Advanced Digital Services Boost the Market for Software-Based Pay TV Conditional Access Systems

Tuesday, December 1st, 2009

MOUNTAIN VIEW, Calif. — Software-based pay TV conditional access (CA) system vendors can certainly feel optimistic in their market prospects, as a maturing global market will seek more sophisticated TV experiences, and broadcasters and local operators demand cost-effective, convenient, and flexible content protection systems. The increasing uptake of TV sets and broadcast services as well as the diversity of content created and delivered over pay TV has intensified the need for competent and adaptable CA systems.

Only software-based CA systems are likely to have the capacity to move with the inevitable content delivery innovations and demand, as they are particularly suited for two-directional, dynamic, and advanced TV systems and services.

New analysis from Frost & Sullivan, World Software-based Pay TV Conditional Access Systems Market, finds that the market earned revenues of nearly $125 million in 2008 and estimates this to reach nearly $475 million by 2015.

Software-based CA systems are ideal for such content, as they offer the most flexible delivery systems, viewing devices, consumer demand, and emerging market realities. Moreover, the increasing popularity of video-capable electronic devices that allow users to view content any time, anywhere, and on any device makes a robust case for software-based CA systems, which offer the portability and dynamism demanded and required by the market.

There is a vast untapped market for pay TV, as only 250 million out of the 2 billion TV-owning households across the globe subscribe to it. However, this gap is rapidly narrowing, as in many countries, government, industry, and consumer trends are moving toward digital television by regulation or market demand.

“The conversion of television broadcasting from analog to all-digital broadcasting presents considerable market opportunities for CA vendors as a whole,” says Frost & Sullivan Industry Analyst Loren Johnson. “When this transition occurs, the number of pay TV subscribers that will require set-top-boxes along with CA systems is anticipated to more than double over a brief period.”

Further, it is projected that many consumers in developed markets will also subscribe to interactive, multi-device, time-shifting, and on-demand capable television service models, giving hope to the CA vendors.

Despite these favorable market conditions, software-based pay TV CA system vendors will have to strategize to deal with the slowdown in the consumption of ‘non-essential’ items due to the current economic decline. Although the entertainment market is relatively recession-proof, the CA market will still be hit, as it is more related to operator and broadcaster spending, which could dip drastically in strained circumstances. Additionally, the purchase cycle for television operators — cable, Internet protocol TV (IPTV), and satellite — can take years, and updating CA systems can involve a considerable investment.

Today, even though card-based CA systems dominate the marketplace, most operators are aware of the benefits of software-based CA systems and have been looking to shift to them. The best time for new vendors or products to enter a market or make a sale to an operator is when the customer is updating or changing its existing systems.

“All key CA vendors, including the traditional card-based vendors, sell software-based CA systems,” notes Johnson. “It is anticipated that as systems modernize and consumers demand additional features, software-based systems will begin to eclipse traditional card-based deployments within the next ten years.”

World Software-based Pay TV Conditional Access Systems Market is part of the Digital Media Growth Partnership Services program, which also includes research in the following markets: World Digital Rights Management System Market, Enterprise Content Management Market, and Dynamic Publishing Solutions Market. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants.