Insider Reporter

Insider Report

news and views on broadcast and professional video/audio sectors, worldwide

w/e November 9, 2008 SCRI International, Inc © 1984 - 2008


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Mixed outlook for IPTV equipment

The North American IPTV and switched digital video (SDV) equipment market declined sharply in the second quarter of 2008, pulling the worldwide market down 5 per cent sequentially to $1.27 billion despite healthy increases in EMEA, Asia Pacific, and CALA, reports market research firm Infonetics Research.

The dip in the overall market is due to slowing IPTV and SDV subscriber additions by service providers in some regions hit hard by the uncertain economic climate, particularly in North America, according to Infonetics’ report.

"In environments where the future of the economy is unknown, IPTV and SDV subscribers are more apt to stay with their current provider, rather than look for a new provider with whom they may have to invest in new equipment and other upfront fees; this is especially true in North America and Western Europe right now. However, service providers around the world—particularly in Asia, Europe, and Latin America--are still investing in IPTV equipment because offering video service is increasingly becoming a requirement to increase revenue per user. Operators will continue to add IPTV and SDV subscribers, just not at the fast clip they previously expected," said Jeff Heynen, directing analyst for IPTV at Infonetics Research

Asian Pay-TV Market Growing

The Cable & Satellite Broadcasting Association of Asia (CASBAA) announced new data for Asia’s pay-TV market, showing 71 million digital pay-TV households out of 300 million pay-TV subscriptions across Asia. "The increase in digital pay-TV market penetration represents a tipping point for our industry in Asia," said Marcel Fenez, Chairman of CASBAA.

"This is especially relevant with regards to the control of revenue leakage since digital pay-TV creates far greater transparency – what might be termed a ‘digital cushion’ - which can slow the growth of pay-TV piracy, while accurately tracking pay-TV subscriptions," said Lee Beasley, Head of Media & Entertainment at Standard Chartered Bank in Hong Kong.

CASBAA noted that the Asian pay-TV markets with the lowest level of revenue leakage (or piracy) are generally those with the highest percentages of digital deployment, according to the findings of the 2008 Pay-TV Piracy Survey, conducted by CASBAA in collaboration with the Creative Industries Division of Standard Chartered Bank. "For instance, Australia, Hong Kong, Malaysia, Japan, Singapore and New Zealand are almost 100 per cent digital and have the lowest piracy levels," added Beasley.

According to CASBAA, the mega-markets of India and China are demonstrating an increased pick-up for digital pay-TV services. India now has 8.5 million digital pay-TV households, while China represents 34 million digital cable connections.

"India’s digital pay-TV market has been driven by the recent exceptional growth in the digital DTH market but, at last, with 1.7 million digital cable subscriptions, India is finally taking off," said Fenez. While China’s most recent growth was clearly driven by the Olympics, "the next trick will be to enable new premium content to enter the market to encourage increased ARPU and to stimulate additional demand," said Fenez.

Mobile Marketing Guidelines

The Mobile Marketing Association (MMA) has released an updated version of its global Mobile Advertising Guidelines. The guidelines provide the global formats, guidelines and best practices necessary to implement mobile advertising initiatives in a variety of mobile media channels, including web, messaging, downloadable applications and video. The MMA has published regional ad guidelines since 2005 and globalised the guidelines in April 2008.

The guidelines are designed to encourage the uptake of mobile marketing worldwide by creating a simplified framework for brands and agencies to deliver mobile advertising in a consistent way. The new set of guidelines are the result of ongoing collaboration between MMA member companies and MMA Mobile Advertising Committee members in the Asia Pacific, Europe, Latin America and North America regions and are representative of the entire mobile marketing ecosystem. They have also received industry endorsement from a range of relevant industry associations.

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Broadcast and Media Technology Forecast

The IABM has put together the Broadcast and Media Technology: global market valuation & strategy to 2012 report. Key findings include:

  • High-definition and file-based workflows will continue to be the key market drivers over the forecast period
  • IP infrastructure has started to have a major impact on video transfer and storage, with hard disc storage now significantly undercutting tape storage
  • Growth peaked in 2007-2008 and is expected to slow in most markets through 2009 and 2010 before picking up again
  • Emerging markets in China, Eastern Europe, India, Latin America and the Middle East will continue to experience double digit growth to 2012
  • China now dominates the Asia-Pacific market with a larger market than Japan
  • Broadcasters are starting to make purchase decisions based on operational functionality rather than technology, opening the market further for complex "solution" provision and third-party service providers
  • Services have become an increasingly important portion of the market as broadcasters disassociate risk and supplement project decisions with consultation for more complex workflow and cross-platform transmission
  • New buyers are entering the market from other industries, such as publication, online, mobile, government, corporate and faith, utilising professional video equipment. In addition, new applications for profession technologies such as digital signage and digital cinema offer new market opportunities
  • New vendors are following these major trends, especially taking advantage of IT trends and the movement towards cheaper (and often more open) software platforms for multi-channel and low-end video delivery

