Sam Rosen, practice director at ABI, wrote: "There are three drivers to set-top box market consolidation: geographic reach and overall scale, platform expertise, and end-to-end technology capabilities. On the semiconductor side, we expect Intel or Marvell to bulk up their portfolio around the set-top and broadband IC markets. From the hardware/OEM side, we see large players such as Ericsson picking up companies, possibly including Technicolor. We also see TiVo extending its end-to-end capabilities on the infrastructure side, and possibly adding manufacturing expertise for the operator market."
ARRIS' acquisition of Pace created the largest set-top manufacturer, with 22% worldwide market share. ARRIS is about three times larger than most competitors including EchoStar, Technicolor, Cisco and Humax.
The pay TV set-top box market is driven by transition to digital platforms and HD video worldwide, a process that continues apace in many regions. Excluding the Asia-Pacific region, the market shows a 2% annual decline through 2020 from a high of about $12.6 billion in 2012 to 2014. The Asian market was nearly $6.5 billion in 2014, and unless other regions approach their digital transitions with the zeal that China did over the last few years, is expected to slide nearly 25% by 2020.
"Business consolidations will also be joined by technology consolidations over the next few years," continued Rosen. "Operators have already taken more ownership of WiFi access points in their broadband products. The coming years will bring consolidation of broadband access points with video set-top boxes, integration of home automation and control functions, and eventually integration of the fixed access network with cellular access networks."