Edgeware has had a global presence since it was founded. Edgeware now has over 200 customers in more than 70 countries, including telecom and cable operators as well as broadcasters and content owners.
Developments in modern streaming technology for video and TV are continuously changing the value chain for distribution. All in all, this results in a steadily increasing volume of video and data traffic.
IP video traffic (including short video formats and video communications) are expected to comprise 82 percent of all consumer-based Internet traffic by 2021, an increase from 73 percent in 2016. 26 percent of this video traffic will be web video for TV equipment, which means an annual growth of 27 percent over the next five years (NB: this does not include TV viewed on mobile devices).* To place this in the proper context, the amount of consumer-driven VOD in 2021 will be comparable to 7.2 billion DVDs per month.* Edgeware’s market for servers and systems for streaming TV will be directly impacted by this increase in traffic.
SHIFT IN ONLINE TV SERVICES
Edgeware’s market is changing from one type of Internet-based TV (IPTV) to a new type of TV service: OTT (Over-The-Top, TV over the open Internet). IPTV services are normally offered by telecom and cable providers that own their own networks. This is one category that has historically represented the majority of Edgeware’s customer base. OTT services are normally offered by traditional OTTs/broadcasters such as TVB in Hong Kong and new content owners such as Netflix. The IPTV market has matured and has a lower growth rate, whereas services for the OTT market are growing rapidly.
The number of global IPTV subscribers is expected to grow annually by 6.4 percent† over the next five years, from 182 million subscribers in 2017 to 248 million in 2022. The largest growth is in China, as Europe is expected to grow by 3.8 percent and Canada by 1.4 percent. OTT services are already a stronger driver of web-based TV services than IPTV. The services are divided primarily into two categories: Subscription-based VOD (SVOD) and advertising VOD (AVOD).
EDGEWARE’S CHANGING CUSTOMER BASE
Edgeware’s systems are used by customers to construct content delivery networks (CDNs) to provide Internet-based TV services. In 2021, 77 percent of all Internet-based video traffic (which itself constitutes 71 percent of all Internet traffic) will be provided via CDN, an increase from 67 percent in 2016.*
The primary customer groups in the market are telecom and cable operators and OTTs/broadcasters, who distribute TV and video content over the Internet.
Telecom operators, which also include broadband providers, accounted for 75.2 percent (75.8) of Edgeware’s net sales in 2017. Telecom operators primarily use Edgeware’s products and solutions to deliver their TV services over IP and normally purchase comprehensive solutions. Examples of customers include KPN in the Netherlands and PCCW in Hong Kong.
Cable operators accounted for 13.6 percent (18.6) of Edgeware’s net sales in 2017. Typically, these customers have similar needs to those of telecom operators. As TV providers, most cable operators already have networks built and they tend to purchase components and functions rather than comprehensive solutions. They also represent the largest customer category in the total market. Examples of these customers are Com Hem in Sweden and Televisa in Mexico.
OTTs/broadcasters accounted for 11.2 percent (5.6) of Edgeware’s net sales in 2017. This is the smallest customer category in the market, but is growing at a faster rate than the other customer segments. Customers in this category use Edgeware’s products to enable their live and on-demand services over the Internet. These customers appreciate high quality, the ability to analyse viewing habits and the delivery quality of the service. Examples of customers include TVB in Hong Kong.
Edgeware has enabled telecom and cable operators to deliver new services over IP, and thereby find new sources of income. New products and services create ever greater potential for delivery to the OTTs/broadcasters customer category, which distributes content via the Internet. Companies in this customer category are growing considerably and thus require scalable streaming solutions. They also require greater insight into user behaviour and high-quality delivery.
Edgeware gained 18 new end clients in 2017 across all segments. The largest customer accounted for 17.7 percent (23.0) of total sales, the three largest for 38.5 percent (41.9) and the five largest for 51.4 percent (55.4).
* Source: Cisco Visual Networking Index: Forecast and Methodology, 2016–2021 † Source: Ovum, October 2017