ACG Research estimates that the total addressable market (TAM) for NSD grew nearly 8% in 2011 to a total market size of over $9B in 2011. The market is expected to grow more than 6% to almost $10B in 2012. Although not double-digit growth, this growth is faster than Cisco’s existing video and broadband hardware markets. The SP Video Infrastructure and CPE Hardware market grew 1% in 2011 and is expected to grow to nearly 5% in 2012. The Broadband Infrastructure and CPE Hardware market grew almost 2% in 2011 but is expected to decline 2% in 2012.
Cisco’s acquisition of NSD has several positive attributes: 1) it puts the company into the faster growing and higher margin software side of the video market; 2) gives Cisco a large book of business recurring and service revenue; and 3) offers greater penetration of MSO accounts outside of the US.
Note: ACG defines the TAM for NSD as the software and related services that drive video broadcast video. ACG divides the market into four basic segments:
- Middleware for STBs and other devices
- Headend/back office: ingest, encoding, scheduling, entitlement management, workflow management, ad management and insertion
- Security: CAS and DRM software, hardware chips, and CAS services
- End-user Software: EPG, IPG, DVR functionality