Set-top box vendors set for consolidation
| 29 May 2014
As their customers, such as AT&T and DirecTV, embark on mega M&As, set top box (STB) vendors will be required to make similar consolidation, a new ABI Research paper asserts.
In its Set-Top Box and Home Networks Market Research report, ABI said that the set-top box market has generally maintained historical leadership positions based on a cable, satellite or IPTV focus.
Yet ABI warns that this definition won't meet the needs of the rapidly merging and growing modern operators today who are looking at extending their services over multiple networks. "This mature, yet fragmented market, in which the top five vendors account for about 37% of revenues, is ripe for further consolidation," argued ABI Research practice director Sam Rosen. "We continue to believe that integration of historically separate cable and IPTV providers with satellite set-top OEMs would bear fruit in the increasingly hybrid set-top box world generated with acquisitions such as AT&T's acquisition of DirecTV...Pace performed a significant feat increasing revenues slightly with 10% lower volumes by focusing primarily on the high-end gateway market. This position, along with its focus on services, seems to be yielding fruit."
Looking at the current composition of the STB arena, it noted that of the top five set-top box vendors—ARRIS, Cisco, Technicolor, Pace and EchoStar—most are heavily weighted to one sector, or, in some cases, have robust proportions serving two of the three sectors. ABI calculates that ARRIS was market leader in 2013 generating with $2.1 million in revenues and shipping about 18.5 million units thanks to a cable and IPTV focus. ARRIS was ahead of Pace, which ABI regards as 'over-weighted' on satellite with smaller cable and IPTV segments. Pace maintained its second position in revenues while falling behind Technicolor from a volume perspective.