Video Driving Growth in Service Provider Infrastructure Market

Wednesday, September 28th, 2011

ACG Research Market Share and Forecast Reports

ACG Research has released two reports on the Service Provider Video Infrastructure (SPVI) market: quarterly market size and share report and its semi annual market forecast.

Despite uncertain economic conditions and service providers’ caution, the Service Provider Video Infrastructure market continued growing (4.5% sequentially) in Q2 2011 to $3.5B. The growth was driven by over the top (OTT) video (Netflix, Hulu, YouTube and others), expansion of broadband/IPTV infrastructure build-out in developing countries and DOCSIS 3.0 expansions.

Cisco Systems gained 3 share points from Q1 and now holds a dominating 65.8% share in CMTS; ARRIS is in second place with 23%. After trailing Motorola in IPTV set top boxes (STBs) by 4 share points in Q2 last year, Cisco now holds a commanding 57.3% share. Motorola continues to lead in cable STBs at 42.7% to Cisco’s 21.6% and Pace plc’s 11.2% share.

Over the top (OTT) video such and tablets continue to cause concern for vendors. Netflix is 50% of the peak hour traffic in North America and other research indicates that iPads now account for over 30% of mobile video viewing.

ACG forecasts that the total SPVI market will grow 10.5% CAGR over the next five years, with strongest growth in core and edge routing (15.5% and 18.5% respectively) and CMTS (14%). STB growth is slowing as the market matures and consumers are expected to shift viewing habits from traditional TVs and STBs to connected devices and tablets.

According to David Dines, principal analyst, “Video, especially OTT, is expected to continue growing rapidly and flood networks particularly at peak times. This means big headaches for carriers as they need to carry this traffic, and they are being cut out of the value chain.” He added, “as a result, service providers are looking for solutions such as CDN, caching and advertising platforms to help them reduce the load and find new business models for cashing in on the OTT gold rush.”

ACG defines this market to include packet infrastructure carrying video traffic (core, edge and CMTS), and set top boxes (including cable, IPTV, hybrid and digital terminal adaptors).