2013/09/24 The “Virtual” Set-Top Box: Is It Really Impacting the Global Set-Top Box Market?

There’s been a great deal of speculation over the past year about the alleged “death” of the digital set-top box.  Much of this speculation has been centered around how new pay-TV distribution models, such as the emergence of non-traditional pay-TV service providers (Intel, Sony, etc.) and the expanded use of OTT video services, will drive current pay-TV service providers to develop and deploy “virtual” set-top box products.  The narrative goes on to say that these virtual products, which could be other non-set-top box consumer electronics products like game consoles or simply software platforms that move the functionality of today’s set-top box into the cloud, will soon turn the set-top box into an anachronism.

Here at MRG, where we have been tracking the set-top box market for years, we have come to two broad conclusions about the “death” of the set-top box narrative:

1. There has been a significant amount of experimentation in both the pay-TV and the consumer electronics industry surrounding the development of “virtual” set-top box products and platforms.  This means, in a nutshell, the threat is real.
2. However, in terms of demand for set-top box products, none of this experimentation has had much of an impact on the size and overall growth potential of the global set-top box market.

MRG recently published its annual worldwide set-top box report.  The report highlights that while the industry is experiencing changing demand dynamics for set-top box products based on where the set-top box is being shipped (by geographic region) and by type of set-top box being shipped (cable, satellite, IPTV, or DTT), overall demand for set-top box products has remained healthy and is projected to remain solid for the next few years.

Source: MRG

The preceding graphic illustrates MRG’s forecast for global set-top box unit shipments by geographic region through the year 2017.  The forecast shows:

• Global set-top box shipments in 2012 reached 231 million, up from 209 million in 2011.
• In 2013, set-top box unit shipments are on track to reach 234 million, a marginal increase over total shipments last year.
• During the period from 2014 – 2017, worldwide unit shipments are projected to stay steady, with total annual unit shipments holding at around 245 million.