    CBS reports Q3 loss

    CBS reported a $12.5 billion loss in its third quarter triggered by a $14.12 billion impairment charge, while a dramatic decline in advertising revenue hurt its television, radio and outdoor divisions in the third quarter. The US broadcaster, which split from its cable networks and films division in 2006, has been plagued by rumours that media mogul Sumner Redstone needs to sell it off to meet debt obligations at an entity that controls the two companies.

    Sinclair Updates Q4 Outlook

    Sinclair Broadcast Group updated its previously issued public guidance for its fourth quarter 2008 net broadcast revenues. On October 13, 2008, the Company commented that it was expecting its fourth quarter net broadcast revenues to be down mid to high single digit percents, as compared to the fourth quarter 2007 net broadcast revenues of $165.7 million, due to volatility in the marketplace and its impact on advertising budgets. The Company now expects its fourth quarter net broadcast revenues to be down low to mid single digit percents due to an inflow of last minute unexpected political ads. The Company cautions that forecasting for the fourth quarter has been made difficult due to a lack of visibility as it relates to the political advertising spending and timing, as well as the unpredictable effect of the current economic environment on the core business.

    Verizon up 30%+

    The second largest US telecoms group reported a 31 per cent increase in third-quarter profits fueled by continued growth in its Verizon Wireless joint venture with Vodafone. Net income increased to $1.67 billion. The mobile unit offset accelerating residential phone line and DSL line losses. Revenues grew by 4.1 per cent to $24.8 billion.

    Verizon is spending $23 billion over seven years to build out a fiber-optic network that will enable the company to offer faster internet access and advanced TV services under its FiOS brand. Verizon added 233,000 new FiOS TV subscribers and now has a total of 1.6 million.

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    Avid Offloads Two Units -- Softimage & Pinnacle PCTV

    Avid continues on its cost cutting strategy by cutting two units -- Softimage & Pinnacle PCTV.

    Autodesk, Inc. and Avid Technology, Inc. announced that they have signed a definitive agreement for Autodesk to acquire substantially all of the assets of Avid's Softimage business unit for approximately $35 million.

    Softimage was founded in 1986 by Daniel Langlois and is headquartered in Montreal, Canada. Softimage develops 3D technology for the film, television and games markets. Its flagship product is SOFTIMAGE|XSI, an extensible 3D animation software solution used by leading media and entertainment companies, including Digital Domain, Ubisoft, SEGA Corporation, CAPCOM, Animal Logic and The Mill. Autodesk Media & Entertainment provides animation, visual effects, editing/finishing and color grading solutions for the 3D market, including entertainment and design industries.

    Avid also announced that it has signed a definitive agreement to sell its Pinnacle PCTV product line and related assets to Hauppauge Digital, Inc.. The deal is expected to close before the end of 2008; financial terms were not disclosed.

    Avid and Hauppauge will work closely together prior to the 2008 Holiday season to ensure a smooth transition of the Pinnacle PCTV product line for distribution partners and consumers. Following the closing of transaction, Hauppauge expects to continue developing and supporting both the hardware and software components of the PCTV line.

    Arri to Acquire Dalsa Digital Cinema Assets

    DALSA Corporation, a supplier of high performance digital imaging and semiconductors, reported revenues of $52.6 million for the quarter ended September 30, 2008, and net income from continuing operations of $6.0 million or $0.32 per share, diluted. As previously announced, DALSA is committed to eliminating the ongoing losses in the Digital Cinema division by the end of 2008.

    The Company has recently entered into a non-binding letter of intent ("LOI"), which includes a 30-day period of exclusive negotiations, with Arnold & Richter Cine Technik GmbH ("ARRI"), one of the world's leading manufacturers of cinematography cameras. Under the terms of the LOI, ARRI would acquire certain existing assets of the DALSA Digital Cinema division. Concurrently, DALSA and ARRI would enter into a technology partnership agreement whereby DALSA will develop for ARRI custom high performance CCD image sensors and related products. Furthermore, DALSA would supply the developed products to ARRI for digital cinematography applications through DALSA's core businesses. Related to the transaction contemplated by the LOI, DALSA will endeavour to find a buyer for its Los Angeles based camera rental operations. DALSA will eliminate the ongoing losses from the Digital Cinema business prior to year end; however, there is no assurance that any transactions will be completed.

