Friday, July 13, 2012

Asian and Eastern European Pay-TV Market Growth


The apparent saturation of pay-TV subscribers in North American and Western European markets has troubled set-top box vendors for some time. They have had to look elsewhere for new upside opportunities.

As an example, while the number of U.S. households that subscribe to  pay-TV service has remained flat during the last two years, those subscribers who are struggling with economic pressures are more likely to switch providers or totally cancel service, according to a recent report from Leichtman Research Group.

As a result, emerging markets have become the new high-growth potential opportunity. However, the emerging market environment is very different from the traditional pay-TV arena. It has economic demands that many mainstream device manufacturers simply can't meet.

A jump in cable and satellite set-top box shipments in Asia-Pacific markets is being driven by cable digitization in India and China -- as well as China's roll-out of digital satellite boxes to its rural households.

"Digital transitions are bringing consumers access to hundreds of international channels and a few HD services for the first time. Asia-Pacific and Eastern Europe’s growth in set-top box units will outstrip those of the rest of the world in the next 5 years," according to Sam Rosen, practice director of TV & video at ABI Research.

Pay-TV service providers in these developing markets require very low-cost boxes. Therefore, set-top box manufacturers are looking to decrease BOM costs by using in-house CAS solutions and low cost SoCs optimized with lower-powered CPUs that support HD video -- and with much simpler graphical user interfaces.

"China has a robust ecosystem of set-top box manufacturers, coupled with CAS vendors China Digital TV and Sumavision" according to Rosen's assessment.

Meanwhile, India is struggling to enable an ecosystem of local manufacturers, as well as to get adequate supply of boxes to meet an unrealistic digitization time-frame.

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