Light Reading

Time for Set-Top Makers to Merge – Study

Alan Breznick

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
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. 
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. 
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.
User Rank: Light Sabre
5/31/2014 | 3:55:34 PM
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
The comms industry is rallying to the cause of open, independent interoperability testing.
Flash Poll
Live Streaming Video
CLOUD / MANAGED SERVICES: Prepping Ethernet for the Cloud
Moderator: Ray LeMaistre Panelists: Jeremy Bye, Leonard Sheahan
Telecom Innovators Video Showcase
Tail-f, Cisco & What the Future Holds

10|9|15   |   8:17   |   (0) comments

Steve Saunders meets with Tail-f's Director of Technology, Carl Moberg, in Stockholm to discuss becoming part of Cisco, ETSI MANO, virtualization and the need to combine science and business in order to create opportunities for service providers.
LRTV Interviews
Broadband Forum Embraces SDN & NFV

10|9|15   |   02:42   |   (0) comments

At Gigabit Europe 2015, Robin Mersh and Kevin Foster from the Broadband Forum explain how the industry body is adapting to meet the SDN, NFV and cloud needs of the access network sector.
LRTV Interviews
Top Tips for FTTH Operators

10|8|15   |   02:26   |   (0) comments

At Gigabit Europe 2015, Ventura Team co-founder Richard Jones talks about some of the key business case considerations for FTTH network operators.
LRTV Interviews
M-net Calls for FTTx Unity

10|8|15   |   03:45   |   (0) comments

At the Gigabit Europe event, Jörn Schoof from M-net, the Munich city network operator, calls for industry collaboration on fiber broadband access rollouts.
LRTV Documentaries
The Business Case Challenge for NFV

10|7|15   |   03:47   |   (0) comments

Virtual CPE is one of the early success stories for network functions virtualization, as service providers are finding flexible, programmable CPE solves a lot of logistics problems and reduces their cost. But even here, Masergy Communications faced a business case challenge, says CTO Tim Naramore.
LRTV Interviews
JT Offers Some Gigabit Lessons

10|7|15   |   4:08   |   (1) comment

Barna Kutvolgyi, managing director, Global Consumer, at JT, the incumbent operator on the island of Jersey, talks about how other service providers can learn from his company's gigabit broadband rollout experiences.
LRTV Interviews
AT&T's Chiosi on the Potential of Open Source

10|6|15   |   06:27   |   (0) comments

AT&T Distinguished Network Architect Margaret T. Chiosi talks to Light Reading's Carol Wilson about the potential for open source technology to liberate communications service providers.
LRTV Interviews
Network Security in a Gigabit World

10|6|15   |   05:52   |   (0) comments

Masergy's James Harrison talks about some of the network security and data center issues network operators need to consider as they expand their broadband services portfolios.
LRTV Documentaries
Telefónica: In Search of Virtual Simplicity

10|5|15   |   07:30   |   (0) comments

Francisco-Javier Ramon Salguero, head of Telefónica's NFV initiative, admits virtualization initially means greater complexity, but with the right abstraction layer, it is possible to create a services-driven network architecture. He explains how Telefónica's current trials and initiatives are aimed at doing that, and what his company and other carriers need to ...
LRTV Interviews
Gigabit Europe Takeaways

10|5|15   |   03:47   |   (0) comments

Participants from the inaugural Gigabit Europe event in Munich share their key takeaways from the conference.
Women in Comms Introduction Videos
Intel Urges Women to Take Advantage of Their Seat at the Table

10|5|15   |   4:27   |   (1) comment

Have inclusive and constructive conversations, attach a bigger meaning to your work and get involved in the cause, Intel's Monique Hayward advises women in comms.
LRTV Interviews
BT Updates on Plans

10|2|15   |   03:16   |   (2) comments

Peter Bell, CIO at Openreach, the access network division at UK incumbent BT, provides an update on the operator's trials and how Openreach is planning to deploy the broadband technology in its street cabinets.
Upcoming Live Events
October 14-15, 2015, New Orleans Ernest N. Morial Convention Center, New Orleans, LA
November 5, 2015, Hilton Santa Clara, Santa Clara, CA
November 17, 2015, Santa Clara, California
December 1, 2015, The Westin Times Square, New York City
December 2, 2015, The Westin Times Square, New York City
All Upcoming Live Events
Network appliances have a strong value proposition in today's networks and will continue to do so in the NFV and SDN-enabled networks of tomorrow.
Hot Topics
M&A Speculation Swirls Around Juniper
Ray Le Maistre, Editor-in-chief, 10/6/2015
Cisco's Chambers Rules Out Political Bid
Mitch Wagner, West Coast Bureau Chief, Light Reading, 10/6/2015
Infinera Fleshes Out Its Metro 100G Story
Ray Le Maistre, Editor-in-chief, 10/7/2015
AT&T Gets Green Light for VoWiFi
Brian Santo, Senior editor, Test & Measurement / Components, Light Reading, 10/7/2015
AlcaLu Execs Lose Out as Nokia Unveils New Top Team
Iain Morris, News Editor, 10/7/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
With so many new and exciting communications technologies now under development, it's easy to get caught up in the industry's escalating hype cycle. That's why the ...
Last week saw a big day in the 15-year history of Light Reading when Editor-in-Chief Ray Le Maistre and I were invited to interview the Deputy Chairman and Rotating ...
Cats with Phones
"What?! I'm on with Finisar about their stock price tanking" Click Here