The digital divide between advanced and emerging economies is expected to define the nature of growth in the STB market over the next few years, which is detailed in our latest Frost & Sullivan report on the size of the Consumer Video Devices Market. Advanced STB users moving up the scale to integrated home media gateways and new STB users adopting basic, low-cost STB devices that offer fundamental STB features and functionality will be key drivers. Over the forecast period, we expect STB unit shipments to grow at a compound annual growth rate of 4%, with more than 200M set-top boxes sold globally by the end of this year.

Digitization in emerging economies and upgrade to advanced STBs, the two pivotal drivers of this segment, are expected to have most impact on unit sales in the near-term of the forecast period. The migration to hybrid STBs in advanced economies is also expected to be an important trend in this market. Hybrid STBs enable operators to address the competition from alternative technology and meet consumer’s interactive, TV everywhere demand. Hybrid STBs, that is the ability to receive content over hybrid cable/IP or satellite/IP connections are gradually becoming mainstream features.

Set top box sales are driven by three major factors: growth in digital cable and digital terrestrial transmission subscribers; churn of Pay TV households from one service to another; and upgrades or replacements of existing set-top boxes. Digitization underway in the highly populous countries of India and China is drove a good chunk of sales in 2012 and will remain a key driver in 2013. These set-top boxes are predominantly lower-end boxes, supporting SD resolution and often based on MPEG-2 for reasons of economy.

Customer churn remains a significant source of upgrades as well. IPTV in particular is seeing a surge in subscriber numbers as consumers are attracted to the rich interactive applications that two-way IPTV networks can support far more easily than cable networks using one-way DVB transmission. The replacement period for STBs is expected to remain steady at its present level of 4 to 5 years. A more detailed demand analysis for set-top boxes is provided in our research study on Pay TV Middleware, which predicts that external factors such as rising costs of deploying Pay TV services, increased competition, bandwidth availability, and consumer trends will all influence the rate of growth of STB unit shipments over the forecast period.

Copies of the report are available to any customer who has a subscription to Frost’s Digital Media research service and anyone interested in getting a subscription can contact me for more details.

We’ve just released our latest Frost & Sullivan report on the size of the Consumer Video Devices Market, which details the market drivers, restraints to market growth, product and pricing trends, competitive landscape, and market forecasts and trend analysis broken out by region of the world for the next five years. Our report details sales numbers showing that Apple owned 56% of the streaming devices market in 2012, with Roku coming in second at 21% of the market.

Apple accounts for the majority of sales by far, despite offering relatively narrow content access – this is not (yet) a market being driven by the value proposition of a streaming TV experience. AppleTV’s AirPlay feature was strategically crafted to simplify the process of transferring laptop and tablet displays to a TV screen, and it is AirPlaying – not OTT streaming – that is the primary reason for purchase of AppleTV devices. Roku is the second largest vendor in this space and is driving growth through a strong lineup of content as well as through a series of agreements with Pay TV vendors such as Time Warner Cable. The long-term potential for this segment does remain uncertain. It is important to note that while current growth rates are high, the total installed base of $99 streaming boxes is quite low.

These devices today are predominantly sold in retail stores to users who seek a convenient, compact device to find and display OTT video (subscription or free) to their television screen. Up until 2012 the market has struggled to find mainstream momentum; even today, we believe only two vendors (Apple and Roku) have crossed the 1M unit mark in annual shipments. Aside from Apple and Roku, TiVo offers the next strongest installed base of users, making them a strategic option for Pay TV service providers looking to establish an IP streaming device partnership.

Google is conspicuous by its absence in this segment. Devices based on the Google TV platform have seen very little commercial success so far, with our estimates of less than 1M total installed devices, of which the discontinued Logitech Revue accounts for the lion’s share. Google remains committed to competing in this space, however, and a bunch of new devices with Google TV have launched in recent months, joining Vizio’s C0-Star device, including the Hisense Pulse, Asus Qube and NeoTV Prime.

The report breaks out market share and sales numbers for tablets, phones, smart TVs, set-top-boxes, game consoles and IP streaming devices, based on region of the world, with projections for the next few years. Copies of the report are available to any customer who has a subscription to Frost’s Digital Media research service and anyone interested in getting a subscription can contact me for more details. Game console data can be found here “More Than 35M Video Game Consoles Expected To Be Sold in 2013, 60% Used For OTT Video“.

Also, while many research analysts at other firms won’t talk to someone unless they are a customer of that firm, I have and always will talk to any company who is interested in getting more details on any aspect of our reports, so email me or call anytime. (917-523-4562)

In January, Amazon announced a new cloud based video transcoding service called Amazon Elastic Transcoder and while it was very bare-bones at launch, Amazon has already added a lot of new functionality to the service in just the past six months. Here’s a run down of what the service now supports:

• Apple HTTP Live Streaming (HLS) Support: Amazon Elastic Transcoder can create HLS-compliant pre-segmented files and playlists for delivery to compatible players on iOS and Android devices, set-top boxes and web browsers.

