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Pay-TV Set-Top Box Demand Peaks in 2009

Shipments of set-top boxes (STBs) are expected to peak this year, at least in mature markets, and then commence a gradual decline. However, the analog TV shut-offs in countries around the world, combined with the strong uptake of high-definition (HD) TV sets, mean that HD STBs will form a growing part of the total market.

HD STBs are expected to account for about 30 percent of all STB shipments as soon as 2010. This is accompanied by a progressive movement from MPEG-2 to MPEG-4 for content delivery.

According to ABI Research industry analyst Michael Inouye, "Closely related to MPEG-4 is a growing affinity for HD boxes over SD. As more HDTVs find their way into homes, the demand for HD content grows in kind. Anticipating this demand some countries and operators have elected to support the more efficient standard up front or to begin deployments of upgraded CPE."

The price points of boxes are converging; MPEG-4 and in some cases HD are getting sufficiently inexpensive that some operators will be providing them to their customers by default.

Some STB vendors feel that demand for standard models will be around for a long time, but some of the infrastructure vendors report seeing a push towards MPEG-4 encoders. So vendors will have to support MPEG-4.

In markets primarily served by digital terrestrial broadcasts where most sales of STBs are retail, especially those with a large MPEG-2 installed base, this means that vendors will have to encourage consumers to switch by reducing the prices of upgraded boxes.

The new report updates ABI's previous STB study. It includes forecast analysis of STBs by platform (CATV, IPTV, DBS, DTT), region (North America, Western Europe, Central/Eastern Europe, Asia Pacific, Latin America, Middle East Africa), compression technology (MPEG-2/4), and shipments of HD boxes (standard and PVR).

In addition the report outlines the aggregate TV household landscape by region and platform.

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