A Shift in the Video Transmission Business

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The growing practice of streaming on-demand video to laptops, tablets and cell phones is changing how content distributors think about reaching their audiences. This “personalization of content” is also having an impact on the global satellite business and could result in a broad realignment between broadcasters and those companies adept at adding value to the content by delivering it on-demand through niche, local and interactive TV channels.

Just over half of commercial satellite capacity worldwide is taken up by video transmission. The satellite and broadcast/cable TV industries have grown in tandem for decades, with more channels and more programming requiring more satellite bandwidth to deliver content to distribution points around the globe. Niche and local channels have developed rapidly in growing markets to address highly segmented audiences at low cost. The rise of digital television should favor personalized content and new viewing habits.

The video transmission supply chain has evolved rapidly in recent years because of innovations in video editing technology, file sharing, networking, digital media and new viewing technologies. This has led to the outsourcing of value-added service to providers who have invested massively to gain a competitive advantage in distribution over the broadcast companies. These specialized service providers are expected to significantly increase their revenues in the coming years.

The video transmission market is highly fragmented, with the three largest video transmission service providers (Globecast, Arqiva and RRSat) holding only a combined 6 percent market share. Smaller players range from subsidiaries of old-line telecom operators to hundreds of independent companies scattered across global TV markets. As the evolution of the video transmission market squeezes these smaller providers, the industry will likely go through a period of steady consolidation, with just a few major companies eventually emerging to provide the bulk of global video transmission.

Video distribution companies are accelerating the shift to more viewing on mobile TV, Internet Protocol television and over-the-top (OTT) services, which bring specialized content from the Internet to user-connected devices. Mobile TV services are expected to spread widely with the development of 4G networks, which will provide increased broadband capacity and the development of 3D mobile broadcasting. OTT services have thus far had difficulty delivering high-quality content, but this could change with the rollout of adapted OTT streaming solutions by the three market leaders — Apple, Google and Microsoft.

New distribution networks will require content backhaul and delivery to distribution head-ends in both standard and high definition. This should have a positive impact on transponder demand and on transmission revenues in coming years. Euroconsult estimates that the overall market value of video transmission services will grow from $15.8 billion in 2010 to $26.7 billion in 2020, a compound annual growth rate of 5 percent.

Mounia El Bouzegaoui is a Paris-based consultant at Euroconsult. She specializes in satellite communications and digital broadcasting, is a contributor to the company’s flagship annual Satellite Communications & Broadcasting World Markets Survey and editor of the recently published Video Transmission Services over Satellite report.