2006 was a very good year for cable set top box manufacturers. In fact, it was the best year ever.
Last year, worldwide digital cable set top box unit shipments hit a record 27.5 million, a significant increase over the 15.6 million units shipped in 2005. In conjunction with the huge increase in unit shipments, digital cable set top box revenues also set a new annual record. Worldwide product revenues last year reached $4.2 billion, up from $3.1 billion in 2005.
So what exactly was behind last year’s cable set top box bonanza? In a nutshell, there were three things:
- Demand for digital set top boxes in China skyrocketed. - The shift from analog cable TV service to digital cable TV service, especially in North America and Europe, remained. - Strong demand for high-end digital cable set top boxes, particularly PVR-enabled or HD-capable boxes, continued to boost unit shipments in North America.
The number one driver for last year’s record unit shipments and revenues was the spike in demand by Chinese cable operators for digital cable set top box products. China, with its 107 million cable TV households, has historically been an analog market. However, with Chinese cable operators rapidly rolling out digital video services in many metropolitan areas, demand for digital boxes is on the rise: Total Chinese digital cable set top box unit shipments exceeded 9 million last year, up from just over 2 million in 2005.
2007 is shaping up to be another good year for the cable set box market. Even with the looming June 2007 integrated security ban in the US, In-Stat is forecasting another solid year for cable set top box manufacturers.
For more details on what happened to the market in 2006, and what to look out for in 2007, check out In-Stat’s upcoming report “The Cable Set Top Box Market: Demand in China Drives Record Growth” (IN0703111ME), which is due to published in late February.
You’ll be able to access this report online when it’s published – in the meantime, take a peek at all of our Multimedia Entertainment Equipment research at: http://www.instat.com/catalog/mmcatalogue.asp?id=162
- Michael Paxton - Senior Analyst
, E-mail:mpaxton@reedbusiness.com
UGC Should Mean More than Just Funny Videos and Copyrighted Content
The debate over copyrighted material and whether it should have a place on sites like YouTube continues to hover over the User Generated Content space like a predator waiting to pounce. And while those providers who allow individuals to share content hope this predator has no teeth, its “bark” may still resonate throughout this market and lead to demonstrable effects that might markedly alter its landscape. With copyrighted content appearing on these UGC sites without permission, thoughts of the music industry’s debacle over digital music may spring to mind, and given recent actions by some content providers these thoughts could turn to convictions that we are headed down the same road. Point in case, Viacom recently asked YouTube to take down over 100,000 clips from their site. Is pirated music and these video clips one and the same, and if not, why all the fuss?
There is strong evidence that digital piracy has observable consequences to both the industry and perhaps to a lesser degree the transgressors, the debate over copyrighted material appearing on UGC sites, however, is far more complex than the MP3 craze and in truth these complexities make it more intriguing, particularly from an outside perspective. The ability for individuals to share content that they are passionate about would seem like a good thing—particularly when you consider that these short clips, by and large, are not substitutes for the content found on television (hence does not cause a shift in demand), which is a significant departure from downloaded digital music. Perhaps the content providers, like Viacom, have internalized the music industry’s battle over pirated songs to such an innate level that these recent actions, which intend to limit copyrighted content, were more reactionary than strategic, although more likely it boils down to a matter of “cashing in” on the UGC trend.
As sites like YouTube and MySpace generate revenues from content uploaded and viewed by their user communities it is understandable that content providers (e.g. CBS), who see their property in part driving this top line, want a piece of the pie. [In this case and going forward, content providers, while certainly applicable to both professional and amateur creators, will refer to the professional community for this discussion] Answering this call have been companies like YouTube who appear willing to share this revenue, which is rather magnanimous when you consider these sites also serve as a marketing platform for the content providers. As a side note YouTube also announced their intentions to start sharing revenue with their user community as well. And there is evidence that traffic at these sites has translated to improved viewer-ship offline. But with Viacom recently asking YouTube to remove more than 100,000 clips it again begets the question, why?
If Universal Music Group (who had previously threatened to sue), Sony BMG, CBS, and NBC among others have come to agreeable terms, why not Viacom? Statements made by Viacom mention a lack of fair market agreements and filtering tools. It would be too speculative to even consider that the other providers received less than fair market agreements or that Viacom was treated differently. And too presumptuous to think that Viacom decided to leverage its own UGC type site (iFilm) in place of YouTube. But what we can consider is why and how these sharing sites can expand the pie rather than cutting it up.
Consider the marketing of television shows. There are numerous advertisements (televised and online) encouraging viewers to tune in, and these ads certainly come at a cost. UGC sites that work within the confines of edicts outlined in the Digital Millennium Copyright Act (namely that they must remove content at the copyright holder’s request), that prevent downloading of content and impose constraints on length are in fact advertising these shows. They generate word of mouth (viral) marketing that is invaluable in a society bombarded by advertisements. Granted some may elect to watch these shows online, but as our research has illustrated in the past, many consumers still view TV watching as a “sitting on the couch” affair.
And when strategically evaluating how these clips will impact an operation, considerations regarding the exposure and change to viewer-ship behavior should enter the thought process. In other words if we were to devise a decision tree it should be more robust than just leave on or take off. Rather the choices should weigh the expectation/probability that these clips add exposure/buzz against reducing demand (viewer-ship) offline, while factoring in the shared revenue. Invariably a segment of the viewers will use these short clips as a substitute for televised/broadcast material and should rightfully be characterized as a detractor for demand. However we would be remiss to ignore the benefits afforded to these content providers in the way of a viable marketing platform—thusly this attribute and its potential to increase in offline viewer-ship must be included as well.
Additionally since many of the sites seem amenable to sharing some of the revenue we can likely prune off any additional branches that look at no shared revenue. This is not to say that sites who do not offer to share revenue cannot or will not be met with a modicum of success, but as the market evolves a level of reciprocity will likely be the modus operandi for the largest video sharing players; barring a significant shift in ideology amongst content providers. And if early indicators are accurate, and these clips do in fact tip the balance towards generating buzz rather than reducing demand of offline shows, then from an empirical point of view the optimal pathway is participation.
Of course these markets are far more complex than our simplistic example alone, but the general theory is still sound. Perhaps these actions are preemptive moves to prevent consumers from acclimating to online viewing. Time will only tell. But one other near certainty, should more companies express the desire to take their content off these sharing sites, is that the net outcome will likely translate to less time spent watching videos at these sharing sites, if not fewer visitors.
In an upcoming UGC update report In-Stat will explore the impact these actions could have on the UGC market. We’ll additionally explore how this market may evolve as it matures. Out of a Technology Adoption Panel survey early indicators point to potential reductions in online participation at these sharing sites should all content other than that which is truly user generated be removed. And if more companies follow Viacom’s path, the cumulative “roars” of this debate may ultimately raze much of the potential these sharing sites represent to content providers, leaving them to fight over a pie that is the same size as it was before any of us heard of UGC.
