Macroeconomic Conditions and Technology Transitions Affecting SP Video Market

The SP Video market declined 3.3% sequentially and 4.9% Y-Y.  A loss of pay TV subscribers in North America, Europe debt crisis, and a slow-down in China were big contributors to the decreases.  Product and technology transitions also played a role: slow-down in DTA rollouts; transition from SD to HD and from DOCSIS 2.0 to 3.0; and increasing demand for multi-screen capabilities.

OTT video and TV everywhere continues to grow.  OTT is now 58% of peak fixed access bandwidth utilization in North America and is expected to triple over the next five years. In mobile, data OTT is a bigger factor; currently it makes up 54% of total peak traffic and is expected to quadruple in 5 years according to Sandvine. 

The pay TV market continues to evolve. In North America, the overall pay TV market declined approximately 300k subs, with cable losing 600k and Telcos adding 300k.  Global IPTV subscribers continue to grow, based on strength in China, India and other emerging countries.  Consequently, cable STB revenues declined 10% Q-Q and over 10% Y-Y, while IPTV STBs increased 2.9%/7.5% (Q-Q/Y-Y).

CMTS market was up 2% sequentially but down 2% Y-Y. Most vendors are shipping their next generation of higher density equipment in volume.

Despite the down quarter, SP Video infrastructure spending should pick up in 2H 2012. Many SPs have spent less than half of their 2011 CapEx budget in 1H 2012, and they are projecting flat CapEx spend from 2011 to 2012.

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David Dines
ddines@acgresearch.net
www.acgresearch.net