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MPEG-2
and Video Services
1998-2003
a market research report
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Telephone companies flirted with video distribution as a part of their mix in the early 1990s, but abandoned efforts as the reforms of the Telecommunications Act began. Now the same technical and market forces that are converging the telecom, entertainment, and information industries are bringing forth a new set of standards for digital information that reach across industries to facilitate the end-to-end operability of multi-vendor systems.
The Moving Pictures Experts Group-2 (MPEG2) is one such industry standard, and one that Insight believes is fundamental to delivering digital video on a network. MPEG2 substantially reduces the bandwidth required to transmit a high-quality digital video signal, and it formalizes the trade-offs between
resolution and the required transmission bandwidth.
All of the industries considering digital video service distribution have to make MPEG2 part of the planning process; it is crucial in digital
head-end, broadband distribution, network access equipment, and the associated architectures and
operations. This is as true for major cable TV MSOs embracing hybrid fiber/coax as it is for
incumbents and CLECs deploying digital subscriber line variants (xDSL). In a similar vein, MPEG2 should be of great interest to very large scale integration component and module manufacturers, consumer electronics firms, PC manufacturers, as well as the traditional cable TV equipment and
telephony equipment vendors.
Insight’s research leaves little doubt that consumer demand for video products relying on MPEG2 is accelerating. This report provides five-year
revenue forecasts for MPEG2 encoding and decoding products: DVD, DVD-RAM, HDTV, VCRs, PCs, Digital Camcorders, Cable and DBS Converters. Insight discusses alternative compression technologies, examines customer segments and network implications, and profiles encoder/decoder vendor competition. Our final conclusion? The acceptance of the MPEG2 standard opens a clear path to worldwide interoperability and will be a major broadband enabler in the years ahead.
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Report Excerpt
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Forces Driving the Market
US phone companies, hunkered down and squabbling with the
FCC and each other for more than two and a half years to
gain petty advantage in the local-long distance wars,
should have heard sirens go off when AT&T completed
their $55 billion merger with the cable TV giant
Tele-Communications, Inc. (TCI). The merger created a
one-stop shop for residential customers looking for phone
service, Internet access, and cable television services.
The move--followed weeks later by Comcast’s $60
billion offer for MediaOne that will create a $97 billion
powerhouse with global telecommunications, programming,
and Internet interests--means video is back as a key
constituent in a bundled offering. Telephone companies
flirted with video distribution as a part of their mix in
the early 1990s, but abandoned efforts as the reforms of
the Telecommunications Act of 1996 began. Now the same
technical and market forces that are converging the
telecommunications, entertainment, and information
industries are bringing forth a new set of standards for
digital information that reach across industries to
facilitate the end-to-end operability of multi-vendor
systems.
The Moving Pictures Experts Group-2 (MPEG-2) is one such
industry standard, and one that INSIGHT believes is
fundamental to delivering digital video on a network.
MPEG-2 is fundamental because it substantially reduces
the bandwidth required to transmit a high-quality digital
video signal, and it formalizes the trade-offs between
quality (resolution) and the required transmission
bandwidth. Depending on the needs of the application,
MPEG codecs (coder/decoders) can deliver compression
(encoding) and expansion (decoding) of the audio-visual
bit stream to suit a wide variety of applications,
including:
- broadcast: used to distribute audio-visual material to
many from a single source, and used by such industries as
broadcast TV, cable TV, and direct broadcast satellite
(DBS).
- stored media: used either to distribute audio-visual
content of packaged media to consumers or to store
material for future broadcast. Standalone digital
versatile disk (DVD) players and DVD modules for PCs are
part of this segment; and in the future, broadcast
companies are likely to use video servers as their source
for pre-recorded material.
- interactive: this application space involves
transmission of audio-visual information in two
directions. Unlike most broadcast and stored media
applications, all the encoding for interactive
applications must be done in real time and lower
resolution transmissions are often acceptable.
