IPTV Sub. Growth Expected to Continue Despite Economic Downturn, Benefiting Taiwan's IP STB Industry

According to statistics of the ITIS project – a project initiated by Taiwan’s Ministry of Economic Affairs and conducted by Taipei-based Market Intelligence Center (MIC) – shipment volume of the Taiwanese IP STB (Internet Protocol Set Top Box) industry is expected to reach 1.75 million units in the fourth quarter of 2008 and 1.84 million units in the first quarter of 2009, representing year-on-year growth rates of 42.2% and 51% respectively. The industry’s shipment value is expected to reach US$166.4 million and US$169.7 million respectively in the fourth quarter of 2008 and the first quarter of 2009. Although the global economy is in a downturn, the impact on IPTV subscriber growth is expected to be limited in the fourth quarter of 2008 and the first quarter of 2009. IP STB shipment is expected to grow steadily. Growth in the Taiwanese IP STB industry in the third quarter of 2008 came mainly from OEM/ODM (Original Equipment Manufacturing / Original Design Manufacturing) orders from European, US and Japanese brands, and European telecom operators also contributed to the industry’s growth.

IPTV subscribers have been growing rapidly in 2008 due to major telecom operators’ investments and the Olympic Games effect. With the shipment of high-end products increasing, both shipment volume and value of the Taiwanese IP STB industry have been experiencing growth. In the third quarter of 2008, Taiwanese IP STB industry shipment volume reached 1.59 million units, up 78.3% year-on-year. The industry’s shipment value reached US$156.7 million in the third quarter, up 31.9% year-on-year.

North America, Western Europe and Japan are still the three main shipment destinations of Taiwanese manufacturers. These three regions combined accounted for 75% of total Taiwanese shipment volume. Telecom operators’ demand for relatively high-end IP STB models has increased, in order to offer more diverse services to their customers. As a result, the shipment share of interactive and PVR (Personal Video Recorder) models in the Taiwanese industry increased to 62.9% and 34.5% respectively.

Meanwhile, as service providers are increasing their procurement share from brand-name vendors, Taiwanese manufacturers’ shipments to brands increased in the third quarter, and direct shipments to service providers declined significantly. Therefore, in the Taiwanese industry’s customer portfolio, branded clients accounted for 67.9% of total shipments in the third quarter. Single-quarter shipment to branded vendors exceeded one million units for the first time. The evident growth of high-end model shipments resulted in a slowdown of the industry’s ASP decline. ASP stood at US$98.6 in the third quarter, down 3.7% compared to the previous quarter.