& cplSiteName &

Time for Set-Top Makers to Merge Ė Study

Alan Breznick
5/30/2014
50%
50%

As four of the biggest pay-TV providers in North America make plans to merge into two, it's time for set-top makers to do the same.

At least so says ABI Research . In a new study released this week, ABI concludes that a consolidation of set-top vendors is needed to meet the evolving demands of such combinations as AT&T Inc. (NYSE: T)'s proposed $49 billion buyout of DirecTV Group Inc. (NYSE: DTV), not to mention Comcast Corp. (Nasdaq: CMCSA, CMCSK)'s proposed $45 billion acquisition of Time Warner Cable Inc. (NYSE: TWC). (See AT&T to Acquire DirecTV for $48.5B and Comcast's TWC Coup: 3 Things to Know.)

In a research note, ABI argues that AT&T's plans to acquire DirecTV particularly highlight the need for set-top boxes that can serve more than one kind of video delivery network. Yet, for the most part, the world's five top STB vendors -- Arris Group Inc. (Nasdaq: ARRS), Cisco Systems Inc. (Nasdaq: CSCO), EchoStar Corp. LLC (Nasdaq: SATS), Pace Micro Technology , and Technicolor (Euronext Paris: TCH; NYSE: TCH) -- "are heavily weighted to one sector, or, in some cases, have robust proportions serving two or three sectors," the firm said.

ABI adds that these five vendors, accounting for about 37% of global STB revenues in a mature yet fragmented market, cannot keep meeting the demands of pay-TV providers as they seek to deploy their video services over multiple networks, including cable, IPTV, satellite, and, presumably, over-the-top. "We continue to believe that integration of historically separate cable and IPTV providers with satellite set-top OEMs would bear fruit in the increasingly hybrid set-top box world generated with acquisitions," like AT&T's proposed purchase of DirecTV, said Sam Rosen, practice director of ABI Research.

ABI predicts that the global set-top market will top out at around 265 million units sold next year before starting to decline. In 2012, the last year for which figures are available, STB makers sold 236 million boxes around the world.

Fresh off its acquisition of Motorola Home, Arris captured the lead in the STB market with $2.1 billion in set-top revenues last year, driven by sales of 18.5 million cable and IPTV boxes, according to ABI. Pace came in second in revenues, even though it dropped behind third-placed Technicolor in sale volume.

Rosen explained that Pace, despite a 10% drop in sales volume, booted its STB revenues slightly by "focusing primarily on the high-end gateway market." He also credited Pace's performance to its "focus on services."

— Alan Breznick, Cable/Video Practice Leader, Light Reading

(4)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
thebulk
50%
50%
thebulk,
User Rank: Light Sabre
5/31/2014 | 11:23:01 PM
Re: Deja vu
@DOShea, do you think there is a real future for the STB market? I think the prediction might be coming true. 
thebulk
50%
50%
thebulk,
User Rank: Light Sabre
5/31/2014 | 11:20:03 PM
What about OTT
I think this really overlooks the impact that smart TVs and OTT media will have in the market. I think settop boxes are going to need to move to just a software platform that runs on a TV or USB drive that you plug in. The days of one sitting around are coming to an end. 
DOShea
50%
50%
DOShea,
User Rank: Blogger
5/31/2014 | 10:47:35 PM
Deja vu
Seems like bad things have been predicted for the largest of the traditional set-top box vendors for a while now. I thought the market was supposed to have started declining already. Well, I guess, some big service provider mergers will finally force some change.
danielcawrey
50%
50%
danielcawrey,
User Rank: Light Sabre
5/31/2014 | 3:55:34 PM
Logical
Seems logical to me - there's probably too many set-top makers in an environment of service consolidation. 

And to be honest, there really isn't much innovation happening with these boxes. They aren't really keeping up with today's digital world. These boxes need to be able to integrate with other consumer electronics. Being able to control them from a phone, laptop of tablet would be way more useful than a remote. 
From The Founder
Light Reading today starts a new voyage as part of a larger Enterprise.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Interviews
No Stopping Cable's Ethernet Gains

12|9|16   |     |   (0) comments


Vertical Systems' Erin Dunne explains why US cable operators, which now command a record-high 26% of the Ethernet market, will keep boosting their share.
LRTV Interviews
Fixing IoT Security Is an Ecosystem Challenge

12|9|16   |   05:34   |   (1) comment


Level 3 Communications' Chief Security Officer Dale Drew says service providers, manufacturers and even consumers must combine to halt massive DDoS attacks using IoT devices in botnets. The solution he has in mind includes reputation-based routing by the service provider but also more secure endpoint devices and greater consumer awareness.
LRTV Interviews
Cox Clears $2B in Business Revenue

12|8|16   |     |   (0) comments


Cox's Jeff Breaux discusses how the third-largest US MSO will reach the $2 billion revenue mark this year and plans to hit $3 billion by 2021
LRTV Interviews
Can Cable Climb Upmarket?

