With digitization of the cable TV industry in India soon reaching its sunset date, MSOs are making large capital expenditures to provide STBs to their subscribers.
Indian Market Scenario
Out of the targeted 120 million homes to be digitized in Phase-III and Phase-IV, 41 million STBs have been rolled out in Phase-III markets and 17.8 million in Phase-IV by various distribution platforms from 2014 to 2016. Out of these, 60 percent of STBs have been deployed by DTH operators. The market is expected to reach 122,000 crore by 2017, growing at a CAGR of 26 percent from 2016-17.
With respect to Phase-III expansion, while the initial push resulted in STBs being seeded in the market as per plan, the multiple court cases filed by different cable operators seeking a stay, delayed the process. The benefits of this expansion can now only be expected to accrue over a longer period as compared to what was anticipated earlier.
Major players offering STBs include MyBox, Arion, Chang Hong, Skyworth, and Sichuan Jiuzhao Electronic. Other players having presence in this segment include Kaon Media, Technicolor SA, Homecast, Pace Plc, Logic Eastern, and Indieon.
Industry players have been actively migrating to MPEG4 technology for STBs. While such STBs cost marginally higher compared to the earlier MPEG 2 STBs, they offer nearly 30 percent savings in bandwidth costs. They also support other value-added service features including personal video recording, which form an essential block for driving up subscriber ARPUs in digitized markets.
With the increasing number of television households in India, there is a great potential for STB industry not only for the foreign manufacturers but also for the local manufacturers. Benefits include clarity of digital picture, availability of more channels, video on demand, and digital video recording (DVR).
As the market is technologically stabilizing toward a set of standards, the Indian companies are gearing up their design process, building quality and product support to ensure they stay in the business for a long term. Being a mass scale kind of technology, the primary focus of the new companies is to drive sales and naturally ramp up the production of devices and equipment.
Companies are now shifting their focus to cater to each and every segment of consumer discretely with customized designs, both in terms of hardware/software and subsequent pricing segments with focus on STBs with DVR facilities and HD range of STBs, Android STBs, and home media services; the innovative features are like UI in local languages and games.
The absence of chip and microprocessor level-design and manufacturing is proving to be a big challenge. Lack of assembly lines owing to the constraints of huge investments and time lag in the face of immediate demand and uncertainty is a big limitation faced by Indian companies. With huge competition from imports, the process of integration on assembly lines which normally takes place in huge manufacturing units is being outsourced to local assembly lines on job-work basis.
Though some of the Indian companies are importing in the branded middleware, Indian manufacturers are undertaking the in-house development of middleware in a significant way. In case of CAS, the presence of Indian vendors is predominant because of the fact that CAS/SMS software development is contiguous with Indian software companies' strength in the development of applications.
Investment in R&D is necessary to keep rolling out new designs and improve the already running models.
The global STB market is largely affected by the rapid use and adoption of digital television technology all over the world. Smart television and HD technology have pushed the use of STB to a great extent. Cable digitization has increased the demand for STBs. Moreover, consumer demand for media-rich home entertainment services has fuelled the growth of the global STB market. Further, increase in disposable income and the emerging middle class have led to drive the global STB market.
The increasing penetration of 3-D and 4K TVs and escalating demand for large-screen displays are fueling the demand for ultra high-definition (UHD) STBs. Smart features such as STB operability through voice commands given by remote control unit (RCU) is garnering high potential. The computational capabilities of STBs in combination with the advent of quality standards to satiate growing customer expectations have culminated in the STB market growth.
The global 4K STB market size is projected to reach USD 7.18 billion by 2024, according to Grand View Research. The growing inclination toward UHD video viewing can be attributed as a major reason for the market growth.
IPTV 4K STBs accounted for over 20 percent of the market share in 2015 and are expected to witness considerable growth over the forecast period. Increasing broadband penetration can be attributed as the major reason for this rise The IPTV STB product segment is projected to gain traction owing to benefits such as integration of TV, PC, home phone, and wireless devices, offering a high quality of viewing experience to the end users.
The Asia-Pacific region was valued at over just over USD 50 million in 2015 and is projected to witness high growth over the next 8 years. India has emerged as a lucrative market for UHD STBs with the country expected to witness a CAGR substantially higher than the regional average. Several DTH operators including Tata Sky, Videocon, and Airtel have launched UHD STBs and are attempting to achieve a higher rural penetration with affordable regional packages.
Technology giants such as Apple Inc. have managed to make their mark in this competitive industry. The Apple TV device aids the streaming of OTT content and other videos over the Internet. The launch of advanced OTT devices, such as Google Inc.'s Chromecast media streaming device and Amazon's Fire TV STBs, has opened up new avenues in the industry.
The ongoing analog switch-off and a global shift to digital technology mark the growth of STB market at the global level. Digitization of cable and other technological upgrades can bring notable growth for many years to come. The growing demand will force investors to create upgrades in the technology used as well as in the current infrastructure.
In the long term, the STB market is expected to shift to more users. More customers are expected to choose services that can provide higher speed, security, and personalization.High demand for satellite TV and its associated set-top box (STB) has become a settled fact today. Digital TV offers new technology for broadcasting television signals. Analog TV transmission has been the traditional method of broadcasting till now. The government-mandated digital addressable cable TV system (DAS), which is scheduled to be completed by December 2016, has been the main demand driver for STBs, and the market for STBs has gained significant momentum in the past four years.