Recent market research shows that despite the down economy, consumers are reluctant to cut back on their broadband television services.

While it’s true that many consumers’ monthly cable television bills have increased during the past year, most of them continue to see value in the services they are receiving, mainly because -- through the introduction of high definition television, video-on-demand and interactive television -- those services keep expanding and improving. As an indication of the growing popularity of these new services, a recent report from the Cable & Telecommunications Association for Marketing shows that HD television is now available in 53 percent of all US homes.

As a result, cable operators and telcos are continuing to invest in their networks – this in an effort to deliver even more compelling and exciting services to their customers, as well as to compete effectively against each other in the increasingly cut-throat IPTV (News - Alert) market.

One of the most important hardware components of any service provider’s access network is the IP set-top box (IP STB). The IP STB is the critical end-device that delivers the functionality to the customer – the “self-provisioning” that facilitates rapid uptake of the providers’ services. What’s more the IP STB is increasingly playing an important role as the collection point of end-user data for the provider.

IP STBs are also playing an increasingly important role in the service provider’s control over quality of service. They have advanced to the point where a service provider can make critical changes in performance simply through remote and automated control of the IP STB itself from the central office. This capability is highly desirous to the service provider because it enables them to avoid dispatching service technicians and paying for costly truck rolls. The more intelligence a service provider builds into its IP STBs, the more granular the control it has over the end-user experience.

All of this means things are looking good for IP STB market. According to a recent report from market research firm In-Stat (News - Alert), the IP STB market is anticipated to generate more than $3 billion in market value by 2014. Helping to propel this is the global phenomenon of switching over from analog to digital TV services. In the US, the FCC recently mandated the transition of all analog television signals over to IP (as of June 12, 2009) – and the changeover included a program wherein users could purchase a digital television (DTV) converter box – which is comparable to an “over-the-air” STB. This in turn has done much to boost the market growth.

As ABI Research notes in a recent press release, this analog-digital switchover “has also brought about a progressive momentum towards sophisticated box types as well as advanced compression technologies.”

ABI Research industry analyst Serene (News - Alert) Fong said "shipments of basic boxes across all television platforms have declined and will continue to fall throughout the six-year forecast period. In contrast, shipments of boxes with HD capabilities and MPEG-4 compression technologies - including HD hybrids - will head north."

The report finds that as more consumers (particularly those who were previously using analog television) come to recognize the improvements in signal quality that DTV (and flat panel televisions) can bring, they will be more inclined to subscribe to cable and telco services that deliver HDTV, and this in turn will help drive growth for service providers and equipment makers alike.

 

As the report points out, STBs are playing an increasingly crucial role in the home for accessing of entertainment and information services. This is especially apparent in mature high-speed Internet economies where service providers strive towards providing interactive bi-directional television, thereby leading to the growth of IP set-top boxes.

The report finds that Motorola and Cisco Systems continue to dominate the cable STB vendor list, with a combined market share close to 50 percent in 2008. Thomson (News - Alert) and Panasonic ranked highest in the DBS and DTT segments, respectively, in the same period.

"Vendors' strategies for retaining their market shares are targeted towards emerging technologies such as HDTV, IPTV and digital TV, as these are expected to be the main driving forces for STB sales in the coming years," Fong concludes.

The quarterly report, "Set-Top Box Shipments and Vendor Market Share," part of In-Stat’s “Home Networking Research Service” and “Digital Media Research Service,” offers STB shipments information and examines the growth potential across four digital video platforms -- CATV, DBS, IPTV and DTT. Detailed market trends, key vendors' market share and market forecast information for key regions are provided where available.