Next Generation Satellite BTV – Is IP The Key?

By Christopher Baugh

The satellite business television (BTV) market has been in existence for decades, and multiple analog and digital networks are in operation today. Enterprises have come to realize that video is one of the most powerful tools for communication with employees, suppliers and customers. This realization has led many enterprises to distribute large amounts of internal video content over BTV networks. Satellite BTV networks for internal training, in-store video promotions, corporate communications and video collaboration have been used by corporations in order to foster effective company-wide communications. The introduction of IP now promises to revolutionize the BTV market in terms of new services, reduced bandwidth requirements and enhanced distribution capabilities.

IP delivery is taking the satellite BTV market to the next level in terms of delivery/service features and efficiency. Whereas MPEG-2 video platforms alone offer improved bandwidth efficiency and elementary network convergence, IP delivery enables enterprises to effectively distribute and control video content from the source to the desktop. With satellite capacity and technology dramatically decreasing in cost, it is more feasible than ever for enterprises to implement and integrate an IP-based satellite video overlay to their existing network.

The movement to IP is certainly in line with enterprise networking demands. The BTV market focus now is on pushing corporate content anywhere, anytime, to any device. If the user has a PC, the content must be delivered securely to the PC desktop. If the user does not have a PC, content must be delivered to a classroom or conference room. If the user missed the presentation, it must be made available from a local service in on-demand format. While these critical requirements are not altogether well-served over MPEG-2 alone, the emergence of IP is seen as the vital enabling factor. Since such a flexible, network-centric approach is prescribed, new IP-based BTV services are seen as a bridge between the TV and IT realms.

The Current State Of Play

The state of the enterprise IP BTV space can best be described as mixed. On one side of the issue, the need for enhanced video communications in the enterprise is quite strong. According to IDC, 30 percent of mergers and acquisitions fail due to poor internal communications. This trend, coupled with the steep decline in business travel, would appear to be an accelerant to market growth for next generation IP BTV platforms.

Many service providers claim the market is performing quite well, despite recent economic difficulties. Enterprises are highly impressed with the features and functionality of many platforms commonly available today. Unfortunately, interest has generally been counteracted by a lack of enterprise buying in many vertical segments. In fact, despite the high level of enterprise interest noted by most vendors, a 12 to 24 month lag in spending increases will likely be the norm. For example, one large U.S. automotive manufacturer claimed it had an immediate need for using IP for video distribution, but it would likely not buy a solution for at least 28 months. Discussion has occurred in the enterprise space, but actual paying customers are few in number.

This trend is primarily a function of worldwide economic difficulties, the war on terrorism, the war in Iraq, and a recent global recession. Despite recent news suggesting an economic recovery, enterprises are generally refraining from making any new investment in “non-critical” telecom infrastructure. In addition, one-way MPEG networks are still the dominant means for BTV distribution. Many old BTV networks are still in place, and a large portion of these networks has no plans to upgrade in the next two years.

This guarded view of the current market could be counterbalanced by the recent activity taking place in the U.S. and Europe. A renewed focus on training in a few key U.S. verticals (pharmaceuticals and retail) and the emergence of intelligent digital signage deployments point to an early stage market starting to take shape. Interest in Europe has also been on the rise, albeit for a different mix of applications. A rise of interest in Asia, the Middle East and Latin America also point to a market potentially gathering steam in the short term.

Market Opportunity Today

The most obvious observation from the pie chart accompanying this article is the existence of a respectable market for IP-based BTV solutions. At over 76,000 sites, the combined North American and European market already is a sizable base of customers from which to secure revenue and experience in delivering service. The data gathered by Northern Sky Research (NSR) for the pie chart was also analyzed in terms of trends, applications and specific segments of the market:

The data displayed a near uniformity in the size of enterprise served. While a small portion of the deployments were for small office/home office (SOHO) users, the customer for the solution was almost always a large corporation. For example, Pfizer is currently working to deliver training videos and corporate communications via satellite IP to all pharmaceutical sales reps. It is likely that the market will continue to grow through large corporate deals over the next two to three years, especially since the service provider model (small to medium-size enterprises and SOHOs) has not proven to be a success. We therefore expect the majority of market growth in the near term to derive from large corporate networks, with “low hanging fruit” coming from upgrades of MPEG BTV networks to IP.

