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How Video Apps are Driving SP Network Investment

Infonetics Research released excerpts from two recently published video equipment market share and forecast reports. These latest market studies demonstrate how video entertainment applications demand is impacting broadband service provider (SP) infrastructure investment decisions. That being said, most of the growth will come from online video streaming apps, not traditional pay-TV.

The first report, Video-on-Demand (VOD) and Encoder Equipment and Video Subscribers -- which tracks video equipment sold to telco IPTV, cable video, and satellite video providers. And the second report, Set-Top Boxes and Subscribers -- which tracks IP, cable, satellite hybrid, DVR, and high definition (HD) STBs, as well as over-the-top (OTT) media servers.

"Two of the most interesting trends in the video equipment and set-top box markets are 1) across the board, pay-TV operators continue to increase their investments in MPEG-4 encoders to reduce bandwidth requirements for their broadcast channels and VOD streams, and 2) despite healthy STB unit growth in 2011, revenue was nearly flat, reflecting the growth of lower-cost STBs in emerging markets, particularly China, combined with the increased competition we're seeing in the more mature markets," notes Jeff Heynen, directing analyst for broadband access and video at Infonetics Research.

VOD and Video Encoder Market Highlights
  • Following annual declines in 2009 and 2010 during the global recession, the video infrastructure market (VOD and streaming content servers and video encoders) grew 6 percent in 2011 to $803 million, as all major world regions except EMEA increased spending.
  • Sequentially (from the third to the fourth quarters), the overall market is up 4 percent and from the year-ago fourth quarter, the market is up 6 percent.
  • Infonetics forecasts double-digit percent revenue increases in the global video infrastructure market in 2012.
  • A cumulative $1.9 billion will be spent on standard and high definition (SD and HD) MPEG-4 video encoders over the next 5 years, from 2012 to 2016.
  • Huawei leads the global VOD server market in both 4Q11 and for the overall year 2011; Motorola and ZTE are neck-and-neck for global VOD revenue in 4Q11

Video Set-Top Box Market Highlights
  • In 2011, worldwide set-top box unit shipments grew 13.7 percent compared to the previous year, while revenue was nearly flat, up less than 1 percent, to $13.3 billion.
  • Similarly, global set-top box unit shipments grew faster (+6.0 percent) than revenue (+3.8 percent) between the third and fourth quarters of 2011.
  • Decent growth in high definition (HD) and DVR STB sales helped keep average selling prices (ASPs) from declining too quickly.
  • In the tight race for overall global STB revenue share, Motorola, Echostar, Pace and Cisco lead, all separated by only a few market share percentage points in 4Q11.
  • IP STB and hybrid IP/DTT STB unit shipments are forecast to grow the strongest among the various types of set-top boxes over the next 5 years, increasing their share of the total market.
  • Demand continues to accelerate for online video streaming devices -- such as those made by Apple, Boxee, Roku, Popcorn Hour, D-Link, NETGEAR, Western Digital and TiVo -- with global over-the-top (OTT) media server revenue jumping 38 percent and unit shipments up 68 percent in 2011 as more service providers offer streaming video to their subscribers.

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