In a bid to increase the competition in the pay-TV content space, the Federal Communications Commission (FCC) plans to relieve consumers of their set-top boxes by providing TV apps that function across digital media devices. Until recently the pay-TV companies hardly faced any competition when it came to their set-top box hardware, which is why over the last two decades the rental prices have increased significantly. It is to control this monopoly; that FCC has come up with such a proposal.
The set-top box market – A brief
Set-top box (STB) is a device connected to the television and allows users to receive unencrypted subscribed channels through an addressable system for viewing encrypted channels. It can convert both analog and digital signals into visuals. STBs also include interactive services such as video on demand (VOD) and the freedom to pay only for specific channels. There are four main types of STBs available in the market today: cable, IPTV, satellite, and hybrid.
Advances in technology along with increasing demand for high-definition videos with better clarity and quality are the major drivers for STBs throughout the globe. Also the advent of HD TVs, and multiple TV sets in a household are other major factors behind the growing demand for STBs. It is expected that the global transition from analog to digital TV will be completed by the end of 2016. At present, it is the on-going migration to HD format which is driving the STB sales in developing countries such as China and India. Analysts at Technavio are of the view that as the migration to the HD format gets completed, the value of global set-top box market might decline to $13 billion by 2020.
In the year 2015, the STB market in the Americas stood at the value of around $5 billion. Moreover, as this is one region, especially North America, which is experiencing market saturation due to technological obsolescence; market analysts are of the view that in the next five years the value of the STB market in the Americas will decline. Though at the same time they are also of the view that UHD STBs might surely push the growth of the market.
Global HD STB market 2015-2020 ($ billions)
FCC’s proposal and its effect on the STB market
Surveys show that an average US household pays a rental fee of around $232 per year on set-top box. It is to bring down or rather get rid of this cost that the FCC has proposed TV apps which will function across digital media devices. In fact, the pay-TV providers will be required to provide free apps to consumers along with providing greater choice in how they obtain pay-TV content by enabling access to universal search across all video content.
This proposal of FCC is seen a positive step for native tech companies like Google, Apple, and Amazon, as can come up with streamlining devices once this proposal moves forward.
Though it will be too early to gauge the effect of FCC proposal on the STB market in America or for that matter on the global STB market; the response to this proposal from industry analysts has been a mixed one. While on the one hand many believe that the FCC proposal will give sweeping licensing powers to the government and regard the move to be beneficial only for a few giant technological companies – there is a growing opinion that if the proposal comes into effect it is sure to break the monopoly of the pay-TV operators, as they will be required to make video applications for third-party devices, potentially letting customers watch TV without renting a cable box.
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