Satellite Operators Will Drive High Growth Rates for the Hybrid Set-Top Box

[BGonaSTICK]

The recent temporary suspension of BSkyB's broadband movie download service, due to the release of a utility that circumvented digital rights management in Windows Media files, has focused attention on a new phenomenon: satellite operators have found a way to offer video-on-demand in competition with cable and telecom operators.

The solution requires the use of "hybrid" set-top boxes at customers' premises: boxes that combine IP video with DBS. Other "HSTBs" combine IP video with cable, or with digital terrestrial television. Annual shipments of such hybrid STBs will grow to more than 50 million worldwide by 2011, according to a new study from ABI Research, with western Europe accounting for the largest share.

"Because they don't offer 'triple-play' services," says principal analyst Michael Arden, "satellite operators are especially interested in hybrid STB technology."

The BSkyB service is the first large-scale deployment of this kind by a satellite operator. A DSL line is used as the IP back channel for the on-demand service. A combination of satellite and DSL feeds is received on the hybrid STB at the consumer's premises. Viewers get their regular channels from satellite, but when they order a movie on demand, it arrives via the DSL network's broadband line.

What will satellite operators' enthusiasm for this model mean for markets? "This year, about 20% of all HSTBs shipped will be for satellite services," notes Arden. "The remainder will incorporate cable or DTT technology with IP. But over time, that ratio will change. DBS Video HSTB shipments in 2011 will be ten times greater than they are today, and will account for a solid majority of all hybrid STBs."

The new ABI Research study, "Worldwide Hybrid Set-Top Box Markets", explores the drivers pushing operators to include dual video platforms on one service, and the impact that the trend will have on the STB market. HSTB shipments are tracked based on technology combination (IP-CATV, IP-DBS, IP-DTT) and by the type of operators utilizing the technology (cable, telecom, DBS, and DTT). The report includes an overview of STB vendor activity directly related to hybrid networks, and a summary survey of the video operators that are utilizing this business model.