Primary distribution encoders are used to deliver linear TV signals to the facilities of those who will be redistributing the signals to consumers. The signals may be encoded using the older MPEG-2 or newer H.264 compression schemes. In the future, SNL Kagan MRG expects programmers will use the latest HEVC compression scheme to deliver both Ultra HD and HD signals.
The research company expects that the overall primary distribution encoder market will be stable with encoder segments like HD H.264 and HEVC growing as more HD channels are launched. SD encoder shipments will fall in regions like North America where the shipments are primarily for replacement. Emerging markets like Latin America, Asia, and the MEA are seeing greater channel growth causing shipments in those regions to grow. HD MPEG-2 encoders will continue to decline in favour of HD H.264 encoders.
While H.264 encoders in this market will retain the lion’s share of revenues throughout the forecast period, HEVC encoder growth really picks up steam in the latter years of the forecast as HEVC encoders begin being used in 2016 with trials in 2015. SoCs for set-top boxes are to be in production in 2014, so products should be available for IRDs in 2015.
Vendors differ on their expectations for HEVC. Some feel that those using MPEG-2 might skip H.264 and go right to HEVC. Programmers can also start to adopt new DVB-S2X extensions which save even more bandwidth when combined with HEVC. Currently, most SD channels are modulated in DVB-S while HD channels are modulated using the DVB-S2 standard which increases the bandwidth of each transponder. DVB-S2X offers improvements in filtering and roll-offs to improve transponder efficiency by as much as 30 per cent.
Others feel that HEVC is unlikely to have much impact unless a programmer is willing to change out all of its receive sites. These HEVC IRDs will be more expensive, so it will be costly. However, those without many receive sites or those with greenfield projects like 4K or Ultra-HD channels may choose HEVC.
Regardless of the divergent opinions in the marketplace, SNL Kagan MRG expects that HEVC encoders will make inroads into this market segment, helping to prop up overall primary distribution encoder revenue.