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Hybrid STBs Key Role for Pay-TV Service Providers

Most television sets are manufactured in Asia. As the major consumer electronics brands plan to introduce new smart TV models at the upcoming CES event in January, manufacturers are increasingly adding Internet connectivity as a standard feature. This phenomenon will include the high-growth Chinese market.

China's connected TV market originally launched in 2009, with over 2 million web TV set shipments and about a quarter million web TV set-top box (STB) shipments.

The fast development of the web TV market is driven by competition between the giant domestic TV vendors in China and the low incremental cost for connected TV functionality -- helping drive wider user acceptance.

As a result, In-Stat now forecasts web-enabled TV shipments will exceed 15 million units by 2014. However, the web TV STB market does face some challenges, associated with its limited sales channel and high retail pricing.

According to In-Stat's market assessment, some telecom operators are deploying web TV STBs coupled with subscriptions to their high bandwidth Internet access, but they do so while keeping a low profile -- due to local regulation concerns.

In-Stat's market study revealed the following findings:

- With the triple-play policy being pushed by the Chinese government, more licensed content providers for web TV sets will emerge.

- Web TV is becoming standard on large screen LED and LCD TV sets.

- The penetration rate of web TV is likely to increase from 8 to 50 percent in the next five years.

- Consumers are willing to pay for web TV content, if the content is in HD quality and current.

- Cable STBs with VoIP functions have already emerged in China.

- In contrast, in the U.S. market over 137 million web-enabled CE devices will ship in 2014.

- Hybrid web-to-TV STBs are emerging as a vital tool to enable broadcasters and pay-TV service providers to provision new over-the-top (OTT) video entertainment offerings.

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