Set-Top Box Manufacturers Respond to Increasing Risks

NEW YORK — The status of the STB (Set-Top Box) within pay-TV households faces significant risk from the development of two-way, digital-cable-ready TVs, media centers, and residential gateways, among others. And STB manufacturers are responding in several ways.

“In recent times, Comcast created a residential network gateway project, which ultimately will act as a convergence device for cable modems, digital cable receivers, and DVRs,” says ABI Research analyst Paulhwa Lee. “The residential network gateway device may even include placeshifting.”

STB manufacturers are adding new features, such as increased hard-disk space, DVD players, DVD burners, and home-audio solutions, which will better align STB functionality with consumer demands. Manufacturers also are attempting to improve electronic program guides and to incorporate more video gaming and Web-based services.

“STB vendors are moving aggressively into the hybrid STB market,” continues Lee. “Hybrid STBs offer a single solution to numerous possible problems caused by the multiplicity of video sources, video formats, and distribution platforms.”

ABI Research forecasts that revenue from standard STB sales will decline in the period from 2008 to 2012; STB vendors initially will rely on growing markets for DBS (Digital Broadcast Satellite), IPTV (IP Television), and DTT (Digital Terrestrial Television) STBs. But according to a recent report from ABI Research, by 2010 even those sectors will be under pressure from alternative technologies introduced to facilitate “the connected home”; vendors must include new features and functions to revive flagging shipment numbers.

“No one video or television technology will be a ‘killer’ in the next few years,” Lee expounds, “so as this market flattens in 2012, STB vendors should incorporate as many of those technologies as possible.”

ABI Research’s recent study, Global Set-Top Box Markets, provides shipments, pricing, and market revenue for CATV, DBS, IP, and DTT platforms. It includes market data for cable and IP residential gateways. The research also examines growth drivers in the STB market, including demand for advanced features, changing regulatory requirements, and the market for hybrid platforms.

It forms part of two ABI Research Services: Home Networking, and Multi-Channel Video, which include other Research Reports, Research Briefs, Market Data, Online Databases, ABI Insights, the ABI Vendor Matrix, and Analyst Inquiry Support.