Hybrid Broadcast-Broadband Set-Top Box Upside

Global demand for digital set-top boxes reached a record high in 2009, with worldwide set top box (STB) unit shipments increasing 11 percent, according the the latest market study by In-Stat. Increased demand for both satellite and terrestrial pay-TV STBs fueled the market growth, with market share fragmented across many vendors.

Even after a record year, the market likely faces numerous challenges. "The set top box market will be solid for the next few years. However, there are some emerging threats that will test the market's long-term viability," says Mike Paxton, an analyst at In-Stat.

According to In-Stat's assessment, the foremost threats are:

- Over-the-top (OTT) video offerings could permit consumers to downgrade or disconnect their current pay-TV service.

- Software platforms that enable consumer electronic (CE) devices to function like, or even replace, a traditional set top box.

- Other consumer electronic devices, such as video game consoles and TV sets, can increasingly replicate the capabilities of a digital set top box.

In-Stat's market study found the following:

- STB unit shipments in 2010 are projected to decrease slightly, returning to 2008 levels.

- Hybrid set top boxes that integrate IP video with an existing broadcast TV platform will ship in significant numbers in 2011, particularly in Europe.

- Sustained demand for advanced set top box products like HD-capable set top boxes and PVR-enabled products, coupled with the continuing analog-to-digital television transition, will keep the set top box market vibrant through at least 2012.

- Satellite set top boxes, the largest market segment, accounted for 48 percent of 2009 global set top box unit shipments.

- Competition in the set top box market is increasing. In 2009, seventeen STB manufacturers shipped over one million units.

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