Consolidation in the global digital TV industry has intensified concerns about the Chinese market
Date： 2021-08-24 23:11:16 Read： 787
Opportunities and challenges;
Seizing the Chinese market has become the key to the diversification and globalization of strategic layout
Smaller and less financially strong companies will be pushed out of business
In the future, it will be more and more obvious to concentrate superior resources to a few enterprises
Market data:
By 2012, 504 million homes worldwide will be digital TV subscribers
The digitization rate is close to 50%
The number of cable users in China has reached 160 million and will grow to 200 million in the next 3-5 years
In an interview with China electronics news, NXP CEO RickClemmer said that the partnership between NXP and taiding will create a leading semiconductor company focusing on digital TV and set-top box chips, enabling NXP's cash flow and capital structure to focus on the digital consumer semiconductor market. In addition, NXP holds a 60% stake in the new company, thus ensuring that NXP has a real lead in the digital TV market.
Industry insiders are not surprised by the consolidation, arguing that it is an inevitable result of market competition. JohnGleiter, senior marketing director of broad com's broadband communications division, told reporters that from a global perspective, the digital TV market is maturing, and based on the needs of competition, set-top box enterprises, chip enterprises will experience more integration process, smaller, relatively weak financial strength of the enterprise will be in the situation of being phased out.
Oligarchic competition pattern may emerge
In recent years, the global digital TV market has been developing rapidly. InformaTelecoms & Media, a market research company, predicts that by 2012, 504 million households worldwide will become digital TV users, with the digitalized rate approaching 50%. Such a huge market attracts more and more enterprises to participate in the market competition, and the result of the competition is that the superior resources are gradually held in the hands of "a few people".
Cisco's acquisition of DVN's set-top box business will give it the capital to compete across borders. After the acquisition, DVN's set-top box business will be merged into cisco's International Cable business under the telecom operator's video technology division. The acquisition will give Cisco access to rich radio and television resources, as timberphone's cumulative set-top box shipments have exceeded 10 million units.
Cisco, MOTOROLA, NXP, the world's leading telecom, mobile terminal and semiconductor companies, have been in the digital TELEVISION industry moves frequently. In early November, Cisco announced it was acquiring the set-top box business of China's DIGITAL World LTD. (DVN). Just after the deal landed, it emerged that MOTOROLA was about to sell its set-top box business. Prior to this, semiconductor giant NXP sold its set-top box, TV chip line and IP business to another digital TV chip company, Taiteng. The integration, acquisition and sale of digital TV set-top box business are the needs of the business structure adjustment of major companies, but also the needs of the industry to scale and intensification after the gradual expansion of the digital TV market. Reporters learned that although the industry giants of the consolidation and mergers and acquisitions of the frequent action, but in the Chinese market, they increase investment and layout of the strength is not reduced, to seize the Chinese market has become the key to their diversification, globalization strategy layout.
Global digital TELEVISION industry competition intensifies
Cisco Systems inc., a global provider of networking solutions, announced on Nov. 2 that it will acquire the set-top box business of China's DVN for up to $44.5 million. DVN's subsidiary, Timberland Group, is a leader in China's set-top box industry, with the largest number of set-top boxes in the country.
On the heels of the Cisco deal, there was news that MOTOROLA inc. was seeking potential buyers for the unit that makes cable TV set-top boxes and other equipment for about $4.5 billion. MOTOROLA said in March last year that it would split itself into two separate businesses, one focused on mobile phones and the other on set-top boxes and enterprise mobility solutions.
Consolidation of the set-top box business is also happening in semiconductors. In October NXP and TVD Microelectronics, a televilion-chip company, announced a merger of their digital TV and set-top box divisions. The company acquired NXP's set-top box, TV chip line and IP business, while NXP acquired a 60% stake in The company by merging the business and paying $30 million.
To build economies of scale and to realize the complementary advantages of resources are the driving force for the industry enterprises to intensify integration. Following the acquisition of DVN's set-top box business, KenKlaer, global vice president and general manager of cisco's international wired business unit, said, "through this acquisition, we will bring our customers a strong combination of DVN's products and cisco's IP next-generation networking platform.
The set-top box division is one of the more profitable of MOTOROLA's business units. MOTOROLA's set-top box division still accounts for a third of the company's revenue, although sales fell to $2.01 billion and profit fell to $199 million in the third quarter. Edward Fitzpatrick, MOTOROLA's chief financial officer, forecast a slight increase in sales in the company's set-top box division in the fourth quarter. "If there was a real buyer for MOTOROLA's set-top box division, it would undoubtedly create a much bigger company in set-top boxes and related businesses." Analysys International analyst Chen Shousend told reporters.
After acquiring all the assets (including teams, existing customer relationships and 2,000 technology patents) of NXP's two key businesses, TV chips and set-top boxes, the chip company will become one of the world's top three digital TV chip suppliers. Li Hongwen, senior vice-president, said the acquisition would boost revenues to $500m in 2009, with 60 per cent coming from the TV chip market and 40 per cent from set-top box chips.
Luan Ling, vice president of American Zhuoran Company and president of China area, told reporters that there will be more and more integration events in the digital TV industry in the future, no matter in the chip industry or in the whole machine industry, the trend of concentration of superior resources to a few enterprises will be more and more obvious.
The Chinese market is the focus of competition
Robert Lloyd, Cisco's global chief executive, visited China shortly after acquiring the DVN business. Reporters noted that during his visit, Robert Lloyd held talks with Zhang Haitao, vice director of the State Administration of Radio, Film and Television.
Robert Lloyd told Zhang that Cisco is willing to conduct comprehensive and in-depth cooperation with sarFT in the research and development of next-generation broadcast networks, as well as discuss cooperation in other areas.
In fact, as early as the end of 2007, Cisco CEO John Chambers promised during his visit to China that the company planned to invest $16 billion in China in the next 3-5 years, and set up a coordination body "China Strategy Committee" for this purpose.
Prior to the acquisition of DVN's set-top box business, Cisco also entered the Chinese radio and television market in March this year through a joint venture with Shanghai Panorama, with an initial investment of up to $10 million.
The huge potential in China's radio and television market is the reason why Cisco is penetrating into the radio and television market from the telecom market. As the world's largest cable TV market, the number of cable subscribers in China has reached 160 million and will grow to 200 million in the next 3-5 years. At present, more than one-third of Cable TV users in China have access to digital TV platforms, and by 2015, all cable TV in China will be digitized.
The opportunity of digital cable TV makes many multinational companies focus on the Chinese market. "China is a very important market for NXP," said NXP CEO RickClemmer. "the improvement in sales in China is definitely better than in other parts of the world. A large part of NXP's sales growth is related to the growth and improvement of our business in China." "Multinational companies have technological advantages in CA(conditional reception), chips, overall solution design, etc., but they lack of understanding of the Chinese market and lack of experience in local services, but with the advancement of digital Chinese cable TV, multinational companies will find more and more opportunities." "Said Chen Shou.
