Pay-TV Set-Top Box Market Revenue Declining29 Jun, 2015 By: Erik Gruenwedel
Satellite and 4K seen as market saviors
Revenue generated from sales of pay-TV set-top boxes in 2014 declined for the first time in 12 years — underscoring market saturation and ongoing consumer shifts in television consumption, according to new data from IHS.
Pay TV operators purchased $15.3 billion worth of STBs, down less than 4% from $15.9 billion in 2013. While shipments grew slightly to 204.7 million units from 203.1 million units in 2013, it wasn’t enough to compensate for the effects of price erosion.
Meanwhile, there exist signs STB market contraction is continuing as evidenced by South Korea hardware manufacturer Woojeon & Handan exiting the market, and Swiss vendor Advanced Digital Broadcast being delisted from the Swiss Exchange.
In addition, U.K.-based Amino and U.S.-based TiVo have acquired pay-TV software companies; and STB market leader ARRIS Group announced its intention to acquire Pace, the second-largest vendor by revenue.
“The industry is now at an inflection point. Mature pay-TV markets are saturated with high-value advanced boxes, so shipments are set to decline there; and operators in emerging markets aren’t transitioning to advanced boxes fast enough to increase overall industry value,” Daniel Simmons, head of connected home research at IHS Technology, said in a statement.
Satellite TV and 4K Saviors?
As the traditional STB market shrinks, continued rollout of Ultra HD video, or 4K resolution, could trigger growth within the STB market. In addition, as satellite-TV operators delve further into offering high-speed Internet service, the need for STBs to deliver broadband will increase.
Indeed, multichannel video program distributors Comcast, DirecTV and Dish Network are expected to launch UHD STBs this year. When combined with global demands, these launches will result in $240 million in UHD STBs shipped to pay-TV service providers in 2015. By 2019, UHD STB shipments to pay-TV operators will reach $5.4 billion and comprise 40% of the market’s value.
“More-aggressive UHD deployments by pay-TV operators could help the set-top box market return to growth,” Simmons said.
Regardless, the global STB market will contract further in 2015, falling to $15.1 billion and will continue falling to 13.2 billion in 2018, before stabilizing in 2019, according to IHS.