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The telco TV headend equipment is expected to grow substantially over the next five years, reports In-Stat. This growth, driven by the expansion of video channels, the introduction of high-definition (HD) content, and the continued adoption of on-demand services will position telco operators to pursue highly-profitable personalized advertising and converged services business models.

According to Keith Nissen, In-Stat analyst, for operators to generate significant profitability from telco TV and related video services, they must find ways for the network to add value. This will dictate finding solutions to the challenges faced with personalized advertising, converged video services, and ultimately the integration of network and Web-based applications. 

Recent research by In-Stat found the following:
- The telco TV headend equipment market will grow to over USD 700 million by 2012.

- The upgrade to MPEG-4 encoding was strong during 2007 and 2008.

- Increasingly, headend functionality will be distributed to the edge and access network.