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Analyst: Retail OTT STBs to overtake Telco IPTV

Global shipments of of OTT STBs sold at retail – including Apple TV, Chromecast and Roku boxes – will overtake shipments of IPTV STBs used for pay-TV services in 2015, according to a new report from information and insight source IHS. In 2015, 31 million retail OTT STBs will be shipped, compared to 30 million IPTV STBs shipped by telcos.

“OTT STBs were initially written off as a temporary measure for consumers to bring OTT video to TV screens,” said Daniel Simmons, director of connected home research at IHS Technology. “It was assumed that Smart TVs, Blu-Ray disc players and gaming consoles would eventually take the place of STB devices; however, while consumer adoption of smart devices has grown considerably, OTT STBs have still managed to flourish.”

Based on the latest information from the Set-Top Box Market Monitor report from IHS Technology, the success of OTT STBs can be attributed to the content strategies of their respective vendors. Apple, Google and Roku have been much more aggressive in adding new content sources and apps to their STBs than TV and gaming console vendors have to their devices. “Ultimately buying a dedicated box enables viewers to choose the OTT services they watch on their TV, rather than simply living with the pre-installed options,” Simmons said.

Pay-TV operators have also embraced OTT by deploying their own Internet-connectable STBs and OTT services designed to compete with OTT video providers. Operators are increasingly relying on OTT capabilities in their STBs to enable catch-up TV, larger video-on-demand (VoD) libraries, as well as search, recommendation and other content discovery features. This level of functionality has become a consumer expectation for pay-TV services. Some Belgacom, Dish Network, Virgin Media and other pay-TV operators have even started providing access to Netflix and other OTT video providers’ services.

Total shipments of connectable pay-TV STBs, which include Internet protocol television (IPTV) STBs, as well as cable TV STBs and digital terrestrial television (DTT) satellite STBs, have far outpaced shipments of OTT STBs. In 2018, connectable pay-TV STB shipments will grow to 169 million units, compared to 38 million retail OTT STB shipments.

As global pay-TV markets trend towards saturation, total pay-TV STB shipments will decline 5 per cent to 197 million units shipped between 2014 and 2018, “Connectable pay-TV STBs will provide an important opportunity for STB vendors to grow their business, despite this overall decline,” Simmons said.

“Pay-TV operators have a strong incentive to be the primary content aggregator in the household,” Simmons continued. “Given the rate at which pay TV operators are integrating OTT services alongside traditional pay-TV features on their STBS, it’s likely that pay-TV STBs will prove to be a bigger threat than Smart TVs to the retail OTT STB market.”

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