Operators Support Two Opposing Technologies

by Alan Harten

Having to face up to ever increasing and varied competition in the cable market itself, as well as newcomers such as Telco’s all fighting for TV viewers, the traditionally set-in-their-ways and unwilling to change cable operators are becoming increasingly uncomfortable.

According to researcher IMS, set-top boxes (STBs) will reach 90.3m unit shipments worldwide in 2009, up from approximately 50.8m units shipped in 2004.

The seemingly indecisive operators are opting for two strategies that totally contradict each other, on the one hand supporting the deployment of new STBs with more advanced features and functions, and yet at the same time supporting concepts that aim to push the ubiquitous STB out of the market.

According to IMS, digital television services are expanding very rapidly across the globe.

Not only newer locations, such as Eastern Europe and Asia Pacific, but also well established operator locations are expanding their digital services to include HD, DVR and interactive features that require more advanced STBs

STB vendors are always coming up with new features to entice operators, but at the same time operators have traditionally been very conservative when it comes to embracing new technologies.

According to ABI Research analyst Paulhwa Lee, “Because some operators are facing stiffer competition, they are now willing to experiment a little more, venturing into offerings such as Electronic Program Guides, wireless support, home networking support for MOCA or HomePlug, and expanded hard drives – all at increasingly affordable prices.”

There is also a growing trend toward partnerships and consolidation.

For example, STB giant Motorola has acquired a Chinese STB vendor, Dahua Digital. The Chinese market is expected to reach 12 million by year end.

Decoder manufacturer Broadcom has partnered with Chinese STB vendor Coship, and decoder manufacturer NXP has acquired Conexant’s STB operations.

Some operators, too, are partnering with new STB manufacturers.

This is because as the United States market matures, subscriber growth slows and evolves towards STB replacement.

STB sales may still be driven by one-off developments such as the CableCARD mandate, the digital to analogue transition, and the unification of data and video.

According to In-Stat, most major cable providers are expanding their network to include support for IPTV, vastly increasing the potential market for IPTV STBs.

In-Stat says that sales of the boxes will increase from 2007’s 3 million units up to a possible 27 million for the fiscal year 2010.

But operators know that these transitions are CAPEX-intensive.

At every opportunity, operators are trying to standardise and commoditise STBs by formulating standards and consortia such as tru2way and CableLabs, so many STB manufacturers are looking to fresh markets in Asia, Europe, and Latin America.

About ABI
ABI is a market research firm focused on the impact of emerging technologies on global consumer and business markets.

It utilises a blend of market intelligence, primary research, and expert assessment from its worldwide team of industry analysts.
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