Pay TV set top box market healthy, growth expected to 2016

Tuesday, August 20th, 2013
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Global Pay TV set top box (STB) shipments continue to grow, with demand expected to peak at 180 million units in 2016, according to new research from Futuresource Consulting.

“Despite the overall STB market topping out this year, this is entirely due to erosion of the free-to-air segment. We’re going to see the trinity of cable, pay satellite and IPTV continue to perform, growing by 2% CAGR between 2012 and 2016,” says Carl Hibbert, head of entertainment content and delivery at Futuresource. “The majority of this growth is coming from Asia Pacific and Latin America, as the regions expand their cable digitalisation programmes and new services continue to appear. Conversely, demand for Pay TV STBs in developed markets is now predominantly saturated, though the transition to higher priced advanced media gateways in these regions will have a sustained and positive impact on revenues.”

Price erosion and differentiation

To entrench against price erosion, STB vendors are adding value and differentiating their products by offering increased storage capacity, multiple tuners, integration of IP services and content, and by introducing sophisticated middleware for the multi-platform environment. Going one step further, advanced multimedia home gateways that share content between multiple screens in the home will reach shipments of nearly 3.5 million units this year, with the majority of demand coming from high ARPU markets such as North America and Western Europe.

Cord cutting and the Internet of Things

“The proliferation of internet enabled devices, OTT services and cloud-based systems has been pushing the threat of cord cutting up the agenda for multi-system operators like Comcast, UPC and Virgin Media. Multimedia home gateways are increasingly a new weapon of choice for operators to stem subscriber churn, offering subscribers new services and more efficient delivery of video to secondary screens in the home and on the move,” says Hibbert. “And although they are costly for operators – at roughly double the price of preceding premium set-tops – they can be extremely cost effective for operators in the long run, particularly in homes with high levels of multiple TV ownership. More importantly, looking to the horizon, these sophisticated devices can open the doors to home automation, security, energy management and e-health, reinventing the multi-system operator as a whole house enabler and placing it at the forefront of the Internet of Things.”