    Utah Scientific Acquires Sandar

    Utah Scientific announced it has acquired Sandar, an important European manufacturer and distributor of routing switchers whose marketing reach in Northern and Eastern Europe and in Asia neatly complements Utah's historical strength in the Americas. Sandar, like Utah Scientific, has been a renowned name in the broadcast industry for 30 years, and its products are widely used by many of the top broadcasters and telecom operators in Europe and Asia. The new company will be known as Utah Sandar.

    While Sandar primarily makes small routers, from 3x3 to 32x32 in size, Utah's product line is focused on larger routers up to 1152x1152 in size. As a result, the combined product line of the two companies will enable customers to take advantage of one-stop shopping with all the benefits of Utah Scientific's famous customer service, 10-year warranty, and support. Sandar has recently developed a new family of affordable, compact routers that are fully compatible with the routing systems manufactured by Utah — using the same control systems.

    Front Porch Digital Acquires SAMMA Systems

    Front Porch Digital, a supplier of content storage management (CSM) for the broadcast, media, and entertainment industries, announced that it has acquired New York-based SAMMA Systems Inc., a provider of migration and preservation services of videotape to digital files.

    "We're in a unique position to fuel growth by merging operations with a company that is strategically aligned with our own mission," said Mark Gray, CEO of SAMMA Systems, Inc. "It is rare when two profitable, global market leaders come together, and I'm confident that the result will be an even more dominant force that provides better products and superior service to more customers. All in all, this is a two-plus-two-equals-five equation."

    Jim Lindner, founder of SAMMA Systems and well-known expert in the field of audio/visual preservation, said, "I am excited to see the mission of audio/visual preservation advanced by the integration of our technologies."

    Mark Gray will assume the role of executive vice president and general manager of the company's Americas division, reporting directly to Mike Knaisch. Jim Lindner will continue in his role as evangelist and visionary in the preservation of A/V content.

    Harmonic Reports Strong Q3

    Harmonic Inc. , a provider of broadcast and on-demand video delivery solutions, announced its preliminary and unaudited results for the quarter ended September 26, 2008.

    For the third quarter of 2008, the Company reported net sales of $91.5 million, up 11% from $82.3 million in the third quarter of 2007. For the first nine months of 2008, net sales were $268.1 million, up 20% from $223.8 million in the same period of 2007. International sales represented 39% of revenue for the third quarter of 2008, compared to 46% in the same period of 2007. In the third quarter of 2008, Harmonic had strong bookings across the Company’s global customer base of cable, satellite, telco and other operators.

    The Company maintained its gross margins in the third quarter of 2008, reflecting the continued success of its new products and solutions, as well as its sourcing strategy and product design innovations.

    “We are pleased with our third quarter operating performance, bookings and momentum moving into the fourth quarter,” said Patrick Harshman, President and Chief Executive Officer. “Across different markets and geographies, video service providers continue to select our award-winning systems and solutions to expand their on-demand, high-definition and next-generation IP-based service offerings.”

    “While the global economic environment creates uncertainty, we remain confident about our strong market position and long-term growth opportunities. Our technology leadership, diverse customer base and operating performance have placed us in an excellent position to further strengthen our competitive position and extend our global customer base.”

    Pixelworks Reports Mixed Q3

    Pixelworks, Inc., a provider of powerful video and pixel processing technology, announced financial results for the third quarter ended September 30, 2008. Third quarter 2008 revenue was $21.5 million, at the high end of management guidance of $20 million to $22 million. Revenue for the third quarter was up 3% sequentially from $20.8 million in the second quarter of 2008 and was down 24% from $28.1 million in the third quarter of 2007.

    “Our third quarter financial performance was at the high end of expectations, as we continued to drive further improvements in gross margin, closely manage expenses and strengthen our balance sheet. Strength in our financial metrics drove positive cash flow from operations of $6.2 million and our sixth consecutive quarter of positive EBITDA,” said Bruce Walicek, President and CEO of Pixelworks. “We secured key design wins for both new and current products with leading electronics manufacturers, and made steady progress against our new product roadmap. As we enter the fourth quarter, we are encouraged by our progress to date and remain focused on tightly managing our financial performance and executing against our turnaround plan.”

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  • Broadcast/Pro Video Product Sales Top $10 billion -- read more

  • 2008 - 2009 Broadcast/Pro Video Product Reports
  • 2008-09 Broadcast/Pro Video Macro Industry Overview Report
  • 2008-09 Broadcast/Pro Video Micro Quantitative Product Data Report
  • HDTV / Digital Trends Report
  • IPTV / Mobile TV Report

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