While the overall set-top box (STB) market declined in 2013, down by 10 percent from last year, video gateways that offer subscription pay-TV as well as hybrid, IP-delivered services saw double and triple digit growth rates across metrics.

"Cable and satellite video gateways had a very strong year, with shipments growing 333 percent and 98 percent, respectively," said Jeff Heynen, principal analyst for broadband access and pay-TV at Infonetics Research (News - Alert).

The news is good for operators, as they look to cut deployment costs. "Video gateways collapse the STB and broadband CPE into a single device, and it's for this reason we expect to see a long-term shift to these devices, at least in North America, to reduce capex in multiple TV set homes," said Heynen.

Infonetics also found in its latest analysis that the use of over-the-top (OTT) media servers is growing, which isn’t surprising given the thirst for consumer multimedia use in the home. However, service providers delivering pay-TV services as an app over a broadband connection are another market segment that is fostering growth; hybrid IPTV (News - Alert) services are an expanding piece of the revenue pie, particularly when it comes to telcos in underserved and rural areas.

As a result, Infonetics expects that global IP video gateway revenue will grow at a 79 percent compound annual growth rate (CAGR) from 2013 to 2018.

This is already being played out: Take for instance TiVo, which has surpassed 2.5 million subscribers across Europe thanks to deals with Virgin Media, ONO and Com Hem (News - Alert). These pay-TV operator partners are using TiVo to deliver next-generation hybrid TV software solutions and advanced television services; TiVo now covers nearly half of the subscribers at Virgin Media (News - Alert) and a third of ONO subscribers.

The global STB market — including IP, cable, satellite, DTT STBs and OTT media servers — totaled $18 billion in 2013, a decline from 2012. Pace closed out 2013 as the worldwide STB revenue and unit share leader, though ARRIS claimed the revenue share lead in 4Q13. Cisco (News - Alert), on the strength of its Telco IP STB sales, finished second in STB revenue in 2013.