12|7|16   |     |   (0) comments


Carol Wilson and Alan Breznick assess cable's prospects for winning more enterprises in a landscape rocked by corporate M&A activity.
Women in Comms Introduction Videos
TalkTalk Exec: Find Your North Star at Work

12|7|16   |   3:38   |   (1) comment


Women need to find their purpose, a professional North Star, and create a personal board for themselves, according to Alex Tempest, director of partners at TalkTalk Business.
LRTV Interviews
Verizon: Beware Unknown Unknowns

12|7|16   |   04:58   |   (0) comments


Chris Novak, director of the Verizon Enterprise Solutions Risk Team, explains that enterprises who don't conduct a thorough audit of their assets often leave some things unprotected because they don't know they exist. Many times these unprotected assets are part of corporate M&A activity but left unshielded they can become a hacker's playground, he tells Light ...
LRTV Interviews
ETSI's CTO Talks NFV, 5G & NGP

12|5|16   |   09:45   |   (0) comments


Adrian Scrase, CTO at standards body ETSI, talks about the various initiatives and specifications developments related to NFV, 5G and NGP (next-generation protocols) that will underpin next-gen networks.
Women in Comms Introduction Videos
Korn Ferry Consultant: How to Find, Cultivate & Be the Best Talent

11|30|16   |   4:10   |   (2) comments


Erin Callaghan, a managing consultant for Korn Ferry Futurestep, shares strategies for companies to improve how they recruit and for women to ensure they don't get lost in the pipeline.
LRTV Custom TV
We Can Make the World More Sustainable

11|29|16   |     |   (0) comments


GeSI is a global e-Sustainability Initiative organization bringing together 40 big multinational companies around the world. According to GeSI's report, information and communication technology can make the world more sustainable. Luis Neves, chairman of GeSI, shared with us his opinion at Ultra-broadband Forum (UBBF2016).
LRTV Custom TV
Finding a New Way to Engage Customers & Drive Revenue

11|29|16   |     |   (0) comments


Mobile revenues are declining. Digicel, a player in the Caribbean telecommunications/entertainment space, has found a new way to engage customers and drive revenue. John Quinn, CTO of Digicel, shared with us its story at Ultra-broadband Forum (UBBF2016)
LRTV Custom TV
Do You Really Need Gigabit Infrastructure?

11|29|16   |     |   (0) comments


Altibox is the biggest fiber-to-the-home (FTTH) player and the largest provider of video and TV in Norway. They started out with zero customers in 2002. Now they have close to half a million households and companies attached to their FTTH business. Nils Arne, CEO of Altibox shared with us their story and insight on 5G at Ultra-broadband Forum (UBBF2016).
LRTV Custom TV
BTís Openreach Strategy & Its Updates in 2016

11|29|16   |     |   (0) comments


A lot of developments at Openreach this year in terms of strategy and planned investments. Peter Bell, CIO of Openreach BT, shared with us the updates of Openreach at Ultra-broadband Forum (UBBF2016).
Upcoming Live Events
May 16-17, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Infographics
Hot Topics
Cable Nodes Becoming a Choke Point
Brian Santo, Senior editor, Test & Measurement / Components, Light Reading, 12/5/2016
Consolidated Snaps Up Fairpoint for $1.5B
Iain Morris, News Editor, 12/5/2016
Small Arctic ISP Caches Netflix in New Way
Mari Silbey, Senior Editor, Cable/Video, 12/7/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Eyal Waldman, CEO of Mellanox Technologies, speaks to Steve Saunders, CEO of Light Reading, for an exclusive interview about the 100 GB cable challenge, cybersecurity and much more.
Join us for an in-depth interview between Steve Saunders of Light Reading and Alexis Black Bjorlin of Intel as they discuss the release of the company's Silicon Photonics platform, its performance, long-term prospects, customer expectations and much more.
Animals with Phones
A Mobile Safari Click Here
Literally.
Latest Comment
Live Digital Audio

Even when there's a strong pipeline of female talent in the comms industry, it tends to leak all the way to the top. McKinsey & Company says women experience pipeline leakage at three primary points: being unable to enter, being stuck in the middle or being locked out of the top. Each pipeline pain point presents its own challenges, but also opportunities to stop the leak. Wireless operator Sprint is making a conscious effort to improve its own pipeline from new recruits to the C-suite, and it wants the rest of the industry to do the same. In this Women in Comms radio show, WiC Board Member and Sprint Vice President of Enterprise Sales Nelly Pitocco will give us her take on the industry's pipeline challenges. Pitocco, who joined Sprint in May and has spent 20 years in the comms industry, will also offer solutions, share how Sprint is tackling the challenge within its own organization and take your questions live on air.