• Visual Watermarking: allows you to overlay up to four still images (PNG or JPG format) on your output video, with full control over the position, size, and scale, and opacity. You can use this to add a logo, legend, or other identifying information to your video.
• Maximum Bit Rate Control: lets you limit the instantaneous bit rate of your output video.  You can use this setting to ensure that your video meets the playback specifications and bandwidth requirements of your desired output devices.

• Maximum Frame Rate: control lets you specify a maximum frame rate for your output video. This is useful when you wish to maintain the frame rate of the source media except in cases where it would otherwise exceed a certain frame rate threshold.

• WebM Output Support: Amazon Elastic Transcoder can now transcode content into VP8 video and Vorbis audio, for playback in browsers, like Firefox, that do not natively support H.264 and AAC.

• MPEG2-TS Output Container Support: Amazon Elastic Transcoder can now transcode content into transport stream containing H.264 video and AAC audio, which are commonly used in broadcast systems.

• Multiple Outputs Per Job: Amazon Elastic Transcoder can now produce multiple renditions of the same input from a single transcoding job.

• Automatic Video Bit rate Optimization: With this feature, Amazon Elastic Transcoder will automatically adjust the bit rate in order to optimize the visual quality of your transcoded output. This takes the guesswork out of choosing the right bit rate for your video content.

• Enhanced Aspect Ratio and Sizing Policies: You can use these new settings in transcoding presets to precisely control scaling, cropping, matting and stretching options to get the output that you expect regardless of how the input is formatted.

• Enhanced S3 Options for Output Videos: Amazon Elastic Transcoder now enables you to set S3 Access Control Lists (ACLs) and storage type options without needing to use the Amazon S3 API or console.

Like all Amazon Web Services, their offerings start off as very basic products, without a lot of functionality, but very quickly turn into pretty robust offerings. Just look at their S3 and CloudFront products which are now on par with competitors who are competing for the high-volume commodity storage, transcoding and delivery business in the market. Amazon still has more work to do before their transcoding service will rival Encoding.com in functionality, but just look at how much the service has expanded in the past six months. I’m also hearing rumors of Amazon making a price cut to their transocding pricing before the end of the year, which is something Amazon is known to do with their AWS offerings once they have been in the market awhile and continue to scale. Many companies raise prices as they scale their services, Amazon typically lowers them.

While there’s been a lot of talk on the topic of CDN federation over the years, we’ve still waiting to see the vast majority of carriers work with each other in any kind of federated model. But that may soon be changing. At the Content Delivery Summit this past May, Cisco presented the latest lessons learned from, “Phase 3 of the CDN Federation Pilot”. Their video presentation below details which carriers are in the pilot program, the business drivers, economic model and plenty of technical implementation details. You can also download the slides from their presentation here.

Of all the video device classes covered in our latest Frost & Sullivan report on the size of the Consumer Video Devices Market, smart phones arguably represent both the most mature market in terms of penetration and the most energetic market in terms of ongoing disruption and expected growth rates. In fact, of the more than 1 billion consumer video devices sold globally last year, smart phones made up 59% of the market. Migration from basic phones to feature phones and feature phones to smartphones and continued consumption of content on mobile handsets are expected to be the primary drivers of this segment over the forecast period of the report.

Copies of the report are available to any customer who has a subscription to Frost’s Digital Media research service and anyone interested in getting a subscription can contact me for more details. Also, while many research analysts at other firms won’t talk to someone unless they are a customer of that firm, I have and always will talk to any company who is interested in getting more details on any aspect of the video, streaming and content ecosystem. You don’t have to be a customer of Frost & Sullivan for me to take your call and do a briefing with you, so call anytime.

At the Content Delivery Summit in May, we had a lot of great presentations from MSOs and carriers on their build out of content delivery services. One of the more interesting ones was from Comcast, who showed how they built out their CDN using mostly open source technologies.

To optimize delivery of its content to their customers, Comcast designed and deployed a large CDN based on open source tools and common off-the-shelf hardware. Comcast detailed the challenges they faced, the options they considered and discussed the good and bad of using open source technologies. Watch the video below to learn about Comcast’s real life experiences operating their CDN and how they handle support issues when using open source platforms. You can also download the slides from the presentation here.

At the Content Delivery Summit in May, we had a lot of information shared by those who collect data on the type and volume of content being distributed over the Internet. One of these companies, DeepField, presented their latest findings on the massive ongoing changes in content distribution. Check out their video presentation below for details on overall CDN traffic growth and market share, a list of content services driving the most volume and trends they are seeing across backbone networks. You can also download their slides from the presentation here.