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Fragmented Pay-TV Set Top Box Market is Evolving

By and large, the traditional pay-TV user experience is very dependent upon the set-top box (STB) design and the capabilities of the associated electronic program guide (EPG). New STB designs tend to be significantly different -- smaller, more attractive -- than the typical legacy devices.

Preliminary results from the IMS Research study of the market for set-top boxes and iDTVs has revealed that Pace plc has taken the number one ranking for worldwide digital STBs shipped to pay-TV customers for 2009, unseating Motorola.

For 2009, the top five ranked set-top box manufacturers included Pace, Motorola, Technicolor (formerly Thomson), Cisco, and Humax. Apparently, Motorola's position is attributed to its leadership in the cable sector while Technicolor's focus and leadership continues to be in the satellite sector.

According to Rebecca Kurlak, co-author of the IMS market study, STB shipments grew 15.2 percent year-over-year on a global basis from 2008 to 2009. Previously in 2008, Pace had held the third place in the rankings -- increasing its shipments by 31 percent year-over-year in 2009.

Kurlak states, "Pace's position as the 2009 market share leader can not only be attributed to the company's December 2007 acquisition of the Philips STB business, but also due to the company's continued organic growth."

The Philips business unit, now Pace France, operates as a division that focuses on IP, DTT and linear TV services. This additional facility has allowed Pace's headquarters in England to remain focused on traditional TV platforms and NDS CAS clients.

Moreover, IMS expects Pace to remain in the top ranking position in 2010 due to its recent partnership announcements of HD roll-outs for Benelux satellite operator M7 Group and Malaysian satellite operator ASTRO -- in addition to its large contract agreements with DirecTV, UPC and Viasat.

The IMS study provides detailed analysis of STB shipments and revenues for 68 countries. TV households are split by region, country, platform, operator, and digital penetration rate. STB shipments and revenues are broken down by SD/HD picture quality, 1-way/2-way data receiving, and by DVR functionality.

The full report will be published at the end of May 2010. It's interesting to note that the market is now highly fragmented, with many vendors offering a variety of STB configurations at various price points.

Shipments of hybrid STBs are expected to grow steadily, due to the increasing number of alliances between satellite and broadband operators -- and that many pay-TV operators are already in the process of expanding their services.

I believe that the introduction of additional purpose-built low-cost STBs -- for over-the-top IP video applications -- will further fragment the vendor landscape and resulting market shares. The final outcome is yet to be determined.

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