For the satellite industry, Thomson Video Networks provides a portfolio of video compression and content processing solutions for the distribution chain and, despite the still-recovering economic climate in 2010, business was surprisingly strong. The contributing factors for this expansion were the subscriber increase experienced by most broadcasters alongside accelerated High Definition (HD) introduction. Compression was again a hotspot for investment to make room for these new HD services. Better bitrate efficiency is the only part of the video chain that has a direct and quantifiable link to the operational cost of the organization, so its an area of investment operators are keen to explore.
Some regions showed particular buoyancy, and in Latin America there was a lot of activity as key broadcasters pursued aggressive competitive upgrade programs. With Sky Brazil, Telefonica, and others all competing for market share and governments active in shaping the media landscape, there is considerable impetus and the region is coming out of its economic difficulties of the past few years. Double-digit growth has been seen in the satellite sector over recent years, with operators providing more services. The ViBE range of encoders is a core component of the infrastructure for these broadcasters as they seek to develop the most efficient platforms.
Inevitably, new technology drives growth forward, and the markets seemingly constant desire for something new means theres always new technology in the pipeline. 2010 has been the year when 3D has suddenly become a must-have for major broadcasters, with the first commercial service launch by Sky and a number of trials underway by others, we can expect around 30 3D channels to be launched through 2011 and 2012. Every large broadcaster is likely to develop a 3D channel, but technical standards are yet to be settled: the side-by-side format can be deployed today with a standard HD encoder, and this is attractive to broadcasters with large existing deployments of HD set-top boxes, who want to stay within the bounds of existing infrastructure. Others will want to launch 3D at full-resolution to deliver the highest quality possible. Whatever consensus the market reaches will be influenced by the largest tier one satellite operators.
Large scale roll-out of HD is still a big differentiator for satellite providers, with the numbers of HD channels doubling every year, and 2010 seeing a particularly sharp rise. Most operators outside the United States (U.S.) have already or have plans for doubling the number of services from the current level about 10 channels. The U.S. is ahead of Europe in this but growth is strong and the spread of HD to terrestrial networks is following on from the momentum created by the initial satellite services. As more high-quality HD infrastructure comes online, the amount of HD content rises, and this in turn drives consumer acceptance. Broadcasters are working through the chain to upgrade equipment for the most efficient delivery of high quality pictures. So the application of the latest compression technology in the new generation of encoders is rolling through from the final encoder to include the contribution and distribution stages, and as a result, the improved compression performance is allowing more channels to be launched in available bandwidth.
For satellite contribution, the MPEG-4 4:2:2 standard is starting to come into its own for the backhaul contribution links, and demand for Thomsons VIBE EM3100 is strong as a result. But there is a certain amount of inertia to be overcome in the industry before the majority of the infrastructure is upgraded. Satellite slots are still set up for older compression equipment, so when renting space for coverage of ad-hoc events, operators cant necessarily save costs even with the improved bitrates available from new encoders. This is holding back investment in new equipment, and the satellite community is responding by allowing finer granularity in the transponder market to reflect the more efficient compression now available.
While the cost benefit of upgrading equipment such as cameras may be difficult to argue, a 15-percent bitrate reduction through improved compression performance leads to specific savings on the balance sheet. With a transponder typically costing USD 2 to 3 million a year to rent, and with the older generation of technology delivering 10 programs per transponder, that equates to around 200k per program, per year. A 15 to 20-percent reduction on that is a considerable cost savings. With larger operators spending upwards of USD 70 million a year, payback on new more efficient compression technology is very quick.
And its not just HD where new compression delivers benefits. Booming sales of Thomsons EM2000 MPEG-2/4 SD encoder confirm the trend for broadcasters to create more space for HD services by upgrading to more space-efficient SD transmission infrastructure.