US researcher In-Stat says that the IP set top market grew 55% last year but that this breakneck growth won’t continue. To some extent that’s just a headline to sell reports. IPTV services have done well and finally are starting to get closer to reaching some form of plateau but only because they represent a decent part of the pay TV market. Most IPTV researchers put the growth between 50% and 65% for 2008, and given the last quarter of 2008 was an economic nightmare and the first quarter of 2009 wasn’t much better, In-Stat thinks it is fairly safe to predict a little doom and gloom.
But in reality we see IPTV partly growing on Greenfield sites but mostly growing on the replacement of other Pay TV services ‘ with the worst affected being cable.
In-Stat argues that many telcos have already launched TV services, so there are fewer new customer prospects for vendors and that existing roll outs were slowed in early 2009 as the economic climate sapped investment by telcos.
‘Established telco TV providers like France Telecom, AT&T, Free, British Telecom, Deutsche Telekom, and China Telecom provided much of the subscriber growth that drives the demand for IP set top boxes,’ says Michelle Abraham, In-Stat analyst. ‘We expect this situation to continue in 2009 and 2010. However with few new deployments, unit shipments of IP set top boxes will see only slight increases in 2009 and 2010.’
That’s not what our contacts are telling us. Many IPTV systems have had to be content to live on a trickle of customers over the past few years while key service problems were ironed out. Last quarter alone the majority of IPTV systems in Europe added around 7% to their entire customer bases, whereas Deutsche Telekom had got its price and offering wrong in the past, but fixed it and has accelerated dramatically, adding a huge number of customers, which represented 27% of its installed base. This is all about continued customer acceptance and while the In-Stat logic is right about fewer new telcos being there to convert, the roll out should continue until telco TV represents something like a third of all pay TV, however long that takes and it will be measured in decades.
Rival researcher Informa has said that there will be 57 million IPTV homes by 2013 which is three times the number today, and we’re more inclined to go with that scenario continued steady growth.
Other conclusions that In-Stat reached were that more than 50% of 2009 IP set top box unit shipments in Western Europe will have hard disk drives. That sounds true and very profitable for set top suppliers.
Other key technology trends are improved power management, support for 3D graphics (not video), multiple codecs, and open software platforms and In-Stat reckons that the average bill of materials for a HD IP set top box will fall below $50 in 2010. There are some set top players we know who won’t be grateful to In-Stat for revealing that figure, true or otherwise.
In-Stat says that Motorola held onto the top market share position in IP set top boxes in 2008, but its market share slipped from 2007 as Cisco’s Scientific Atlanta ramped up shipments. Do US researchers only see US companies? It didn’t give figures for the numerous Chinese, Japanese and Korean suppliers, nor Pace, which is doing very well or UK based Amino, one of the original rivals to Kreatel, which formed the core of the Motorola sales when it was acquired a few years back. Both Pace and Amino acquired rivals last year ‘ Pace took the Philips set top business and Amino bought Tilgin, and both had record years, despite the downturn.