High-end HD and PVR Models to Be Growth Drivers for Taiwan's Cable STB Industry in 2H 09

Friday, September 4th, 2009
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According to research of the Taipei-based Market Intelligence & Consulting Institute (MIC – previously known as the Market Intelligence Center) conducted as part of the Industry and Technology Intelligence Services (ITIS) project, shipment volume of the Taiwanese digital cable STB (Set Top Box) industry reached 2.37 million units in the second quarter of 2009, up 8.0% year-on-year. The industry’s shipment value reached US$168.9 million in the second quarter of 2009, up 19.6% year-on-year. With MSO companies reacting conservatively to the economic downturn and adjusting shipments, Taiwanese digital cable STB shipment in the second quarter slightly declined compared to the first quarter of 2009.

In the first half of 2009, cable TV operators continued to be faced with a number of challenges. Due to the economic downturn, consumers reduced spending on entertainment and switched to online video services featuring low fee rates or no fees at all. Seasonal factors also had an impact. As a result of these factors, digital switchover among consumers slowed down significantly in the second quarter of 2009. The reduced demand for digital cable STBs also affected the shipments of Taiwanese digital STB manufacturers.

In the second half of 2009, several factors are expected to contribute to a rebound in digital cable STB orders and push the shipment volumes of Taiwanese digital cable STB manufacturers, including: the traditional peak season in the second half of the year, the back-to-school period, and cable TV operators’ increasingly diverse applications bundled with digital TV.

With MSO companies increasing HD content and investing in relevant equipment, the share of HD models in Taiwanese digital cable STB shipment increased, from 17% at the end of 2008 to 40% in the second quarter of 2009. The shipment increases of relatively high-end HD and PVR models helped to slow down the ASP (Average Selling Price) decline of cable STBs. Taiwanese cable STB industry ASP in the second quarter of 2009 was US$71.2.

Looking ahead to the development of the Taiwanese cable STB industry in the second half of 2009, even though cable TV operators have invested in digital development for many years, their progress has been relatively slow. With the competitive pressure from other digital TV service providers increasing, in the first half of 2009 these operators increased investments in HD content and used HD products for bundled sales with basic services. This will stimulate Taiwanese manufacturers’ continued development towards shipments of HD models.

Meanwhile, cable TV service providers hope that the PVR time-shift function can offer users more time to freely select programming and increase users’ attachment to digital TV. In this way, these service providers can also close the gap with IPTV service providers in terms of HD and PVR applications. Therefore, it is expected that cable TV operators’ aggressive promotion of HD and PVR services will attract users to switch to digital services. In the coming year, due to this service promotion of cable TV operators and orders from major brands, high-end HD and PVR models will be shipment growth drivers for Taiwanese cable STB manufacturers.

In the third quarter of 2009, Taiwanese digital cable STB shipment volume is expected to reach 3.32 million units, representing a year-on-year growth rate of 49.6%. Taiwanese digital cable STB shipment value in the third quarter of 2009 is expected to reach US$234.5 million.

More information can be found in the following MIC report: The Taiwanese Cable STB Industry, 3Q 2009.