The technology, media, and telecom (TMT) suppliers' market is largely dominated by hardware manufacturers. Customer premises equipment for both home connectivity and entertainment services generated more than USD 24 billion in revenues in 2022. In terms of market positioning, a large proportion of leaders in the hardware market are commercializing both set-top boxes and broadband CPE. And an increasing share of their business has moved to the broadband segment in recent years following a decrease in both sales and usage of traditional pay-TV set-top boxes.
Accelerating investments in CPE innovation
Meanwhile, broadband CPE sales generated an estimated USD 15.6 billion in 2022. With high-speed broadband already available to a large majority of consumers in most advanced markets, operators are increasingly focusing on improving the overall user experience at home. CPE manufacturers are already developing future-proof devices on Wi-Fi 6E and Wi-Fi 7 standards, while the consumer market is just starting to adopt Wi-Fi 6 equipped gateways. In this segment, a growing share of revenues is heading towards home networking solutions, with dedicated companies like the Turkish Airties, or the Americans Plume and Eero which specialize in mesh solutions, Wi-Fi optimization and AI-based smart home experiences. Plume alone illustrates the interest those companies attract on financial markets: it successively secured USD 85, 270 and 300 million from funding rounds between 2020 and 2021 and reached a USD 1.5 billion valuation at the end of 2021.
In 2022 set-top box manufacturers have seen their revenues drop by almost 6% year-on-year. In 2022, the STB & streaming devices market only represents two-thirds of the revenues it was generating 5 years ago. This follows a trend that has been largely unfavorable 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.
Other device manufacturers have been forced into joining the bandwagon and launched their own products to compete in this segment, accompanying partnering telcos in their transition towards STB-less offers. SEI Robotics, for example, launched a 4K OTT dongle back in 2020 in partnership with TiVo and is now deploying small streaming hub devices with telcos across Europe, Asia and Middle East. Innopia launched its first OTT dongle for Korean service TVing back in 2014 and has since worked with Orange and Reliance Jio to develop OTT streaming devices for their customer base.
Consolidation on the video segment
2022 was also a strong year for consolidation on the software side of the video market. In April, 24i acquired The Filter and its content discovery solutions, bringing it under the umbrella of its owner Aferian (formerly known as Amino Technologies). In April again, equity firm PSG announced the creation of Backlight, a company backed by a USD 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 (formerly under Kudelski group's ownership) and both companies merged under the new entity ZEGI group, creating a new brand leader on the middleware and UX launcher segment that was weighing an estimated 20 million EUR in 2022. In September, streaming engine Wowza announced having bought Swedish Flowplayer. This acquisition occurs just a year after the US-based company announced a partnership with private equity investment firm Clearhaven Partners. The same month, software firm Globant announced its investment in the sport-focused OVP company LaLiga Tech.
Global tech giants also compete across all levels of the broadband and video streaming value chain. Amazon notably is dominating the cloud industry with its subsidiary AWS, and also owns the home networking solution provider Eero. Microsoft operates its video delivery solutions through the brand Eclexia (under Vetrya) and acquired leading ad tech company Xandr at the end of 2021 from AT&T. Google operates its own video infrastructure and playout solutions, with integrated analytics and media intelligence tools in its Google Cloud suite.
Advanced metadata capabilities have become a must-have for content providers and video services over the last few years. This segment is now a large contributor to the video services tech supply industry and now represents over 12% of the overall revenues generated by software solutions dedicated to the TV & video delivery sector. Several companies are specialized in developing metadata and AI-based tools like Gracenote, which was acquired by Nielsen back in 2017 for USD 540 million and provides audience insights coupled with streaming usage metrics. This segment of the industry is shaped by ties and synergies with the ad tech world, metadata being a key element of audience engagement strategies for publishers and advertisers.
On the service and device level, media intelligence metrics are collected and analyzed by specialized companies like Conviva, Skyline Communication, Vimond, Bridge Technologies or Interra Systems. Those are mostly working with top-tier operators and video platforms to optimize their content delivery operations and provide a top quality experience to their users through real-time analysis of the quality of video delivery and service performance. The consolidation movement observed in the video solution market has also expanded to metadata and media intelligence providers with Innovid consolidating its acquisition of TVSquared for USD 160 million in March, and BeBanjo getting acquired by Mediagenix in July.
As shown in recent news, 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.
Ophélie Boucaud | Senior Analyst at Dataxis
This research highlight is based on our data coverage of technology solution providers globally. Please contact us to get a demo and see the depth of our service.