4K Set-Top Box Sector Will Quadruple in '16

The 4K set-top box market is undergoing a growth spurt this year ahead of increasing by 46% annually through 2021.

According to ABI Research, the 4K set-top box market will increase fourfold from less than two million units last year to more than seven million in 2016.

Dogged by declines in the value of pay-TV and free-to-air boxes, the overall set-top box market is facing a 9% drop this year to less than $16 billion in revenue.

"Digital transitions are taking longer than initially planned and the market is experiencing significant downward pressure on set-top box pricing," said Sam Rosen, managing director and vice president at ABI Research. “Hardware revenues will fall, but value through software and services remains an opportunity. Providers should be looking to take on logistics and lifecycle challenges, in addition to testing and integration, to help the overall market flourish as well as focusing on 4K and HDR color set-top boxes in the years ahead."

The set-top box sector has been undergoing consolidation with Arris buying Pace and Technicolor acquiring Cisco's set-top box unit. Huawei Technologies Co. Ltd. , at just more than $1 billion in revenues, jumped ahead of a number of vendors that stumbled a bit with drops of 25% to 40% in revenues, including EchoStar and Humax, according to ABI Research.

"Significant market consolidation already occurred," Rosen said. “Operators worldwide are now carefully considering new opportunities to deliver video services, specifically through the use of streaming media adapters and adaptive bitrate, better known as ABR, IP-based protocols.

"It is important to note that satellite broadcast remains a significant factor in pay-TV distribution while terrestrial platforms, augmented by set-top boxes with some storage and advanced IP services, are becoming important for select telco operators who are backing away from licensing content.”

China still maintains its lead as the largest set-top box market by units, but ABI predicted that India will likely surpass China as the shipment leader in 2018 or 2019.

— Mike Robuck, editor, Telco Transformation