It has been a tough year for many sectors of the video business. The STB business took a big hit and is now generally recognized that it is a commodity business. Home gateways grew significantly. The transition to CCAP is leaving many QAM vendors out in the cold and fights over retrans fees are not helping.
Pay TV is no longer a must have service, (about one-quarter of Charter’s customers do not want TV service) and cord cutting/shaving is becoming more common. Competition from outside the traditional competitor circle is getting stronger. Netflix continues its robust growth and now has 40 million subscribers. Google is continuing its fiber rollout. In an apparent response to Google, AT&T recently announced GigaPower, a fiber-based service with 300 Mbps and a free upgrade to gigabit service available next year.
The industry structure is shifting and talks about consolidation are rampant. Time Warner and Comcast both hired M&A staff. On the equipment side, Arris is still assimilating Motorola. Cisco is working on shifting its business away from commodity hardware to software with its NDS assets. With technology, viewing habits and competition rapidly changing, ACG sees consolidation as necessary and inevitable.
Tablets continue to grow and video viewing on tablets/mobile devices are the fastest growing segment. Forty-eight million tablets were shipped in Q3 13, 37% Y-Y growth rate. Video is about 44% of all mobile data usage and is expected to account for over 60% by 2018.
MSOs are recognizing the need to change viewing experience with better user interfaces and more OTT like viewing options. Charter and Liberty both tested cloud-based UI/guides that are more competitive with the OTT players. They are also getting serious about business services and other services such as home monitoring.
Trends:
- 2014 will be the year of
- CCAP
- Home gateways
- Online video advertising systems
- Cloud-based UI deployments
- STB prices will continue to fall; there will be increasing competition from no-frills vendors.
- Traditional pay TV subscribers will continue to fall in developed countries; OTT services will grow.
- More MSOs will launch multiscreen and OTT like services, though if history is a guide, few will take much share from Netflix and other OTT services.
- Current home monitoring/security offerings from the MSOs will be modestly successful. Offerings must overcome negative brand perception that MSOs created over with high prices and poor service.
- Pay TV subscribers in developing nations will continue to grow, though long term we see that penetration rates will disappoint as customers just get data service and watch via streaming.
- Google will continue to deploy fiber in existing markets and may announce one more market in 2014, but no massive nationwide effort.
- Google’s Loon project with weather balloons in the stratosphere is fraught with technical and business problems; there is a slight chance of it being deployed commercially.
For more information about ACG's video services, contact sales@acgresearch.net.
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