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Global Pay-TV Digital STB Revenue Reached $20.3B

Following a relatively flat three-year period, the global pay-TV set-top box (STB) market managed to achieve the highest annual revenue total in its history during 2013, setting the stage for continued growth through 2015, according to the latest market study by IHS.

Worldwide digital STB shipment revenue last year totaled $20.3 billion -- that's up 3 percent from $19.6 billion in 2012. Revenue will set new highs during the next two years and will peak at $22.8 billion in 2015.

This follows the period from 2010 through 2012 when revenue remained in the $19.5 billion range.

"Set-top boxes proved to be critical to the strategies of pay-TV operators in 2013," said Daniel Simmons, director for research at IHS.

Growth in 2013 was mainly driven by multimedia home gateways (MHG) reaching large scale in North America.

MHGs are being used by service providers to transition from a legacy broadcast-based pay-TV experience to one that is Internet-centric and better positioned to compete with over-the-top (OTT)-rivals such as Amazon and Netflix.

U.K. STB manufacturer Pace leads this vital market segment with a share of more than 48 percent in 2013. This strong MHG performance also helped Pace retain its global number one status in terms of units shipped in 2013. Cisco continued to lead the global pay-TV STB market in revenue terms.

The market dynamics for STBs are complex and vary considerably from territory to territory, but ultimately depend on individual pay-TV operator strategies and developments in the wider media and consumer electronics industries.

U.S. STB revenue will continue to grow until 2015 as Comcast, DirecTV and Dish Network expedite their MHG deployments, driving the higher end of the market.

Chinese and Indian cable TV digitization and the International Telecommunication Union’s (ITU) GE06 deadline in 2015 for the analog terrestrial TV switch-off will continue to drive large volumes of lower-value boxes. However, many of these projects will near completion in 2015 and the market will contract to $20.7 billion by 2018.

Despite this midterm blip, the longer-term view is more positive with ultra-high-definition (UHD) STBs using High Efficiency Video Codec (HEVC) becoming significant toward the end of the forecast period. IHS expects pay-TV operators to purchase 13 million UHD STBs in 2018.

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