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DBS Pay-TV with Over-the-Top VOD Service

Most of the attention regarding the emerging over-the-top disruptive video distribution model has been focused on either small start-up companies or the major portal aggregators. However, there is a whole other category that's worthy of further analysis, as this story unfolds.

The recent temporary suspension of BSkyB's broadband movie download service in the UK has focused attention on a growing phenomenon: satellite pay-TV operators have found a way to offer video-on-demand in competition with cable and telco pay-TV services.

The solution requires the use of a hybrid set-top box (STB) at customers' premises: devices that combine IP video with direct broadcast satellite (DBS). Other "HSTBs" combine IP video with cable, or with digital terrestrial television (DTT). Annual shipments of such hybrid STBs will grow to more than 50 million worldwide by 2011, according to a new study from ABI Research, with western Europe accounting for the largest share.

"Because they don't offer 'triple-play' services," says principal analyst Michael Arden, "satellite pay-TV operators are especially interested in hybrid STB technology."

The BSkyB service is the first large-scale deployment of this kind by a satellite operator. A DSL line is used as the IP back channel for the on-demand service. A combination of satellite and DSL feeds is received on the hybrid STB at the consumer's premises. Viewers get their regular channels from satellite, but when they order a movie on demand, it arrives via the DSL network's broadband line.

What will satellite operators' enthusiasm for this model mean for markets? "This year, about 20 percent of all HSTBs shipped will be for satellite services," notes Arden. "The remainder will incorporate cable or DTT technology with IP. But over time, that ratio will change. DBS Video HSTB shipments in 2011 will be ten times greater than they are today, and will account for a solid majority of all hybrid STBs."

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