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October 21, 2015

Digitization Brings the Next Big Growth Surge for Set-Top Boxes

By Steve Anderson, Contributing Writer

The digital set-top box is an increasingly hot commodity, whether it's the one that offers over-the-top (OTT) access to systems like Hulu (News - Alert) and Netflix or the one that's offered directly from a pay TV operator. A new report from Transparency Market Research, meanwhile, suggests that this trend is likely to carry on, and much of it thanks to increasing digitization.



New set-top boxes are looking to offer a lot more than access; according to the report, the latest generation is set to offer personal video recording tools, but also access to shopping and games as well as movies available on demand. That's driving plenty of interest, a move that's reflected in the adoption numbers. In 2014, the Asia-Pacific market was the largest such market for set-top boxes, taking about 31 percent of market share. It's also expected to generate the largest growth in the market, with a compound annual growth rate (CAGR) of about 9.9 percent during the forecast period, set to run through 2022. The North American market, meanwhile, is considered a “mature” market thanks to its early adoption of digitization, though there will be growth as Internet protocol television (IPTV (News - Alert)) and hybrid broadcast broadband (HBB) boxes start emerging.

IPTV boxes, meanwhile, are expected to make some huge gains worldwide with a CAGR of 10.7 percent, but HBB boxes are making inroads in the more mature markets of Europe and North America. This is largely due to combined IPTV service and standard cable/satellite service in one platform, allowing for a best-of-both-worlds approach. Video quality is also important here, as high definition (HD) boxes took the largest market share at about 66 percent, and were expected to continue growth as 4K and even 8K boxes started to emerge.

The growth of the set-top box market is somewhat surprising; some might have thought set-top boxes would be supplanted by televisions performing the same functions. But the idea of people making a move toward the Internet for television is no shock; cable cutters have been around for a few years now, and the trend doesn't seem to be declining. Cable and satellite providers, therefore, have had to preserve markets. Now, the Internet is proving an exciting new “second-screen” opportunity, a means to provide access to back episodes while keeping subscribers writing checks for up-to-the-second content.

The increase of mobile devices and mobile video means the idea that someone could get most of an evening's entertainment from a combination of Redbox, Netflix, and YouTube (News - Alert) isn't out of line. Cable providers have been seen fighting back on this front by putting up bandwidth caps, but that's often prompted a backlash and the rise of municipal fiber services, not to mention Google (News - Alert) Fiber outright.

But with cable putting the Internet to work, it's offering a deeper, richer experience that could keep more users in place. This could be a strategy that pays off long term for cable and satellite providers, combining ease of use with depth of material, and at the heart of it all is the simple set-top box.




Edited by Kyle Piscioniere
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