Not Tapped Out Yet

Monday June 29, 2009 - Shelby Cunningham

For some time, those smart engineers who tell us all about the technical intricacies of video compression technology told us that MPEG-2 had reached its efficiency peak some years ago. They said it was tapped out – no more improvements. But apparently technical breakthroughs for old technology happen, and broadcast encoder makers like Tandberg and Harmonic tell us that they have now managed to squeeze as much as a 20% gain in greater MPEG-2 efficiency, thus extending the life of this codec.

Even though MPEG-4 AVC usage is rapidly growing, it’s not doing it at the expense of MPEG-2 as STBs for digital cable, satellite, IPTV and terrestrial transmissions still decode MPEG-2. Even though a handful of services are only delivering programs in MPEG-4 AVC, the STBs and TVs are still capable of decoding both MPEG-2 and MPEG-4 AVC. Chip makers haven’t seen enough demand to efficiently make AVC-only chips, and media processors that decode MPEG-4 AVC still decode MPEG-2 at this point in time.

Including MPEG-2 in digital STBs and TVs seems to be a sure thing for a few more years thanks to the new greater efficiency, the need for backward compatibility and the current cost savings for chip suppliers to make hybrid chips. For now...

Source: DTC

Diversification Key to STB Supplier Strength in Multiplatform Market

Monday June 22, 2009 – Antonette Goroch

While pay TV STB shipments were one of the few electronics segments to log growth in 2008, and are forecasted to continue their good fortune with gains again in 2009, the good times will not continue to roll for all STB suppliers. Suppliers will have to diversify their customer bases – both by geography and delivery platforms -- to remain standing as the market matures in many areas.

DTC’s most recent research showed that STB shipments across pay TV platforms saw some 21% growth between 2008 and 2009, but only some suppliers saw shipments grow, and others even posted declines. Though some region specific factors (such as new sub growth in China or DTA adapters for cable in the U.S.) boosted shipments on a case by case basis, a key factor for success was the ability to serve multiple systems and regions.

Successful suppliers were those able to tap into multiple markets and platforms, rather than one region, platform or system. Pace, once a fairly niche player for the European market, is forecasted to realize 16% growth in pay TV STB shipments from 2008 to 2009, more than twice the overall market rate, due to its successful efforts to expand its tier one system customers across platform and regions. Similarly, ADB, which also employs a multiple platform/region strategy, is forecasted to see 26% growth in pay TV STB shipments in 2009.

Those suppliers serving a less-diversified customer base were far more susceptible to the competitive nature of the pay TV business on a system-by-system basis. EchoStar, for instance, generates the vast majority of its STB shipments from Dish Network, the second largest DTH satellite operator in the U.S. EchoStar is forecasted to see shipments fall 8% in pay TV STB shipments in 2009 due to increased competition from both digital cable and IPTV, along with a maturing subscriber base of 14 years. EchoStar has made several moves to combat the situation by penetrating the North American IPTV market through the ViP-TV service (serving customers of the now defunct IP-Prime), as well as its joint venture in the Mexican pay TV market with Mexican cable operator, MVS Communications.

This type of diversity will only become more important over coming years, as declining demand in the U.S. and other mature pay TV markets slow shipment growth overall. STB suppliers able to establish themselves now with a diversified customer base will have a far stronger position as the market peaks and slows.

Where in the World is Digital Terrestrial TV?

Monday June 15, 2009 – Myra Moore

Now that the world’s largest shut down of analog terrestrial TV transmissions has occurred in the U.S., what’s next? Plenty, it seems. With the exception of Germany, The Netherlands, and a handful of smaller Western European countries, the rest of the world has yet to pull the analog TV plug.

In fact, 79% of the countries in the world haven’t even started commercial DTT transmissions, although 42% have pledged to do so in the near future. Not all countries will join the digital TV club as many need their limited resources devoted to more critical endeavors than building digital TV systems.

Source: DTC

But companies selling infrastructure equipment or DTT receivers don’t have to worry about the well going dry just yet. From 2010 to 2013, some populous and/or prosperous countries are scheduled to shut off their analog systems – among them Canada, the U.K., France, Ireland, Italy, Spain, and South Korea. And there are a significant number of countries just now testing, building, or planning a system. They, of course, won’t be the gravy train that the U.S. has been with more than 1,000 terrestrial broadcasters building infrastructure and tens of millions of DTT receivers sold to consumers (including a forecasted 38 million D-t-A converter boxes).

