The technology, media and telecom (TMT) suppliers' market is still largely dominated by TV CPE but an increasing share of business has moved to the broadband segment in recent years following a decrease in both sales and usage of traditional pay-TV STBs says a study from Dataxis.
The study found that in 2022 home connectivity and entertainment services generated more than $24 billion in revenues with a large proportion of leaders in the hardware market commercialising both set-top boxes and broadband CPE. Moreover, regarding the latter segment, the analyst calculated that broadband CPE sales generated an estimated $15.6 billion in 2022.With high-speed broadband already available to a large majority of consumers in most advanced markets, the report noted that operators are increasingly focusing on improving the overall user experience at home. It added that CPE manufacturers are already developing future-proof devices on Wi-Fi 6E and Wi-Fi 7 standards, while the consumer market was just starting to adopt Wi-Fi 6 equipped gateways. Dataxis also found that a growing share of revenues is heading towards home networking solutions, citing companies including Airties, Plume and Eero.
Yet the study also found that in 2022 set-top box manufacturers saw revenues drop by almost 6% year-on-year. The sector now only represents two-thirds of the revenues it was generating five years ago. This says Dataxis follows a trend that has been largely unfavourable to traditional pay-TV device manufacturers over the last few years as consumers are increasingly getting equipped with connected TV sets and/or OTT streaming devices.
This also means that pure players in the streaming devices segment are rapidly gaining market shares at the expense of historical market leaders. Apple TV, Chromecast, Roku and Amazon Fire TV combined market share in the TV & video hardware market (excluding TV sets) already accounted for 20% of revenues in 2022.
Looking at consolidation, Dataxis pointed to the acquisition by 24i of The Filter and its content discovery solutions, bringing it under the umbrella of its owner Aferian, formerly known as Amino Technologies. This happened at the same time that equity firm PSG announced the creation of Backlight, a company backed by a $200 million investment and made of the acquisition of five fast-growing tech companies from the media and entertainment industry, active across the whole OTT value chain: from production to delivery, alongside metrics and analytical tools. Backlight now operates Wildmoka, Iconik and Zype on the video segment, and also owns brands ftrack and Celtx on the production level. In July, Zappware acquired its competitor iWedia and both companies merged under the new entity ZEGI group, creating a new brand leader on the middleware.
Looking at broader trends revealed in the study, Dataxis highlighted global tech giants competing across all levels of the broadband and video streaming value chain, advanced metadata and artificial intelligence.
Looking at how the latter segment could affect the TMT market as a whole, Dataxis senior analyst Ophélie Boucaud said: “artificial intelligence is clearly positioned as the next hit target for tech giants, and the video and entertainment industry is also firmly committed to the AI race. TV and video solution providers have been consistently investing in the matter for years as it can be a key driver for audience engagement, user retention, UX optimization, content curation and service performance improvement. The recent arrival of over-performing solutions on the tech market is likely to also make waves in the TMT sector.”