Monday June 22, 2009 – Antonette Goroch
While pay TV STB shipments were one of the few electronics segments to log growth in 2008, and are forecasted to continue their good fortune with gains again in 2009, the good times will not continue to roll for all STB suppliers. Suppliers will have to diversify their customer bases – both by geography and delivery platforms -- to remain standing as the market matures in many areas.
DTC’s most recent research showed that STB shipments across pay TV platforms saw some 21% growth between 2008 and 2009, but only some suppliers saw shipments grow, and others even posted declines. Though some region specific factors (such as new sub growth in China or DTA adapters for cable in the U.S.) boosted shipments on a case by case basis, a key factor for success was the ability to serve multiple systems and regions.
Successful suppliers were those able to tap into multiple markets and platforms, rather than one region, platform or system. Pace, once a fairly niche player for the European market, is forecasted to realize 16% growth in pay TV STB shipments from 2008 to 2009, more than twice the overall market rate, due to its successful efforts to expand its tier one system customers across platform and regions. Similarly, ADB, which also employs a multiple platform/region strategy, is forecasted to see 26% growth in pay TV STB shipments in 2009.
Those suppliers serving a less-diversified customer base were far more susceptible to the competitive nature of the pay TV business on a system-by-system basis. EchoStar, for instance, generates the vast majority of its STB shipments from Dish Network, the second largest DTH satellite operator in the U.S. EchoStar is forecasted to see shipments fall 8% in pay TV STB shipments in 2009 due to increased competition from both digital cable and IPTV, along with a maturing subscriber base of 14 years. EchoStar has made several moves to combat the situation by penetrating the North American IPTV market through the ViP-TV service (serving customers of the now defunct IP-Prime), as well as its joint venture in the Mexican pay TV market with Mexican cable operator, MVS Communications.
This type of diversity will only become more important over coming years, as declining demand in the U.S. and other mature pay TV markets slow shipment growth overall. STB suppliers able to establish themselves now with a diversified customer base will have a far stronger position as the market peaks and slows.
