Posts Tagged ‘Broadcast CapEx’

What are the Commercial Drivers for the Global Move to HDTV Operations?

broadcast technology market research | Posted by Joe Zaller
Oct 13 2010

For the most part, large scale broadcast industry CapEx tends to be project-based.  Our most recent research into where money is being spent in the broadcast industry shows that the top two projects globally are “upgrading infrastructure for HD / 3Gbps operations” and “upgrading transmission and distribution capabilities,”  both of which are undoubtedly influenced by the move to HDTV.

As broadcasters migrate to HDTV operations much of the industry’s infrastructure is being replaced, making the move to HDTV a strong driver of broadcast industry CapEx. 

At a time when we are now several years into the HD transition, what continues to drive broadcasters to move to HDTV operations?  Are broadcasters moving to HD to for engineering reasons (e.g. delivering better image quality to viewers), or for commercial reasons (e.g. to remain competitive in the marketplace)?

As part of the 2010 Big Broadcast Survey, we asked a global sample of more than 5,600 broadcast professionals about the most important trends in the broadcast industry.  Respondents were presented with a series of industry trends, and asked to indicate which one was the most commercially important to their business over the next few years.

In order to better understand the drivers behind each trend, respondents were then asked a series of questions about the one industry trend that they indicated was most commercially important to their business – e.g. respondents who indicated that the transition to HDTV operations was the trend most important to their business were asked  why this is the case. 

The results are shown in the chart below:

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Q. Why the transition to HDTV operations the most important to your business?

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On a global basis the most important overall driver for the move to HD is simply completing the job.  In many parts of the world, broadcast professionals are now in the middle of multi-year complex HD migration projects, so this should not be too surprising.  

The second and third ranking factors cited by respondents as drivers for their transition to HDTV were delivering improved picture quality to viewers and the competitive demands of the market.  More engineering-oriented drivers such as taking a technology lead and future-proofing operations were seen by most respondents as much less important.

Like all data of this type, there are of course variations based on respondent demographics.  For example:

  • the competitive demands of the market were ranked as the most important HD driver for US broadcasters, while state funded broadcasters as well as those in Asia ranked completing the job as the their top driver
  • respondents from Australia, MEA and the UK cited more technology-oriented drivers (taking a technological lead in the market and future-proofing operations) than those from other areas where HD is perhaps more mature
  • broadcasters who derive most of their income from subscription revenues cited competitive demands of the market as their top driver for migrating to HD, while both commercial and state funded broadcasters said that completing the job was most important to them

 

Despite these differences, it’s clear that the key drivers for the move to HDTV are commercially oriented.   In today’s environment, the broadcast procurement process is usually based on carefully considered commercial factors, and often as part of a major planned project

As written previously, our research shows that the top priorities for the broadcast industry in 2010 include completing the transition to HD, achieving cost savings through operational efficiencies, and generating new revenue streams.  These projects all have a strong commercial justification, and will continue to drive a large share of the industry’s CapEx.

Interestingly, these results highlight why the buzz about some new technologies such as 3D has faded over time as potential buyers begin to appreciate the commercial issues associated with their deployment.  Indeed, many of those who commented on industry trends at the IBC 2010 exhibition commented that the market has become more realistic about 3D.

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This article is based on the findings from the 2010 Big Broadcast Survey (BBS), a global study of industry trends, technology purchasing behavior and the opinion of vendor brands.  With more than 5,600 people in 120+ countries participating, the 2010 version of the BBS is the largest and most comprehensive market study ever done in the broadcast industry.

Transition to HDTV to Drive European Broadcast Project Spending

broadcast industry technology trends, broadcast industry trends, broadcast technology market research | Posted by Joe Zaller
Sep 20 2010

This article was originally written for and published by the IBC Daily News.

Much of the technology spending in the broadcast industry is project-based, and for the past several years the transition to HDTV operations has been one of the key drivers of large scale CapEx by broadcasters and other broadcast professionals in the EMEA region.

Our research shows that the transition to HDTV will continue to be the top driver of technology spending.  But which product categories will be the beneficiaries of this spending, and just how long will the transition continue?

This article uses data from the 2010 Big Broadcast Survey (BBS), the broadcast industry’s largest ever and most comprehensive study of the broadcast industry, to help answer these questions.  We’ll do this by looking at three key drivers of broadcast technology spending: the major planned projects in EMEA; the current and future technical make-up of the broadcast infrastructure in EMEA; and finally the projected HDTV upgrade cycles for a variety of product categories.

 

Major Planned Projects in Europe

In an industry where major projects drive technology spending, it’s important to understand what projects are being planned by broadcast professions.

The chart below, which provides a breakdown of the projects planned by more than 1,400 broadcast professionals from EMEA, shows that upgrading infrastructure for HD / 3Gbps operations is by far the most common project in the region.

It also shows that workflow / asset-management and archive-related projects will be deployed in EMEA, along with new studios and new channels (many of which will certainly be HD-capable).

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The Technical Make-up of EMEA’s Broadcast Infrastructure

But how much of the HD transition in EMEA has already been completed, and how long will move to HDTV operations continue to drive spending?

To find out we asked our research participants about the state of their broadcast infrastructure, and their plans to upgrade their equipment to HD.  It turns out that not only is there still a considerable amount of HD upgrades to be done, but also that customers intend to carry on with these upgrades over the next several years.

While more than half of the broadcast infrastructure in EMEA is SDI, only about a quarter has been transitioned to HDTV operations. 3Gbps appears to have not yet been widely deployed in the region.

Interestingly, 19% of EMEA’s broadcast infrastructure is still analog.  This begs the question of whether this infrastructure will be upgraded directly to HD, skipping out SDI all-together.

With such a considerable amount of analog and SDI infrastructure in the EMEA today, the transition to HDTV, and the CapEx required to make this happen, would appear to be far from over.

Indeed, when we asked respondents to project the technical make-up of their infrastructure in 2-3 years time, the picture was quite different.  For example, respondents predicted that in 2-3 years the amount of analog infrastructure in EMEA would fall to just 7%, while the amount of HD infrastructure would jump considerably.  This strong increase in HD infrastructure will come from the upgrading of current SDI plant, as well as migrating analog equipment directly to HDTV.

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HDTV Upgrade Plans in EMEA

So having established that the transition to HDTV operations will continue to drive CapEx for broadcast infrastructure, what equipment categories will see the benefit of this spending?

BBS respondents were asked detailed questions about both the current state of the plant infrastructure, as well as their plans between now and 2012 to upgrade a variety of individual products types to HDTV.

Overall about 20% of respondents have fully upgraded each product category to HDTV, with another 25-40% partially upgraded.  This implies that there is still a considerable amount of HDTV upgrades to come in the coming years as analog and SDI plants, along with those that have partially moved to HD are converted to full HDTV operations.

Understanding how the factors discussed above drive CapEx should help industry participants to better plan their business strategies as we enter 2011.  Tracking major projects is important because they are one of the industry’s most important drivers of technology CapEx, because projects drive capital budgets, which ultimately drive product purchase.   When interpreting these findings, it’s important to note that these results look across a wide geographic region.  Granular analysis of the information in this article is available from Devoncroft Partners.

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