Cisco continues to hold its commanding leadership position in the SPVI market (ACG Research’s Service Provider Video Infrastructure 4Q 2102 Worldwide Market report). Not surprisingly, Cisco has held a leadership position for many quarters based on it strengths in CMTS and packet infrastructure. It is notable that Cisco has been solidifying its position in STBs by taking share from Motorola in IPTV STBs and developing cable STBs (second place in market share).
In aggregate, the SP Video infrastructure market shrunk 2 percent to $13B in 2012. CMTS revenues dropped in the high single digits in 2012 though it remains a $1+ billion industry. CMTS build out is starting to level off as MSOs are completing their DOCSIS 3.0 build out and as port densities are doubling and reducing ASP. Cable STBs have been essentially flat, based on declining video subscribers; however, a mix of HD and DTAs has helped buoy the market. IPTV STBs were also down, driven by price pressures and demand for low-end devices in emerging markets. Packet Core and BRAS saw double-digit declines in annual revenues; Carrier Ethernet gained modestly.
ACG also published its Video Infrastructure Software and Services Market 4Q 2102 report, which tracks conditional access systems (CAS), digital rights management (DRM), middleware, subscriber software and infrastructure software (head end, workflow, advertising). In the aggregate, Cisco leads this market, based on its strength in CAS.
When combined, the hardware and software markets are approximately $16 billion in annual revenue. While we have seen a flattening of growth, this sector remains very strategic to SPs. The market is undergoing a transition as SPs deal with 1) competition from over-the-top video competition, 2) how to deliver video to multiple smart devices within the home, and 3) upgrading infrastructure to handle increasing bandwidth demand of consumers.
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