Thinking smart inside the box
Set-top boxes are reclaiming their status as primary home entertainment access gateways
Sponsored Feature The latest generation of set top boxes (STBs) has reached a level of technological sophistication that's way beyond the single-function appliances that used to squat athwart chunky tubes in the early years of the satellite and cable TV revolution.
In doing so STBs have also outsmarted the PCs and smartphones that vied to fill the gateway gap when our TV viewing habits began to fragment back in the noughties.
Increasingly, users now want to centralize their digital viewing and social interaction on a single high-specification HD display rather than juggle between connected devices, depending on whether they want to watch broadcast or on-demand TV, video sharing platforms, videoconference – or all four.
STB market is rolling
That trend was significantly boosted by shifts in viewer behavior wrought by the COVID pandemic, so much so that the STB market is now rolling, according to Future Market Insights. Broadly, this is due to new aggregations of content, technological innovation and increased subscriber demand, it concludes. The analyst expects the global STB market to be worth $33.4 billion by the end of 2022, growing to $57.7 billion by 2032, with a compound annual growth rate (CAGR) of 5.6 percent over the forecast period.
That revenue growth is being driven by a confluence of market forces, starting with developments in hardware and software which are key to STB product differentiation. Their ability to support advanced display technologies, for example, such as 4K UHD and 8K UHD resolution, plus voice-enabled remote control, are advanced features that users increasingly expect and are ready to pay for.
With software, a shift away from proprietary (and pricey) STB middleware toward more open system software options that are more user-customizable, able to seamlessly interface with diverse online media (like apps and social networks), and more cost-effective to deploy to market is also proving decisive.
The emergence of open platforms "cut out the software middleware from the STB ecosystem", notes Grand View Research. This creates an opportunity for STB vendors to reduce overall cost and integrate open software platforms like Android TV and RDK (Reference Design Kit) into their products to add value to their offerings.
Compelling technology of itself, however, will not guarantee growth for pay-TV players. The principle performance metrics across sector participants must also include the implementation of go-to-market strategies that are geared for agile partnerships with content suppliers, communications operators and other influential players.
Tech and content providers form alliances
Over-the-top (OTT) direct-to-consumer streamed media channels are also helping to orchestrate the STB renaissance, coinciding with steady value growth across subscription-based services like Amazon Prime Video, Disney+, HBO Max, Hulu, Netflix and others. Omdia's 'Global: Pay TV & Online Video' report calculates that global subscription numbers total went from 1.14 billion in 2020 to 1.34 billion in 2021, an increase of 17.7 percent year-on-year.
The analyst firm predicts those figures will swell by a further 10.5 percent in 2022 to reach 1.48 billion by the start of 2023. With market entrants and major incumbents still only part-way through their respective global expansion programs, this means the pay-TV and online video sector will continue to expand. Omdia forecasts the worldwide total will exceed 2 billion in 2027.
The OTT subscription tv market remains a turbulent and highly competitive global opportunity characterized by a constant battle to attract new subscribers and keep hold of existing ones. And commercial participants at all levels – from providers of the enabling hardware and software to content producers and aggregators – are betting on strategic partnerships to reinforce their own market presence in a bid to outperform their rivals. These also create routes for expansion where partners have established strengths in geographic regions.
Tactical alliances between technology providers and content providers in particular are proving critical to the consolidation of streamed content ecosystems.
The collaboration between ZTE and Netflix is a case in point. Since 2019, ZTE has been working with Netflix on multiple STB projects, including the Hailstorm Hybrid Program. This is Netflix's Android TV-based STB device scaling initiative, designed to give pay-TV operators and consumer electronics partners better ways to integrate Netflix on their devices.
"We are committed to being tightly involved in R&D with partners as the most effective way of ensuring complete integration between complementary solutions," says Wu Xin, VP of fixed & multimedia product at ZTE. "These commitments also complement plans to introduce our solutions into global markets where Android TV is already established."
'Super-aggregators' stepping up…
Providing a wide range of viewing options for pay-TV audiences is no longer enough to assure subscriber growth. Being able to deliver a diverse and constantly updated choice of films, boxsets, documentaries and other types of video content is table stakes for any player. But they also have to help their viewers navigate and make sense of the mass of choices they find on their screens. And this is where the 'super-aggregator' comes into play.
Pay-TV operators "need to be able to address [additional online activity] opportunities to continue to grow, argues Daniel Simmons, Research Director, Media Delivery at Omdia: "This means that pay-TV operators must become 'super-aggregators'."
