Cisco at forefront of video growth

Infrastructure and set-top boxes boosted by "TV Everywhere"

Video - both business and consumer - is driving much of what Cisco prioritizes on these days. By its own research, Cisco says video will account for over 90% of global consumer IP traffic in 2014. And the company this week just closed on its $5 billion acquisition of NDS, a provider of software designed to create pay TV video offerings that enable subscribers to view, search and navigate digital content on any device.

Perhaps it's no coincidence then that Infonetics Research found the markets for video infrastructure - video-on-demand, encoders and set-top boxes -- to be growing, and that Cisco is recognized as the leader in one of them.

The driver is TV Everywhere, according to Infonetics, which notes that this and other multi-screen video initiatives are "fundamentally changing the TV business model." From apps streaming live TV to iPads to telcos and cable MSOs offering value-added home automation services to subscribers, video is hot in the home.

VOD and encoder revenue will grow but set-top box revenue will not, even though demand is strong. Revenue is expected to decline in 2013 due to falling prices, Infonetics notes.

The global video infrastructure market, including IPTV, cable and satellite video infrastructure, will grow 9% in 2012, to over $875 million, Infonetics expects.  Cisco is one of five players holding more than 66% of the global VOD and streaming content server market, the others being Huawei, Motorola, ZTE and Concurrent.

Infonetics expects the number of IPTV subscribers to more than double from 2012 to 2016, when it will hit 168 million worldwide, with the majority in Asia and Europe. China appears poised to outspend all regions on VOD and streaming content server gear as operators add VOD streams.

Much of the future growth in the video infrastructure market will come from MPEG-4 HD encoders.

In hybrid IP-based set-top boxes, Cisco is now perceived as the overall top supplier by operators, surpassing last year's leader, Motorola. Cisco has led in global IP STB revenue share for four straight quarters, Infonetics found, thanks to contracts with AT&T, Deutsche Telekom, and Telus.

Infonetics found, though, that Cisco and Motorola are actually tied as the most installed IP STB suppliers among carriers, followed by Amino. The firm expects the overall set-top box market, including cable, satellite, IP and hybrid IP/DTT STBs, to grow modestly in 2012, to $14.7 billion before falling prices cause a revenue decline next year. Those declines, however, will be partially offset by shifts from cable and satellite STBs to hybrid STBs.

In a survey, Infonetics found that 94% of service providers use IP STBs to deliver video services. The top three IP STB applications are VOD, electronic program guide, and whole-home DVR.

Ethernet is the leading technology for connecting STBs to home networks and sharing media with other devices, followed by 802.11n and universal plug and play. Seventy-one percent of survey respondents says they will need more than 500G of hard drive capacity by 2013 due to increases in HD programming and time-shifted viewing.      

North America remains the most lucrative market for set-top boxes, with an STB average selling price of over $150, Infonetics found.

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