Monday April 12, 2010 – Antonette Goroch
China, the largest cable market in the world with more than 170 million subscribers total, has come to dominate digital cable STB shipments, having now completed its sixth year of its massive digital transition. Indeed, DTC estimates China made up more than 40% of total worldwide digital cable STB shipments in both 2008 and 2009, and will again in 2010.
Although Chinese cable subscribers are helping to haul in the big numbers, they haven’t done much to advance high-margin services (such as HD, VOD and PVR) or the boxes that receive them. To date, the receivers are almost exclusively low-cost STBs (some have reported per unit prices of under $50), with only basic one-way functionality. Placing digital STBs in the U.S and Western Europe is a higher-margin proposition for suppliers as receivers that can handle HD, VOD and other high-end goodies are common place. But now that the initial infrastructure has been put in place, it’s only a matter of time before Chinese operators begin offering boxes that receive HD and include high-capacity hard drives for PVR services.
Hunan Cable Group, one of the largest Chinese cable operators with more than 5 million subscribers, for instance, became the first to announce this March that it would launch an MPEG-4 AVC based HDTV service in 2010, which will include both HD channels and an extensive VOD library. The two largest domestic STB suppliers, like Coship and DVN, each announced they will soon make available new families of HD STBs that support high-end services and decode video in both MPEG-4 AVC and MPEG-2.
To date the digital cable market has been dominated by domestic suppliers. There’s no doubt that Western STB suppliers would like a slice of the higher-margin STB market especially now that significant market saturation is a reality in the U.S. Western Europe. Whether or not they’ll get it remains to be seen – stay tuned.
