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Cable Technology Feature Article

June 24, 2014

Home Gateways to Drive STB Software Growth

By Tara Seals, TMCnet Contributor

It’s becoming fairly obvious that today's consumers don't want their multichannel content confined to the living-room TV set. So for operators, the focus is shifting from traditional set-top boxes (STBs) to home-media gateways—which convert digital media streams between networks—and the software that enables these devices.

According to the latest SNL Kagan MRG report, client-side TV software solutions implemented on set-top boxes and home media gateways overall will see diminishing growth rates for total STBs, as that part of the market is expected to peak in 2015 and remain fairly static in 2016 and 2017.

However, the significant growth in home media gateways (a subset of total STBs) will be driven by increased demand in North America and Western Europe, which will account for the vast majority of total shipments between 2013-2017. Asia-Pacific and Latin America will experience accelerated growth in the latter years of the forecast.

"While total client-side STBs will grow by about 5 percent through 2017, home media gateways (also known as IP gateways or home media servers) will more than double, providing significant opportunity for software vendors," said Norm Bogen, research director at SNL Kagan MRG.

The findings echo STB forecasts on the hardware side. While the overall 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, according to Infonetics (News - Alert).

"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.

Edited by Maurice Nagle

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