Super-aggregation defines the integration of streamed content, linear channels, and other digital media (social networks, say) into a holistic TV experience that's available ready-consolidated at its point of consumption. After content itself, the user experience is usually named as a pay-TV service's main differentiating quality: typically speaking the way in which content is accessed, surfaced, presented and interacted with. And it's here that STB software and hardware integration can make a real difference.
Providers that attempt this using software alone will be frustrated and limited by scalability, suggests Simmons. "Trying to achieve super-aggregation only as an app across the connected device ecosystem means that it just becomes an app among all the others in a TV screen's primary user experience," he says, "which is outside of operators' abilities to manage."
Put another way, a STB will be critical to the success of any super-aggregation strategy, "because it gives operators control over the primary user experience of the TV screen through which all apps are accessed and controlled, and can be used to add value," adds Rafael Cortes, Product Director of Multilaser Industrial.
"They can manage every element of this experience," Cortes explains, "from the available apps on the screen, right through to the buttons on the remote control."
Users like app-compatible STB software
In its simplest form, super-aggregation is about providing consumers with "all their TV content in one place" by aggregating multiple sources of online video into one platform adorned by value-added user interfacing features. It's a requirement which has led many STB manufacturers to move away from Linux, with Android TV emergent as the stronger challenger for next-generation STB operating systems.
"For us, Android TV has a strong market outlook," says Juan Carlos León Flores, Technological Development Manager at LatAm telco América Móvil. "One reason for this is it has an operators tier which allows them to customize the platform to suit their own needs, enabling them to attract more users and enhance consumer 'stickiness'. Plus, we can promote our own apps in the launcher and in search results."
ZTE is another STB leader that believes Android TV brings compelling advantages for super-aggregators looking to grow their subscriber base through value-added differentiation. The company first launched an Android TV STB in 2017, and has continued to develop enhanced offerings since.
ZTE's Digital Video Broadcasting (DVB) hybrid STB (ZXV10 B836CTSI-A20) for example is based on the Google Common Broadcast Stack (CBS) platform – announced in October 2020 and designed to accelerate the reach of Android TV - and was designed with the aim of accelerating the roll-out of new services for service providers.
The company has deployed Google Ad Manager – a compatible linear ad insertion (aka. addressable TV) platform - on its Android TV STBs for Telkom Indonesia. The service is expected to help generate more advertising revenue for the telco by allowing it to show customized ads to its payTV subscribers while they watch live TV, matching the contents more closely to their preferences and increasing the likelihood of stimulating a purchase.
More recently, ZTE launched a range of new STBs that support 4K and 8K ultra HD video output. Developed in partnership with semiconductor partner Amlogic, the ZTE 8K STB debuted in September 2022. When connected to a big screen, it can deliver immersive 4K UI and enhance ultra HD video quality, says the firm.
"The 8K STB, by virtue of a 12 nanometer chipset and a quad-core 64-bit processor, can support 8K video decoding and output, with resolution being four times that of its 4K predecessor," explains Wu Xin at ZTE. "It also supports innovative video services such as multichannel video decoding, 'naked eye' VR, and free-viewpoint video – all features indoor and outdoor ultra HD video services need."
ZTE and Amlogic also collaborated to simultaneously launch the 4K Wi-Fi 6 mesh home media terminal. "This is a converged STB, router and gateway built around our chipset that's based on the quad-core ARM Cortex-A55 architecture," says Ruiliang Yang, Amlogic's Senior Director of Business Development & Marketing. "By leveraging Android TV, it can provide access to a massive choice of apps and media resources."
With a gigabit-speed WAN uplink and five Wi-Fi antennas, the STB also brings network services for commercial use-cases such as hotels, retail, hospitals and other out-of-home requirements, Yang adds.
Smart home support is next frontier
Smart home support is another market segment where next-generation STBs can add value, says ZTE's Wu Xin. Working with Amlogic again, ZTE recently launched an Android TV-based DVB-compliant STB with far-field voice which represents a type of cross between a smart speaker and an STB.
Xin says. "As a central voice control device, the STB achieves the entire home coverage of smart voice services, supports the control of a wide range of smart home devices, and enables visual installation." As such the STB is positioned to enable solutions developers to build a multi-ecosystem platform, using voice as a key interface for smart home management.
"This DVB STB adopts the far-field voice recognition technology and supports several of the most-spoken languages," ZTE's Xin continues. "Users can directly control the device by voice command instead of a remote control device. With a dual microphone array, its far-field voice pickup distance is 5-metres."
The pandemic has grown the stay-at-home economy to such an extent that it is unlikely that consumers will ever settle the one dimensional STBs of the past ever again.
Sponsored by ZTE.