Reflecting the uncertain times for the traditional TV set-top box, STB revenues for equipment suppliers are now going up while STB shipments are going down.
In its latest report, Infonetics Research Inc. found that global STB revenues climbed to $4.8 billion in the second quarter, up more than 10% from $4.3 billion in the year-ago period and up 4% from the first-quarter total. Growth in cable set-tops and over-the-top streaming media players bolstered the category, which also includes IPTV, satellite TV and digital terrestrial set-tops.
Yet STB shipments fell in the spring quarter, at least on a year-on-year basis. Infonetics found that unit shipments dropped 3% from the same period a year earlier, even while rising 7% from the first-quarter total.(See Set-Top Revenues Droop in Q2 .)
Calling it "a fascinating period of mixed signals" for the global set-top market, Jeff Heynen, principal analyst for broadband access and pay TV for Infonetics, said it's difficult to tell where the market is heading right now. For instance, he noted that satellite TV STB shipments are continuing to decline while cable STB shipments now appear to be rebounding "due to an ongoing refresh cycle in North America and Europe."
Indeed, cable STB revenues for the hardware suppliers rose 3% in the second quarter from the first quarter, according to the report. During the same period, unit shipments increased 4%.
Not surprisingly, Arris Group Inc. (Nasdaq: ARRS) benefited greatly from this trend. Arris, which Infonetics now ranks as the world's leading set-top maker, gained nearly two market share points between the first and second quarters.
Outside North America and Europe, however, the story was quite different. Infonetics found that streaming media players are "quickly becoming the STB of choice for pay-TV providers in emerging markets, where free video content is abundant and service providers are looking to bundle live streaming video with their own broadband offerings."
With the STB market in flux as pay-TV providers increasingly experiment with delivering video to other, more mobile devices, Infonetics continues to maintain that the set-top market may have peaked. In its latest forecast, the research firm projects that STB market revenues will slowly decline at a compounded annual rate of 0.05% over the next four years, falling to a still-hefty $19.2 billion by 2018.
— Alan Breznick, Cable/Video Practice Leader, Light Reading