STB market consolidation to continue

DetailsJoseph O'Halloran | 21 June 2015

Avago's buy-out of Broadcom and the ARRIS acquisition of Pace will only be the latest in significant consolidation that will continue to impact the set top box market says ABI Research.

Looking at the STB arena in its Set-Top Box and Home Networks Market Research report, the analyst noted that with the English company within its fold, ARRIS is now the world's largest STB with 22% worldwide market share of the set-top box market. ARRIS is now about three times larger than most competitors including EchoStar, Technicolor, Cisco, and Humax.

Overall the analyst believes that the pay-TV set-top box market is driven by transition to digital platforms and HD video worldwide—a process that continues apace in many regions. Excluding the Asia-Pacific region, ABI calculates that market will show a 2% annual decline to 2020 from a high of about $12.6 billion in 2012 to 2014. The Asian market was worth nearly $6.5 billion in 2014, and, warned ABI, unless other regions approach their digital transitions with the zeal that China did over the last few years, will slide nearly 25% by 2020.

ABI sees three drivers to set-top box market consolidation: geographic reach and overall scale, platform expertise, and end-to-end technology capabilities. Postulating as to where the next moves may come from, Sam Rosen, Practice Director at ABI Research said: "On the semiconductor side, we expect Intel or Marvell to bulk up their portfolio around the set-top and broadband IC markets. "From the hardware / OEM side, we see large players such as Ericsson picking up companies, possibly including Technicolor. We also see TiVo extending its end-to-end capabilities on the infrastructure side, and possibly adding manufacturing expertise for the operator market.

"Business consolidations will also be joined by technology consolidations over the next few years," continues Rosen. "Operators have already taken more ownership of Wi-Fi access points in their broadband products. The coming years will bring consolidation of broadband access points with video set-top boxes, integration of home automation and control functions, and eventually integration of the fixed access network with cellular access networks."