The set-top box (STB) market in China is headed for decline as the market matures with ever-larger swathes of the population already in possession of the device, even though China will continue to export STBs in big numbers to less developed countries, according to a China Electronics Supply Chain topical report from IHS Inc.
China's STB shipments will decline to a projected 130.8 million units at the end of this year, down 12 percent from 148.6 million in 2012. The loss in 2013 is in marked contrast to the 20 percent gain in 2012, and shipments will trend down in general during the next few years. By 2017, China STB shipments for both domestic usage and exports will barely exceed the hundred-million mark, amounting to 103.7 million units.
While regulations from China's central government as well as the country's increasing urbanization will continually push up the number of TV viewers in the state, China's set-top box market itself is waning and will suffer negative growth, the victim of a maturing space.
Both domestic and export STB markets counted a loss in shipments during the first half of 2013 compared to the same time last year, with the domestic cable and satellite STB segments encountering softness after the government ended financial incentives meant to encourage shopping among the Chinese.
Migration from analog to digital also slowed during the first six months of the year, mainly because local governments stung by financial cutbacks reduced subsidies to cable TV operators. The anemic state of the market persisted into the second half, so no improvements were evident that could have lifted the market.
Even so, Chinese STB makers are said to be attempting the development of new and diversified products to gain fresh markets.
In particular, manufacturers are investing resources on the high-definition STB segment, banking on stable growth that will come from the population migrating away from analog to digital. With China's cities becoming increasingly sophisticated and enjoying access to burgeoning technologies like high-definition broadcasts, large portions of the country have converted to digital. Such areas continue to pose the greatest opportunity for domestic STB makers looking for additional revenue streams.
Chinese STB makers are also keen on exporting their products to developing countries. Here standard-definition STBs and low-cost HD set-top boxes could play key roles in penetrating export markets, where Chinese products are welcomed because of their affordability. China shipped out some 11 million cable STBs and 28 million satellite STBs in the first half this year, with those markets in 2015 forecast to grow to 15 million and 60 million, respectively. A third device type, terrestrial STBs, will see exports decline from 22 million by year-end to 18 million in 2015.
The Chinese STB market will be difficult to crack, even for local aspirants, IHS believes. Players seeking to gain access to the Chinese STB market will find it hard to enter the tightly held space, currently controlled by the big names in China's STB industry that will leave little room for newcomers.
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