Communications and Technology Industry Research

Cable TV services seem to be as popular as ever; last year operators signed up millions of new customers. A ripple effect of this boom is that manufacturers of set-top boxes had a bumper year during 2006.

 

Just how much of a boom are we talking about here? Market research firm In-Stat (News - Alert) reported Wednesday that shipments of digital cable set top boxes reached 27.5 million, a dramatic increase over the 15.6 million units shipped during 2005. This growth was reflected in revenues which set a new record, $4.2 billion, up from $3.1 billion in 2005.

 

In-Stat attributed much of the growth to demand from the Chinese market. The trend doesn’t look like it will abate anytime soon, either.

“In-Stat expects that digital cable set top box unit shipments will again be strong in 2007, led by sustained demand from cable operators in North America and China,” In-Stat analyst Mike Paxton said in a statement.

 

Paxton noted, however, that the set top box industry will experience a transition this year, due to the July 1 deadline (the “7-07 mandate”) set by the FCC (News - Alert), mandating that manufacturers cease production of boxes with integrated security. Instead, boxes going forward will be produced that are compatible with separate devices, called CableCards, which contain the security features.

 

CableCards let cable companies retain control over access to their services, while enabling customers to use set top boxes manufactured by third parties.

 

Regardless of the changes this mandate will have in the industry, it seems very likely that demand from China will continue to significantly impact growth of digital set top box shipments. In-Stat based this prediction on the fact that set top box shipments in China rose to more than 9 million during 2006, from 2.2 million during 2005.

 

While the market as a whole is on the upswing, individual manufacturers are seeing mixed results. For example, Motorola (News - Alert) and Scientific Atlanta both maintained their positions as the top two cable set top box makers, yet their combined global market share decreased from 69 percent in 2005 to 49 percent in 2006. That decline can be attributed to the rise of Asian and European manufacturers, which captured new business in markets outside North America.

 

In North America, meanwhile, high-end boxes are the key market driver, In-Stat said. These include devices with built-in personal video recorder (PVR) and high-definition (HD) functions. More than 8 million such boxes were shipped during 2006, up from 6 million during 2005.