Table of Contents
•The watermarking market has been struggling for growth because a few vendors dominate it and rely primarily on licensing for their revenues. The use of watermarking is growing in post-production and consumer applications, resulting in growth in the broader product and software ecosystem of which watermarking forms a small—although crucial—part.
•Watermarking is expected to grow in relevance as 4K content becomes more prevalent and closing the analog hole once again becomes a necessity. The current vendor landscape is not expected to change, however, given that watermarking remains a difficult technical challenge.
•Fingerprinting is the key to automated workflows, improved asset management efficiency, and improved content analytics. While the segment remains a stronghold of homegrown and walled garden solutions, it is gradually approaching maturity.
•As with watermarking, core fingerprinting revenues are small and are closely tied to content identification and indexing databases. The broader ecosystem this technology enables is thriving.
•The watermarking market is concentrated when considering only core product revenues and discounting home-grown costs from total market estimates. Civolution, Verance, and Digimarc together account for nearly x % of the market.
•In contrast, the fingerprinting market is highly fragmented, both in terms of vendors and product categories that include non-linear editing (NLE), multiscreen applications (apps), and media asset management (MAM) systems. NLEs account for roughly x % of fingerprinting revenues, while multiscreen apps account for approximately x %. Gracenote (formerly TDS) plays a key role, as do Avid and Adobe.
•The rise of over-the-top (OTT) content consumption on unmanaged devices is driving uptake of both technologies in terms of application diversity and unit installations. Restraining factors include limited standalone market value and high fragmentation.
•This insight provides a quantitative analysis of both markets in the base year of 2013, with short-term forecasts for the core technology and the surrounding ecosystem.
•Watermarking: Watermarking (more generally, steganography) is the process of inserting visually imperceptible and securely immutable information into digital audiovisual content to secure content against piracy. Applications include identification of copyrighted content, indication of permission (or lack thereof) of restricted operations such as copying, and identification of the source of a given copy of content to enable downstream traitor tracing. By necessity, the insertion and detection of watermarking are highly confidential processes. Watermarks must be indistinguishable and immutable in ordinary content operations in order to provide meaningful, durable protection.
•Fingerprinting: Fingerprinting refers to the open insertion of information—whether text, audio, or video—to assist with automated identification of content. This is used as a building block for onward applications such as search, management, indexing, correlation, or Big Data gathering for analytics purposes.
•Revenues: For the purposes of this study, only commercial market revenues are counted in market sizing. Values ascribed to homegrown development or in-house customization are not reflected in market sizing. Revenues are counted in US dollars for the calendar year. For both watermarking and fingerprinting, only revenues specific to video applications for media and entertainment (M&E) are considered.
•Core Revenues: These are revenues accrued by vendors of actual watermark or fingerprint generation, insertion, and detection components. They include licensing revenues, royalty revenues, and professional services provided by core vendors. There are several cases in which one vendor pays patent royalties to another. To the extent that this can be determined, that royalty amount is subtracted from the payee’s revenue estimates to minimize double counting and reduce artificial market inflation.
•Total Revenues: Core components are rarely sold in isolation, except by primary vendors such as Digimarc, Civolution, and Verance. Most vendors provide watermarking or fingerprinting features as an enabling but small component within a much broader platform or system. Isolating the specific value of the watermarking or fingerprinting component is therefore difficult. Indeed, most vendors indicate that they do not break these out separately. Frost & Sullivan’s estimates are based on assessment of the percentage of total deal value that could be reasonably ascribed to the fingerprinting/watermarking component. Percentages used in the internal model vary by vendor and by application.
•Clarifying Notes: Professional services revenues accrued by third-party system integrators and vendors are not considered in market sizing. For example, an estimation of traitor tracing services offered by vendors such as Irdeto (through its 2011 acquisition of BayTSP), MarkMonitor, or SecuriSearch, which rely on content watermarks and which may leverage fingerprints for content recognition, are not included. Similarly, revenues associated with components for automated piracy detection and piracy management in consumer electronics devices are not included. Revenues accrued from non-video and non-M&E applications are not considered.
Revenue Forecast Discussion
•Core revenues for the watermarking market have fluctuated significantly over the past 2 years as outstanding litigation is settled and a more stable revenue stream materialized. 2013 was marked by slowing revenue growth and saturation as major customers in North America and Western Europe reached the end of their locked-in licensing periods and global demand was not high enough to compensate for this loss.
•2014 has similarly been disappointing so far, but there are several bright spots on the horizon. As online consumption of premium video content grows, and as unmanaged devices such as tablets and Smart TVs become primary destinations for Pay TV, broadcast, and video-on-demand (VOD) content, watermarking as a piracy management tool becomes increasingly important.
•As 4K inches towards becoming a reality, concerns about camera prints and screen captures are resurfacing. An analog screen capture of 4K content can easily be used to generate high-quality HD feeds, which are optimally suited for widespread piracy. Thus, increased emphasis on fingerprinting as an enduring layer of protection is expected once encryption has been removed.
•There is some level of commoditization with watermarking, where a few vendors supply most of the commercial technology, and several CAS and DRM vendors provide their own watermarking solutions more to complete product portfolios rather than to generate revenue.
•Overall, the market is expected to remain mostly flat in 2014 relative to 2013, with meaningful growth starting in 2015 and continuing into 2016. Within core revenues, services revenues are likely to grow fastest, followed by subscription licenses. Patent royalty revenues are likely to remain flat or decline slightly.
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