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How Smart Consumer Electronics Transform Pay-TV

The conversion from analogue to digital media technology has driven the evolution of consumer electronics (CE) from specialized "dumb" devices to multipurpose, IP networked computing devices. This evolution has been highly disruptive to the traditional home video entertainment market -- creating a new over-the-top pay-TV opportunity.

The advent of Smart CE devices is having a profound effect on the digital multimedia home environment and associated consumer entertainment preferences. According to the latest market study by NPD In-Stat, they now forecast that smart CE device unit shipments will surpass 92 million in 2016.

"CE vendors fundamentally agree that, increasingly, consumers are becoming technically savvy, and as a result are fully capable of using devices that are far more advanced than say, the traditional pay-TV Set Top Box (STB),” says Norm Bogen, VP Research at NPD In-Stat.

In fact, consumers are eager to own smart devices that will afford them more freedom to access content outside the traditional "closed" walled gardens of the legacy pay-TV service providers -- including content that is now widely available on the Internet from a variety of independent sources.

As a result, savvy CE manufacturers see a tremendous opportunity in filling the gap between what pay-TV service providers currently provide and the lower-cost alternatives that consumers are already craving.

The vast majority of legacy pay-TV providers have resisted the transition to an abundant "open" digital entertainment landscape. Therefore, if savvy CE manufacturers substitute their own devices as an alternative to current STBs, then they can easily tap some of the revenue away from the more lethargic pay-TV service providers.

However, in an attempt to minimize the potential impact this could have on their customers and revenue stream, some traditional pay-TV service providers have begun to adopt and deploy their own smart STBs. The question remains, however, is it too little too late to retain the next wave of pay-TV subscriber defections?

Findings from the latest market study include:

  • Unit shipments of smart CE devices will surpass 92 million in 2016.
  • North America will see unit shipments of smart STBs reach 3.2 million in 2015.
  • Video game consoles will lead the market in smart devices rising to 36.7 million units in 2016.
  • Total media devices shipped to Eastern Europe will reach 79.2 million devices in 2016.
  • Asia Pacific will account for 37.1 percent of CE devices shipped worldwide over the forecast period.

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