coverstory_cover story 20/08/2014 11:27 Page 2
Record STB revenue
Following a relatively flat three-year
period, the global set-top box market
managed to achieve the highest annual
revenue total in its history in 2013,
setting the stage for continued growth
through 2015, according to IHS
Technology.
Worldwide digital STB shipment
revenue last year totalled $20.3 billion,
up 3% from $19.6 billion in 2012, as
presented in the attached figure. Revenue
will set new highs during the next two
years and will peak at $22.8 billion in
2015. This follows the period from 2010
through 2012 when revenue remained in
the $19.5 billion range.
“Set-top boxes proved to be critical to
the strategies of pay TV operators in
2013,” said Daniel Simmons, director for
Entone: As more and more content
shifts to the cloud, we expect that STBs
and home gateways will shift roles from
content rendering to ensuring a
consistent consumer experience, and
maintaining a required level of service
quality throughout the home.
Farncombe: The home gateway is likely
to be challenged in the cloud-based world,
considering that content consumption is
increasing on connected devices inside
the home, and also outside of the home
which is a driver for pure cloud based
platforms. The diversity of devices and
the still changing technical aspects of
streaming and content security implies
that home gateways will have to evolve,
and this is always complicated to
implement as they are proprietary
solutions.
Freesat: The popularity of linear TV and
in particular major TV channels is not in
decline. With large TV screens as the
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 (MHG), which combine
support for pay-TV services with Internet
access, residential gateway services, Wi-Fi
and other advanced features.”
These findings are derived from IHS
Technology’s latest STB Market Monitor
report, from the Consumer Electronics
service of IHS.
Growth in 2013 was mainly driven by
MHG 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.
U.K. STB manufacturer Pace leads this
vital market segment with a share of
more than 48% 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.
The market dynamics for STBs are
complex and vary considerably from
territory to territory, but ultimately
depend on individual pay-TV operator
strategies and developments in the
wider media and consumer electronics
industries.
US STB revenue will continue to grow
until 2015 as Comcast, DirecTV and
Dish Network expedite their MHG
deployments, driving the higher end of
the market.
Chinese and Indian cable TV
digitisation and the International
Telecommunication Union’s (ITU) GE06
deadline in 2015 for the analogue
terrestrial TV switch-off will continue to
drive large volumes of lower-value
boxes. However, many of these projects
will near completion in 2015 and the
market will contract to $20.7 billion by
2018.
Despite this midterm blip, the
longer-term view is more positive with
ultra-high-definition (UHD) STBs using
High Efficiency Video Codec (HEVC)
becoming significant toward the end of
the forecast period. IHS expects pay-TV
operators to purchase 13 million UHD
STBs in 2018.
“UHD STBs will be strategically
important to operators in all
territories,” Simmons said. “Beyond
enabling an additional premium-content
tier, HEVC use will result in more
efficient Internet Protocol (IP) video
distribution, allowing operators to offer
superior OTT services. Pay-TV is nearing
saturation across the world, and under
such conditions, operators will be
increasingly reliant on the technologybased differentiation enabled by STBs
to compete for subscribers.”
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