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Set-Top Shipments Will Keep Soaring

Despite the rapid growth of multi-screen video services, the old familiar TV set-top box will continue to rule the roost for years to come.

So says IHS . In its latest "Set-top Box Market Monitor" report, the research firm predicts that STB shipments will rise globally this year, next year and in 2015 as pay-TV providers deploy more HD set-tops, multimedia home gateways (MHGs) and other digital set-tops in customers' homes. IHS also predicts that STB revenue will hit new highs as well.

Specifically, IHS believes that set-top shipments for cable, satellite, IPTV and terrestrial services will climb to 269 million units this year, up 8 percent from 250 million in 2012. IHS then sees STB shipments rising 6 percent to 286 million units in 2014 and 1 percent to 290 million units in 2015, before starting to fall back in 2016.

As a result, STB industry revenues will continue to climb as well. For example, IHS forecasts that set-top revenues will reach a record total of US$22.2 billion this year.

Even though pay-TV providers are scrambling to extend their reach to PCs, tablets, smartphones, game consoles and other newer, video-enabled devices, IHS said, they are heavily relying on STBs and gateways to serve as the "central platform for video services" in subscribers' homes. As a result, the firm said, the multi-screen video phenomenon will actually drive the growth of the STB business over the next few years as providers seek to fend off competition from such over-the-top video leaders as Netflix and Amazon.

In a prepared statement, Daniel Simmons, senior principal analyst for TV technology at IHS, noted that STBs "are facing a mounting challenge to their role as the dominant pay TV video consumption device because of operators' growing emphasis on supporting multi-screen devices." But, he continued, "operators are continuing to deploy STBs in order to manage the compatibility between their delivery networks and the consumer electronics devices that consumers are increasingly using to view content now."

Further, IHS believes that the continuing shift to HD set-tops and gateways in more mature pay-TV markets like North America and Western Europe will fuel the growth of the STB business. The firm predicts that HD set-tops will account for more than half of all pay-TV boxes shipped for the first time in 2014.

In such less mature pay-TV markets as India, IHS said, STB shipments will be driven by more basic digital cable set-top models. The firm also sees terrestrial digital TV deployments in Central and Eastern Europe and Central and South America fueling STB shipments.

Finally, IHS said, the adoption of ultra HD services will spur greater STB shipments in the future.

Eventually, though, set-top shipments will start to decline as the worldwide digital TV transition nears an end. IHS predicts that STB shipments will drop 5 percent to 276 million units in 2016 and slide 2 percent to 271 million units in 2016.

Looking at the vendor rankings, IHS found that Pace remained the set-top box king last year, accounting for 11.3 percent of all pay-TV STBs shipped. Technicolor came in second, boosting its shipments by almost 5 million units to unseat the former Motorola (now part of Arris Group.)

Cisco Systems took over the lead in pay-TV STB revenue in 2012. But Arris and Motorola combined for more revenue, indicating that the new Arris may well beat Cisco this year.

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