Revenue from pay TV set-top box sales hit an all-time high of $20.3 billion in 2013, up 3 percent from 2012, and will peak at around $22.8 billion in 2015.
That was the conclusion of a just-released IHS Technology report, which disputes a study released in June by ABI Research suggesting the global set-top market is fully mature, and that operators need to consider consolidation to keep up with the ongoing wave of pay-TV mergers.
"Set-top boxes proved to be critical to the strategies of pay TV operators in 2013," said Daniel Simmons, director for connected home research at IHS. "Far from being pushed out of the living room by Internet-enabled consumer electronics, STBs are being repositioned as the hub of the connected home. STBs increasingly are being transformed into multimedia home gateways, which combine support for pay-TV services with Internet access, residential gateway services, Wi-Fi and other advanced features."
With 272 million set-tops shipped globally, growth in 2013, IHS says, was mainly driven by multimedia home gateways (MHGs) reaching large scale in North America.
"MHGs are being used by service providers to transition from a legacy broadcast-based pay-TV experience to one that is Internet-centric and better positioned to compete with over-the-top (OTT)-rivals such as Amazon and Netflix," IHS concludes. "U.K. STB manufacturer Pace leads this vital market segment with a share of more than 48 percent in 2013. This strong MHG performance also helped Pace retain its global No. 1 status in terms of units shipped in 2013. Cisco continued to lead the global pay-TV STB market in revenue terms."
U.S. set-top revenue will continue to expand, the research company adds, until 2015, as Comcast (NASDAQ: CMCSA), DirecTV (NASDAQ: DTV) an Dish Network (NASDAQ: DISH) expedite their MHG deployments.
In early June, ABI Research released a report suggesting that the top set-top vendors--Arris, Cisco, EchoStar, Pace Micro Technology and Technicolor--need to combine forces amid a mature and fragmented market.
- read this IHS Technology report
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