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Why Is Ericsson Optimistic about the Media Business Segment?

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Dec. 30 2016, Updated 10:36 a.m. ET

Addressable market of $12 billion

The media sector primarily consists of software and hardware compression, cloud-based TV platforms, video processing and storage, and media and content delivery. 

Ericsson (ERIC) believes the total addressable market in this space to be $12 billion, with a CAGR (compound annual growth rate) of 9%–12% between 2016 and 2018.

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Video to drive growth in media

Currently, video accounts for 35% of all traffic on mobile devices, and mobile video consumption is growing quickly. According to Ericsson, “By 2019, 80% of all the traffic going through the networks will be video.”

According to Ericsson’s November 2016 Mobility Report, mobile video traffic is expected to rise 50% YoY (year-over-year) between 2016 and 2022. Although social networking driven by Facebook (FB) and Twitter (TWTR) is expected to rise 39% YoY until 2022, its share in total mobile traffic will account for 10% in 2022, a fall of from 15% in 2016, due to strong growth in video consumption.

The report also states that mobile traffic in file sharing, web browsing, software downloads, and audio will rise at CAGRs of 19%, 23%, 33%, and 34%, respectively, over the next six years.

Ericsson expects video traffic to rise 11 times, from 4.3 exabytes to 49 exabytes, during the same period.

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