Advanced Television

Market value for video transmission services over satellite to reach $27bn by 2020

February 10, 2011

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.

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