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Transformation of a relatively mature pay-TV market and a surge in OTT services are identified as two key drivers in the growth of video infrastructure sales, according to findings from market intelligence specialist Synergy Research Group.
The firm’s research suggests that the video infrastructure market generated revenues of $32 billion for technology vendors in 2011, a figure which is forecast to grow by over 7 per cent per year to reach $45 billion by 2016. While revenues from client hardware and software segment (comprised primarily of set-top boxes, residential gateways and associated software) will remain relatively flat at around $14 billion per year, particularly strong growth will be seen in content management and distribution (comprising content delivery networks, media data centres and content management related software), which will surge to become a $23 billion market by 2016. Revenue from professional services related to video infrastructure will also show strong growth, while the content acquisition and preparation segment will grow by a steady 5 per cent per year.
Synergy Research says that driving the growth in infrastructure sales are two big trends – transformation of a relatively mature pay-TV market and a surge in OTT services. The number of pay-TV subscribers worldwide will keep on growing steadily, but more importantly according to the firm, the number of digital pay-TV subscribers will continue surging to reach over 900 million by 2016. Meanwhile, IP will have a major impact on pay-TV networks, which will continue evolving towards data centres and cloud-centric architectures. On the OTT side, the boom in accessing free content will continue to drive huge increases in traffic while generating little revenue for service providers, but at the same time paid, OTT services will account for an ever-larger proportion of the revenues of pay-TV operators, which will in turn drive investment in technology that is able to support OTT.
“Clearly the biggest event in this market recently is Cisco’s acquisition of NDS,” says Jeremy Duke, Synergy Research Group’s founder and Chief Analyst. “The price was high but you can see the rationale. Cisco was already a market leader with 18 per cent video infrastructure market share; the addition of NDS boosts this to 21 per cent by adding revenues and customers in some key market segments. It also significantly expands what Cisco can offer to telcos and to cable operators looking to migrate their traditional cable head ends to data centre and cloud architectures – which we believe is a multi-billion dollar market in transition.”