- production: used by directors, editors, sound
technicians, and other people modifying the content of
the initial audio-visual bit stream to produce a final
version for distribution. Directly editing the MPEG-2
video stream is difficult at present; most of the work is
done in the analog domain and then encoded or decoded in
the MPEG-2 bit stream as needed.
The MPEG-2 Standard
The MPEG-2 standards were developed by a joint committee
(Working Group 11) of the International Standards
Organization (ISO) and the International Electrotechnical
Commission (IEC). The recommendations were finalized in
November of 1994. The International Telecommunications
Union-Telecommunications Standardization Sector, ITU-T,
also recognizes these standards.
What makes MPEG somewhat unique in the annals of
standards-making, is that the MPEG-2 Working Group hit on
the idea of setting up a patent pool to make it easier
for manufacturers to license the required intellectual
property and thereby quicken their time to market. The
MPEG-2 Working Group helped establish the MPEG Licensing
Administrator (LA) Limited Liability Corporation in 1997,
and though not all the patents essential to the practice
of MPEG-2 may be licensed from MPEG LA, over 40 important
patents are available in the US.
MPEG-2 uses what are called levels and profiles for its
encoding and decoding. A profile is a subset of the
entire bit stream syntax. Once a profile is selected, the
level constrains the parameters within the syntax by
various confines, such as pixel luminance and
chrominance, pixels per line, transmission bit-rate, and
frame encoding.
Different profile and level combinations have already
been established for different products and for different
applications of digital compression. For example, current
DVDs and standard definition TVs (SDTVs) use main profile
at main level, often denoted as MP@ML, which allows
bit-rates up to 15 Mbit/s and a maximum resolution of
720x576 picture elements or pixels (horizontal x
vertical). Higher quality images, such as those expected
from high definition TV (HDTV), require additional
bandwidth. HDTV proposals specify at least main profile
at high level (MP@HL), up to 80 Mbit/s and 1920x1152
pixel resolution.
By way of comparison, a typical uncompressed bit stream
encoding a National Television System Committee (NTSC) or
phase alternating line (PAL) analog TV signal requires 90 Mbit/s or higher bandwidth. MPEG-2 uses two techniques to
lower the required bandwidth to 4 to 6 Mbit/s for
standard quality:
- spatial compression: divides a video picture into
macroblocks of pixels, which are then encoded. This
compression is done within a single picture.
- temporal compression: uses motion estimation and
motion compensation techniques. Macroblocks of spatially
encoded pictures are predicted and compared, and the
differences are stored.
Commercial Significance of the MPEG-2 Standard
Shipments of devices using MPEG-2, such as DVD players,
DVD-read only memories (ROMs), digital televisions (DTVs), and DBS systems, will grow from about 11.8
million units in the US in 1998 to 95.5 million devices
in 2003, generating nearly $35.8 million in sales
revenue. Worldwide, the decoder market will grow from
19.8 million units sold in 1998 to 424 million in 2003,
and will generate $115.8 billion in revenues that year.
Already in 1998, leading PC vendors like Compaq, IBM, and
Dell were manufacturing PCs with DVD capabilities. DVDs
have even become available on high-end notebook PCs.
This report provides forecasts for all the MPEG-2
encoding and decoding products.
The market forecast for MPEG-2 related products is split
into projections for encoder products and decoder
products. For the most part, the projections show
substantial growth over the period of the study from 1998
to 2003. Where data were available (such as for US DBS
converters), actual sales for 1998 are given. The market
projections are broken down by product or application as
appropriate and forecast for both the US and worldwide.
Where applicable, the report provides unit forecasts and
revenue projections. The revenue projections were
determined from the estimated street price of the final
products sold to the end user.
The report does not include unit forecasts or revenue
projections for intermediate products, such as decoder
chips, encoder chip sets, and decoder/encoder modules. It
also does not include forecasts for MPEG-2 applications
implemented only in software. These software-only
implementations, especially for decoding, will become
more important commercially as general purpose
microprocessors from Advanced Micro Devices, Cyrix, and
Intel meet the processing requirements of the MPEG-2
algorithms.
