Issue link: http://digital.copcomm.com/i/8034
gaming, are proliferating in markets such as South Korea and the UK. T is segment has been tough for middleware makers. By the early 2000s, it had become clear that middle- ware was not going to generate enough im- mediate revenue to be a stand-alone business. Pay television operators were not interested in anteing up additional costs for software in set- top boxes, and it would be a few more years before these operators would see the value in middleware. Now, nearly a decade later, the middleware market for cable and satellite in mature pay television regions is dominated by two companies: NDS and OpenTV. Neither of those companies are pure play middleware providers. Each company has diversifi ed its product line to include back-end or applica- tion development to ensure cash fl ow. T e fi erce competition in ITV middleware is in emerging cable, IPTV, and satellite markets, where companies, like Alticast, have seen in- creasing success and familiar names, such as Microsoft, are fi nding new customers. IPTV operators are using advanced applications as a competitive edge over traditional cable and satellite networks. T e primary driver behind growth in pay television subscriptions over the past decade has been the move to digital networks. T is has allowed set-top box manufacturers and middleware makers to survive harsh eco- nomic times that have destroyed many busi- nesses. More mature markets, such as the US, are well into the transition, with emerging markets in India and China now presenting opportunities for new growth, although at much lower price points. For middleware companies that have tradi- $100 $200 $300 $400 $500 $600 $700 $800 $0 (millions) tionally focused on game consoles or PCs as their market, the ITV segment does not bring to mind obvious opportunities, but set-top boxes are now becoming powerful enough to handle more sophisticated graphics, and consumers in markets outside the US are be- ing treated to much more sophisticated inter- $50 $100 $150 $200 $250 $300 $0 (millions) $200 $400 $600 $800 $1000 $0 (millions) Source: Acacia Research Group Spending on Middleware for Interactive Television 2009-2014 Spending on Middleware for Mobile Devices 2009-2014 2009-2014 A big growth area for gaming middleware is the mobile market, as a number of handsets tackle 2D and 3D gaming, including LG Dacom with its karaoke application. Spending on Middleware for Video Game Consoles & PCs faces and applications. While traditional game middle ware manufacturers are not going to suddenly try their hand at ITV middleware, the market does present opportunities for partnerships and technology licensing. Television is changing dramatically, and game middleware providers have been enabling more immersive interactive entertainment for a long time. As TVs become more interactive, the opportunities will become more obvious, such as interface, font, voice, and even graph- ics technologies that can make the crossover. T ese are just a few of the types of technolo- gies long used in game middleware that could fi nd a home in ITV through partnerships and alliances with set-top box, television, and ITV middleware makers. Spending on middleware for interactive tele- vision will grow at a compound annual growth rate of 6.9 percent, from approximately $701 million at the end of 2009 to $980 million at the end of 2014. Overall, the market for entertainment mid- dleware will suff er from economic problems well into 2010, but that will create pent-up demand that will return toward the end of the year and in early 2011. T ose companies that have invested wisely and are using this time to develop new, compelling technologies for interactive en- tertainment developers will be best poised to attract new and returning customers later in 2010 and early 2011. ■ 35% 3D Christine Arrington is a principal and senior analyst at Acacia Research Group. She can be reached at christinea@ acaciarg.com. March 2010 39 Percent of Mobile Phone Installed Base 2D vs. 3D 65% 2D 2009 2010 2011 2012 2013 2014 2009 2010 2011 2012 2013 2014 2009 2010 2011 2012 2013 2014