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Futuresource: Global Set-Top Box Market Still Growing

16 Aug, 2013 By: Erik Gruenwedel

Asia Pacific and Latin America pick up slack from saturated North American and European markets

Despite shrinking video subscribers and transition to cloud-based platforms, worldwide pay-TV set-top-box shipments continue to grow, with demand expected to peak at 180 million units in 2016, according to new research from Futuresource Consulting.

The London-based research firm said the combination of cable, satellite and telecommunications operators offsets the erosion of the free-to-air segment.

“We're going to see the trinity of cable, pay satellite and IPTV continue to perform, growing by 2% between 2012 and 2016," said Carl Hibbert, head of entertainment content and delivery at Futuresource. "The majority of this growth is coming from Asia Pacific and Latin America, as the regions expand their cable digitalization programs and new services continue to appear.”

Hibbert said demand for set-top-boxes in developed markets is now predominantly saturated, though the transition to higher priced advanced media gateways (i.e. cloud-based) in these regions will have a sustained and positive impact on revenue going forward.

To compete against price erosion, set-top-box vendors are differentiating their products by offering increased storage capacity, multiple tuners, integration of IP services and content, and by introducing sophisticated middleware for the multi-platform environment.

Going one step further, advanced multimedia home gateways that share content between multiple screens in the home will reach shipments of nearly 3.5 million units this year, with the majority of demand coming from high (average revenue per unit) markets such as North America and Western Europe.

Combating cord-cutting

With the proliferation of Internet-enabled devices, over-the-top services and cloud-based systems, the threat of cord-cutting for multi-system operators like Comcast, Time Warner Cable and others, has never been greater.

Indeed, Comcast, TWC and Cablevision collectively lost more than 1 million video subscribers in their most-recent fiscal quarters.

Futuresource said multimedia households are increasingly a new weapon of choice for operators to stem subscriber churn, offering subscribers new services and more efficient delivery of video to secondary screens in the home and on the move.

"Although they are costly for operators — at roughly double the price of preceding premium set-tops — they can be extremely cost effective for operators in the long run, particularly in homes with high levels of multiple TV ownership,” Hibbert said. “More importantly, looking to the horizon, these sophisticated devices can open the doors to home automation, security, energy management and e-health, reinventing the multi-system operator as a whole house enabler and placing it at the forefront of the evolving digital landscape.”

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