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Insight Into the Global Video Managed Services Market

  • December 2015
  • -
  • Frost & Sullivan
  • -
  • 26 pages


Table of Contents

Revenue Soars as Content Companies Abandon In-House Over-the-top (OTT) Rollouts and Refocus on Core Competencies

Over-the-top (OTT) video delivery is inherently complex due to the fragmentation and changes in technologies across a number of workflow aspects. Managed services can help this process by accelerating time to market, reducing risk, and mitigating the need for experimental capital investments in on-premise equipment and resources. This market insight explores the size of the global video managed services market and presents revenue forecasts and key trends. It also outlines the existing competitive landscape and future growth opportunities.

Key Findings
- Video managed services, where entire portions of a content company’s workflow are outsourced to an external company, is a long-established market with global revenue over $ billion. A new spurt of growth is underway from content companies seeking to reduce their exposure to the risk and expense of maintaining high-quality workflows and customer experiences despite the increasing over-the-top (OTT) content consumption, fragmented device landscape, and changing streaming and compression standards.
- Managed services offer technology vendors a way to maintain profit margins amid the plummeting product prices and rampant commoditization. As value shifts towards software and cloud computing, technical expertise is difficult to obtain and managed services help fill a critical gap for vendors and customers alike.
- Customers of managed services span traditional broadcasters, traditional pay-TV operators, original programmers, studios, online video service providers, and even enterprises. By revenue, Ericsson is the leader through its organic growth and the acquisitions of Technicolor and Red Bee Media.
- Content companies are frustrated by the lack of products and solutions to meet current workflow needs in an agile fashion. As a result, such companies are building their own infrastructure and then reselling it as a service offering. This presents a serious competitive threat to vendors across the board. As an example, MLBAM has risen rapidly through the ranks to also become one of the top three companies by value.

Market and Segment Definitions
- Frost & Sullivan sees a continuum of outsourcing, ranging from simplistic Infrastructure-as-a-Service (IaaS) through Software-as-a-Service (SaaS) and Platform-as-a-Service (PaaS) all the way to managed services. Managed services are distinct from professional services or consulting services in that managed services are a round-the-clock outsourcing while other services are one-time engagements with the option of ongoing maintenance. They are also distinct from cloud-based outsourcing, which involves the entire operation rather than just the computation being outsourced. Analog-to-digital conversion services for archives are not included in this market sizing.
- The market’s regional segmentation into North America and Latin America (NALA); Europe and the Middle East (EMEA); and Asia-Pacific (APAC) are also shown below.

Complexity of OTT Services and Role of Managed Services
- OTT video delivery is inherently complex, due to the fragmentation and changing technologies across a number of aspects of the workflow:
o There are over types of connected devices in use, each with over vendors and at least three significant platforms per category. As a result, the combinatorial matrix, even for service providers to reach at least
80 percent of subscribers, is overwhelming.
o There are several compression and streaming technologies, including SD, SD+, HD, and 4K resolutions with HDR on the way. This also includes AVC, HEVC, and VP9 compression; HLS, HDS, and MPEG-DASH,
SmoothStreaming and even RTSP and RTMP streaming; and HTML5 and native apps for playback.
o Broadcast compliance regulations such as closed-captioning, censorship, and interchange formats are increasingly being enforced on OTT content as well. These vary by region or even country, and it is difficult for
broadcasters seeking an international reach for their content to stay on top of creation, transmission, and rendering technologies for each of these.
- For pay-TV service providers, the need to provide companion OTT services is well understood. The ultimate goal for these operators is to deliver a high-quality, branded, differentiated service—at par with managed services on set-top boxes—on the wide range of unmanaged consumer-video devices that are increasingly being used by consumers. While Return On Investment (ROI) remains uncertain, the need to quickly roll out OTT content is a competitive imperative. Managed services can help by accelerating the time-to-market, reducing risk, and mitigating the need for experimental capital investments in on-premises equipment and resources.
- For all content companies, the best managed-service providers serve as growth partners for content companies. Vendors in this market are different not only in terms of best-of-breed technologies but also reliable business guidance, such that customers may flourish in a disrupted, highly competitive market.

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