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Cable Technology Feature Article

May 28, 2014

In a Dynamic STB Sector, Market Shares are Shifting

By Tara Seals, TMCnet Contributor

Broadcom, once thought of as mostly just a player in the North American cable set-top box market, has extended its market share 4 percent to command nearly half of the STB silicon market globally, including in the satellite, IPTV and DTT markets.

ABI Research (News - Alert) said that it now holds a 49 percent market share. With the exception of MStar, all of the other vendors in the market saw revenues nearly flat or falling during 2013. It found that saturation is an issue in the market, as STB shipments through 2018 will decline in North America and Western Europe (especially in saturated cable platforms that are losing subscribers to telco and satellite alternatives). However, they are set to grow strongly in Asia-Pacific and Latin America, where subscribers are gaining access to pay-TV platforms for the first time.

The firm said that worldwide, the set-top box market was 236 million units in 2012 and is expected to peak at 265 million in 2015 before softening. Strong unit shipments of basic boxes in China (44 million), the United States (29 million), and India (23 million) dominate the market. Significant demand exists in basic boxes (both SD and HD DTAs and zappers) with low processing power, which drop from about 53 percent of shipments in 2012 to 43 percent of shipments in 2018.

“Most set-top vendors remain very optimistic about their prospects in either the latter half of 2014 or mid-year 2015,” said ABI Research practice director Sam Rosen. “This optimism is well placed in OEM designs that are being tested by operators. However, especially in this environment where pay-TV operators are pursuing large-scale mergers (as well as mergers within smaller operators), less designs go to production while achieving higher unit volume.”

That’s not to say that Broadcom won’t have competition. “Looking to 2014, we do expect to see Entropic and MStar experience growth,” continued Rosen.  “Entropic has more highly integrated designs, resulting from the Entropic-Trident (News - Alert) acquisition while MStar is well positioned within the free-to-air markets and gaining ground in some low-cost pay-TV markets as well.”

Broadcom also dominates in the closely related home networking market, where technology shifts are becoming more and more rapid. Infonetics (News - Alert) said that Wi-Fi 802.11ac shows some of the strongest growth among wireless technologies, with just 5 percent of operators surveyed using it today, moving to 85 percent in 2015. However, optimism for G.hn as an in-home networking technology continues to intensify despite the lack of available products: Though no respondents currently use G.hn, 45 percent expect to next year.

ABI also noted that home network software standards, including UPnP, DLNA, and HNAP, are working to solve  device fragmentation issues and create the home network of the future alongside other alternative networking technologies, enabling the distribution of data and video content over coax and power lines.

At the high end of the market, residential gateway boxes (which include more than four tuners and are intended to be used with thin-client set tops), are providing significant profits for set-top box manufacturers. These are increasingly replacing standalone elements like modems as multiscreen video thirst drives home network demands.

"Residential gateways have quickly become the new gatekeeper for high-margin traffic," said Jeff Heynen, principal analyst for broadband access and pay TV at Infonetics. He noted that multiscreen video is growing quickly: 6 percent of survey respondents offered the service last year, 55 percent are offering it today and 80 percent plan to offer it next year.

There are shifts afoot in the STB OEM space too. According to Infonetics, Arris (News - Alert) and Pace (the latter is a Broadcom customer) have supplanted Chinese giants Huawei and ZTE as the perceived top residential gateway vendors among Infonetics' operator respondents.

"Service providers are increasingly relying on residential gateways instead of basic modems to deliver voice, data and video services because they can be remotely managed, have an open application layer to add on new features, and offer higher throughput, greater security features, and the ability to monitor revenue-generating traffic within the home network," Heynan said.

Other major trends in the STB market include digital terrestrial transitions, digital cable transitions, HD service offerings, hybrid (CATV-IPTV (News - Alert), DBS-IPTV, and DBS-DTT) set-top boxes, and the adoption of cable video gateways. 

Edited by Maurice Nagle

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