Shipments of free-to-air (FTA) set tops are projected to offset excessive losses in the pay TV set top sector, or so proclaimed a spate of sugarcoated headlines this week, ignoring the booming growth seen in the media streaming device market while propping up the traditional set top sector through tenuous manipulation of shipment figures.
But this mincing of words and numbers alike is no fault of Futuresource Consulting which published the data this week, but of certain news outlets who depend almost entirely on the continued support from the Comcasts and Liberty Globals of the world. So, Futuresource’s latest forecast states specifically that the worldwide media box market, comprising connected TV streaming devices along with traditional pay TV set tops, is forecast to experience a 1% rise in shipments this year, while a separate finding claims the pay TV set top market will defy all odds and climb 1% this year.
Naturally, pay TV advocates then jumped on the chance to hype up how 2019 will mark the resurgence of the set top market in a highly misleading manner.
Futuresource attributes a declining pay TV set top market directly to cord cutting, although a silver lining will see a much larger – but not complete – offset thanks to a surge in FTA set top shipments compared to the total media box market. It warns, however, that a flattening in the global pay TV set top market masks diverging regional trends. Steep declines in North America will be balanced by gains in Latin America and a large part of Asia.
Why then has no one taken it upon themselves to make the point that a rise in FTA set tops in Asia and Latin America is in no way whatsoever beneficial to pay TV operators or manufacturers of cable and satellite set tops and their component suppliers in North America and Europe? This is the real immediate issue facing the industry and the cynical edge of this article’s opening gambit all of a sudden seems wholly reasonable.
“While satellite pay TV set top volumes will remain flat during the forecast period and digital cable boxes will see a CAGR decline of 2%, we expect IPTV to grow from 56 million shipments in 2019 to 67 million in 2023, representing a CAGR of 5%, as internet infrastructures improve,” said Futuresource Senior Market Analyst Matthew Rubin.
Meanwhile, media streaming devices will be the predominant driver of the total media box market in 2019, forecast to rise by 8% through 2019 – the largest growth seen in any flavor of media box – to reach 87 million units this year. North America will account for more than 1 in 3 media streaming device shipments this year, while the total media box market will surpass 350 million shipments in 2019, with “a little help” from the FTA set top segment.
From this, we can see streaming devices have a 25% share of the total media box market, while IPTV set tops have a 16% share. Futuresource has avoided giving out exact figures for cable, satellite and FTA set tops in the press release, giving us a missing 59% market share (206.5 million units) to play with. No doubt though all three of these remaining hardware types are being squeezed by the rise of media streaming devices in developed regions, while FTA hardware is doing a stellar job at providing cord cutters with a cheaper alternative in regions where internet infrastructure is less reliable.
Another silver lining for the traditional set top market, according to Futuresource, stems from video codec changes as a result of a rising demand for UHD content. “With UHD rapidly becoming commonplace in developed markets, the industry is once again seeking alternative codecs that provide further efficiencies in video compression. This is positive news for set top vendors because it seeds replacement cycles as broadcasters and SVoD providers begin to take advantage of improved compression schemes. We forecast this transition commencing early in 2022, as VVC (H.266) and AV1 become more extensively available in hardware-based SoC implementations,” said Futuresource.
There is a thin line between providing genuine insights into the global consumer video hardware market and misleading readers by bundling very different technologies into the same data sets. Futuresource walked a tightrope here while other research firms have been much more reckless in reporting their findings. As always, Faultline Online Reporter feels compelled to provide clarity when these sorts of headlines arrive in our inbox.