Technology | Media | Telecommunications

Tuesday, April 12, 2011

Over-the-Top Video Service STB Market Share

Infonetics Research earlier this month released its fourth quarter 2010 (4Q10) Cable, Satellite, IPTV, and Over-the-Top (OTT) set-top box (STB) subscriber market share and forecast.

In the fourth quarter of 2010, Infonetics witnessed the dramatic growth of over-the-top video entertainment services, as service providers and equipment vendors seemed to reach their optimal price-points.

However, by and large, these services continue to complement traditional pay-TV rather than fully replace it. On a global basis, demand for set-top boxes continues to increase as more countries transition from analog to digital broadcast television and more operators offer enhanced services -- such as HDTV and DVR.

"There is increasing demand for hybrid set-top boxes, which leverage the existing broadcast infrastructure, but utilize the broadband connection to incorporate OTT content and increase interactivity and on-demand services," notes Teresa Mastrangelo, directing analyst for video at Infonetics Research.

Highlights from the latest Infonetics market study include:

- Worldwide set-top box (STB) sales dipped 1 percent in 4Q10 from the previous quarter, to $3.63 billion, with cable STBs seeing the biggest sequential decline.

- Infonetics projects STB shipments to increase 25 percent from 2010 to 2015, while revenue declines 5 percent to $13.1 billion, as STB average selling prices (ASPs) continue to drop.

- Over-the-top (OTT) media servers (standalone set-top boxes such as Apple TV, Roku Media Player, Boxee STB) experienced the strongest sequential growth, nearly doubling quarter-over-quarter -- as providers such as Netflix and Hulu launched low-cost streaming services toward the end of 3Q10.

- Netflix added more than 3 million subscribers in 4Q10 -- nearly twice as many as in the previous quarter, and 3 times as many as during the same period in 2009. Netflx now supports a subscriber base that exceeds 20 million.

- Hulu introduced its paid service, Hulu Plus, last year at a similar price point; its subscriber base is expected to exceed 1 million in 2011.

- It's anticipated that Amazon UK's purchase of LOVEFiLM will likely drive increasing OTT media server demand in Europe.

- OTT media server revenue jumped 90 percent in 2010, and is forecast by Infonetics to grow to $1.16 billion in 2015.

- The race for vendor leadership in the overall set-top box market is extremely tight, with Motorola just edging out Pace and Technicolor for worldwide revenue in 4Q10 -- due its focus on the lucrative North American market and offering more STBs with HD and DVR functions, which produce higher ASPs.