A spate of corporate acquisitions is redrawing the competitive landscape in the world of IPTV and telco TV, with far-reaching consequences for all members of the IP video ecosystem. The December 21, 2006 announcement that Motorola would acquire Tut Systems was just the latest in a similar series of moves that included Ericsson's acquisition of Redback Networks. According to ABI Research principal analyst Michael Arden, the pool of independent IPTV solutions vendors keeps on shrinking, creating a market gap which will affect smaller telecom operators.

"Those first IP video equipment providers were small startups creating cutting-edge technologies that the larger vendors weren't nimble enough to do themselves," says Arden. "Lately, as IPTV technology becomes more important – not only for telco TV but also for cable and satellite – the big companies need those technologies, and they are going out and acquiring the small companies that were the first ones in the market."

So the industry is seeing a shift in market clout, towards the large vendor that can provide everything, as opposed to going with "best of breed" from a number of small vendors. While that bolsters the position of companies such as Motorola and Alcatel which can increasingly offer end-to-end IPTV solutions, it removes companies that had addressed the needs of medium-to-small operators.

"It isn't worth it to the likes of Motorola to be developing products for those 3000-5000 subscriber networks," says Arden. "So the needs of the smaller operators are no longer being met, and other companies are trying to break into that market positioned as suppliers of smaller solutions."

These and other shifts in the IPTV equipment market are examined in a new ABI Research study, "Telco Video Infrastructure: Analysis of IP Video Encoders, Servers, and Other Headend Equipment in Telecom Networks", which details vendor activity – from contracts to business plans to mergers and acquisitions – along with emerging operations decisions that telecom video providers must make regarding competitive threats, revenue leveraging, and service integration.