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November 21, 2007

Broadcast value chain to grow to $8.7 billion in North America and western Europe by 2012

While broadcasters face the opportunities and challenges of fighting to adapt to multi-channel and multi-platform content distribution, the transition will present a clear market opportunity for technology vendors and systems integrators in the near term. Indeed, spend by broadcasters in North America and western Europe on technology is likely to reach an estimated $8.7 billion by 2012.

By CBR Staff Writer

The broadcast value chain is undergoing a significant transformation as digital workflows, high definition (HD) and traditional IT infrastructure revolutionize the TV industry. 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. By the end of 2006, broadcast value chain market revenue in western Europe and North America totaled $6 billion. Western Europe accounted for $2.8 billion and North America for $3.2 billion. Between the end of 2007 and 2012, the market will grow at a compound annual growth rate of 6.4%.

The production and broadcast distribution environment is evolving

Traditional media-based workflows, involving the physical movement of video assets from one point to another and affectionately known as ‘sneakernet’ by some in the industry, are being rapidly transitioned to digital ‘tapeless’-based workflows. This transition creates a variety of enterprise-wide benefits for broadcasters, including a reduction in operational expense, a reduction in production times and enhanced repurposing opportunities.

The broadcast space is particularly complex and is becoming ever more challenging as workflows and processes evolve. Managing, tracking and handling digital assets are becoming some of the most important aspects of a modern broadcast system. Implementing transparent asset management systems reduces operating margins, eliminates redundancies and ultimately boosts competitive position. Furthermore, aligning broadcast engineering with commercial operations through enterprise-wide management solutions will be a key source of competitive advantage in the near term.

Systems standardization is a key strategy to reduce the complexity of broadcast systems

As broadcasters continue to migrate more of their mission-critical systems to automated file-based workflows, there are both opportunities and challenges to be faced 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 said that they consider standardizing infrastructure technologies and simplifying their current broadcast systems to be key strategies for 2007. Transparency is crucial for broadcasters as the depth and breadth of file-based workflows develop. Moving towards central archives and architecture is expected to provide a significant opportunity to combat systems silos and eliminate redundant functions.

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There is still a considerable addressable market for moving towards a fully tapeless environment. In most cases, assistance is required to help broadcasters simplify and standardize their current systems to boost efficiencies in their IP-based workflows. This will prove a lucrative opportunity, particularly for professional services and systems integrators (SIs).

Challenges remain for the transition to HD and digital archives

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 in the move towards a hybrid infrastructure, as broadcast facilities are forced to handle a plethora of audio, video and aspect ratio formats.

Moving towards a hybrid infrastructure will require the 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 increase 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 an 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. Enhanced asset management systems, coupled with increased transparencies within the archive management function, will prove important as back catalogue digitization intensifies.

Change creates risk, but it also generates opportunity. This is particularly true with regards to the broadcasting sector. Indeed, broadcasters are at a critical juncture where adapting to a fragmented media landscape is crucial for survival. 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 a competitive position, as they are able to provide holistic and managed packages from a variety of technology vendors.

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