Despite growing demand for digital set-top boxes in emerging markets, set-top revenues for equipment suppliers fell in the second quarter, particularly for cable STB vendors.
In its latest report, Infonetics Research Inc. found that global STB revenues slipped to $4.3 billion in the second quarter, down 3 percent from $4.4 billion in the first quarter and down 9 percent from the year-ago total. The first quarter figure was also down from the same period in 2012. (See Cable STBs Buck the Trend.)
Cable set-tops fared particularly poorly in the spring quarter after starting off the year well, Infonetics reported. Cable STB revenues plummeted 14 percent from the first quarter even as unit sales held their own, coming in flat.
Infonetics said cable STB revenues fell even though unit sales stayed even because there were more single-tuner standard-definition boxes shipped to such emerging markets as China, India, and Latin America as those formerly analog TV markets embrace digitization. At the same time, there were fewer more advanced digital set-tops sent to North America and Western Europe, which have already gone nearly all-digital.
Jeff Heynen, principal analyst for broadband services and pay TV at Infonetics, said researchers are "seeing the market bifurcate along geographic lines." He argued that North American and Western European service providers are now entering "a post-STB market," where a saturated pay TV business is prompting providers to switch from traditional set-tops to new video gateways in search of fresh growth.
- The STB market is in the midst of a series of significant technology shifts, and these changes are resulting in ebbs and flows in shipments on a global scale, with individual markets swinging each quarter's performance. There are real unit shipment declines occurring in North American and Western Europe that won't be offset by growth in Asia Pacific and Latin America until 2014.
In the closely watched vendor sweepstakes, Pace plc surged to the top in market share in the second quarter, leapfrogging well over Cisco Systems Inc. (Nasdaq: CSCO). While Pace's STB revenues soared, Cisco saw its revenue fall sharply from the first quarter, when it hit a record high, according to Infonetics. Arris Group Inc. (Nasdaq: ARRS) took over third place, boosted by its acquisition of Motorola Home earlier this year.
— Alan Breznick, Cable/Video Practice Leader, Light Reading