Is the Set Top Box (STB) Dying?

written by: Emma Wells

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According to some analysts, the set top box is on the brink of death.

NAB, the Connected TV Summit, and the TV of Tomorrow shows all touted the end of the set top box. It is a bold claim, but one that’s worth exploring,

What would cause the STB to become obsolete? And if the set top box actually died, what would replace it?

The thing is, most set top boxes (STBs) in the market are very basic, with limited functionality. There are few models with a Wi-Fi chip and browser- the two elements that consultant Michael Collette says will be essential for future developments.

TV operators are starting to re-imagine what the STB will be in the future.  At CES in January, Cisco modelled a hybrid solution called Videoscape “that brings together digital TV and online content with social media and communications applications”.

It is costly to breathe new life into the STB.  And as a result, cost often limits the deployment of new, better boxes that have the capacity to deal with advancing services.

Much like mobiles and computers are now quickly become obsolete, some people are starting to predict that set top boxes no longer have the capacity to keep up with sweeping industry changes.

This difference becomes especially stark when compared to the innovation potential of TV apps.  TV apps require substantially less effort to update than the STB or TV. This means that lifecycles can be accelerated, and there is more room for experimentation and development.

At the TV of Tomorrow show last week, Mike Boxham made it clear that he thought that the shift in enhanced TV is "firmly towards second-screen/ACR/watermarking, and not STB”.

Thinking outside the set top box

At the NAB show this year, it was predicted that STB’s relevancy was threatened by the advent of TV everywhere. While there was a lot of talk about 3D, LED, and HDSLR, the idea of TV everywhere could shake up consumer behaviour significantly- affecting not just what device people use to watch TV, but where and what they watch.

By connecting directly to consumer electronics devices, pay TV operators would be able to do away with “expensive and proprietary set-top box hardware” that needs to be installed and deployed in customers’ homes. 

At some point, TV apps could become the essential point of differentiation- just like we have seen in the mobile world.  Imagine a cell phone provider without an app platform. Seen Nokia's or Apples stock chart lately?

During the Connected TV Summit in London last week, Siemens even went so far as to say that TV apps on connected TVs can “throw the set top box out of your operations plan”.  If true, this prediction could spell trouble for STB manufacturers.

Pay TV Companies Exploring Alternatives

So if STBs are supposed to die, what are TV operators doing about it?

Yesterday, US pay TV operator Comcast announced that it’s trialling delivering TV channels using internet protocol technology rather than streaming them to set-top boxes. Comcast said that they would be delivering the service “in network” over its own infrastructure. By doing so, Comcast will be able to reach a growing number of connected devices like TVs, Blu-ray players, game consoles and the like.

According to Gigaom, this could also eventually lead to Comcast limiting the number of set-top boxes it has to roll out and support.

The future of the set top box

According Irdeto's Christopher Schouten, there are still business cases where the STB performs well; “if we look at industry trends, there are many markets where broadband is not yet as advanced, where [the set-top box] will be the dominant model for some countries."

And all the talk of the death of set top box could be overhyped – after all, in 2008 everyone was predicting STBs would die, too.

However, the major STB manufacturers do seem to be struggling at the moment. All four major manufacturers saw their average sales prices decline by between 2 and 12% in 2010. Whether the market rebounds in 2011 remains to be seen- but I would keep an eye on this space.

Emma blogs for TV Genius over at the TV Trends Blog. TV Genius is a software company that has specialised in TV content discovery, recommendations, search, and interactive TV guides since 2005.




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