The global set-top box market declined 10.2% in the first quarter of this year to $3.1 billion, but it's nothing to worry about, says Infonetics Research, as the decline is primarily attributed to normal seasonal trends. The firm also anticipates new growth going forward in hybrid STBs.

"Despite a quarter-over-quarter decline in the global set-top box market, all major segments are up from this time a year ago in both revenue and shipments, indicating that the pay-TV market is rebounding after two years of significant declines," said Teresa Mastrangelo, directing analyst for video at Infonetics Research."

In 1Q11, evidence continued to mount that operators are in the early stages of implementing hybrid IP networks that offer the best of both OTT (over-the-top) and on-demand services combined with linear broadcast. As such, the hybrid segment of the market will experience the strongest growth over the next few years."

The cable STB segment continues to contract as subscriber growth remains limited across the lucrative North America and EMEA markets and demand slows for advanced services; as such, the cable STB segment experienced the strongest sequential revenue declines, down 12.9% in the quarter.

Also, lower than expected demand for IPTV services in EMEA during Q1 2011 resulted in strong declines in shipments into this region, causing an 11.7% drop in global IP STB revenue.

Demand for OTT media services remained strong in Q1, but challenges lie ahead for this category, Mastrangelo said. Nonetheless, during Q1, hybrid STBs represented 8% of revenue and 7% of shipments. Netgem leads in hybrid IP/OTA STBs, Motorola leads in hybrid IP/QAM STBs and ADB leads in hybrid IP/DVB-S STBs, the research found.

Motorola and Pace continue to battle it out for overall STB market leadership, with Motorola leading in revenue and Pace leading in unit shipments. Cisco is the market share leader in both revenue and shipments in the IP STB market. And Echostar leads in worldwide satellite STB revenue, "in a tight race with Technicolor," said Mastrangelo.