Year In Review... Thomson Video Networks
For a company with a track record in broadcasting as long as that of Thomson, a corporate re-structure while being a significant event does not affect the core activities of developing technologies the worlds broadcasters rely on. It does, however, provide a more favorable framework for our activities, and it was a notable event on the companys calendar for 2010. The creation of Thomson Video Networks and Thomson Broadcast was announced in September, and sets the seal on a streamlining of Thomsons business around two key areas of activity: the digital headend, and transmission.
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.
Progress in compression technology has been remarkable over the past three years we have halved the bit rate needed for high quality HD channels. Broadcasters are able to run at an average rate of one channel extra per year per transponder as a result, and this is a trend that will continue for the near future. The showcase for the latest compression technology in 2010 was the soccer World Cup, where all-new infrastructure meant that the picture quality for this event was noticeable higher than what is seen in the average HD content.
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.
Refocused into its new business unit, Thomson Video Networks is geared to developing appropriate solutions for a rapidly-evolving 21st century media industry, with state-of-the-art offerings in hybrid and multi-format compression systems for all networks, outstanding strategies for migration to All-IP based video transport, breakthrough video server technologies, and comprehensive redundancy and monitoring systems. Evolution in the market is a constant, and technology innovations for the not-too-distant future will include solutions for new services, among them the new 3D channels. Expect a consensus on the standard in 2011, and integrated solutions to support the roll-out.