Moreover, Infonetics assessed the current pay-TV IP, cable, satellite, and hybrid set-top box (STB) and over-the-top (OTT) media servers market.
"Operators are being extremely cautious with their video infrastructure spending right now, looking to sweat their assets as much as they can -- knowing that a spending spree looms on the horizon to support more unicast and multi-screen services, including RS-DVR, start-over, look-back, and streaming delivery to mobile devices," said Jeff Heynen, directing analyst at Infonetics Research.
Infonetics said that they expect a noticeable increase in video equipment spending during 2013. Clearly, this year will be a challenging one for most pay-TV service providers in the saturated markets -- such as North America and Europe.
Both are key markets, as the legacy video entertainment distribution chain seeks ways to counter the adoption and growth of lower-cost over-the-top (OTT) streaming video offerings. Traditional vendors are experiencing some buyer hesitation, due to a cloudy outlook in these markets.
Ultimately, these legacy pay-TV service providers must find a way to create offers that appeal to younger consumers -- that solution likely includes embracing the high-growth streaming video value proposition. I believe that's where the current upside growth opportunities exist.
3Q12 VOD and encoder market highlights include:
- Infonetics has increased its long-term forecast for the overall video infrastructure market to $1.1 billion by 2016, as operators worldwide migrate to MPEG-4 HD encoders to support higher picture quality using less bandwidth and as multi-screen services take off.
- For the quarter, VOD and encoder equipment revenue fell 3 percent in 3Q12 from 2Q12, with all regions declining by single digits.
- Following 2 consecutive quarters of declines, spending on VOD and streaming content servers grew 1.8 percent in 3Q12.
- Infonetics forecasts the number of IPTV subscribers to nearly double between 2012 and 2016, from 83 million to 165 million worldwide.
3Q12 set-top box market highlights include:
- Worldwide set-top box revenue was essentially flat in 3Q12, totaling $3.7 billion.
- Cisco held serve as the cable set-top box market share leader for the second straight quarter, beating out Motorola by a hair.
- The IP set-top box segment grew the most in 3Q12, with revenue up 27 percent from the previous quarter.
- 45 percent of all set-top boxes shipped now have HD capabilities.
- Infonetics has increased its long-term overall STB forecast, due mainly to a pick up in the pace of cable and satellite STB shipments in the Asia-Pacific region, principally in China and India; Infonetics expects the global STB market to grow to $16.6 billion in 2016.