In its recently released report, Euroconsult, the international consulting and analyst firm in the satellite sector, forecasts that the market value for video transmission services over satellite including video distribution services for TV channels and contribution services for permanent and occasional use is expected to reach $27 billion in 2020, up from $15.8 billion in 2010.
“The anticipated revenue growth for video transmission services in the coming years is based on strong market drivers such as the multiplication of channels, the launch of new formats and the takeoff of digital TV in emerging regions,” said Pacome Revillon, CEO of Euroconsult. “Furthermore, demand for increasingly complex video transmission solutions will push service providers to create end-to-end solutions with satellite remaining a key part of the delivery network.”
TV channel distribution: A core market, new standards and emerging regions driving growth
The video transmission market is mainly supported by the distribution of video content on pay-TV platforms, with TV signals delivered to viewers either directly by satellite or through the head-ends of terrestrial networks. According to the Euroconsult’s just-released ‘Video Transmission Services over Satellite, Global Market Analysis & Forecasts to 2020,’ an estimated 25,000 TV signals were transmitted by satellite by year-end 2010. While the North American and European markets remain the largest markets, the takeoff of digital TV in emerging regions, such as India, Russia and Brazil, could make those markets the most important growth engines over the next ten years.
Technological improvements are profoundly transforming the market for video transmission, with more complex and diverse requirement offering new revenue opportunities to market players. The migration to HD and 3D transmission formats, the roll-out of fiber and 3G/4G networks, the development of linear and non linear usage and the multiplication of video screens all play a critical role in this phenomenon.
Innovation boosts the video contribution market
Meanwhile video contribution services, with the transmission of raw video material, are also growing with a 24% CAGR in terminals deployed in the last five years. The need to broadcast live programming and cover both global and local events is fueling TV-channel demand for occasional video services. Innovation is playing a major role in the current market growth in satellite newsgathering (SNG) for sports, news and other programming. The introduction of cheaper and lighter and more portable terminals is, for example, a key driver for the multiplication of content captured and transmitted. Innovation here includes the recent introduction of MSS terminals, the current use/roll-out of 3G or 4G network terminals and the likely introduction of terminals using Kaband satellite systems in the near term.
According to the Euroconsult report, global traffic on occasional use terminals was estimated at close to 5 million hours in 2010 for around 22,000 terminals deployed. The increase in terminals per channel and technical improvements are expected to drive growth in this market in the coming decade, with Ka-band transmission being seen as a real opportunity to increase both traffic and terminals, due to a potential decrease in transmission costs.
Changes expected in the value chain: broadcasters increase outsourcing, consolidation among service providers The video transmission market is highly fragmented with specialized service providers, satellite operators, telecommunication companies and broadcasters each managing a part of the transmission. Broadcasters still currently capture the bulk of the estimated market value of video transmission, as they continue to perform a large part of the transmission activity in-house. However, with growing demand for end-to-end services and increasingly demanding viewers, the management and transmission of video content is becoming increasingly complex. Some in-house broadcasting units and smaller providers may find it difficult to maintain a position in the market, due to resource and network limitations. This may lead to more vertical integration, and outsourcing to specialized companies will also become more commonplace. The continuing negative economic climate may accelerate this trend by pushing broadcasters to optimize their costs and investments.
Likewise, industry consolidation is likely to increase due to the increased complexity of the solutions. While the leading specialized service providers (Globecast, Arqiva and RRSat) currently capture around 6% of the total market value of video transmission services, new players are expected to emerge alongside the market consolidation and reorganization of historical market players. Recent transactions, such as the acquisitions of Ascent Media activities and Crawford Communications by Encompass, may be followed by further M&A activities in the next few years. This will be required to take advantage of growth opportunities and reach the critical size needed to manage more complex content management and transmission requirements.