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Growing Hybrid Set-Top Box Demand

A new breed of digital set-top box (STB) that will receive and decode broadcast video content from satellite, terrestrial, or cable networks and interactive wireline services such as video-on-demand is finding its way into more and more households.

These "hybrid" boxes are the result of government regulations and red tape that limit the kind of electronic content that particular kinds of companies can supply to the public. They also provide a faster time to market for existing broadcast operators that wish to include interactive video services.

According to Michael Arden, Principal Analyst at ABI Research, the move to this format has been sparked by two scenarios. "In some countries, franchising and regulatory requirements do not allow telecom operators to broadcast certain kinds of information � essentially, they can't provide programming," he says. "So telecom operators are packaging existing satellite, terrestrial, or cable video services with interactive video-over-IP."

"On the other hand, DTT or satellite operators that already have broadcast approvals are giving their customers an STB that allows them to receive those satellite over-the-air signals as well as enabling interactive video-on-demand." Companies that offer over-the-air services are worried about losing customers because they lack a wireline service allowing interactivity. For example, Rupert Murdoch's BSkyB has purchased Easynet, a British broadband service provider, and market-watchers speculate about a combination of its DSL network with BSkyB's video service.

The interest in IP-capable STBs is already well-established and growing, and it may offer a wide range of practical solutions in divergent markets around the world. "Some will offer a stripped-down version," says Arden, "perhaps on-demand only. In other markets � particularly the US and some Western European countries - it will be the most advanced kind of video service with all the �bells and whistles.' It's a pretty flexible business model that can be adapted to the demands of the market."

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