Pay-TV software spending shrinks in developed markets

Joseph O'Halloran
| 24 July 2014

A survey from ABI research has found that developing nations are leading the charge when it comes to operator spending on middleware, conditional access, DRM and other back-office software elements.

The Multiscreen Video Middleware and DRM Market Research found that overall worldwide pay-TV operator spending on video software was up about 5% year-on-year to $4.48 billion at the end of 2013. Growth of pay-TV, especially in developing regions of Asia-Pacific, including China, India, Malaysia, Indonesia and other countries, was found to be offsetting losses in the developed markets.

Spending shrank 5% among pay-TV providers in North America and Western Europe, the fall being driven by what ABI said was "classic" end-to-end middleware functions, while newer experiential components including guide technologies and interactivity fared better. Looking at North America in particular, some middleware providers surveyed indicated that the development of Comcast's RDK was one of the most significant factors in the decrease in software spending during 2013, with merger uncertainty a second important reason. ABI observed that the RDK was regarded as a threat mainly by larger middleware companies with operators directly hiring developers rather than relying on traditional vendors while smaller middleware providers saw it as an opportunity to decrease technology spending while offering robust solutions.

In terms of who is leading the market, the survey found that TiVo and Rovi are currently outpacing middleware and professional service integrators such as Cisco/NDS and NAGRA. "The strategic focus at these companies, as well as at Ericsson, fresh off its Mediaroom acquisition, is to develop solutions which extend pay-TV systems to multiple screens. We expect future acquisitions similar to the Ericsson acquisition of Azuki Systems and the ARRIS acquisition of SeaWell Networks to better prepare over-the-top (OTT) delivery platforms," noted ABI Research practice director Sam Rosen.