Equipment suppliers will just have to work a little harder to tailor solutions to individual countries that will likely make their jobs harder by building systems that will vary slightly from country to country. Plus, the transition has already been completed for the U.S., which has 100 million TV households. Not many of those kinds of TV household penetrations left in the world – oh, except for China.

MPEG-4 AVC Sitting Pretty

Monday June 8, 2009 – Maya Jasmin

Adoption of the MPEG-4 AVC codec is advancing nicely with only a few years having passed since the first Advanced Video Codec (AVC) products debuted. While crowned as the heir to the ubiquitous MPEG-2 codec, it will be a while before MPEG-4 AVC is sitting pretty and alone on the video codec throne. For now the two codecs work nicely together even providing MPEG-2 device shipments with a boost as digital set-top boxes, TVs and other devices donning the latest technical advances are also supporting the MPEG-2 standard. And even though MPEG-4 AVC won’t cannibalize MPEG-2 anytime in the near future, the newer codec has also done much for introducing the MPEG standard into non-traditional devices, like mobile handsets, personal media players, and handheld video game systems.

DTC expects shipments of MPEG-4 AVC mobile handsets to sustain healthy double digit yearly growth throughout 2013 and probably beyond. Shipments are expected to reach 118 million in 2009 catapulting to over 700 million by 2013. Personal Media Players will experience robust shipment numbers throughout the forecast period as well, and even with slight declines in yearly growth in the outer years, DTC still forecasts shipments of 73 million in 2013. DTC also expects handheld video game systems to contribute heavily to MPEG-4 AVC product shipments in the future, but with limited insight into next generation systems as our current forecast does not include next generation handhelds. For more information about the adoption and impact of MPEG-4 AVC in video devices and downloads, please visit http://dtcreports.com/report_avc.aspx.

Source: DTC

The Next Video Marriage: Broadcasters and Mobile Service Providers

Monday June 1, 2009 – Antonette Goroch

Subscriptions for mobile TV services (data or content plans including video/TV services) are on the rise with 3G services delivering most of the subscribers. DTC estimates that mobile TV subscriptions grew 37% in 2008, reaching just shy of 100 million worldwide.

Source: DTC

The majority of these subscribers, more than 95 million, were 3G unicast subscribers, compared with just 3.5 million subscribing to broadcast (as opposed to unicast) mobile TV services. Broadcast services, however, are reaching many more than the 3 million subscribers as most mobile broadcast TV services don’t require a subscription. 3G mobile TV pay services are outselling pay mobile broadcast TV services for a couple of reasons: One is just simple math – there are far more 3G services that offer video than there are mobile broadcast pay TV services. Also, consumers have warmed up to the unicast packages because they are perceived to have more value by providing both on-demand content, as well as cheaper pricing plans and more varied content.

Mobile broadcast subscriptions, conversely, have typically carried high price tags for fairly limited packages of rebroadcast TV channels. Consequently, there has been little traction with new fee-based broadcast services. In the U.S. for instance, there had been high hopes for MediaFlo services launched by both AT&T and Verizon during 2007/2008. High prices, and the lack of a clear value proposition for consumers, however, have left results far shy of expectations, with 2008 subscribers barely reaching 100,000. Pay DVB-H services in Europe haven’t fared a lot better. Only South Korea’s S-DMB service has met with any measurable success with about 1 million subscribers.

While broadcast mobile TV services have floundered as premium subscriptions, they have fared far better under the free, ad-supported model. Indeed, while premium broadcast subscriptions showed little growth in 2008, handsets that include mobile TV tuners that receive free channels grew 46% during the period, rising from 38 million in 2007 to more than 55 million. Japan and South Korea, two of the first regions to offer free mobile TV broadcast services in 2006, made up the vast majority of installed handsets, comprising more than 50 million combined.

The challenge for either model will be achieving profitability. Though 3G TV is racking up subscribers, it is far more expensive and network intensive to offer unicast TV services compared to broadcast, leaving its profitability in doubt. A likely future scenario for this emerging pipeline (already being experimented with some, such as Telecom Italia) will be hybrid models that combine both the network efficiencies of using broadcast for popular high-traffic content, with the on-demand specificity and niche capabilities of unicast services.