[Source: Telecompaper]

The shipment of over-the-top (OTT) set-top boxes (STBs) sold at retail will this year pass shipments of IPTV STBs used for pay TV services, IHS said. The global number of retail OTT STBs shipped, including Apple TV, Chromecast and Roku boxes, will this year reach 31 million, compared to 30 million IPTV STBs shipped by telecom companies.

IHS noted that OTT STBs were initially written off as a temporary measure for consumers to bring OTT video to TV screens; it was assumed that smart TVs, Blu-Ray disc players and gaming consoles would eventually take the place of STB devices. And yet, while consumer adoption of smart devices has grown considerably, OTT STBs have still managed to flourish, the report showed.

The success of OTT STBs can be attributed to the content strategies of their respective vendors. Apple, Google and Roku have been much more aggressive in adding new content sources and apps to their STBs than TV and gaming console vendors have to their devices. This means that a dedicated box enables viewers to choose the OTT services they watch on their TV, rather than simply living with the pre-installed options.

Pay-TV operators have also embraced OTT by deploying their own internet-connectable STBs and OTT services designed to compete with OTT video providers. Operators are increasingly relying on OTT capabilities in their STBs to enable catch-up TV, larger video-on-demand (VoD) libraries, as well as search, recommendation and other content discovery features. Consumers now expect this level of functionality. Some Belgacom, Dish Network, Virgin Media and other pay TV operators have also started providing access to Netflix and other OTT video provider services.

Total shipments of connectable pay-TV STBs, which include IPTV STBs, as well as cable TV STBs and digital terrestrial television (DTT) satellite STBs, have far outpaced shipments of OTT STBs. In 2018, connectable pay-TV STB shipments will grow to 169 million units, compared to 38 million retail OTT STB shipments. As global pay TV markets trend towards saturation, total pay-TV STB shipments will decline 5 percent to 197 million units shipped between 2014 and 2018. But connectable pay-TV STBs will provide an important opportunity for STB vendors to grow their business, despite this overall decline, IHS said.

Given the rate at which pay TV operators are integrating OTT services alongside traditional pay TV features on their STBS, it’s likely that pay TV STBs will prove to be a bigger threat than smart TVs to the retail OTT STB market, the report said.