Advanced Television

Pay-TV growth propels video encoder market

October 22, 2014

The demand for pay-TV video encoders is on the rise, with cable, IPTV and satellite companies requiring these products to get consumers the shows they want from content producers to their home set-top boxes. In fact, with the global expansion of pay-TV subscribers and increasing number of channels, cable, IPTV and satellite companies have been left with little option but to step up their video encoder purchases.

Analysis from Frost & Sullivan finds that the market earned revenues of $435.1 million in 2013 and estimates this to double to $895.2 million by 2020.

“Advanced markets are investing in sophisticated video encoder technologies, while other markets are just beginning their cable digitalisation journeys,” said Frost & Sullivan Digital Media Research Analyst Robert Cavin. “Overall, pay-TV subscriber bases are expanding in all markets across the globe, indicating ample opportunities for pay-TV video encoder vendors in the coming years.”

Market participants can achieve strong growth rates either through encouraging greenfield deployments in emerging regions such as China, India and Latin America or by upgrading existing infrastructure in long-standing regions like North America and Europe. Of these two options, the latter will be more rewarding, as North America and Europe have high average revenue per user (ARPU) despite the higher number of overall pay-TV subscribers in China, India and Latin America. Robust ARPU and subscription fees mean higher pay-TV industry revenues that will allow service providers to deploy state-of-the-art equipment to keep subscribers satisfied.

However, escalating consumer awareness and usage of over-the-top video services through various media, challenges the linear pay-TV business model, thereby, limiting the sales volumes of encoders. In addition, the shift towards software-based architectures and multi-screen viewing options is also adversely affecting market development.

“As such, it is a competitive necessity for pay-TV video encoder vendors to offer unified multi-screen services along with linear pay-TV as this will give consumers the viewing freedom they desire without having to leave the pay-TV ecosystem,” stated Cavin. “It is also important for pay-TV video encoder vendors to roll out reliable products with efficient compression technologies.”



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