Global pay TV middleware market to exceed $2 billion by 2020

Wednesday, February 18th, 2015
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On-Demand Consumption Models Define New Breed of Pay TV Middleware Solutions

  • The market will focus on agile open source middleware to compete with the over-the-top ecosystem, finds Frost & Sullivan

The surge in Internet protocol (IP)-enabled video consumption devices such as smart TVs, smartphones and tablets is compelling pay TV middleware solution providers to deliver a unified multiscreen experience to viewers. However, delivering on-demand video services on any screen anywhere presents its own set of challenges and technical impediments. Service providers are being forced to reinvent themselves to offer highly personalized content and value-added services in order to support the new self-selection consumption models that characterize the viewing habits of today.

New analysis from Frost & Sullivan, Global Pay TV Middleware Market, finds that the market earned revenues of $1.05 billion in 2014 and estimates this to reach $2.03 billion by 2020. The study covers the IPTV, cable, direct to home and digital terrestrial TV application segments.

“Factors favoring market growth include the increase in the deployment of hybrid models such as cable + IPTV, satellite + IPTV and terrestrial + IPTV,” explained Frost & Sullivan Digital Media Industry Analyst Hiral Jasani. “Moreover, the need for interactive pay TV middleware on secondary devices to offer managed experiences on unmanaged devices is lending impetus to the markets across North America, Latin America, Europe, the Middle East and Africa.”

Unfortunately, rising subscriber churn and a high demand for over-the-top (OTT) subscriptions have put tremendous pressure on existing pay TV operator business models. Thus, highly interactive, flexible consumption models that leverage OTT as an opportunity instead of a threat are expected to come to the fore, fuelling the need for advanced pay TV middleware solutions globally.

“Pay TV middleware vendors will need to be extremely nimble and focus on providing agile solutions that allow service providers to compete with OTT services,” noted Jasani. “They must direct attention towards open source middleware, as this has proven to be a successful strategy for middleware vendors and operators alike.”

Currently, the global pay TV middleware market remains fragmented, with pay TV infrastructure vendors and end-to-end turnkey solution providers dominating market share. Heavy commoditization of set-top boxes characterizes the market and continues to exert downward price pressure on pure-play middleware vendors. In developed markets such as North America and Western Europe, we continue to see more hybrid cable and satellite deployments. On the other hand, emerging markets such as Africa and India are gradually moving towards pay TV ‘IPfication’. This digital transformation offers quite a few large-scale Greenfield opportunities to pay TV middleware solution providers.

“Operator partnerships with advanced search and recommendation providers are gaining pace and will eventually change the landscape for pay TV middleware solution providers,” stated Jasani. “The market has already seen a flurry of acquisitions such as that of Microsoft Mediaroom by Ericsson, Conax by the Kudelski Group, and NDS by Cisco Systems in order to leverage the huge potential of consumer video delivery services.”

Global Pay TV Middleware Market is part of the Digital Media Growth Partnership Service program.