All of the industries considering digital video service
distribution have to make MPEG-2 part of the planning
process because it is crucial in digital head-end,
broadband distribution, network access equipment, and the
associated architectures and operations. This is as true
for major cable TV multiple system operators (MSOs)
embracing hybrid fiber/coax (HFC) as it is for incumbents
and competitive local exchange carriers (CLECs) deploying
digital subscriber line variants (xDSL). In a similar
vein, MPEG-2 should be of great interest to very large
scale integration component and module manufacturers,
consumer electronics firms, PC manufacturers, as well as
the traditional cable TV equipment and telephony
equipment vendors.
Our research leaves little doubt that consumer demand for
video products relying on MPEG-2 is accelerating. The
number of DBS subscribers in the US exceeded 8.6 million
by the end of 1998--and while some would argue that DBS
appears to be off to a slow start--it is actually
exceeding compact disk (CD) and video cassette recorder
(VCR) penetration at a comparative point in their life
cycles. The success of digital video as part of a
broadband bundle will ultimately depend on the ability of
the service providers to deliver services economically on
an end-to-end basis, from content source to consumer. The
acceptance of the MPEG-2 standard opens a clear path to
worldwide interoperability and will be a major broadband
enabler in the years ahead.
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Market Segmentation
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- Encoder
- Decoder
- Cable
- Converters
- DBS
- Converters
- DVD Players
- DVD Recorders
- DVD RAM
- DVD ROM
- Digital Camcorders
- PCs with DVD Capability
- SDTVs
- HDTVs
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Table of Contents
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Chapter I
EXECUTIVE SUMMARY
1.1 Forces Driving the Market
1.2 The MPEG-2 Standard
1.3 Commercial Significance of the MPEG-2 Standard
Chapter II
INTRODUCTION
2.1 Applications Using MPEG-2 Standards
2.1.1 Context for the MPEG-2 Standard
2.2 Digital Video and Multimedia Services
2.3 Electronic Video Systems
2.3.1 Interlaced or Progressive Image Displays
2.4 Compression
2.4.1 Digital Compression
2.4.2 Spatial Compression
2.4.3 Temporal Compression
2.4.4 Audio Compression
2.5 Multiplexing and Transporting of Multimedia
2.6 The Digital Decoding Process
2.7 Digital Equipment
2.7.1 Personal Computers Are Leading Digital Display
Platforms
2.7.2 Digital Versatile Disk
2.7.3 Recordable DVDs
2.7.4 Digital TV Sets
2.8 Market Opportunities
2.8.1 Compression Products and Vendor Opportunities
2.8.2 Consumer Market Drivers
2.8.3 Service Provider Market Drivers
Chapter III
MPEG-2 STANDARD & ITS USE IN COMPRESSION
3.1 History of MPEG-2
3.1.1 Defining Image Quality & Bandwidth
3.2 MPEG-2 Video Compression Process
3.2.1 Spatial Compression
3.2.2 Temporal Compression
3.3 MPEG-2 Systems
3.3.1 Program Stream
3.3.2 Transport Stream
3.3.3 MPEG-2 Audio
3.4 MPEG-2 Applications
3.5 Access to the Technology
Chapter IV
ALTERNATIVE VIDEO COMPRESSION TECHNOLOGIES
4.1 Early Standards and Their Applications
4.1.1 MPEG-1 for Video
