Audio Codec Market to Exhibit Steady Growth in the Next Five years

Audio codec, as the name suggests, is a kind of device or computer program that codes or decodes data streams into analog or digital signals to form an audio. The global audio codec market is being majorly driven by the increasing demand for mobile phones and tablets across the world coupled with massive rise in data traffic, thus resulting in a huge demand for audio codec hardware and software. Rising middle class population, increased disposable incomes, and availability of low-cost mobile phones and tablets nowadays in the market are major factors responsible for the high demand for electronics, thus boosting the growth of the audio codec market, globally.

The global audio codec market which was valued at USD 5.49 Billion in 2015 is expected to reach USD 7.44 Billion by 2022, registering a CAGR of 4.3% between 2016 and 2022. It is a highly competitive market, with the majority of the players having their presence in the Americas. Geographically, the market was dominated by APAC in 2015, and since it is the fastest-growing region, it is expected to hold the largest market share over the forecast period as well.

Which is the leading application segment of this market?

Audio codec are primarily used in applications, such as desktop and laptop; mobile phones and tablet; television and gaming consoles; headphone, headset, and wearable devices; automotive infotainment, media devices and home theaters, and other applications including broadcasting, software platforms, audio production and recording, and IP telephony. Currently, the segment of other applications holds the leading position in the overall audio codec market. This growth can be attributed to the higher consumption of the audio codec software more than the audio codec hardware, which is the costlier part of the audio codec market. Hence, the overall contribution of these applications makes the other applications segment as the leading segment and the major contributor of revenue to the overall audio codec market. In addition, the segments of wearable device, headphone, and headset, and music and media device, and home theater systems are the fastest-growing applications of this market, since mobile phones and tablets are comparatively manufactured at a high rate among all the consumer electronics, thus boosting the demand for audio codec hardware and software.

What are the prime drivers of this market?

The growth of audio codec market is primarily driven by the factors such as increasing penetration of internet and data traffic and growing subscription of mobile phones across the globe. In the majority of the regions, the growing concept of connected life in the form of connected infrastructures and machineries has changed the consumer’s pattern to a certain extent. Similarly, the rising usage of mobile broadband-enabled smartphones is expected to generate an explosion of data traffic in the years to come. Moreover, increase in the internet penetration has been generating more demand for audio codec among the users for the compression and decompression of digital audio signals. Also, major factors driving the growth of smartphones include greater product innovation, expanding 4G networks, and decreasing prices, owing to the increasing competition among smartphone manufacturers.

What are the upcoming opportunities that will benefit the overall market growth?

Factors such as emerging demand for set-top box (STB) and video-on-demand (VOD) services and rising demand for infotainment in passenger cars is likely to create huge opportunities for the worldwide audio codec market in the near future. The emerging demand of STBs is expected to play an essential role in the growth of this market in the coming years as audio codec enables audio compression and decompression in STBs. In addition, the growing video-on-demand services require adoption of audio codec to broadcast the content. Also, as automotive infotainment systems are a necessary requirement in modern cars, the demand for audio codec may increase.

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What factors are expected to hinder the growth of this market?

Declining usage of optical media products is the major factor that may inhibit the growth of this market. The increasing advancements in online and mobile content delivery have resulted in an increase in movie downloading and streaming services. Consumers are increasingly shifting from optical disc media to online and mobile media content consumption, which is decreasing revenue from DVD and Blu-ray disc players. Also, the major challenge of the audio codec market which needs to be addressed is the continuous optimization of the component size. For audio codec manufacturing companies, size of the codec IC needs to be optimized according to the changing consumer needs and applications, along with maintaining its quality and reliability, thus making miniaturization a big challenge to overcome in the near future.

What are the strategies pursued by the companies to sustain this market?

Cirrus Logic, Inc. (U.S.), Texas Instruments Inc. (U.S.), STMicroelectronics N.V (Switzerland), Qualcomm Inc. (U.S.), Analog Devices, Inc. (U.S.), Maxim Integrated Products Inc. (U.S.), Realtek Semiconductor Corp. (Taiwan), Dolby Laboratories, Inc. (U.S.), Fraunhofer IIS (Germany), and Technicolor SA (France) are some of the leading players operating in this market. The competitive landscape shows the new product launches as the key strategy adopted by the players in this market between January 2014 and March 2016. Mergers & acquisitions, agreements, collaborations, and partnerships are the other strategies being adopted by the players to gain a stronger hold on the market as well as expand their customer base during the projected period.

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