Market research firm Infonetics Research earlier this month released its fourth quarter 2010 (4Q10) Cable, Satellite, IPTV, and OTT Set-Top Boxes and Subscribers market share and forecast report, now led by analyst Teresa Mastrangelo.

ANALYST NOTE

"In the fourth quarter of 2010, we witnessed the dramatic growth of over-the-top services, as service providers and equipment vendors hit the 'sweet spot' for pricing. However, these services continue to complement pay TV rather than replace it. On a global basis, demand for set-top boxes continues to increase as more countries transition from analog to digital and more operators offer enhanced services such as high definition and DVR. We also are seeing increasing demand for hybrid set-top boxes, which leverage the existing broadcast infrastructure, but utilize the broadband connection to incorporate OTT content and increase interactivity and on-demand services," notes Teresa Mastrangelo, directing analyst for video (cable, satellite, IPTV video) at Infonetics Research.

SET-TOP BOX MARKET HIGHLIGHTS

• Worldwide set-top box sales dipped 1% in 4Q10 from the previous quarter, to $3.63 billion, with cable STBs seeing the biggest sequential decline
• Infonetics projects STB shipments to increase 25% from 2010 to 2015, while revenue declines 5% to $13.1 billion, as STB average selling prices continue to drop
• Over-the-top media servers (standalone set-top boxes such as Apple TV, Roku Media Player, Boxee STB) experienced the strongest sequential growth, nearly doubling quarter-over-quarter as providers such as Netflix and Hulu launched low-cost streaming services toward the end of 3Q10
  • Netflix added more than 3 million subscribers in 4Q10 -- nearly twice as many as in the previous quarter, and 3 times as many as during the same period in 2009 -- now supporting a subscriber base that exceeds 20 million
  • Hulu introduced its paid service, Hulu Plus, last year at a similar price point; its subscriber base is expected to exceed 1 million in 2011
  • Amazon UK's purchase of LOVEFiLM will likely drive increasing OTT media server demand in Europe
• OTT media server revenue jumped 90% in 2010, and is forecast by Infonetics to grow to $1.16 billion in 2015
• The race for vendor leadership in the overall set-top box market is extremely tight, with Motorola just edging out Pace and Technicolor for worldwide revenue in 4Q10 due its focus on the lucrative North American market and offering more STBs with HD and DVR functions, which come with higher ASPs