Vertical Market Leaders

A review of IP BTV data clearly indicates that new deployments are taking place in historically strong BTV verticals (retail, manufacturing, automotive, etc.). Upgrades to existing MPEG or analog networks (“low hanging fruit”) appear to be the largest component of current totals, with traditionally strong verticals such as retail and automotive leading the market. Such upgrades are usually the business of a large integrator/manufacturer such as Hughes Network Systems, but other vendors also see this market as an opportunity and have won business accordingly. NSR expects large integrators to secure the majority of business over the near term, but increasing competition will occur over the long run. In addition, the vertical segments listed above will likely represent the bulk of opportunities in this space over the next three years.

Region-Specific Applications

After reviewing the data gathered for this exercise, it was clear that growth of enterprise IP BTV will not occur in the same manner in each region. Each region demonstrates differing enterprise communications needs and requires a different mix of applications that will propel market growth. For example, while training is a significant application in the North American market, training applications in Europe appear to be lagging. NSR’s research and feedback on current and future opportunities pointed to a few key segments/applications:

• Corporate Training in North America – Corporate training is still considered to be a strong application, especially with the introduction of IP.
• Retail Digital Signage and Kiosk Business in North America/Europe – Perhaps more than any other application or vertical segment, there appears to be increasing demand for digital signage and kiosk applications in the retail market. Safeway recently installed a 2,000-site training and digital signage/kiosk network to grocery stores in the U.S. and Canada. Networks of similar size will soon be deployed at Home Depot, a number of convenience stores and various other retail locations.
• Long-Term Corporate Communications Focus – Interest in distribution of corporate communications is expected to increase worldwide due to a reduction in corporate travel. This application is now especially important in the financial sector where increased investor communications are the norm. It is expected that applications such as video-conferencing (one-way and two-way satellite), desktop presentations and corporate addresses will increase in demand over the next 12 to 18 months.
• Educational Content Distribution in Asia-Pacific – Education models (with a subscription fee) have mostly failed in North America and Europe. However, NSR noticed a few successful education distributors in Asia that are making a respectable business from education content distribution to schools and universities. NSR expects this application to represent an important component of growth in the Asia-Pacific region.
• Broadcast of Western Content to Other Regions – NSR has also noticed an increasing interest in the broadcast of Western-originating enterprise video content to other regions of the globe. For example, NSR noted at least six opportunities for distribution of U.S.-based BTV content to the Asia-Pacific region in the span of two months. While most of this content is in MPEG-2 format, a long-term prospect for IP is assumed due to the inherent cost and bandwidth efficiencies of IP platforms.

Revenue Generation

Most importantly, revenue is currently being generated from enterprise IP BTV platforms over satellite. In fact, NSR estimates the market for IP BTV solutions worldwide will reach $95.2 million by the end of 2003. Of this amount, North America (69 percent) and Europe (25.7 percent) will represent the two largest regions for service. The global IP BTV market will grow to over $600 million by 2006. This projection excludes customer premise equipment (CPE) sales, integration and installation revenues. This conservative projection is based on estimations of actual deployment deals in the near term, in addition to NSR projections of service take-up in the latter forecast years.

Christopher Baugh is president of Northern Sky Research, a Fla.-based satellite consulting firm. He can be reached at [email protected].

IP-Based BTV Delivery Methods

• Delivery to classroom TV
• Delivery to corporate conference room
• Delivery across IT networks to the desktop or work station
• Delivery to video screens at point of sale or point of purchase in retail outlets
• Delivery to information points in public places – airports, railway stations, hotels and hospitals
• Delivery to handheld devices

Source: Northern Sky Research