Global shipments of pay-TV set tops reached just $15.3 billion in 2014, down nearly 4 percent from the $15.9 billion in sales reported in 2013, according to research firm IHS.
It was the first revenue decline in the pay-TV set-top market in a dozen years. Shipments did grow by 1 percent to 204.7 million units.
"Pay TV STB vendors have had a great run since 2002, with strong global pay TV growth, cable digitization mandates, the introduction of digital video recorders, high definition TV, and Internet protocol TV all providing sustained stimuli for the market," said Daniel Simmons, head of connected home research at IHS Technology. "The industry is now at an inflection point. Mature pay TV markets are saturated with high-value advanced boxes, so shipments are set to decline there; and operators in emerging markets aren't transitioning to advanced boxes fast enough to increase overall industry value."
IHS noted the significant, ongoing consolidation among set-top vendors. Not only did Arris recently acquire Pace, for example, but South Korea's Woojeon & Handan exited the market, and Swiss vendor Advanced Digital Broadcast (ADB) delisted itself from the Swiss stock exchange in order to reposition itself.
IHS predicts STB revenues will further decline in 2015 to around $15.1 billion. By 2018, the market is projected to nadir out at $13.2 billion before stabilizing in 2019.
Future growth will be driven by satellite TV operators, who don't deliver broadband and can't virtualize set-top functions as easily. Emerging regions like Africa and South America will also fuel the business.
"In light of future STB opportunities being mainly in satellite TV, and in Africa, the Middle East, South America and Central America, Arris' plan to acquire Pace makes strong strategic sense," Simmons said. "As well as making Arris almost three times the size of its nearest competitor, Pace is well positioned in key growth markets. It is the third largest provider of satellite STBs globally and the second largest provider of STBs in South and Central America. It's highly likely that there will be further consolidation, as other vendors look to secure growth through acquisition and compete with ARRIS's new scale. Vendors that are strong in satellite STBs and emerging markets, such as Altech Multimedia, Humax, Sagemcom and Technicolor, could be key acquisition targets."
- read this IHS press release
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