Global set-top-box shipments hampered by challenging sequence of circumstances

The set-top-box market continues to shrink, with global market volume retreating by 2% in 2023. That’s according to a new report from Futuresource Consulting, which identifies a combination of challenges facing the industry.  However, shifting strategies and a keener focus on operating system software may provide some opportunities as the market moves forward.

A rising tide of consumer indifference

“Evolving consumer tastes are stripping the market of its appeal,” says James Manning Smith, Senior Market Analyst, Futuresource Consulting. “The home entertainment world has changed, with Pay-TV and the set-top-box being left behind as the consumer’s main outlet for video services.”

As a result, Pay-TV subscriber numbers are falling, while consumer behaviour is changing, shifting towards the smart TV operating system to access video-on-demand and streamed content.

“At the same time, macroeconomic conditions, rising interest rates and the subsequent cost of investment are negatively impacting Pay-TV operator expenditure on new box deployment and R&D. This is creating a domino effect, with lack of box innovation restricting replacement opportunities, which is extending lifecycles, and consequently reducing annual shipments.”

Set-top-box stockpiles impacting demand

Futuresource notes further problems for the industry. Pay-TV operators have been carrying high levels of set-top-box inventory, stockpiled due to supply chain uncertainties caused by the coronavirus pandemic. And while some vendors expect to see demand improve as inventory is deployed, the steady decline of Pay-TV subscribers will continue to result in a falling total addressable market.

“As Pay-TV operators are challenged by unfavourable market conditions, and as consumer behaviour changes, investing in new set-top-box deployments becomes harder to justify,” says Manning Smith, “Instead Pay-TV providers are investing in content partnerships and bundling offers with video on demand providers, or even pivoting to add-on services or products outside the realm of home entertainment.”

IPTV provides hope for the industry

While both satellite and cable box volumes fell by 4% last year, there is some opportunity within IPTV set-top-box, which grew by 0.6%. This is due to evolving platform strategies, with IPTV Pay-TV offerings such as Sky Stream, DIRECTV and MagentaTV One marking the future direction of Pay-TV services.

“IP-based delivery has grown in popularity for both consumers and operators,” says Manning Smith, “as there’s no requirement for specialist equipment and installation, reducing investment requirements for service delivery and often lowering service charges. We expect IPTV set-top-boxes to remain the only growth category over the forecast period.”

Futuresource projections show that overall set-top-box demand will continue to fall away across the forecast period, with a CAGR of -2% between 2024 and 2028.

Futuresource Consulting’s Global Set Top Box Market Outlook report assesses the current state of the market and provides an outlook on the shape of the sector over the next five years. For more information or to make a purchase, please contact luke.brodin@futuresource-hq.com.

About the author

James Manning Smith

James Manning Smith is a Senior Market Analyst, leading Futuresource’s entertainment hardware and smart home research team. Over eight years, he has supported clients with electronics market insights and forecasts, covering the mobile device, home electronics, telecoms, and data storage markets.