4.1.2 Px64 for Video-Conferencing
4.1.3 H.320/H.324 for Video-Conferencing
4.1.4 H.323 for Video-Conferencing Over IP Networks
4.1.5 JPEG for Still Images
4.2 Proprietary Video Compression Standards
4.2.1 Indeo
4.2.2 Cinepak
4.2.3 Wavelets and Fractals
4.3 Future Image Compression Standards
4.3.1 MPEG-4
4.3.2 MPEG-7 for Multimedia Search Engines
Chapter V
RELATED STANDARDS ORGANIZATIONS
5.1 Competing HDTV Standards
5.1.1 Advanced Television Systems Committee: the Grand
Alliance
5.1.2 The Digital Team from the PC Industry
5.1.3 Advanced Television Enhancement Forum
5.2 Organizations Developing Multimedia Standards
5.2.1 ADSL Forum
5.2.2 ATM Forum
5.2.3 CableLabs
5.2.4 Digital Audio-Visual Council
5.2.5 Digital Video Broadcasting Project
5.2.6 DVD Forum
5.2.7 International Electrotechnical Commission
5.2.8 International Standards Organization
5.2.9 International Telecommunications Union
5.2.10 Society of Cable and Telecommunications Engineers
5.2.11 Software & Information Industry Association
5.2.12 SONET Interoperability Forum
5.2.13 Telcordia Technologies
Chapter VI
CUSTOMER SEGMENTS AND NETWORK IMPLICATIONS
6.1 Encoder Customer Segments
6.1.1 Customers with Real-Time Requirements
6.1.1.1 Cable TV Multiple Systems Operators
6.1.1.2 TV Broadcasters
6.1.1.3 DBS Service Providers
6.1.1.4 Telecommunications Service Providers
6.1.2 Customers with No Real-Time Requirement
6.1.2.1 Production Studios
6.1.2.2 DVD Producers
6.1.3 Distribution Networks
6.1.3.1 HFC Distribution Network
6.1.3.2 SDV Network Architectures
6.2 Decoder Customer Segments
6.2.1 Consumer Electronics Buyers
6.2.2 PC Buyers
Chapter VII
VENDOR PROFILES
7.1 Product Overview
7.1.1 Encoders
7.1.2 Decoders
7.2 Offerings by MPEG-2 Encoder Vendors
7.2.1 Encoder Vendors
7.2.2 MPEG-2 Encoder Market Analysis
7.3 Offerings by MPEG-2 Decoder Vendors
7.3.1 MPEG-2 Decoder Market Analysis
7.3.2 Vendors of Decoder Chips
7.3.3 Vendors of Products Using MPEG-2 Decoders
7.3.3.1 Cable Converters
7.3.3.2 DBS Converters
7.3.3.3 DVD Players & Recorders
7.3.3.4 Digital Camcorders
7.3.3.5 PCs with DVD Capability
7.3.3.6 SDTVs and HDTVs
Chapter VIII
MARKET FORECASTS
8.1 Scope of Forecasts
8.2 Encoder Forecasts
8.3 Decoder Product Forecasts
8.3.1 Forecasts of Cable Converters
8.3.2 Forecasts of DBS Converters
8.3.3 Forecasts of DVD Players & Recorders
8.3.4 Forecasts of Digital Camcorders
8.3.5 Forecasts of PCs with DVD Capability
8.3.6 Forecasts of SDTVs and HDTVs
8.3.7 Summary of Decoder Product Forecasts
Appendix
GLOSSARY
List of Abbreviations
Table of Figures
Chapter I
I-1 Forecast of US and Worldwide Decoder Product
Shipments, 1998-2003 (Thousands)
I-2 Worldwide MPEG-2 Revenue from Encoders and Decoders,
1998-2003 ($Millions)
Chapter II
II-1 Time Line of the Development of Digital Compression,
1950-2000
II-2 Basic Video Services Delivery Architecture
II-3 Penetration of US Households by DBS, PCs, Cable, and
Television, 1994-1998
II-4 Sales of TVs in the US, 1992-1997 (Millions)
II-5 US Revenue Forecast from Consumer Applications that
Require Broadband Technology, 1998-2003 ($Billions)
Chapter III
III-1 MPEG-2 Video Compression Process
III-2 MPEG-2 Systems Overview
III-3 MPEG-2 Transport Structure
Chapter IV
IV-1 Fractal Transforms
Chapter VI
