Broadcast value chain to grow to $8.7b

The broadcast value chain is undergoing a significant transformation as digital workflows, high definition (HD) and traditional IT infrastructure revolutionise the TV industry. In a new report, "The Evolving Broadcast Value Chain, 2006 - 2012", research analyst Datamonitor says this transition will present a clear market opportunity for technology vendors and systems integrators in the near term. It predicts that spend by broadcasters in North America and western Europe on technology will reach an estimated US$8.7 billion by 2012.

"The broadcast value chain market will see significant growth over the coming years as broadcasters look to upgrade their equipment to handle file-based workflows and HD content," says Chris Khouri, Datamonitor's media and broadcasting analyst and the report's author. "By the end of 2006, broadcast value chain market revenue in western Europe and North America totaled US $6 billion. Western Europe accounted for $2.8 billion and North America for $3.2 billion. Between now and 2012, the market will grow at a compound annual growth rate of 6.4%.

As broadcasters continue to migrate more of their mission-critical systems to automated file-based workflows, there are both opportunities and challenges with regards to complexity. These challenges primarily arise through a lack of interoperability and changing organizational structures, including personnel, management and physical movement of systems.

Over 65% of respondents to Datamonitor's Customer Focus survey of 150 broadcasters consider standardising infrastructure technologies and simplifying their current broadcast systems as key strategies for 2007.

One of the primary challenges associated with the looming transition to an HD-based broadcast environment is the integration with standard definition (SD) infrastructures. The use of multiple new signal formats is a major issue with the move towards a hybrid infrastructure, with broadcast facilities forced to handle a plethora of audio, video and aspect ratio formats.

Moving towards a hybrid infrastructure will require a careful re-evaluation of current workflows, particularly with the necessity of up-converts and down-converts from SD to HD, and vice versa. As broadcasters look to transition towards SD/HD infrastructures, there will be strong opportunities for those technology providers and integrators that can address the challenges presented with multiple formats.

Furthermore, as broadcasters grow their content portfolios the physical constraints and costs of storing this content increases significantly. Digitally storing content allows broadcasters to alleviate these costs, and benefit from an increase in usage and a reduction in time-to-air.

Back catalogue digitization will create increased need for both storage solutions and video servers (particularly with the looming transition towards HD and MPEG-4/H.264), as well as for strong asset management systems.

Change creates risk, but it also generates opportunity. This is particularly true with regards to the broadcasting sector. "Broadcasters are at a critical position where adapting to a fragmented media landscape is crucial for survival," says Khouri. "As they move towards file-based workflows and HD, there is considerable risk in implementing an architecture in-house that is difficult to adapt to new standards, technologies and systems upgrades. Furthermore, broadcasters are looking for the 'whole package' rather than just a single hardware or software solution. This means that professional service providers, most notably SIs, are in an advantageous position by being able to provide holistic and managed packages from a variety of technology vendors."

Datamonitor's report "The Evolving Broadcast Value Chain, 2006 - 2012 describes the market issues, strategic implications and technological adoption for players in the broadcast sector. It also outlines key business trends as well as forecasting broadcast value chain market size from 2006 - 2012 in Western Europe and the United States.

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