MOUNTAIN VIEW, Calif., Feb. 6, 2013 /PRNewswire/ -- Pay TV systems rely on conditional access systems (CAS) to ensure that content and subscription revenues are protected against piracy. Major markets like North America and Western Europe have already digitized their cable systems and have mature offerings of satellite direct-to-home (DTH) and IPTV services as well. Hence, CAS vendors are focusing on growth markets like South and South-East Asia, as well as Latin America for maximizing future revenue prospects.
These growth regions are quite different in nature from the more established Pay TV markets. For example, the average revenue per user (ARPU) for digital cable in India is approximately $5 USD, while the ARPU for Pay TV in the United States is more than $50 USD. Similarly, the average price for a set top box in the United States is more than $100 USD, while the average cost in China is under $20 USD. On the bright side, subscriber counts in these densely populated regions can be in the tens of thousands even for lower tier operators, so the volumes can – to some extent – compensate for the lower price points supported by these markets.
These growth markets are also regions where piracy rates are traditionally higher, and law enforcement is typically less effective, placing a greater burden for security on the CAS system alongside the pressures for low-cost, high-reliability systems. To succeed in these markets, most vendors are pursuing a volumes strategy, offering the minimum necessary functionality with adequate security to simultaneously meet the functional and pricing needs of the Pay TV service providers. For leading vendors in the market, this is relatively easy to execute from a liquidity perspective. However, for smaller vendors, this is a much more challenging task.
As part of every market that the Digital Media group at Frost & Sullivan studies, one or two vendors are identified for their potential to outgrow the market based on the strength of their organizational strategy, product and pricing strategy, sales channel strategy and partnership strategy. For its strategic excellence in navigating the challenges of growth markets in the Pay TV CAS and DRM market, Frost & Sullivan identifies Safeview as a Hot Vendor in an analysis of this market for 2012-2013. From its inception as a spin-off of leading Spanish Telco Telefonica, Safeview established a global footprint through local joint ventures with carefully chosen partners who are entrenched in the local MSO communities. These partners provide the trusted relationships with MSOs that ease the way for successful sales for Safeview, as well as critical insights into local customer requirements. Recognizing the lack of technical expertise with these smaller MSOs, Safeview is also taking on a systems integrator role. This is done through customer service and technical service centers established in the same geographies as their global customers to maintain profitability in a highly cost-competitive market.
In the cable segment, Safeview is aggressively targeting tier-II and tier-III cable operators in India and Latin America. This is a strategic sweet spot – these operators are not large enough in size and do not have high enough ARPUs that justify the price points of the highest-end solutions in the market. However, they are not so small that they need to settle for minimal solutions that typically provide CAS systems at no cost when bundled with a set top box purchase.
"Safeview is prudent in its focus on India in this narrow window of opportunity during the next two years of aggressive cable digitization," said Frost & Sullivan Industry Manager Avni Rambhia. "They are targeting the market in a customer-centric way with products and pricing targeted to meet local market demand and excellent customer support, which provides a compelling differentiator against other smaller vendors competing for the same business."
If you are interested in more information on the Pay TV Conditional Access Systems and Digital Rights Management market, please send an e-mail with your contact details to Mireya Espinoza, Corporate Communications, at email@example.com.
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SOURCE Frost & Sullivan