Set-top boxes morphing into MHGs
The growth spurt coincides with STBs being repositioned as multimedia home gateways (MHGs).
Worldwide digital STB shipment revenue totaled $20.3 billion in 2013, up 3 percent 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 $19.5 billion range.
Global digital set-top box revenue forecast (US$-billions). Source: IHS Technology, July 2014
"Set-top boxes proved to be critical to the strategies of pay TV operators in 2013,” said Daniel Simmons, director for connected home research at IHS, in a statement. "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, which combine support for pay-TV services with Internet access, residential gateway services, Wi-Fi and other advanced features."
Growth in 2013 was mainly driven by MHG reaching large scale in North America. MHGs are being used by a variety of service providers to compete with over-the-top (OTT)-rivals such as Amazon and Netflix. STB manufacturer Pace leads this vital market segment with a share of more than 48 percent in 2013. Cisco continued to lead the global pay-TV STB market in revenue terms.
Such companies as Comcast, DirecTV and Dish Network with their MHG strategies in the U.S. market are driving high-end STB sales through to 2015 while Chinese and Indian cable TV digitization and the International Telecommunication Union’s (ITU) GE06 deadline in 2015 for the analog 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.
The longer-term view is more positive as STBs that can support ultra-high-definition (UHD) pictures using High Efficiency Video Codec (HEVC) will become significant toward the end of the forecast period. IHS expects pay-TV operators to purchase 13 million UHD STBs in 2018.
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