Monday, February 9, 2009 – Antonette Goroch
The economic meltdown may be wreaking havoc on the consumer electronics industry, but the global market for digital cable receivers is surprisingly healthy. The worldwide upsurge in demand, however, is more for low-cost receivers vs. the more full-featured high-cost STBs that have dominated the market in recent years.
Indeed, DTC’s most recent analysis of the market shows stronger than expected unit shipments in 2008, surpassing 45 million units compared to our previous expectations of just 39 million. Two things are driving this bright spot—exceptionally strong growth in the Chinese digital cable market and U.S. cable operators needing to clear analog transmissions off their systems to make room for more HD programs.
Chinese digital cable subscriptions grew substantially in 2008, propelled by the Olympics and a favorable regulatory environment for operators. According to government figures, digital cable subscribers in China rose from 24 million in 2007 to 44.5 million in 2008 generating high growth in digital cable receiver shipments.
Comcast, meanwhile, the largest U.S./worldwide digital cable operator, began what is sure to be a trend among cable operators, placing large orders for low-cost digital-to-analog (DtA) converters that will be placed in homes that still have analog service. Many cable operators who still deliver analog programming want to free up bandwidth by delivering only digital programming to the home. In order to accommodate their customers who don’t want to purchase the digital service, cable operators will use these low-cost, small footprint DtA converters that allow subscribers to view the programming on analog TVs. Millions of the devices will likely ship into the market in the near future continuing to help boost digital cable receiver sales during severe economic conditions.
Despite these favorable shipment numbers, the market may be less lucrative for receiver vendors than it appears. A large portion of these units—those going to China, India and the U.S. DtA market—are bare bones, low-cost models. For example, Comcast reports it is paying just $35 per DtA unit. It’s unlikely there’s much margin for the converter makers, but given the current conditions, they’re probably glad to get the orders.
