(27 June 2009 9:10 pm)

MUMBAI: The economic slowdown and the falling of advertising revenues are ailing the broadcast industry, causing broadcasters to tighten their budgets on new equipments and replacements for 2009 and 2010," reveals a study done by Frost & Sullivan.

The study further states that a direct effect of this will be seen on overall demand for the broadcast and digital terrestrial television (DTT) video encoders market.

The study suggests the market revenue to fall by $160 million in 2010 compared to that of $240 million in 2008.

US is considered to be the most effected region due to recession and saturation in demand caused by digitisation. Other regional digital mandates, too, will drive the demand for video encoders, though there is a very high risk of delay in several regions, as broadcasters face financial constraints to fund their capital expenditure (Capex).

Eventually, what will spur recovery in the market are upgrades to advanced compression formats and high definition (HD). HD unit penetration will start exceeding standard definition product deployments in 2011.

"The video encoders market has not been isolated from the economic downturn and should brace itself for a growth decline of close to 30 per cent in 2009. The economic downturn has only reinforced the priority list of a broadcaster," says Frost & Sullivan senior industry analyst Vidya S Nath.

Investment cutbacks and Capex freezes are challenging the video encoders market, leading to further price reductions and accelerated competition, even though product penetration is continuously increasing, adds Nath.