trends
• Market Consolidation: acquisitions and mergers
• Inorganic growth efforts: new product lines, new regions
Threats:
•Highly competitive market
•Not a lucrative segment: low volumes
•Alternative media: complex and fragmented customer demands; demand for cheap solutions- high risk of failure
Opportunities:
•Overall fall in pricing for hardware- calls for innovation
•Potential to create turnkey efficient and robust software-based systems
•Alternative media markets
Weakness:
•Tremendous price pressure, low margins
•Saturation in demand from premium regional markets
Strengths:
•Aggressive demand in Asia
•Demand for high resolution, advanced formats
•Broadcasters diversifying: investing in alternate media
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Technology Trends
• Ultra HD Technology from NHK Broadcasting
UltraHD format is four times as high and four times as wide as HD. It is a prototype for a new
digital video format, proposed as replacement for existing high definition television (HDTV). The
current High-Definition Television (HDTV) uses 1,080 lines of resolution, where as UltraHD uses
7,680 x 4,320 pixels in a widescreen aspect ratio of 16x9, making for a total of approximately 33
million pixels. UltraHD is so named because it provides a video resolution containing 16 times
as many pixels as current HD.
• AVS- Format in China
Audio Video Coding Standard or AVS is an independent coding-decoding standard, which
officially became the national standard of China in 2005. AVC is 2-3 times more efficient as
compared to the traditional MPEG-2 standard. The performance of AVS and AVC is similar.
However, AVC's licensing mode is complex and fees expensive, where as AVS's licensing
mode is as simple as that of MPEG-2 and fees competitive.
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Competitive Landscape: Changes Expected
More than 20 vendors in this market globally
Usual Suspects (Global Presence):
•Tandberg Television (Ericsson)•Cisco Scientific Atlanta•Motorola•Harmonic•Grass Valley•Envivio•Harris•Comtech TV (earlier Radyne)
Examples of Emerging Vendors
NTT, Fujitsu
Streambox
Digital Rapids,
Telestream,
Viewcast
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Conclusions
• Broadcast market maturing in North America and Western Europe
• Immediate growth expected in Asia
• Vendors need to innovate: demand for lower cost, highly efficient and scalable software solutions
• For survival, if not robust growth: “expand your horizons,” alternative market segments
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