In a bit of irony, the dreaded and sometimes hated ubiquitous set-top box is not going away anytime soon for pay TV subscribers because, among other leading reasons, those consumers are becoming more enamored with non-set-top connected devices.
According to market researcher IHS, set-tops are facing a challenge from a plethora of connected devices and the inexorable march towards TV Everywhere. But "operators are continuing to deploy STBs in order to manage the compatibility between their delivery networks and the consumer electronics devices that consumers are increasingly using to view content now," said Daniel Simmons, senior principal analyst for TV technology at IHS, in a press release.
The research said STB shipments for cable, satellite, terrestrial and IPTV digital TV services will rise 8 percent this year to 269 million units, 19 million more than the 250 million units that shipped in 2012. Not only that, but even as connected TVs and other peripherals continue to gain consumer acceptance, set-top box shipments will climb to 286 million in 2014 and 290 million in 2015, which "will represent the peak of the market for the foreseeable future."
Individually, the researchers said Pace Plc (LSE: PIC.L) was the leading set-top box vendor with 11.3 percent of all pay TV unit shipments in 2012, while Technicolor climbed into second place ahead of Motorola. As far as making money, Cisco (Nasdaq: CSCO) led the way in 2012, but Arris (Nasdaq: ARRS) and Motorola merged in 2013 to create a box juggernaut whose revenue stream outstripped Cisco's.
One trend that seems not only predictable but predestined is that much of the volume growth will be driven by demand for more "basic models" sold to support digitization in India, as well as terrestrial TV digitization in Central and Eastern Europe and South and Central America. Those efforts, when they peak, will cause shipments to level off.
"The global transition from analog to digital TV will be almost complete by 2016, leading to a contraction in the overall number of STBs shipped," Simmons added.
At that point, those vendors that have developed the most technologically advanced set-top boxes will be in the catbird seat, because those units "will allow them to drive value in the developed markets, as well as those that can extract maximum margin from the emerging markets," he added.
- IHS issued this press release
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