VI-1 Number of Basic Subscribers to the Largest Cable
Companies, 1998 (Thousands)
VI-2 Penetration of Cable into US TV Households,
1987-1998
VI-3 US Direct-To-Home Subscribers, 1995-1999
VI-4 TMN Management Layers
VI-5 Virtual Paths and Circuits within a Transmission
Link
VI-6 Typical Switched Digital Video Architecture Using SONET/ATM/xDSL
Chapter VII
VII-1 DTV on a PC Using A Tuner Card and A Graphics Card
VII-2 Current Generation Digital Television
VII-3 Next Generation Digital Television
Chapter VIII
VIII-1 Worldwide MPEG-2 Revenue from Encoder and Decoder
Products, 1998-2003 ($Millions)
VIII-2 Worldwide MPEG-2 Encoder Unit Forecast by Number
of Channels, 1998-2003 (Thousands)
VIII-3 Worldwide MPEG-2 Encoder Unit Forecast, by Type of
Encoder, 1998-2003 (Thousands)
VIII-4 Worldwide MPEG-2 Encoder Sales Forecast, 1998-2003
($Millions)
VIII-5 Worldwide MPEG-2 Encoder Sales Forecast, by
Encoder Type, 1998-2003 ($Millions)
VIII-6 Worldwide DVD Recorder and DVD-RAM Encoder Market,
1999-2003
($Millions)
VIII-7 US Forecast of Sales Revenue and Shipments of
Encoders, 1998-2003
VIII-8 US Forecast of Shipments of Encoders by Number of
Channels, 1998-2003 (Thousands)
VIII-9 US Forecast of Sales Revenue of Encoders by Number
of Channels, 1998-2003 ($Millions)
VIII-10 Encoder Revenue Market Share, US versus Rest of
World, 1998 and 2003
VIII-11 US and Worldwide Decoder Product Unit Shipments,
1998-2003 (Thousands)
VIII-12 US and Worldwide Decoder Product Sales Revenue
Forecast, 1998-2003 ($Millions)
VIII-13 Worldwide Decoder Product Unit Sales and Revenue
Forecast, 1998-2003
VIII-14 US Decoder Product Unit Sales and Revenue
Forecast, 1998-2003
VIII-15 Worldwide Decoder Product Unit Distribution by
Type, 1998 and 2003
VIII-16 Worldwide Decoder Product Revenue Distribution by
Type, 1998 and 2003
VIII-17 US Cable Converter Forecast, 1998-2003
VIII-18 Worldwide Cable Converter Forecast, 1998-2003
VIII-19 US and Worldwide Shipments of Cable Converters
(Thousands)
VIII-20 US Market Share of Cable Converter Market, 1998
and 2003
VIII-21 Average Price of Cable Converters, 1998-2003
VIII-22 US DBS Converter Forecast, 1998-2003
VIII-23 Worldwide DBS Converter Forecast, 1998-2003
VIII-24 US and Worldwide Shipments of DBS Converters,
1998-2003 (Thousands)
VIII-25 US Market Share of DBS Converter Market, 1998 and
2003
VIII-26 Average Price of DBS Converters, 1998-2003
VIII-27 US Forecast of DVD Players & Recorders,
1998-2003
VIII-28 Worldwide Forecast of DVD Players &
Recorders, 1998-2003
VIII-29 US and Worldwide Unit Shipments of DVD Players
and Recorders, 1998-2003 (Thousands)
VIII-30 US and Worldwide Sales Revenue of DVD Players and
Recorders, 1998-2003 ($Millions)
VIII-31 US Market Share of DVD Player & Recorder
Market, 1998 and 2003
VIII-32 Price Forecast of DVD Players and Recorders,
1998-2003
VIII-33 US Forecasts of Digital Camcorders, 1998-2003
VIII-34 Worldwide Forecasts of Digital Camcorders,
1998-2003
VIII-35 US and Worldwide Unit Shipments of Digital
Camcorders, 1998-2003 (Thousands)
VIII-36 US and Worldwide Sales Revenue of Digital
Camcorders, 1998-2003 ($Millions)
VIII-37 US Market Share of Digital Camcorder Market, 1998
and 2003
VIII-38 Price Forecast of Digital Camcorders, 1998-2003
