Pay TV operators are in danger of losing subscribers to their rivals if they cannot support the streaming of IP content from their gateway device to other set-top boxes and multiscreen devices, Mike Paxton, Senior Analyst at SNL Kagan MRG (Multimedia Research Group) warned today. He reckons the device that makes this possible, the home media gateway, will become the basis for service differentiation thanks to in-home content streaming and multiroom DVR. He says the home media gateway is an integral part of next-generation video services. Operators expect them to make services stickier and so help avoid cord shaving, cord cutting or subscriber losses to other traditional platform operators.
These are the dynamics behind the SNL/MRG forecasts showing a rapid growth in home media gateway shipments over the next three years. The company predicts 13 million unit shipments in 2014 and 24 million by 2017 compared to just under 10 million in 2013. Most of these boxes will be sold in North America and Europe because their cost, in the region of $300-350 per unit, limits the addressable world market today.
“The thought process at Pay TV providers is that home media gateways have a serious impact on how their service is viewed by subscribers when they are comparing it to others,†Paxton said.
During a webcast focused on the future of this device category, SNL/MRG noted that although home media gateways accounted for 4% of global STB shipments last year, they made up 15% of the set-top box market value. Vendors love the category because of the high margins.
IPTV providers have led the way with home media gateway deployments, in terms of units shipped. Paxton said cable will make them a bigger priority this year and next. However, it is satellite platforms, some of whom are already on their second generation of home media gateway, who will be shipping the largest volume of these devices by 2017, followed by IPTV and then cable. Satellite operators will account for 9.4 million units that year compared to 5.8 million for the cable industry. The figure for IPTV will be 8.8 million.
SNL/MRG says a home media gateway should include multiroom DVR, support IP video streaming including to multiscreen devices and other STBs, support HDTV and support applications that allow Pay TV subscribers to connect to social networking sites and even streaming media sites like Netflix. It will include an integrated hard disk and an integrated modem or access to one via Ethernet or WiFi.
Companies using these devices (list courtesy of SNL/MRG) are: Free (which made its own Freebox Revolution V6, shipping since late 2010), Numericable (La Box by Sagemcom, since February 2012), Bouygues Telecom (Bbox by Samsung, since March 2012), Liberty Global (Horizon by Samsung, since April 2012), Comcast (X1 from Pace, since June 2012), Cox (Cisco 9800 Series, since February 2013), Shaw Communications (ARRIS Moxi Gateway, since mid 2011), BendBroadband (ARRIS Moxi Gateway, mid 2011), DIRECTV (HR34-700 Genie from Pace, December 2012 and the second generation HR44 Genie from Humax, March 2013), DISH (Hopper by EchoStar Technologies, March 2012) and GCI (Pace XG-1, August 2013). The other available products today are the TiVo Premiere Elite and the TiVo Roamio.
The high price of these devices limits the addressable market and it also limits the pace at which Pay TV operators can deploy them, due to the high CapEx burden. These are two of the challenges for the home media gateway market but they will not deter what Paxton calls a solid pattern for growth.
Perhaps not surprisingly then, more STB vendors are going to enter the home media gateway market, with SNL/MRG predicting that Technicolor and Netgear are two of the companies introducing solutions in the near future. He highlighted the forthcoming HMG7000 from Netgear because the company is dipping its toe into the market for service provider delivered STBs. Traditionally Netgear has built for retail.
Nearly all (98%) of home media gateways being shipped today are headed solutions (meaning they are attached directly to a television set like a traditional STB). There is some interest in headless solutions (which can sit remotely from a television and feed devices in the home, like from a basement) but not enough to seriously change this balance.
A good example of a headless solution shipping today is the ARRIS MG5125G Moxi Gateway, and Pace announced a headless gateway that is scheduled for delivery to Comcast this year, Paxton reported.
Paxton noted two more potential drags on the growth of this device segment. The first is the growing interest in cloud-based TV services like network PVR. “This could undercut demand for the more full-featured STB including home media gateways,†he said. If that movement becomes more apparent or widespread in the next few years it has the potential to dampen the worldwide installations potential. The other is ecosystem complexity: too many different companies involved in software development, leading to performance problems.
