Transition Defines Service Provider Video Infrastructure Market

In addition to facing the macroeconomic uncertainty that is challenging nearly all IT markets, the SPVI market is undergoing significant transitions on three major fronts:

Converged IP infrastructure: Cable operators’ desire to move to a converged IP infrastructure has been in the works for several years. This is understandable, given the complexity of the legacy systems and the mission-critical nature of the infrastructure. The development of the CCAP architecture addressed this need, and CCAP based products are being trialed now. We expect commercial deployments to start in late 2013. Interestingly, this transition is being driven and managed by the service providers with the cooperation of the traditional networking vendors.

TVE is part evolution and part revolution. It is evolutionary in that we have had the ability to stream video content to computing devices for over a decade. It is revolutionary in that tablets, mobile devices and LTE wireless are providing consumers much greater choice and control over content, location and time. This transition is in full progress and is being driven by a different set of players than has been customary: consumer electronics manufacturers, content owners and the standards bodies that influence protocols and technologies such as MPEG dash and HTML5. This is unfamiliar territory because the SPs or the traditional vendors are not in control of the device and have less influence over the design, implementation or utilization.

The OTT revolution is also fully underway, but the impact is not totally felt as yet. This revolution is not about technology but business models and revenue participation. The balance of power has shifted more to consumers. SPs must find business models, pricing, packaging and bundles that appeal to consumers and that they can provide in a profitable manner. While content owners have significant leverage in the OTT model, they are also dependent on consumers’ tastes and requirements.

These transitions are dramatically changing the roles and relationships of the technology suppliers, service providers, content owners and consumers and are creating significant challenges for all the parties. In addition to these macro transitions, pay TV operators are facing increased demand for higher speeds and more competitors (fiber, DTT, satellite and cable), and need to upgrade existing networks to stay competitive.  

These market conditions present a difficult landscape for SPs and their suppliers, as it dictates not just a technology transition but a re-evaluation of core business models as well.  These are definitely interesting times for the pay TV market.

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