VIII-39 US Forecast of DVD-ROMs, 1998-2003
VIII-40 Worldwide Forecast of DVD-ROMs, 1998-2003
VIII-41 US and Worldwide Units Shipments of DVD-ROMs,
1998-2003 (Thousands)
VIII-42 US and Worldwide Sales Revenues of DVD-ROMs,
1998-2003 ($Millions)
VIII-43 Market Share of DVD-ROM Market, 1998 and 2003
VIII-44 Average Price of DVD-ROMs in the US and
Worldwide, 1998-2003
VIII-45 US Forecasts of Standard and High Definition TVs,
1998-2003
VIII-46 Worldwide Forecasts of Standard and High
Definition TVs, 1998-2003
VIII-47 US and Worldwide Unit Shipments of Standard and
High Definition TVs, 1998-2003 ($Millions)
VIII-48 US and Worldwide Sales Revenues of Standard and
High Definition TVs, 1998-2003 ($Millions)
VIII-49 Market Share of Standard and High Definition TV
Market, 1998-2003
VIII-50 Price Forecast of Digital TVs, 1998-2003
VIII-51 Combined US Digital Decoder Product Shipment
Totals, 1998-2003 (Thousands)
VIII-52 US Digital Decoder Product Shipments by
Application, 1998-2003 (Thousands)
VIII-53 Combined Worldwide Digital Decoder Product
Shipment Totals, 1998-2003 (Thousands)
VIII-54 Combined Worldwide Digital Decoder Product
Shipments by Type, 1998-2003 (Thousands)
VIII-55 Combined US Digital Decoder Product Revenue
Totals, 1998-2003 ($Millions)
VIII-56 Summary of US Digital Decoder Product Revenues by
Type, 1998-2003 ($Millions)
VIII-57 Combined Worldwide Digital Decoder Product
Revenues by Type, 1998-2003 ($Millions)
VIII-58 Combined Worldwide Digital Decoder Product
Revenues by Type, 1998-2003 ($Millions)
Table of Tables
Chapter III
III-1 Documents that Define the MPEG-2 Standard
III-2 MPEG-2 Profiles and Levels
III-3 MPEG-2 Pictures Defined
III-4 Primary Audio Formats
Chapter IV
IV-1 Comparison of Digital Compression Standards
IV-2 Comparison of Data Rates and Compression Rates of
Motion JPEG and MPEG
Chapter V
V-1 ATSC Formats
Chapter VI
VI-1 US Direct-To-Home Subscriber Count, 1995-1999
Chapter VII
VII-1 Encoder Competitor Summary, 1998
Chapter VIII
VIII-1 Worldwide MPEG-2 Encoder Unit Forecast by Number
of Channels, 1998-2003 (Thousands)
VIII-2 Worldwide MPEG-2 Encoder Sales Forecast, 1998-2003
($Millions)
VIII-3 US Forecast of Sales Revenues and Shipments of
Encoders by Providers, 1998-2003 (Thousands and
$Millions)
VIII-4 US and Worldwide Decoder Product Unit Shipments,
1998-2003 (Thousands)
VIII-5 US and Worldwide Decoder Product Sales Revenue
Forecast, 1998-2003 ($Millions)
VIII-6 US and Worldwide Cable Converter Forecasts,
1998-2003
VIII-7 US and Worldwide DBS Converter Forecast, 1998-2003
VIII-8 US and Worldwide Forecast of DVD Players &
Recorders, 1998-2003
VIII-9 US and Worldwide Forecasts of Digital Camcorders,
1998-2003
VIII-10 US and Worldwide Forecasts of DVD-ROMs, 1998-2003
VIII-11 US and Worldwide Forecasts of Standard and High
Definition TVs, 1998-2003
VIII-12 Summary of US Digital Decoder Product Shipments
by Type, 1998-2003 (Thousands)
VIII-13 Summary of Worldwide Digital Decoder Product
Shipments by Application, 1998-2003 (Thousands)
VIII-14 Summary of US Digital Decoder Product Revenues by
TYPE, 1998-2003 ($Millions)
VIII-15 Summary of Worldwide Digital Decoder Product
Revenues by Type, 1998-2003 ($Millions)
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