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Global Analysis of the Broadcast and DTT Market : Backpack Encoders Impact Contribution Revenue while Refresh Cycle Bolsters DTT Segment but HEVC Still Elusive
The broadcast and digital terrestrial transmission (DTT) video encoders market earned $ million worldwide in revenues in 2015, which is up slightly from a disappointing 2014.
Contribution encoder revenues are forecast to increase modestly year-over-year, while revenues from DTT and primary backhaul are projected to steadily decline.
o Content quality, latency, and compression efficiency remain the primary differentiators for contribution encoders. Quality is also crucial for DTT.
o Growth in AVC, and rise in resolutions to HD and UHD are driving revenues forward. However, average prices are falling; compounding this challenge is falling demand as countries reach completion of digitization and contribution networks shift to using uncompressed video over IP.
- HEVC or H.265 is the most salient technical disruption on the horizon. Frost & Sullivan forecasts a strong uptick in HEVC sales in the 2017 to 2018 timeframe, once high dynamic range (HDR) issues are resolved and encoders can break the Mbps barrier for K fps compression of real-time content. HEVC will also begin to be used for applications outside of 4K—particularly in DTT broadcasts of HD content.
- HEVC promises a new era of innovation and growth in this market, as average sales prices are likely to be at least to times higher than comparable AVC encoders. As implementations continue to mature, there will also be wide scope for innovation and relative differentiation. This is in sharp contrast to highly commoditized AVC and MPEG-2
“Mobile contribution,” where sub-$ backpack encoders deliver contribution feeds over wireless networks, significantly impacted the newsgathering vertical in 2014 and will continue to impact growth. Faster growth in low-end markets and stagnating growth in higher-end markets are also impacting overall revenue growth.
- Competition continues to intensify as a growing number of vendors are offering products based on commercial encoding chipsets. That said, this continues to be a market where select vendors can grow and maintain market share on the strength of product performance and research innovation.
- In contrast to other encoding markets, this area is expected to remain a bastion of hardware-based (rather than software-based or cloud-based) architectures over the forecast period. Where software is used, it is more likely to be in terms of field programmable gate array (FPGA) programming or hardware-accelerated use of GPUs and CPUs rather than actual software or virtualized images
- New DTT deployments, upgrades, overhauls of existing DTT deployments, and an increasing number of HD and 4K channels are all expected to contribute towards continued market opportunity. While MPEG-2 sales remained strong in 2015, Frost & Sullivan believes this is the last upgrade cycle for this aging technology and it will begin to be decisively supplanted by AVC moving forward.
Key Questions This Study Will Answer
- In the face of disruptive challenges, how long will revenues continue to grow and at what rate?
- Are the existing competitors structured correctly to meet customer needs?
- What fundamental disruptions in terms of technologies, applications, and product structure will impact vendors and the overall market over the forecast period?
- What are the current pricing trends in the market, and how are competitors continuing to provide value-priced products while retaining profitability?
- What is the current global status of broadcast digitization? What advances are expected over the coming years?
- What regional trends exist in digitization and digital TV, and what does this mean for global growth strategies for vendors?
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